Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Q1 2020 Earnings Presentation
24 slides from Kinder Morgan's earnings presentation, Apr 22, 2020
Slide 1: Investor Update
KINDERZMORGAN / Investor Update April 2020
Slide 2: Disclosure
Disclosure Forward looking statements / non-GAAP financial measures General – The information contained in this presentation does not purport to be all‐inclusive or to contain all information that prospective investors may require. Prospective investors are encouraged to conduct their own analysis a
Slide 3: Kinder Morgan: Leader in North American Energy Infrastructure
Kinder Morgan: Leader in North American Energy Infrastructure Unparalleled & irreplaceable asset footprint built over decades CO2 & transport Largest natural gas transmission network CO2 EOR oil & gas production Natural gas 6% 3% pipelines ~70,000 miles of natural gas pipelines Terminals 14% 659
Slide 4: 2020 Updated Guidance
2020 Updated Guidance Revised to incorporate estimated impact of COVID-19 & oil price decline Change from Change from Key metrics 2020 Forecast 2020 Budget 2019 Adjusted EBITDA $7.0 billion (8)% (8)% Distributable cash flow $4.6 billion (10)% (8)% Expected reduction in DCF to be more than offset wit
Slide 5: 2020 Updated Guidance Assumptions
2020 Updated Guidance Assumptions Change from 2020 Budget Segment EBDA Discretionary capital Key developments — Reduced upstream customer activity impacting contributions from gathering & processing (G&P) assets, particularly in the Bakken Natural Gas (4)% ($457 million) — Nearly $250 million of rem
Slide 6: 2020 Updated Guidance Sensitivities
2020 Updated Guidance Sensitivities Limited remaining commodity exposure for remaining 9 months Assumptions (last 9 mos) Change Potential Impact to Adjusted EBITDA (balance of year) Natural Gas Products Terminals CO2 Total Natural gas G&P volumes +/- 5% $23 million ~$23 million Refined products volu
Slide 7: $3.3bn of Commercially-Secured Capital Projects Underway
$3.3bn of Commercially-Secured Capital Projects Underway Project backlog as of 3/31/2020 Demand Pull / KMI Capital Estimated Supply Push ($ billion) In-Service Date Capacity Permian takeaway projects (PHP, TX Intrastates, NGPL) • • $ 0.9 Q4 2020 – Q1 2021 4.0 bcfd Supply for U.S. power & LDC demand
Slide 8: Our Response to COVID-19
Our Response to COVID-19 Prioritizing the health of our co-workers & their families while maintaining safe & reliable operations of our assets Leveraging well-established and previously utilized business continuity & pandemic response plans Kinder Morgan’s Pandemic Preparedness Committee activel
Slide 9: Resilient through Prior Cycles
Resilient through Prior Cycles Conservative business strategy built to withstand commodity price dislocations Quarterly Adjusted EBITDA (left, in $mm) WTI Crude Oil (right, $ / bbl) $2,100 $100 $1,900 $90 $1,700 $80 $1,500 $70 $1,300 $60 $1,100 >$25 / bbl ~$25 / bbl $50 decline decline $900 $40 $700
Slide 10: Prepared to Weather the Storm
Prepared to Weather the Storm Disciplined management of the balance sheet improves financial position relative to prior downturns NET DEBT / ADJUSTED EBITDA CFFO – CAPITAL EXPENDITURES – DIVIDENDS PAID(c) $ in millions Significantly lower leverage with ~$10 billion Self funding all dividends & capex
Slide 11: Highly-Contracted Cash Flows
Highly-Contracted Cash Flows >90% from take-or-pay & other fee-based contracts CONTRACT MIX(a) Contract type: Payment feature: Example assets: Natural gas interstates / LNG (>90%) Natural gas intrastates (>75%b) Entitled to payment regardless of throughput Liquids terminals (>70%) 5% 4% 64% Take-or-
Slide 12: Customers Are Primarily End-Users of the Products We Handle
Customers Are Primarily End-Users of the Products We Handle Net revenues underpinned by investment grade counterparties & credit support | Data as of 4/3/2020 Marketer Midstream Not rated 6% 3% 11% Producer – non-IG or not rated ~70% B- or below 3% 13% End-users such as large integrated energy, util
Slide 13: Natural Gas Segment is Predominantly Transport Pipelines
Natural Gas Segment is Predominantly Transport Pipelines ~80% take-or-pay | Fee-based gathering & processing assets focused on the Bakken, Eagle Ford & Haynesville NATURAL GAS SEGMENT VOLUMES Bbtu/d Transport Sales Gathering Gathering % 50,000 20% 45,000 18% 40,000 16% KMI overall 35,000 14% busines
Slide 14: Products Segment Transports Multiple Essential Fuels
Products Segment Transports Multiple Essential Fuels Fee-based revenues from critical infrastructure providing mix of feedstock & finished products to refineries & end users Crude oil 27% Products KMI overall Gasoline business mix volume mix 44% 14% 2019 Jet fuel Products Segment: 13% 64% Refined pr
Slide 15: Refined Products Volumes Relatively Steady over Time
Refined Products Volumes Relatively Steady over Time Including through prior crude oil price downturns (2015 & 2018) REFINED PRODUCTS VOLUMES(a) mmbbld 1.8 17.0 HISTORICAL VOLUME GROWTH CAGR 2015-2019 1.7 16.0 1.1% > 0.7% 1.6 15.0 KM U.S. consumption 1.5 14.0 Refined product demand is 1.4 13.0 typic
Slide 16: CO2 Segment Predictable Volumes & Hedged Commodity Price
CO2 Segment Predictable Volumes & Hedged Commodity Price Mitigating uncertainties where possible | EOR oil & gas production represents ~6% of KMI business mix NET OIL PRODUCTION: ACTUALS VS. BUDGET HEDGED VOLUMES mbbld as of 4/7/2020 Actual Budget 45 Apr - Dec 40 2020 2021 2022 2023 Oil - WTI hedges
Slide 17: CO2 Segment Consistently Generates Free Cash Flow
CO2 Segment Consistently Generates Free Cash Flow Low cash cost structure yields healthy margins through multiple commodity price cycles EOR OIL & GAS CASH OPERATING COSTS CO2 SEGMENT FREE CASH FLOW $ per net barrel $ millions Cash costs Avg. realized oil price FCF Capex Acquisitions Adj. Segment EB
Slide 18: Non-GAAP Financial Measures & Reconciliations
Non-GAAP Financial Measures & Reconciliations Defined Terms Reconciliations for the historical periods 18
Slide 19: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The non-GAAP financial measures of Adjusted Earnings and distributable cash flow (DCF), each in the aggregate and per share; segment earnings before depreciation, depletion, amortization (DD&A) and amortization of excess cost of equity investments and Certain Items
Slide 20: Use of Non-GAAP Financial Measures (Continued)
Use of Non-GAAP Financial Measures (Continued) Adjusted Segment EBDA is calculated by adjusting segment earnings before DD&A and amortization of excess cost of equity investments (Segment EBDA) for Certain Items attributable to the segment. Adjusted Segment EBDA is used by management in its analysis
Slide 21: GAAP Reconciliations
GAAP Reconciliations $ in millions Reconciliation of DCF 2019 Reconciliation of Adjusted EBITDA 2019 Net income available to common stockholders (GAAP) $ 2,190 Net income (GAAP) $ 2,239 Total Certain Items (29) Total Certain Items (29) Adjusted Earnings (a) 2,161 DD&A and amortization of excess cost
Slide 22: GAAP Reconciliations
GAAP Reconciliations $ in millions Reconciliation of Adjusted Segment EBDA 2019 Reconciliation of interest, net 2019 Natural Gas Pipelines (GAAP) $ 4,661 Interest, net (GAAP) $ (1,801) Certain Items (51) Certain Items (15) Natural Gas Pipelines Adjusted Segment EBDA 4,610 Interest, net (a) $ (1,816)
Slide 23: Reconciliation of CO2 Free Cash Flow
Reconciliation of CO2 Free Cash Flow $ in millions Reconciliation of CO2 Free Cash Flow 2015 2016 2017 2018 2019 Segment EBDA $ 657 $ 827 $ 847 $ 759 $ 681 Certain items: Non-cash impairments and project write-offs 622 29 - 79 75 Derivatives and other (138) 63 40 90 (49) Severance tax refund - - - (
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