Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Kinder Morgan Energy Partners — Credit Suisse Energy Summit 2010
27 slides from Kinder Morgan's conference presentation, Feb 2, 2010
Slide 1: Credit Suisse Energy Summit
ENERGY PARTNERS, L.P. Credit Suisse Energy Summit Park Shaper, President February 2, 2010
Slide 2: Forward Looking Statements
ENERGY PARTNERS, L.P. Forward Looking Statements 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 future acti
Slide 3: Use Of Non-GAAP Financial Measures
ENERGY PARTNERS, L.P. Use Of Non-GAAP Financial Measures The non-generally accepted accounting principles ("non-GAAP") financial measures of distributable cash flow before certain items (both in the aggregate and per unit), segment earnings before depreciation, depletion, amortization and amortizati
Slide 4: Use Of Non-GAAP Financial Measures - Cont'd
ENERGY PARTNERS, L.P. Use Of Non-GAAP Financial Measures - Cont’d "Certain items" are items that are required by GAAP to be reflected in net income, but typically either (1) do not have a cash impact, for example, goodwill impairments, allocated compensation for which we will never be responsible, a
Slide 5: Size Does Matter
ENERGY PARTNERS, L.P. Size Does Matter Growth opportunities Since 1997, ~$20 billion in growth capital invested ~$11 billion in organic expansion / greenfield projects ~$9 billion in acquisitions Access to capital Successfully raised capital, in good times and bad ~$9 billion in public
Slide 6: The Kinder Morgan Strategy
ENERGY PARTNERS, L.P. The Kinder Morgan Strategy Same Strategy Since Inception Focus on stable, fee-based assets which are core to the energy infrastructure of growing markets Increase utilization of assets while controlling costs Classic fixed cost businesses with little variable costs Impr
Slide 7: Delivering 13 Years Of Consistent Growth
ENERGY PARTNERS, L.P. Delivering 13 Years Of Consistent Growth Total Distributions (GP + LP) ($MM) Annual LP Distribution Per Unit (b) $2,500 $2,416 $4.40 $4.50 $4.20 GP (a) 15% $2,132 $4.02 3% $4.00 = $2,000 LP =4 $1,854 A GR $3.26 $3.48 R $3.50 0 C $3.13 CAG $1,469 $3.00 6- 201 $2.87 199 $2.63 0 2
Slide 8: Significant Historical Returns
ENERGY PARTNERS, L.P. Significant Historical Returns (a) KMP: 27% CAGR Since ‘96 (b) KMR: 13% CAGR Since ‘01 (c) Dollars Dollars AMZ (d) $2,250 $320 = $306 KMP = $2,181 $2,000 $290 KMR = $291 $1,750 $260 $1,500 $230 $1,250 $200 $1,000 $170 $750 AMZ (d) = $662 $140 $500 $110 $100 $250 $80 $100 S&P 50
Slide 9: Promises Made, Promises Kept
ENERGY PARTNERS, L.P. Promises Made, Promises Kept Promises Made Promises Kept Budgeted Actual Distribution per unit: Distribution per unit: 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 2006: $3.28 20
Slide 10: Asset Footprint And Management Expertise Have Led To Growth Opportunities
ENERGY PARTNERS, L.P. Asset Footprint And Management Expertise Have Led To Growth Opportunities Industry Launch Led to: Led to: Rank (a) Pad Acquisitions (b) Internal Growth (b) – CFPL, CALNEV, Charter Triad, – Carson terminal, East Line & Northline Products st Cochin 1 – SFPP expansions Pipelines
Slide 11: Current Capital Structure
ENERGY PARTNERS, L.P. Current Capital Structure Kinder Morgan Energy Partners, L.P. Market Equity (a) $18.0B Debt (b) 10.4B Enterprise Value $28.4B 2010E EBITDA (c) $3.2B 2010E DCF (d) $2.4B Additional Cash Incentive Shares Distribution Distribution KMR (NYSE) KMP (NYSE) (LLC) (Partnership) i-units
Slide 12: Unmatched Footprint
ENERGY PARTNERS, L.P. Unmatched Jet Trans Fuel Mountain Pipeline Footprint 2 Cochin Largest independent transporter of petroleum products in the U.S. Pacific Express Transport ~1.9 million barrels per day (Bbl/d) 2nd largest transporter of natural gas in U.S. (a) 2 Trailblazer Own an interes
Slide 13: As Important As Size, Location
ENERGY PARTNERS, L.P. As Important As Size, Location Products Pipelines: well-located with origin in refinery/port hubs and terminus in population centers Natural Gas Pipelines: well-positioned in Rockies, Shales, Texas CO2: own and operate best source of CO2 for enhanced oil recovery Termin
Slide 14: Stable Asset Base...
ENERGY PARTNERS, L.P. Stable Asset Base… Natural Gas Products Kinder Morgan CO2 Terminals Pipelines Pipelines Canada – Interstate: virtually all – Liquids: take or pay take or pay – S&T: minimum – Bulk: minimum Volume Security – volume based – No volume risk – Intrastate: ~78% volume guarantee vol
Slide 15: ...That Is Also Well-diversified
ENERGY PARTNERS, L.P. …That Is Also Well-diversified KMP 2010E CO2 Segment DCF Natural Gas Pipelines 28% CO2 transport and sales Profile (b) 59% Interstate (c) 72% oil production related 41% Texas Intrastate Production hedged (a): 2010=73% ($57/Bbl) 2011=60% ($63) 30% 28% 2012=32% ($82) 20
Slide 16: Green Energy Creates Opportunities
ENERGY PARTNERS, L.P. Green Energy Creates Opportunities Renewable Fuels – Expect to handle ~250 MBbl/d – Continue to utilize and expand of renewable fuels in 2010 (a) refined products pipelines and (25-30% of U.S. market) terminals to handle ethanol, biofuels and changing / increasing fuel specif
Slide 17: Sources of Future Growth
ENERGY PARTNERS, L.P. Sources of Future Growth Growth Drivers KM Opportunity – Leverage Footprint – Cheap, abundant, domestic energy source – Full-year impact of REX, MEP, KMLA – Shifting supply from multiple basins – Completion of construction of FEP in 2010 – U.S. demand for natural gas expected t
Slide 18: ~$20 Billion in Capital Invested 1998-2009
ENERGY PARTNERS, L.P. ~$20 Billion in Capital Invested 1998-2009 (a,b) (billions) Total Invested by Type (a,b) Total Invested by Year (a) $12 $2.4 $9 $3.5 $3.3 JV Contributions $6 Expansion $3.0 $2.9 $8.7 $8.8 Acquisition $2.7 $3 $2.5 $0 Expansions Acquisitions $2.0 $1.9 $1.6 Total Invested by Segme
Slide 19: $1.5 Billion in Growth Expenditures Planned for 2010
ENERGY PARTNERS, L.P. $1.5 Billion in Growth Expenditures Planned for 2010 (millions) 2010 Budgeted Growth Expenditures CO2 Natural Gas Pipelines (a) 28% 22% 7% Products Pipelines 0.2% KM Canada 13% 11% Terminals 19% Identified Acquisitions Announced Acquisitions (b) __________________________ (a) I
Slide 20: Balance Sheet Has Remained Solid
ENERGY PARTNERS, L.P. Balance Sheet Has Remained Solid (a) (millions) Credit Summary Budgeted FY 2009 Yr-end 2010 Credit Metrics Debt / EBITDA (b,c) b,c) 3.8x 3.6x EBITDA / Interest (c) 6.4x 6.1x L-T Debt Rating Baa2/BBB Revolver Liquidity (d) Long-term Debt Maturities (e) Total Bank Credit $1,787 N
Slide 21: 2010 Partnership Goals
ENERGY PARTNERS, L.P. 2010 Partnership Goals Distribution Target $4.40 per unit (4.8% growth) Excess coverage of ~$32 million Maintain Solid Balance Sheet Year-end 2010 Debt / EBITDA of 3.6x Expansions / acquisitions financed 50% equity, 50% debt Operate all of our assets in a safe, co
Slide 22: KMR: The Basics
ENERGY PARTNERS, L.P. KMR: The Basics KMR is KMP… KMR shares Pari passu with KMP unitholders; represent limited liability interests in Kinder Morgan Management LLC, whose only investment is i-units of KMP IPO in May-2001; trades on NYSE under symbol KMR Market value = $4.7 billion (~1/4 of t
Slide 23: KMR: Compelling Investment Proposition
ENERGY PARTNERS, L.P. KMR: Compelling Investment Proposition (a) KMR has generated strong returns for KMR Discount to KMP 10% investors… (b) 7% avg discount 50% total return in 2009 5% since 2001 IPO (a) 0% 13.0% compound annual total return since 2001 IPO vs. 14.1% for KMP, -5% 13.7% for the
Slide 24: Insiders Prefer KMR
ENERGY PARTNERS, L.P. Insiders Prefer KMR Management Purchases of KMR & KMP (a) (millions) $10 $8 $6 $4 $8.0 $2 $4.5 $0 KMR KMP __________________________ (a) Purchase of KMR shares and KMP units by directors and officers of KMR/KMP since the KMR IPO in 2001, as reported in SEC Form 4 filings 24
Slide 25: Risks
ENERGY PARTNERS, L.P. Risks Regulatory Pacific Products Pipeline FERC/CPUC case Periodic rate reviews Unexpected policy changes Crude Oil Production Volumes Crude Oil Prices Budget assumes $84/Bbl realized price on unhedged barrels 2010 Sensitivity is ~$6 million DCF per $1/Bbl chang
Slide 26: Attractive Value Proposition
ENERGY PARTNERS, L.P. Attractive Value Proposition Unparalleled asset footprint Established track record Industry leader in all business segments Experienced management team Supportive general partner Transparency to investors Attractive returns driven by combination of yield plus grow
Slide 27: ENERGY PARTNERS, L.P.
ENERGY PARTNERS, L.P. KINDER/MORGAN
Kinder Morgan Energy Partners — Credit Suisse Energy Summit 2010 on 6ix