Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — JPMorgan US All Stars Conference 2020
37 slides from Kinder Morgan's conference presentation, September 2020
Slide 1: Investor Update
Investor Update September 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: A Core Energy Infrastructure Holding
A Core Energy Infrastructure Holding Generating significant cash flow & returning significant value to shareholders >$30 billion market capitalization One of the 10 largest energy companies in the S&P 500 ~15% owned by management Highly aligned management with significant equity interests $1.05 per
Slide 5: 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 6: 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 7: U.S. Natural Gas Demand Expected to Grow
U.S. Natural Gas Demand Expected to Grow >85% of the forecasted demand growth is driven by Texas and Louisiana LONG-TERM DEMAND TRENDS Bcfd, 2020 – 2030 +12.2 LNG exports +4.1 Industrial +2.2 Mexico exports, net +1.6 Other +0.9 Commercial +0.7 Transport LNG +0.4 Residential Exports to Mexico -0.9 Po
Slide 8: Hydrocarbons Required to Meet Long-Term Energy Demand
Hydrocarbons Required to Meet Long-Term Energy Demand U.S. energy infrastructure will be critical for decades GLOBAL PRIMARY ENERGY DEMAND BY FUEL Broad-based natural gas demand growth across all billion tons oil equivalent sectors leads to growing share of total energy demand 18 forecast Led by g
Slide 9: $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 10: Successfully Achieving Attractive Build Multiples
Successfully Achieving Attractive Build Multiples Established track record of leveraging our footprint & project management expertise Competitive advantages: INVESTMENT MULTIPLES: PROJECTS COMPLETED 2015-2019 Capital invested / year 2 Project EBITDA(a) Expansive asset base ― ability to leverage or
Slide 11: Weathering the Storm
Weathering 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 with 5.6
Slide 12: 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% 68% Take-or-pay Entitled to payment regardless of throughput Reservati
Slide 13: 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% ~70% B- or below 12% Producer – non-IG or not rated 13% End-users such as 4% large integrated energy,
Slide 14: Prioritizing Environmental, Social & Governance (ESG)
Prioritizing Environmental, Social & Governance (ESG) Ongoing enhancements to ESG disclosures | Long-standing commitment to reducing methane emissions SUSTAINALYTICS ESG RISK RATING(a) SUCCESSFUL METHANE EMISSIONS REDUCTIONS(a) bcf, cumulative across KM operations reported to EPA Natural Gas STAR pr
Slide 15: Biofuels Important to Growing Global Transportation Demand
Biofuels Important to Growing Global Transportation Demand Our network includes substantial blending, pipeline, terminaling & export capabilities for ethanol & other biofuels ETHANOL BIODIESEL RENEWABLE DIESEL Our existing assets Fuel-grade ethanol breakout (e.g., unit-train Biodiesel services inclu
Slide 16: Compelling Investment Opportunity
Compelling Investment Opportunity Strategically-positioned assets generating substantial cash flow with attractive investment opportunities Stable cash flows with ~74% take-or-pay or hedged earnings(a) ~7% current dividend yield Board remains committed to the previously planned $1.25 dividend (annua
Slide 17: Appendix
KINDER MORGAN Appendix
Slide 18: 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 19: 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 20: 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 21: Forecasted U.S. Natural Gas Production
Forecasted U.S. Natural Gas Production Bcfd 2020 2021 2025 2030 40 35 30 25 20 15 10 5 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: W
Slide 22: 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 23: Leading the Way Out of the Permian
Leading the Way Out of the Permian Successfully completed GCX on time & budget | PHP well underway Leveraging existing footprint into new takeaway capacity that reaches Natural Gas Pipelines across Texas & the Desert/Southwest (DSW), connecting into major Under Construction demand markets Our adva
Slide 24: Supporting the Buildout of U.S. LNG Exports
Supporting the Buildout of U.S. LNG Exports Serving significant liquefaction capacity & well-positioned to capture more Kinder Morgan network advantages: Natural gas transportation leader ~70,000 miles of natural gas pipelines Move ~40% of U.S. natural gas consumption & exports Supply diversity Conn
Slide 25: Manageable Natural Gas Re-Contracting Exposure
Manageable Natural Gas Re-Contracting Exposure Analysis of existing contracts that renew during next two years EXPECTED ANNUAL NET RE-CONTRACTING EXPOSURE (KM SHARE): % of $7.8bn 2020B KMI Total Segment EBDA(a) Expiring contracts are assessed for volumetric & rate 2021 2022 risk based on November
Slide 26: Integrated Terminaling Network Focused on Refined Products
Integrated Terminaling Network Focused on Refined Products Irreplaceable collection of assets, capabilities & market-making connectivity Our unmatched scale & flexibility on the Houston Ship Channel: KM terminals & assets refined products terminals Colonial 43 million barrels total capacity local re
Slide 27: 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 28: 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 29: 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 30: 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 31: 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 32: Non-GAAP Financial Measures & Reconciliations
Non-GAAP Financial Measures & Reconciliations Defined Terms Reconciliations for the historical periods 32
Slide 33: 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 34: 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 35: 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 36: 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 37: Reconciliation of CO2 Free Cash Flow
Reconciliation of CO2 Free Cash Flow $ in millions Reconciliation of CO2 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 - - - (
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