Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Kinder Morgan 2012 Analyst Conference
26 slides from Kinder Morgan's conference presentation, Jan 25, 2012
Slide 1: CO2 - Tim Bradley, President CO2 Group
CO2 Tim Bradley President CO2 Group
Slide 2: History of CO2 Group and Looking Forward
History of CO2 Group and Looking Forward Track Record – Consistently very close to budget despite inherent volatility Shell CO2 formed in 1998, KM share 20% DCF ($MM) (a) Acquired remaining 80% in April 2000 $1,400 Acquired SACROC interests June 2000 Acquired Yates interests in 2001 and 2003
Slide 3: 2011 Performance Recap – Made Plan
2011 Performance Recap – Made Plan Higher price and lower costs offset volume shortfall, Capex below plan SACROC (a) Outperformed DCF $593MM vs. $555MM plan Oil: 28,627 Bbl/d vs. 29,374 Bbl/d NGLs: 16,644 Bbl/d vs. 17,008 Bbl/d 2011 DCF: CO2 Source and Transportation Flat DCF $300MM vs. $301
Slide 4: 2011 and 2012 DCF by Asset Group
2011 and 2012 DCF by Asset Group (a) 2011 DCF 2012B DCF = $1,082 MM = $1,365 MM Katz Katz -1% 2% S&T 27% S&T 26% SACROC Complex Sacroc 55% Complex Yates Yates 55% 17% 19% __________________________ (a) Segments shown without elimination 4
Slide 5: 2012 Expansion Capital Budget - $437 Million
2012 Expansion Capital Budget - $437 Million Staff overhead and CO2 CO2 purchases and staff purchases – aggregated overhead allocated to assets CO2 Purchases Katz 19% 16% CO2 S&T CO2 S&T 31% Yates 34% Staff OVHD 9% 7% Katz 9% SACROC SACROC Yates 28% 41% 6% 5
Slide 6: 2012 Executive Summary
2012 Executive Summary Capex Program $437 MM (a) CO2 S&T – $134.8 MM $350MM DCF Drill 11 wells Debottleneck Gathering System (22+ miles of pipe) Order additional Compression (32,000 horsepower) Produce 1,260 MMcf/d SACROC Complex – $119.7 MM $747MM DCF Activate 27 patterns Initiate work
Slide 7: Impact of Oil Price / Volume Variance on 2012 DCF
Impact of Oil Price / Volume Variance on 2012 DCF 2012 Budget: $1,365MM Volume +/– 1,000 Bbl/d SACROC / Katz $26.6MM Yates $14.4MM Price +/– $1/Bbl WTI $5.8MM CO2 $1.6MM NGL $2.5MM Crude $1.7MM __________________________ Note: Unhedged WTI price presumed to average $93.75/b, WTI-WTS spread = $2.34,
Slide 8: CO2 S&T Growth Opportunities
CO2 S&T Growth Opportunities Demand is strong and continues to increase Domestic EOR Projected CO2 Demand (a) We have a simple plan: Bcf/d 12 10 1. Sign Contracts securing the demand 8 6 2. Develop the supply to 4 meet those contracts 2 — Options: 400-600 0 MMcf/d for $1-2 Billion 1985 1990 1995 200
Slide 9: CO2 Source & Transportation
CO2 Source & Transportation Growing Business Opportunities Permian Basin CO2 Deliveries Permian Basin MMcf/d 1,800 2011 supplies were at capacity, customers Other 1,600 were being pro-rated Sheep Mtn. 1,400 1,200 Permian Basin demand is growing via new 1,000 Bravo Dome projects, extensions of ex
Slide 10: CO2 Volumes
CO2 Volumes Produced and Sold to our Customers Significant growth since 2005: CAGR: volumes +6.2%, price +13.9% CO2 KM-share 2012 vs 2011: volumes +1%, price +13.6% MMcf/d 700 600 And, just to be clear: 500 Although our customer deliveries often have and 400 will exceed our entitlement, sales
Slide 11: Demand Growth and Regeneration
Demand Growth and Regeneration 5-year Contracted Volumes High oil prices have increased long-term demand for CO2 CO2 Daily Contract Quantities MMcf/d Total contract quantities signed in 2006-2011 1,000 represents 2 times our entitled production during 2006 2012 that period 800 Weighted average con
Slide 12: Doe Canyon Field Expansion
Doe Canyon Field Expansion $255 MM, 65 MMcf/d increase Doe Canyon Expansion Project Flow Rate MMcf/d 180 170 MMcf/d (from 105 MMcf/d) 160 — Adds 750 Bcf reserves 140 Timing : 2nd Quarter 2014 120 ) 100 Project delivers attractive ( 80 returns based on contracts recently executed and currently
Slide 13: St. John's CO2 Source Opportunity
St. John’s CO2 Source Opportunity Expect to close in late January McElmo Sheep Dome Mountain Located in Arizona and New Mexico Bravo 10” Pipeline Placitas Dome In-place CO2 resource of 12+ ~200 Miles Tcf Cortez — 40 wells drilled to-date 20” pipeline Asset acquisition $30MM ~400 Miles Denver C
Slide 14: Oil and Gas Segment
Oil and Gas Segment Production and DCF Net Hydrocarbon Production (Mboe/d) 50 Gas Processing Original oil in place (billion Bbls) 40 Katz SACROC 2.8 Yates SACROC Yates 5.0 30 Katz 0.23 20 10 Gross production (Bbl/d) 2011 2012 0 SACROC oil 28,627 27,868 2002 2003 2004 2005 2006 2007 2008 2009
Slide 15: Oil & Gas: Basis for Hedging Policy
Oil & Gas Basis for Hedging Policy Oil & Gas All-in Cost Structure (a) ($/Net Boe) O&G cost structure has strong correlation to $100 DD&A energy prices TOTI Power is tied to gas prices $80 CO2 Expense High activity levels have increased staffing and $60 Workover Exp other service costs Other W
Slide 16: Oil and Gas Segment Production Forecasts
Oil and Gas Segment Production Forecasts Production expectations tend to grow over time Evolution of Forecasted 2012 Production (a) over Time (MBbl/d, 8/8ths) 50 Despite oil price volatility, we have replaced all 40 of our oil production and 98% of our HC production with new proved reserves for the
Slide 17: Oil & Gas and Business Unit IRR
Oil & Gas, and Business Unit IRR 35% All-in O&G IRR (2000-2021) ~23.7% Required disclosures in 10-K plus proved reserves cash flows: 14.8% 10-K + Reserve Report 30% — With unhedged prices, IRR would have been 40% Gas Processing Adding in Katz and Gas Processing excluded 25% from disclosures incr
Slide 18: Oil and Gas Segment
Oil and Gas Segment Over past 5 years, capex 10% below plan, oil production 1% below plan Capex ($MM) Net Oil Production (MBbl/d) $600 50 45 $500 40 35 $400 30 $300 25 20 $200 15 10 $100 5 $- - 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Budget Actual Budget Actual 18
Slide 19: SACROC Production & Operations Highlights
SACROC Production & Operations Highlights Oil Production 2003-2012 (MBbl/d) 2011 – Review 40 Oil production 2.6% below plan Actual Budget — Platform pressure and conformance issues 30 — Injection rates higher than expected – curtailed pattern activations from 35 to 27 — Field gas production contin
Slide 20: SACROC Unit Look-back
SACROC Unit Look-back: Recent Projects – Meeting, sometimes exceeding expectations SWCL Gilligan’s Island Bbl/d Bbl/d 12000 6000 AFE AFE Actual Actual 10000 5000 Forecast Forecast 8000 4000 6000 3000 4000 2000 2000 1000 0 0 11/07 12/09 10/10 11/12 12/14 10/15 1/07 6/07 4/08 9/08 2/09 7/09 5/10 3/11
Slide 21: Yates Production
Yates Production Steady 2011 Production (MBbl/d) Yates oil production missed plan in 2011 (3.4%) Feb freezing event 25,000 Oil column thinned to <20’ in February; last 9 20,000 months loss of 0.3’ (less OCT reduction rate from recent past-higher stability). 15,000 Stabilized / improved productio
Slide 22: Katz CO2 Project
Katz CO2 Project The first year Investment $199MM project total, $125MM thru 2011 Bbl/d 7,000 Oil Response 6,000 2011 plan 1,455 vs. actual 499 Bbl/d Response delayed 7-8 month 5,000 Effect was 875 Bbl/d (95% of short fall) 4,000 Recent Operation Challenges Scale, Asphaltine, Corrosion 3,0
Slide 23: Katz CO2 Project
Katz CO2 Project Solid oil response but delayed from plan Katz Phase 1 – Oil Cut 1.000 0.100 0.010 AFE Forecst Actual 0.001 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Oil Rate Increase from 232 to 1104 (Dec-Dec) Phase 1 – All Producers Responding Response seen in All Phase 1 Wells Oil Cut increas
Slide 24: KM CO2 Current Outlook
KM CO2 Current Outlook Development Plans 2012-2021 1. SACROC Base Case Forecast — 67 MMBoe net (a), $715MM KM-share capex ($172MM CO2) DCF ($MM) (b) — Continue platform development plan; production forecast is based on existing recovery expectations $1,600 — Forecast assumes deteriorating inlet gas
Slide 25: Historical Long-term Outlook
Historical Long-term Outlook The best is yet to come CO2 segment outlook has continued to Historical DCF Projections ($MM) grow over past 5 years $1,600 2012 $1,400 2011 Oil prices have increased from $50 to 2010 2009 $90/Bbl $1,200 2008 — Increased costs but also opportunities 2007 $1,000 Highe
Slide 26: Kinder Morgan
KINDER/MORGAN
Kinder Morgan — Kinder Morgan 2012 Analyst Conference on 6ix