Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Kinder Morgan 2014 Analysts Conference
36 slides from Kinder Morgan's conference presentation, Jan 29, 2014
Slide 1: CO2 - Jim Wuerth, President CO2 Group
CO2 Jim Wuerth President CO2 Group
Slide 2: Kinder Morgan CO2 Asset Map
KINDER/MORGAN Kinder Morgan CO, Asset Map rrr CO2 PIPELINE = PROPOSED LOBOS CO? PIPELINE == CRUDE PIPELINE © C02 SOURCE FIELD ; A OIL PRODUCTION FIELD i * KM HEADQUARTERS SACROC YATES:
Slide 3: Historical Long-term Outlook
Historical Long-term Outlook The best is yet to come Historical DCF Projections ($MM) CO2 segment outlook has $2,000 continued to grow over past 5 2014 $1,800 2013 2012 years 2011 $1,600 2010 2009 $1,400 2008 2007 Higher CO2 volumes and prices $1,200 — Increased demand, improved $1,000 contract te
Slide 4: History of CO2 Group and Looking Forward
History of CO2 Group and Looking Forward Track Record – Consistently very close to budget despite inherent volatility Shell CO2 formed in 1998, KM share 20% Acquired remaining 80% in April 2000 DCF ($MM) (a) Acquired SACROC interests June 2000 Acquired Yates interests in 2001 and 2003 $1,600
Slide 5: 2013 Performance Recap
2013 Performance Recap SACROC (a) DCF $758MM vs. $744MM plan Oil: 30,655 Bbl/d vs. 30,251 Bbl/d NGLs: 19,520 Bbl/d vs. 19,229 Bbl/d 2013 DCF: S&T DCF $391MM vs. $379MM plan $1,389MM plan (b) CO2Production: 1,218 MMcf/d vs 1,275 MMcf/d $1,418MM actual Yates DCF $247MM vs. $236MM plan 20
Slide 6: 2013 and 2014 DCF by Asset Group
2013 and 2014 DCF by Asset Group (a) 2013 DCF = $1,418 MM 2014 DCF = $1,526 MM Katz GLSAU Katz GLSAU 1% 4% 2% S&T 27% S&T 30% SACROC Complex SACROC 54% Complex Yates 51% Yates 18% 13% __________________________ (a) Segments shown without elimination 6
Slide 7: 2014 Expansion Capital Budget - $1,076 Million
2014 Expansion Capital Budget - $1,076 Million CO2 purchases and staff overhead - CO2 purchases and staff overhead – aggregated allocated to assets Katz CO2 8% Purchases ROZ 16% 7% GLSAU Staff OVHD 6% 6% Yates Katz S&T 3% 4% 47% S&T 51% ROZ 7% SACROC 25% GLSAU 2% SACROC 16% Yates 2% 7
Slide 8: 2014 Executive Summary
2014 Executive Summary Capex Program $1,076MM (a) S&T – $548MM Capex (includes $39MM Cap OH & Cap CO2) $453MM DCF Drill 3 new wells and acquire 3D seismic at McElmo Dome / Doe Canyon Yellow Jacket booster compression Cow Canyon development St Johns unit and Lobos pipeline development CO2 r
Slide 9: Impact of Oil Price / Volume Variance on 2014 DCF
Impact of Oil Price / Volume Variance on 2014 DCF ($ in millions) 2014 Budget: $1,526 Volume +/- 1,000 Bbl/d SACROC / Katz / GLSAU $28.0 Yates $14.9 CO2 Volume +/- 50 MMcf/d $9.8 Oil Price +/- $1/Bbl WTI $7.0 NGL $2.0 CO2 $2.1 Crude $2.9 NGL Price +/- $1/Bbl $3.9 __________________________ Notes: Un
Slide 10: CO2 Source & Transportation
CO2 Source & Transportation Growing Business Opportunities Permian Basin CO2 Deliveries MMcf/d Permian Basin 1,800 2013 supplies were at capacity, customers Other 1,600 Sheep Mtn. were being pro-rated at times 1,400 1,200 Permian Basin demand is growing via new 1,000 Bravo Dome projects, extensi
Slide 11: CO2 Entitlement Volumes
CO2 Entitlement Volumes Produced and Sold to our Customers CO2 KM-share Significant growth since 2005: MMcf/d CAGR: volumes +5.76%, price +14.18% 800 2014 vs 2013: volumes +12.74%, price 700 +9.36% 600 500 As a reminder: Although our customer deliveries often have 400 and will exceed our entit
Slide 12: Demand Growth and Regeneration
Demand Growth and Regeneration 5-year Contracted CO2 Volumes CO2 Daily Contract Quantities MMcf/d 2006 2014 1,000 High oil prices have increased long-term demand for CO2 800 — Weighted average contract life 600 with 3rd parties is 10 years 400 200 - 1 2 3 4 5 Year 12
Slide 13: Expanded Supply, New Markets
Expanded Supply, New Markets Status of CO2 Supply Expansions (MMcf/d) ($MM) ($MM) New Total Already Current Production 1,300 MMcf/d* Volumes Cost Approved Current Status New Sources Yellow Jacket Boosters 90 $214 $ 214 In execution Cow Canyon 200 $ 380 $ 56 Pending Final Approval St. Johns 300 $ 982
Slide 14: KM CO2 Anticipated Demand (MMcf/d)
KM CO2 Anticipated Demand (MMcf/d) 1,400 Last Year 1,200 Includes GLSAU 1,000 acquisition volumes 800 600 400 200 - 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 1,400 Current Outlook 1,200 1,000 800 600 400 200 - 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 KM TP Contract DCQs
Slide 15: Doe Canyon Field Expansion
Doe Canyon Field Expansion $255 MM, 95 MMcf/d CO2 Increase Projected Production Forecast (MMcf/d) 200 MMcf/d (from 105 MMcf/d) — Beating 170 MMcf/d target — Adds 750 Bcf reserves — Beating expected returns Completed : 4th Quarter 2013 — 4 months ahead of schedule — Parallel & booster compression
Slide 16: McElmo Dome Field Expansion
McElmo Dome Field Expansion Yellow Jacket Area – Booster Compression Project Incremental Production w/ Booster Compression (Bcf/d) 1.6 Booster Target Rate of 1.2 Bcf/d 1.4 Compression — Yellow Jacket first step in adding field 1.2 1.0 compression Gas Rate (BCFD) 0.8 — Adds 1.7 Tcf reserves Base 0.
Slide 17: McElmo Dome Field Expansion
McElmo Dome Field Expansion Cow Canyon Development Projected Production Forecast (Bcf/d) 1.6 1.4 Additional 200 MMcf/d Opportunity Cow Canyon 1.2 — 1.3 Tcf reserves potential 1.0 — Known area from past drilling Gas Rate (BCFD) 0.8 Base Decline 0.6 Pre-development phase underway 0.4 Compression —
Slide 18: St. Johns Development Project
St. Johns Development Project KM CO2’s first greenfield CO2 development will kick-start new Permian EOR Kinder Morgan will spend an additional $909MM over 18 years to develop the St. Johns CO2 field AZ Cortez CO2 Pipeline • About 450 sq. mile unitized Area, 300 sq. mile in development • NRI 83.5%
Slide 19: Cortez Pipeline Expansion Project
Cortez Pipeline Expansion Project Expansion enables significant growth in CO2 supply to the Permian Increases current capacity from 1.3 Bcf/d to nearly 2.0 Bcf/d $327MM (100%-share) planned investment 64-mile loop, 50,000 additional horsepower Cortez Partnership will finance 100% of expansio
Slide 20: Additional CO2 Development Underway
Additional CO2 Development Underway As we meet Permian need, focus shifts to new sources and new markets Potential New Markets New source fields being evaluated across the region CO2 recapture projects identified or under development with initial recapture of 78 MMcf/d of CO2 off amine units N
Slide 21: Oil and Gas Segment
Oil and Gas Segment Production and DCF Net Hydrocarbon Production (MBoe/d) Original Oil in Place (Billion Bbls) 60 Gas Processing SACROC 2.8 50 GLSAU Yates 5.0 40 Katz Yates Katz 0.23 30 20 SACROC GLSAU 0.48 10 Gross Production (Bbl/d) (b) 2013 2014 0 2002 2003 2004 2005 2006 2007 2008 2009
Slide 22: Oil & Gas Margins and Cost Structure
Oil & Gas Margins and Cost Structure Oil & Gas All-in Cost Structure (a) ($/Net Boe) O&G cost structure has strong $100 correlation to energy prices $80 Power is tied to gas prices High activity levels have increased $60 staffing and other service costs $40 Well-work and rig contracts now bein
Slide 23: Oil and Gas Segment
Oil and Gas Segment Over past 5 years, capex 7% below plan, oil production 0.5% below plan Capex ($MM) Net Oil Production (MBbl/d) $500 40 $450 35 $400 30 $350 $300 25 $250 20 $200 15 $150 10 $100 $50 5 $- - 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Budget Actual Budget Actual ______________
Slide 24: SACROC Production & Operations Highlights
SACROC Production & Operations Highlights Oil Production 2003-2014 (MBbl/d) 2013 – Review 40 Actual Budget Oil production 1.3% above plan 35 — Harvest better than expected 30 — Good results from infill program — Platform 2 and 3 meeting oil expectations 25 — GOR under control 20 NGL production 1
Slide 25: SACROC Unit Harvest Project
SACROC Unit Harvest Project: 2,500 Bbl/d of incremental oil & ~54 MMcf of additional recycled CO2 to inject 2-6 Harvest Production – older projects 2-2 2-1 2-4 3-5 3-6 3-7 3-8 4-3 4-1 3-3 3-2 3-1 3-4 8-8 8-6 8-2 8-4 10-7 10-8 12-5 10-6 10-3 12-12 8-9 10-14 10-15 10-12 10-13 10-16 12-13 8-7 8-5 12-
Slide 26: SACROC Unit – Bypassed Pay Opportunity
SACROC Unit – Bypassed Pay Opportunity Middle Canyon re-development (CR 1 and 2) — > 90 MMBbls of oil in place — Typically very low processing rate — Exploit with horizontal injectors (30 candidates identified) — Platform test well performing as expected — Drill first CR1 well in February • 7,200’
Slide 27: SACROC Unit – Long Range Plan
SACROC Unit – Long Range Plan SACROC Oil Production LRP 35000 30000 25000 Changes from 2013 plan — Platform 5 area (5 patterns) 20000 — 30 bypass pay horizontal well candidates 15000 — 2 additional harvest areas — 16 pattern West Shore project 10000 Bbl/d_Actual Bbl/d_2014Plan 5000 Bbl/d_2013Plan
Slide 28: Yates Production
Yates Production Steady 2013 Oil Production (Bbl/d) Oil Production 0.8% above plan 25,000 Slowing oil column thinning; 0.5’ vs. 0.8’ in 2012 (currently 16.9’) 20,000 New, improved membranes increase NGLs 15,000 Continued success in targeted East Side drilling 10,000 — Focus deeper completions
Slide 29: Katz CO2 Project
Katz CO2 Project The Third Year - Improving Investment $242MM project total, $179MM thru 2013 Bbl/d 7000 Oil Response Oil rate up from 1,806 to 3,605 Bbl/d 6000 (Dec to Dec) 2013 Plan 2,850 vs. Actual 2,691 Bbl/d 5000 Phase 1 improving but below target 30 Bbl/d Success from re-perf/stim/up
Slide 30: Goldsmith Landreth San Andres Unit (GLSAU)
Goldsmith Landreth San Andres Unit (GLSAU) Phase 2 Area (2011-2014) 22 Pats CO2 Pilot Phase 1 Area Area (2010- (2009-2010) 2011) 4 Pats 16 Pats Phase 3 Area (2014) 7 Pats Field Data 2014 Capital Program OOIP = 477 MMSTBO 8 pattern activations for 2014 57 MMSTBO recoverable reserves $33.6MM i
Slide 31: Residual Oil Zone
Residual Oil Zone Pre-Waterflood So Post-Waterflood So San Andres ROZ oil saturation similar to water-flooded main pay San Andres — ROZ has undergone “Mother- Nature’s Waterflood” MPZ MPZ Several significant San Andres ROZ projects underway in San Andres TZ TZ 13.9 MMSTBO recoverable reserves
Slide 32: KM ROZ Phase I Project
KM ROZ Phase I Project KM ROZ Phase 1 Well Layout KM ROZ Phase I Production Forecast 180 developed acres; 9-20 acre inverted 5-spots $91.9MM capex (excluding capitalized CO2) 4.7 MMSTBO recoverable reserves Attractive economics at conservative recovery factor Continuous, well-connected, hi
Slide 33: 1-Section ROZ Development Forecast
1-Section ROZ Development Forecast San Andres Dimensionless Curves 1-Section Oil Production Forecast ROZ performance expected to be like MPZ 12% recovery IRR - 20.8% performance 18% recovery IRR - 30.4% — Same rock – both San Andres — Same saturation – water-flooded 50% Sor (a) recovery IRR
Slide 34: Oil and Gas Segment Production Forecasts
Oil and Gas Segment Production Forecasts Production expectations tend to grow over time Evolution of Forecasted 2014 Production (a) over Time (MBbl/d, 8/8ths) 60 We have replaced 132% of our Hydrocarbon 50 production (net BOE) with new proved reserves 40 this year (R/P increase from 5.9 to 7.8) 30 2
Slide 35: P2's, Development Costs - Oil & Gas and Business Unit IRR
Oil & Gas, and Business Unit IRR 35% All-in O&G IRR (2000-2023) ~22.7% Required disclosures in 10-K plus proved Total 10-K + Reserve Report reserves cash flows: 17.1% Gas Processing 30% — With unhedged prices, IRR would have been 47.1% Adding in Gas Processing excluded from 25% disclosures incre
Slide 36: KM CO2 Current Outlook
KM CO2 Current Outlook Development Plans 2014-2023 SACROC Group Forecast — Continue platform development plan; production forecast is based on existing recovery expectations — Initiate Bypass Pay development in CR area — Forecast assumes deteriorating inlet gas quality impacting NGL production vol
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