Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Barclays Energy CEO Conference 2018
36 slides from Kinder Morgan's conference presentation, Sep 5, 2018
Slide 1: Investor Presentation
Investor Presentation September 2018
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: A Core Holding in Any Portfolio
A Core Holding in Any Portfolio One of the Largest Diversified Energy Infrastructure Companies in North America CO2 S&T KM Canada Natural Gas Pipelines CO2 EOR 4%3% Largest natural gas transmission network 7% in North America Terminals 15% Own or operate ~70,000 miles of natural $8,093m m Natura
Slide 4: Compelling Investment Thesis
Compelling Investment Thesis Significant Cash Flow Generation, Significant Value to Shareholders ~$40 billion market capitalization One of the 10 largest energy companies in the S&P 500 Highly-aligned management (15% ownership) Investment grade rated debt Expect near-term eligibility for upgrade to
Slide 5: Delivering on Objectives
Delivering on Objectives Key Milestones Reached De-lever balance sheet Published Budget 2018B ∆ from 2017 ― Reduced debt by close to $6 billion since Q3 2015 Segment EBDA incl. JV DD&A (a) $8,093 million 5% ― Finished Q2 2018 at 4.9x net debt / EBITDA ― Plan to further repay debt with ~$2 billion o
Slide 6: Financial Flexibility from Significant Cash Flow
Financial Flexibility from Significant Cash Flow Prioritizing a Healthy Balance Sheet Early mover in industry shift to self-funding, higher dividend coverage and lower leverage ― $0 KMI equity issued since 2015 and none expected for the foreseeable future ― 2018 budgeted dividend coverage of 2.6x ―
Slide 7: Kinder Morgan's Commitment to Shareholders
Kinder Morgan’s Commitment to Shareholders Generate Predictable, Fee-Based Cash Flows and Leverage Footprint to Deliver Growth Diversified, highly-contracted asset base core to North American economy Stable, fee-based ― ~90% of cash flows from take-or-pay and other fee-based contracts assets ― ~96
Slide 8: Positioned to Support Future of Natural Gas
Positioned to Support Future of Natural Gas Kinder Morgan Transports ~40% of All Natural Gas Consumed in the U.S. Eagle Ford, 5 Eagle Ford, Haynesville, 6 8 Haynesville, U.S. PRODUCTION 10 PROJECTED TO GROW BY >30 SUPPLY (Bcfd) Permian, 7 BCFD AND >40% OVER NEXT 10 Other U.S., 31 YEARS FROM FOUR KEY
Slide 9: Unmatched Natural Gas Network and Deliverability
Unmatched Natural Gas Network and Deliverability Strong Fundamentals Drive Value on Existing Assets and Create Investment Opportunities KM NATURAL GAS PIPELINES (Bcfd) 2017 2018E 2019E = Growing supply area U.S. Natural Gas Demand 80 89 95 Volume Growth 8 6 = Key areas of demand growth Bakken % Grow
Slide 10: $6.3bn of Secured Capital Projects Underway
$6.3bn of Secured Capital Projects Underway Significant Opportunities Primarily Resulting from Expansive Natural Gas Footprint Demand Pull / Supply KMI Capital Estimated Secured Capital Projects Push ($ billion) In-Service Date Capacity Natural Gas Elba liquefaction and related terminal facilities $
Slide 11: Growth Driver: Buildout of U.S. LNG Exports
Growth Driver: Buildout of U.S. LNG Exports Multiple Liquefaction and Natural Gas Transport Opportunities Across KM Footprint Global demand driving significant buildout of LNG export KM Network Reaches Multiple Export Facilities capabilities in the U.S. TGP KMLP U.S. LNG exports reached over 3 Bcf
Slide 12: Project Highlight: Elba Island LNG Export Terminal
Project Highlight: Elba Island LNG Export Terminal Elba Liquefaction Company (ELC)(a) / Southern LNG Company (SLNG) Project Scope Liquefaction facilities (10 small-scale modular units) Ship loading facilities; boil-off gas compression Located on Elba Island near Savannah, Georgia Project Stati
Slide 13: Growth Driver: Surging Permian Production
Growth Driver: Surging Permian Production KM Providing Additional Takeaway Capacity for Associated Natural Gas Production Existing footprint reaches across Texas with KM Positioned to Serve Current and Future Production connectivity into all major demand markets Natural Gas Pipelines Under Construct
Slide 14: Project Highlight: Gulf Coast Express (GCX)
Project Highlight: Gulf Coast Express (GCX) Permian Direct-to-Gulf Coast Project Satisfying Multiple Growth Drivers Project Scope Project Drivers Mainline: 447.5 miles of 42” pipeline originating at the Waha Producer push project to transport prolific growing natural gas Hub and terminating near
Slide 15: Solid Liquids Fundamentals
Solid Liquids Fundamentals Attractive Opportunities to Supply U.S. Products to Consumers Here and Abroad GLOBAL LIQUIDS CONSUMPTION EXPECTED TO GROWTH LED BY CHINA AND INDIA EXCEED 100 MILLION BARRELS PER DAY BY 2019 OVER NEXT TWO YEARS North America Rest of World 102 100 95 97 98 +2.5 Rest of World
Slide 16: Positioned to Support U.S. Gulf Coast Exports
Positioned to Support U.S. Gulf Coast Exports The Premier Refined Products Aggregation and Market-Clearing Hub KM’s HSC position represents the largest Integrated Houston Ship Channel Terminal Footprint independent refined products terminalling KM terminals system in U.S. Colonial and assets truck
Slide 17: Beyond the Backlog
Beyond the Backlog Long-Term Natural Gas Fundamentals Drive Value on Existing Assets and New Projects Southbound Storage to support Downstream capacity for renewable power connectivity for significant generation and Permian volumes Marcellus growth LNG exports Transport additional supply Haynesville
Slide 18: Potential Valuation Upside
Potential Valuation Upside Median Valuation Metrics Imply ~40-50% Share Price Upside for KMI DCF Yield(a) EBITDA Multiple (b) 11% 14.8x Med: 12.6x 13.8x 9% 9% 9% Med: 8% 13.2x 12.9x 12.4x 12.3x 8% 11.3x 10.6x 8% 10.5x 7% 7% 6% KMI ENB-CN TRP-CN SEP EPD ETE WMB MMP PAGP MMP WMB EPD ENB-CN TRP-CN SEP
Slide 19: Key Takeaways
Key Takeaways Run for Shareholders, by Shareholders A CORE HOLDING IN ANY PORTFOLIO Diversified energy Positioned for Financial flexibility Delivering infrastructure growth to execute shareholder value • One of the 10 largest • $6.3bn backlog • Commitment to • Significant cash flow energy companies
Slide 20: Appendix
KINDERMORGAN 20
Slide 21: Kinder Morgan Canada Limited (TSX:KML)
Kinder Morgan Canada Limited (TSX:KML) Strategic Assets Positioned to Support Growing Oil Sands Production On August 31, 2018, KML closed the sale of the Trans Mountain Pipeline and related assets to the Government of Canada for C$4.5 billion (subject to customary purchase price adjustments) — Sold
Slide 22: Attractive Results on Recent Expansion Projects
Attractive Results on Recent Expansion Projects Capital Invested / Year-2 EBITDA(a) 6.1x 6.0x 6.0x 5.5x Total Capital Invested Natural Gas Pipelines Original Estimate Actual / Current Estimate (b) Note: Projects completed during 2015 through 2017. Includes certain projects placed in service prior to
Slide 23: Stable, Multi-Year Fee-Based Cash Flow
Stable, Multi-Year Fee-Based Cash Flow 96% of 2018B Cash Flow is Independent of Commodity Price(a) 66% Fee-Based Take-or-Pay: highly dependable cash flow under multi-year contracts Entitled to payment regardless of throughput for periods of up to 20+ years 24% Other Fee-Based: dependable cash flow
Slide 24: Energy Toll Road
Energy Toll Road Cash Flow Security with ~90% from Take-or-Pay and Other Fee-Based Contracts Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada ’18B EBDA %(a) 56% 15% 15% 11% 3%(a) 73% interstate pipelines 80% liquids 66% oil production Asset Mix 61% refined products 64% ter
Slide 25: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) Committed to Being a Good Corporate Citizen PRIORITIZING ESG EVERYDAY ESG-RELATED ACHIEVEMENTS Operations Management System Publicly reporting ESG metrics since 2007 Intentional, routine risk management activities Employees - including management - bonu
Slide 26: Asset Integrity and Safety are Top Priorities
Asset Integrity and Safety are Top Priorities Kinder Morgan’s EHS Metrics Consistently Outperform the Industry OPERATE SAFELY & EFFICIENTLY OUR SAFETY PERFORMANCE VS. INDUSTRY(a) Safe operation of our assets is mission critical to our We track 36+ safety metrics and post monthly long-term succes
Slide 27: KMI Business Risks
KMI Business Risks Summary Regulatory — FERC rate cases (Products Pipelines and Natural Gas Pipelines) — Provincial, state, and local permitting issues CO2 crude oil production volumes Throughput on our volume-based assets Commodity prices — 2018 budget average strip price assumptions: $56.5
Slide 28: Natural Gas Segment Outlook and Asset Overview
Natural Gas Segment Outlook and Asset Overview Well-Positioned: Connecting Key Natural Gas Resources with Major Demand Centers Long-Term Growth Drivers: Asset Summary Exports Natural Gas Pipelines: 70,000 Miles — LNG exports: liquefaction facilities U.S Nat Gas Moved by KM: ~40% and pipeline infra
Slide 29: Highly-Contracted Natural Gas Pipelines
Highly-Contracted Natural Gas Pipelines Contracted Capacity and Term by Region Contracted Average Term Region Capacity Remaining Storage 326 Bcf 2 yr, 11 mo NORTH Transport 19.3 Bcfd 6 yr, 3 mo Storage 52 Bcf 1 yr, 8 mo Interstate SOUTH Transport 13.2 Bcfd 7 yr, 2 mo Transport Contracts LNG 18 Bcf 1
Slide 30: Products Segment Outlook and Asset Overview
Products Segment Outlook and Asset Overview Products Pipelines: Stable, Strategic Assets Long-Term Stability: Asset Summary Pipelines: ~10,000 Miles Steady demand for refined 2017 Throughput: ~2.1 mmbbld products volumes on strategically Condensate Processing Capability: 100 mbbld located assets T
Slide 31: Terminals Segment Outlook and Asset Overview
Terminals Segment Outlook and Asset Overview A Diversified System Across Liquid and Bulk Hubs and Services Long-Term Growth Drivers: Asset Summary North American Logistics Bulk 35 Solutions Liquids 51 — Crude and NGL growth Total KMT: 86 Terminals — Refining and petrochemical KMPP: 66 growth Total
Slide 32: CO2 Segment Outlook and Asset Overview
CO2 Segment Outlook and Asset Overview Own and Operate CO2 for Enhanced Oil Recovery (EOR) Long-Term Growth Drivers: Asset Summary Demand for scarce supply of CO 2 Production: Net drives volume and price 2018 CO2 0.6 bcfd 2018 Oil 38 mbbbld Trillions of cubic feet of recoverable 2018 NGLs 11 mbb
Slide 33: CO2 Segment Significant Returns and FCF
CO2 Segment Significant Returns and FCF Generating High Returns and ~$6 Billion in Cumulative Free Cash Flow IRR% 2000-2017 CUMULATIVE FCF GENERATION ($BN) 30% $5.8 $5.3 $4.9 $4.2 $3.7 25% $3.1 $2.7 20% 2012 2013 2014 2015 2016 2017 2018B 15% DISTRIBUTABLE CASH FLOW ($MM)(a) $1,500 $1,250 10% $1,000
Slide 34: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The non-generally accepted accounting principles (non-GAA P) financial measures of distributable cash flow (DCF), both in the aggregate and per share, segment earnings before depreciation, depletion, amortization and amortization of excess cost of equity investment
Slide 35: KMI GAAP Reconciliation
KMI GAAP Reconciliation ($ in millions) Yr. Ended Yr. Ended Reconciliation of DCF 12/31/17 Reconciliation of Adjusted EBITDA 12/31/17 Net Income Available to Common Stockholders $ 27 Net Income $ 223 Certain Items 1,445 Certain Items 1,445 Adjusted Earnings 1,472 Income taxes before Certain Items (g
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