Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Morgan Stanley Energy Summit 2012
34 slides from Kinder Morgan's conference presentation, Aug 30, 2012
Slide 1: Companies Run By Shareholders, For Shareholders
Companies Run By Shareholders, For Shareholders Steve Kean Chief Operating Officer August 30, 2012
Slide 2: Forward-Looking Statements / Non-GAAP Financial Measures
Forward-Looking Statements / Non-GAAP Financial Measures This presentation contains forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. In particular, statements, express or implied, concerning fut
Slide 3: Tremendous Asset Footprint
Tremendous Asset Footprint 3rd largest energy company in North America with combined enterprise value of approximately $100 billion (a) Largest natural gas network in U.S. — Own an interest in / operate over 62,000 (b) miles of natural gas pipeline — Connected to every important U.S. natural gas
Slide 4: Kinder Morgan – Four Ways to Invest: KMP, KMR, EPB & KMI
Kinder Morgan – Four Ways to Invest: KMP, KMR, EPB & KMI 563MM Public Kinder Morgan, Inc. (54%) Float KMI (C-corp) 1.037 billion shares (a) Cash Market Equity $38.0B (a) dividends to 291MM Management/ Debt 11.1B (b) shareholders (28%) Original S/H Enterprise Value $49.1B 2012E Dividend per Share $1.
Slide 5: Our Strategy – Stay the Course
Our Strategy – Stay the Course Same Strategy Since Inception Focus on stable fee-based assets that are core to North American energy infrastructure — Market leader in each of our business segments Control costs — It’s the investors’ money, not management’s – treat it that way Leverage asset fo
Slide 6: 16 Years of Consistent Growth
16 Years of Consistent Growth Total Distributions (GP + LP) ($MM) KMP Annual LP Distribution per Unit (b) $4.98 $3,500 $5.00 $4.61 $3,118 $4.40 GP LP $4.50 $4.20 $3,000 $2,737 $4.02 $4.00 $2,450 (a) $3.48 $2,500 $2,171 $3.50 $3.13 $3.26 $2.87 $1,877 $3.00 $2.63 $2,000 $2.44 $1,469 $2.50 $2.15 $1,500
Slide 7: Significant Historical Returns
Significant Historical Returns (a) KMP: 25% CATR Since ‘96 (b) KMI: 15% CATR Since Inception (e) $4,000 $140 KMI = $124 Dollars KMP = $3,362 Dollars UTY= $120 $3,500 $120 $3,000 $100 $2,500 MSCI = $120 $80 S&P 500 = $110 $2,000 $60 $1,500 AMZ (d) = $1,052 $40 $1,000 $500 $20 ⇐ IPO 2/10/2011 S&P 500
Slide 8: Promises Made, Promises Kept
Promises Made, Promises Kept Promises Made Promises Kept KMP Budgeted KMP Actual LP Distribution: LP Distribution: 2000: $1.60 2000: $1.71 2001: $1.95 2001: $2.15 2002: $2.40 2002: $2.435 2003: $2.63 2003: $2.63 2004: $2.84 2004: $2.87 2005: $3.13 2005: $3.13 KMP achieved 2006: $3.28 2006: $3.26 LP
Slide 9: Significant Identified Growth Opportunities
Significant Identified Growth Opportunities Tremendous footprint provides nearly $10B of identified growth projects over next 5 years (a) Approximate Growth Capex (a) Selected Potential ($B) Growth Projects TGP Northeast upgrade Natural Gas Pipelines $1.7 LNG expansions EPNG Mexico border expa
Slide 10: Stable, Diversified Cash Flow
Stable, Diversified Cash Flow Addition of El Paso assets increases natural gas pipeline business mix — KMP’s natural gas pipelines segment contribution increases from ~30% to ~38% pro forma for dropdown of TGP / 50% EPNG and FTC divestitures (a) — EPB is 100% natural gas pipelines — KMI’s overall
Slide 11: Toll Road-like, Fee-based Business Model
Toll Road-like, Fee-based Business Model Natural Gas Products Kinder Morgan CO2 Terminals Pipelines Pipelines Canada (KMP) (KMP) (KMP/EPB/KMI) (KMP) (KMP) – Interstate: virtually all – Take or pay, – S&T: primarily take or pay minimum volume – Essentially no Volume Security – Volume based minimum
Slide 12: KMP / KMR
KINDER/MORGAN KINDER MORGAN ENERGY PARTNERS, L.P. KMP /KMR
Slide 13: KMP System Map
KMP System Map KINDER/MORGAN (KMP/KMR) 7a NN PLANTATION KMP GAS PIPELINES @ KMP GAS STORAGE @ = KMP GAS PROCESSING e KMP GAS TREATERS Z\ KMP TERMINALS. KMP PRODUCTS PIPELINES @ KMPPRODUCTS PIPELINES TERMINALS, %& ) KMP TRANSMIX FACILITIES KMP PETROLEUM PIPELINES m KMP PETROLEUM PIPELINES TERMINALS,
Slide 14: KMR 101
(KMP/KMR) KMR 101 KMR is KMP KMR Discount to KMP — KMR shares are pari passu with KMP units 10% — KMR dividend equal to KMP cash distribution, but paid in additional shares; effectively a dividend reinvestment 5% program (a) 0% — Like KMP units, KMR shares are tax efficient — but with simplified t
Slide 15: KMP's Diversified Cash Flow
(KMP/KMR) KMP’s Diversified Cash Flow 2012 Pro Forma Natural Gas Pipelines Business Mix (a) ~60% interstate ~40% intrastate (c) CO2 Products Pipelines S&T ~55% pipelines ~45% associated terminals / transmix CO2 Oil Natural Gas Production (b) 7% CO2 Pipelines ~27% CO2 transport and sales 20
Slide 16: KMP 2012 Growth Expenditure Forecast
(KMP/KMR) KMP 2012 Growth Expenditure Forecast 2012 Forecast Total KMP Growth Expenditures Pre-dropdown Post-dropdown = $2.4 billion (a,b,c) = $5.3 billion (a,b,d) CO2 CO2 S&T CO2 Oil S&T Production CO2 Oil 3% Production 7% Natural Gas Natural Gas 13% 6% 30% Pipelines Terminals Pipelines 13% 69% 30%
Slide 17: $30B of Growth Capital Invested at KMP
(KMP/KMR) $30B of Growth Capital Invested at KMP (a,b) ($ in billions) Total Invested by Type (a,b) Total Invested by Year (a) $15 $3.4 $5.5 $5.3 $12 JV Contributions $5.0 Expansion $9 $15.0 $4.5 Acquisition $6 $11.9 $4.0 $3 $3.5 $3.3 $- Expansions Acquisitions $3.0 $2.8 $2.5 $2.6 $2.5 $2.4 Total In
Slide 18: How We Have Done: KMP Returns on Capital
(KMP/KMR) How We Have Done: KMP Returns on Capital 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Segment ROI (a): Products Pipelines 11.9% 11.8% 12.8% 12.9% 12.4% 11.6% 11.8% 13.2% 12.5% 13.4% 13.7% 12.9% Natural Gas Pipelines 13.3 15.5 12.9 13.5 14.0 15.5 16.7 17.5 16.9 14.0 11.9 11.9
Slide 19: EPB
KINDER/MORGAN EL PASO PIPELINE PARTNERS j EPB
Slide 20: EPB System Map
KINDER/MORGAN (EPB) EPB System Map EPB GAS PIPELINES @ PB GAS STORAGE W EPB LNG TERMINALS f/\ ie Ki HEADQUARTERS SIN. 20
Slide 21: Well-positioned in Natural Gas
(EPB) Well-positioned in Natural Gas Natural Gas 2012 Highly stable cash flow stream Business Mix — Over 90% of revenue comes from capacity reservation charges LNG — Average contract life of ~8 years — Minimal throughput and commodity 12% Natural Gas exposure Pipelines Opportunities for growth 8
Slide 22: KMI
KINDER/MORGAN INC. KINDER MORGAN KMI
Slide 23: KMI Overview
(KMI) KMI Overview KMI pays regular c-corp dividend with attractive combination of yield plus growth KMI Investments / Assets: — Investment in MLPs • KMP: – General Partner (GP) interest receives incentive distributions from KMP – KMI owns ~11% of total limited partner (LP) interests • EPB: – GP
Slide 24: Stable Fee-based Cash Flow, Substantial Growth Opportunities Through MLPs
(KMI) Stable Fee-based Cash Flow, Substantial Growth Opportunities Through MLPs Vast majority of cash flow comes from stable, fixed-fee energy infrastructure — ~84% from fee-based energy pipelines, storage and ancillary services — ~16% oil production-related • Price exposure substantially hedged t
Slide 25: KMI Remaining Assets Available For Dropdown
(KMI) KMI Remaining Assets Available For Dropdown Plan to move all assets to KMP / EPB over time, except NGPL (a) __________________________ (a) Plan to dropdown all assets to KMP / EPB over time, except for KMI legacy 20% interest in NGPL which is currently expected to remain at KMI 25
Slide 26: Risks
Risks Regulatory (KMP/EPB/KMI) — Pacific Products Pipeline FERC / CPUC cases — Periodic rate reviews — Unexpected policy changes Crude oil production volumes (KMP) Crude oil prices (KMP) — 2012 budget assumes $93.75/Bbl realized price on unhedged barrels — 2012 sensitivity is ~$5.8 million DCF
Slide 27: Attractive Value Proposition
Attractive Value Proposition Unparalleled asset footprint Highly visible, attractive dropdown inventory at KMI via El Paso pipeline assets Significant, identified growth opportunities across each segment Attractive returns driven by combination of yield plus growth Established track record
Slide 28: Appendix
KINDER/MORGAN Appendix
Slide 29: Natural Gas Pipelines Segment
(KMP/EPB/KMI) Natural Gas Pipelines Segment Well-positioned connecting key natural gas resource plays with major demand centers Long-term Growth Drivers: Highly visible, attractive dropdown inventory at KMI via El Paso pipeline assets Natural gas the logical fuel of choice — Cheap, abundant, dom
Slide 30: Products Pipelines Segment
(KMP) Products Pipelines Segment Well-located with origin in refinery / port hubs and terminus in population centers Long-term Growth Drivers: Development of shale play liquids infrastructure — Condensate transportation, processing and storage services from Eagle Ford • Condensate processing facil
Slide 31: Terminals Segment
(KMP) Terminals Segment Well-located in refinery / port hubs and inland waterways Long-term Growth Drivers: $1.6 billion of identified major projects Newbuild and expansion of export coal and petcoke terminals (IMT, Houston, Whiting) Expansions and higher rates at well- located, high-connectiv
Slide 32: CO2 Segment
(KMP) CO2 Segment Own and operate best source of CO2 for EOR Long-term Growth Drivers: Strong demand for CO2 — Expansion of CO2 source fields and pipelines • Several large, long-term CO2 S&T contracts executed — Higher rates and better terms on new/renewed CO2 S&T contracts — St. Johns CO2 field a
Slide 33: Kinder Morgan Canada Segment
(KMP) Kinder Morgan Canada Segment Sole oil pipeline from Oilsands to West Coast / export markets Long-term Growth Drivers: Expand Oilsands export capacity to West Coast and Asia — TMPL is lowest-cost option for expansion to West Coast — Following successful open season, major expansion under way
Slide 34: Kinder Morgan
KINDER/MORGAN