Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Q2 2020 Earnings Presentation
25 slides from Kinder Morgan's earnings presentation, Jul 22, 2020
Slide 1: Investor Update
KINDERZMORGAN / Investor Update July 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 6% 3% ~70,000 miles of natural gas pipelines Terminals 14% 659 bcf of working storag
Slide 4: 2020 Updated Guidance
2020 Updated Guidance Revised to incorporate estimated impact of pandemic & commodity price declines Key metrics 2020 Budget 2020 Forecast down slightly Adjusted EBITDA $7.6 billion more than 8% Expected reduction in DCF to be more than down slightly Distributable Cash Flow (DCF) $5.1 billion offset
Slide 5: 2020 Updated Guidance Sensitivities
2020 Updated Guidance Sensitivities Commodity exposure for remaining 6 months Assumptions (last 6 mos) Change Potential Impact to Adjusted EBITDA & DCF (balance of year) Natural Gas Products Terminals CO2 Total Natural gas G&P volumes +/- 5% $14 million ~$14 million 3.030 bcfd Refined products volum
Slide 6: Key Volumetric Assumptions
Key Volumetric Assumptions Historical volumes & forecast for remaining 6 months of 2020 REFINED PRODUCTS PIPELINE VOLUMES NATURAL GAS GATHERING & PROCESSING VOLUMES Gasoline, diesel & jet fuel, mmbbld bcfd 2.0 4.0 Actuals Forecasted Q3-Q4 average Actuals Forecasted Q3-Q4 average 1.8 3.5 1.6 3.0 1.4
Slide 7: Forecasted U.S. Natural Gas Production
Forecasted U.S. Natural Gas Production Bcfd 40 2020 2021 2025 2030 30 20 10 0 Northeast Permian Haynesville Eagle Ford SCOOP-STACK Niobrara & PRB Bakken Associated Non-Associated 140 120 100 80 60 40 20 0 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 Source: WoodMackenzi
Slide 8: $2.9bn of Commercially-Secured Capital Projects Underway
$2.9bn of Commercially-Secured Capital Projects Underway Project backlog as of 6/30/2020 Demand Supply KMI Capital Estimated Pull Push ($ 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 (TGP
Slide 9: 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 10: Highly-Contracted Cash Flows
Highly-Contracted Cash Flows Stable cash flows with ~74% take-or-pay or hedged earnings(a) CONTRACT MIX(a) Contract type: Payment feature: Example assets: Natural gas interstates / LNG (>90%) Natural gas intrastates (~75%b) 6% 2% Entitled to payment regardless of throughput Liquids terminals (>75%)
Slide 11: 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 | Ratings as of 7/13/2020 Marketer Midstream Not rated 6% 2% 12% Producer – non-IG or not rated ~70% B- or below 13% End-users such as 4% large integrated energy,
Slide 12: Our Pandemic Response
Our Pandemic Response 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 actively m
Slide 13: Gathering & Processing Assets Across Multiple Key Basins
Gathering & Processing Assets Across Multiple Key Basins Represents ~9% of KMI EBDA with ~7% in Natural Gas & ~2% in Products (primarily Bakken) ~18% Other ~40% Eagle Ford SHORT-TERM DRY GAS PRODUCTION OUTLOOK Copano South Texas & Bcfd, 2019 – 2021 Multiple systems in Uinta, Oklahoma, San Juan & oth
Slide 14: 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 15: 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% 15% 2019 Jet fuel Products Segment: 13% 64% Refined pr
Slide 16: Refined Products Pipes Historically A Steady Contributor
Refined Products Pipes Historically A Steady Contributor Fee-based with stable volumes over time, including through prior crude oil price downturns | ~10% of total KMI EBDA REFINED PRODUCTS VOLUMES(a) mmbbld 2.0 17 HISTORICAL VOLUME GROWTH CAGR 2015-2019 1.8 16 Pandemic 1.6 impact 15 1.1% > 0.7% KM
Slide 17: 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 6/30/2020 Actual Budget Jul - Dec 45 2020 2021 2022 2023 2024 Crude oil - W
Slide 18: 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 19: Energy Toll Road
Energy Toll Road Cash flow security with >90% from take-or-pay & other fee-based contracts Natural Gas Pipelines Products Pipelines Terminals CO2 2020 EBDA %(a) 62% 15% 14% 9% Refined Liquids Jones Act CO2 & Interstate / LNG Intrastate G&P products Crude terminals tankers Bulk terminals EOR Oil & Ga
Slide 20: Non-GAAP Financial Measures & Reconciliations
Non-GAAP Financial Measures & Reconciliations Defined Terms Reconciliations for the historical periods 20
Slide 21: 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 22: 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 23: 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 24: 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 25: Reconciliation of CO2 Free Cash Flow
Reconciliation of CO2 Free Cash Flow $ in millions Reconciliation of CO 2 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 - - -