Kinder Morgan, Inc. · NYSE:KMI

Kinder Morgan — 2011 Barclays CEO Energy/Power Conference

38 slides from Kinder Morgan's conference presentation, Sep 8, 2011

  1. Slide 1: Companies Run By Shareholders, For Shareholders

    Companies Run By Shareholders, For Shareholders Richard D. Kinder Chairman and Chief Executive Officer September 8, 2011

  2. Slide 2: Forward-Looking Statements

    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 actions, conditions or eve

  3. Slide 3: Use of Non-GAAP Financial Measures

    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 amortization of excess cost of e

  4. Slide 4: Different Ownership Interests in Same Set of Assets

    Different Ownership Interests in Same Set of Assets Kinder Morgan Energy Partners, L.P. Kinder Morgan, Inc. Market Equity $22.3 (a) LP & GP Market Equity $18.3B (d) Debt 11.1B (b) Distributions Debt 3.2B (e) Enterprise Value $33.4B $1.3B (c) Enterprise Value $21.5B 2011E LP Distribution per Unit $4.

  5. Slide 5: KMR 101

    KMR 101 (a) KMR is KMP KMR Discount to KMP  KMR shares are pari passu with KMP units 10%  KMR dividend equal to KMP cash distribution, but paid in 5% additional shares; effectively a dividend reinvestment 0% program (b) -5%  Like KMP units, KMR shares are tax efficient — but with -10% simplified

  6. Slide 6: Our Strategy: Stay the Course

    Our Strategy: Stay the Course Same Strategy Since Inception  Focus on stable fee-based assets that are core to North American energy infrastructure — Market leader in each of our business segments  Control costs — It’s the investors’ money, not management’s – treat it that way  Leverage asset foo

  7. Slide 7: Asset Footprint

    Asset Trans Mountain Footprint 2 Cochin Puget Sound  Largest independent transporter of petroleum products in the U.S. — Transport ~1.9 MMBbl/d (a) Pacific Express  2nd largest transporter of natural gas in the U.S. — Own an interest in / operate over 24,000 Horizon 2 2 miles of interstate / intra

  8. Slide 8: 15 Years of Consistent Growth

    15 Years of Consistent Growth KMP Total Distributions (GP + LP) ($MM) (a) KMP Annual LP Distribution Per Unit (b) $3,000 $5.00 $4.60 $2,648 $4.40 GP LP $2,420 $4.20 $2,500 $4.02 $4.00 $2,132 $3.48 $1,854 $3.13 $3.26 $2,000 $2.87 $3.00 $2.63 $1,469 $2.44 $1,500 $1,265 $2.15 $1,162 $978 $2.00 $1.71 $8

  9. Slide 9: Significant Historical Returns

    Significant Historical Returns (a) KMP: 25% CAGR Since ‘96 (b) KMR: 13% CAGR Since ‘01 (c) Dollars Dollars $3,000 $450 AMZ (d) KMP = $2,735 = $397 $2,500 $375 KMR = $359 $2,000 $300 $1,500 $225 AMZ (d) = $899 $1,000 $150 $500 $75 S&P 500 = $119 ⇐ IPO 5/14/2001 S&P 500 = $213 $0 $0 Dec-96 Dec-98 Dec-

  10. Slide 10: Promises Made, Promises Kept

    Promises Made, Promises Kept Promises Made Promises Kept KMP Budgeted KMP 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 2006: $3.26 2007

  11. Slide 11: KMP

    KINDER/MORGAN KMP

  12. Slide 12: Diversified Cash Flow

    (KMP) Diversified Cash Flow KMP Segment Earnings before DD&A CO2 2011E = $3.8 billion (a,d) Natural Gas Pipelines  $1,098MM segment EBDA (a)  $1,079MM segment EBDA (a,d) — 28% CO2 transport and sales — 50% Interstate — 72% oil production related — 50% Intrastate (e) — Production hedged (b): 2011=8

  13. Slide 13: Sources Of Future Growth

    (KMP) Sources Of Future Growth KM Opportunity – Growth Drivers Leverage Footprint – System expansion / extension (e.g. Eagle Ford) – Cheap, abundant, domestic and clean – – Acquisitions (e.g. KinderHawk) natural gas is the logical fuel of choice – Greenfield development (e.g. FEP)  Natural Gas – In

  14. Slide 14: More Specifically…

    (KMP) More Specifically… Estimated Investment Potential Projects Near-term (3-5 years) (a) – Investments in shale infrastructure → Natural gas pipeline extensions / new construction  Natural Gas / Liquids – $1.0–1.8 billion → Crude / condensate storage → Convert natural gas assets to liquids / crud

  15. Slide 15: Over $22B of Growth Capital Invested

    (KMP) Over $22B of Growth Capital Invested (a,b) ($ in billions) Total Invested by Type (a,b) Total Invested by Year (a,b) $15 $12 $3.5 $2.7 JV Contributions $3.3 $9 Expansion $3.0 $2.8 $6 Acquisition $9.3 $10.4 $2.5 $2.5 $3 $2.5 $2.4 $- $2.0 Expansions Acquisitions $2.0 $1.6 $1.5 Total Invested by

  16. Slide 16: Returns on Capital

    (KMP) Returns on Capital 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Segment ROI (a): Products Pipelines 11.9% 11.8% 12.8% 12.9% 12.4% 11.6% 11.8% 13.2% 12.5% 13.4% 13.7% Natural Gas Pipelines 13.3 15.5 12.9 13.5 14.0 15.5 16.7 17.5 16.9 14.0 11.9 CO2 27.5 24.6 22.0 21.9 23.8 25.7 23.1 21

  17. Slide 17: Balance Sheet Remains Solid

    (KMP) Balance Sheet Remains Solid (a) ($ in millions) Credit Summary Debt / EBITDA (b,c) 3.4x EBITDA / interest (c) 6.2x Long-term debt rating Baa2 / BBB / BBB (d) Revolver Capacity Long-Term Debt Maturities Total bank credit $2,000 (e) 2011 $7 (f) Less: 2012 $967 (g) Commercial paper --- 2013 $507

  18. Slide 18: Focused on Distribution Growth

    (KMP) Focused on Distribution Growth Annual LP Distribution Per Unit (b)  History of Delivering Distribution $4.60 $4.40 Growth (a): $4.02 $4.20 $3.48 — 1-year growth = 4.8% $3.13 $3.26 $2.87 — 3-year growth = 8.1% $2.44 $2.63 $2.15 — 5-year growth = 7.0% $1.42 $1.71 $1.24 $0.94 $0.63 1996 1997 199

  19. Slide 19: KMI

    KINDER/MORGAN KMI

  20. Slide 20: 98% of Cash Comes from KMP

    (KMI) 98% of Cash Comes from KMP KMI Total Cash Receipts Interests in KMP (b) 2011E = $1.36 billion (a) NGPL  General Partner interest receives  A major interstate natural gas incentive distributions from KMP pipeline and one of the largest GP natural gas storage operators in  KMI owns ~11% of to

  21. Slide 21: Total Hypothetical Distributions

    (KMI) Growth in KMP Distributions Leads to KMI Growth Hypothetical KMP Distributions of Cash from Operations Received $1,511 with incremental LP Interests 14MM units outstanding GP Interest (+$56MM) Additional 14MM units $1,455 $1,600 Total Hypothetical Distributions $1,373 $56 $1,400 to KMI ($ in m

  22. Slide 22: Liquidity Summary

    (KMI) Liquidity Summary (a) ($ in millions) Credit Summary Net debt / distributions received less G&A (b) 2.5x Long-term debt rating Ba1 / BB / BB+ (c) Revolver Capacity Long-Term Debt Maturities (d) Total bank credit $1,000 2011 --- Less: 2012 $839 Revolver drawn (365) 2013 --- Letters of credit (4

  23. Slide 23: KMP Drives KMI Growth

    (KMI) KMP Drives KMI Growth KMP Cash Distributions Received by KMI $1,330  Substantial cash flow GP $1,202 LP Units Owned  Minimal capital expenditures at $1,079 KMI level $902 $1,169  Strong balance sheet $682 $632 $1,054 $574 $940 $477  Growing distributions and $406 $582 $783 $333 $536 $472 i

  24. Slide 24: KMP Risks

    KMP Risks  Regulatory — Pacific Products Pipeline FERC / CPUC cases — Periodic rate reviews — Unexpected policy changes  Crude Oil Production Volumes  Crude Oil Prices — 2011 budget assumes $89/Bbl realized price on unhedged barrels — 2011 sensitivity is ~$5 million DCF per $1/Bbl change in crude

  25. Slide 25: KMI, KMP & KMR: Attractive Value Proposition

    KMI, KMP & KMR: 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 growth 25

  26. Slide 26: Appendix

    KINDER/MORGAN Appendix

  27. Slide 27: $2.5 Billion Growth Expenditures Forecast in 2011

    (KMP) $2.5 Billion Growth Expenditures Forecast in 2011 (a) KMP Growth Expenditures 2011E = $2.5 billion (a,b,c) CO2 19% Natural Gas Terminals (b) 17% 53% Pipelines (a) 11% Products Pipelines (b,c) __________________________ Year-to-date capital raised through 6/30/2011: • $1,070 million of equity -

  28. Slide 28: KMP 2011 Budget

    KMP 2011 Budget (a) ($ in millions, except per unit) 2010 2011 Change Actual Budget $ % Segment EBDA $3,311.8 $3,636.7 $324.9 10% Segment EBDA w/JV DD&A (b) $3,457.4 $3,813.6 $356.2 10% Distributable cash flow Net income $1,505.5 $1,746.9 $241.4 16% DD&A (b) 1,056.2 1,100.1 43.9 4 Book / cash tax di

  29. Slide 29: KMP Quarterly Profile

    KMP Quarterly Profile (a) ($ in millions, except per unit) 1Q 2Q 3Q 4Q Year Segment EBDA w/JV DD&A (b) 2011B Total Segments (c) 24% 23% 25% 28% $3,813.6 2010 Products Pipelines 24% 26% 25% 25% $687.5 Natural Gas Pipelines 26% 22% 23% 29% 981.4 CO2 26% 25% 24% 25% 960.2 Terminals 23% 25% 25% 27% 646.

  30. Slide 30: KMP’s Stable Asset Base

    KMP’s Stable Asset Base Natural Gas Products Kinder Morgan CO2 Terminals Pipelines Pipelines Canada – Interstate: virtually all – Liquids: take or pay – S&T: primarily take or pay – Bulk: minimum  Volume Security – Volume based minimum volume – No volume risk – Intrastate: ~75% volume guarantee, gu

  31. Slide 31: KMP Natural Gas Pipelines Segment

    KMP Natural Gas Pipelines Segment Well-positioned in the Rockies, shales and in Texas 2011 Growth Drivers:  Fayetteville Express (FEP) pipeline in- service  Eagle Ford shale development (under JV with Copano, and on standalone basis) Trailblazer  KinderHawk full year plus volume growth REX  Stor

  32. Slide 32: Eagle Ford

    Eagle Ford Eagle Ford Gathering LLC  50 / 50 joint venture with Copano in South Texas  Total KM capex approximately $142MM  111 miles of 30” and 24” pipeline and liquid handling facilities at Freer  Partial in-service Aug-2011, full in-service Sep-2011  Capacity expanded from 375,000 to 705,000

  33. Slide 33: Haynesville

    Haynesville KinderHawk Field Services LLC  Gathering and treating services for Haynesville / Bossier Shale  419 miles of pipe installed as of July 2011  Over 2 Bcf/d of capacity  Well-positioned to access over 20 Tcf of gas  2,350 GPM of treating capacity in service (19 plants / 11 locations) 

  34. Slide 34: KMP Products Pipelines Segment

    KMP Products Pipelines Segment Well-located with origin in refinery / port hubs and terminus in population centers 2011 Growth Drivers:  PPI tariff escalator (PPI + 2.65 = ~6.8% (a))  Organic volume growth Cochin  Full year of 2010 acquisitions (Chevron, Shell, High Sierra) and expansion projects

  35. Slide 35: KMP Terminals Segment

    KMP Terminals Segment Well-located in refinery / port hubs and inland waterways 2011 Growth Drivers:  Increase in rates on existing contracts  Higher coal and ethanol throughput  Full year of 2010 acquisitions (Slay, USD, Watco) and expansion projects (Carteret and Pier IX)  Partial benefit from

  36. Slide 36: KMP CO2 Segment

    KMP CO2 Segment Own and operate best source of CO2 for EOR 2011 Growth Drivers:  Current forecast 250-300 Bbl/d production increase at Katz — Seeing initial response; production increase from ~300 Bbl/d to ~600 Bbl/d in recent months, current rates exceeding 700 Bbl/d  Higher overall oil / NGL pri

  37. Slide 37: KMP Kinder Morgan Canada Segment

    KMP Kinder Morgan Canada Segment Sole oil pipeline from oilsands to West Coast / export markets Trans Mountain 2011 Growth Drivers: 2  New toll settlement pending on Trans Puget Mountain pipeline (TMPL) Sound Express Long-term Growth Drivers:  Expand oilsands export capacity to West Coast and Chin

  38. Slide 38: KINDER/MORGAN

    KINDER/MORGAN

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