Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Kinder Morgan Energy Partners — Credit Suisse 2008 Energy Summit
26 slides from Kinder Morgan's conference presentation, Feb 6, 2008
Slide 1: Credit Suisse 2008 Energy Summit
Credit Suisse 2008 Energy Summit February 6, 2008
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward looking statements, including these, within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Exchange Act of 1934, as amended. Forward looking statements are not guarantees of performance. They i
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures This presentation utilizes the non- non-generally accepted accounting principles financial measures of segment segment distributable cash flow, KMP distributable cash flow, and earnings before interest, taxes and DD&A (“(“EBITDA” EBITDA”). For KMP overall, we defin
Slide 4: Capital Structure
Capital Structure Kinder Morgan Energy Partners, L.P. Market Equity (a) $14.0B Debt (b) 7.0B Enterprise Value $21.0B 2008E EBITDA (c) $2.5B 2008E DCF (d) $1.8B Additional Cash Incentive Shares Distribution Distribution KMR KMP (LLC) (Partnership) 72 million i- i-units (a) 176 million units (a) 62M 1
Slide 5: The Kinder Morgan Strategy
The Kinder Morgan Strategy Same Strategy Since Inception Focus on stable, fee-based assets which are core to the energy infrastructure of growing markets Increase utilization of assets while controlling costs Classic fixed cost businesses with little variable costs Improve productivity to drop a
Slide 6: Unmatched Footprint
Unmatched Trans Footprint Mountain 2 Cochin Largest independent transporter 2 of petroleum products in the U.S. Pacific Transport more than 2 million barrels per day (Bbl/d) 2nd largest transporter of natural Trailblazer 2 gas in U.S. (a) REX 3 2 Approximately 22,000 miles of Northern REX inters
Slide 7: Well-diversified Asset Base
Well-diversified Asset Base KMP CO2 2008 DCF Natural Gas Pipelines 32% CO2 transport and sales Profile (b) 47% Texas Intrastate 68% oil production related 53% Rockies Production hedged (a): Little incidental commodity risk CO2 Natural Gas 2008=83% ($44/Bbl) 28% Pipelines 2009=73% ($49) 27% 2010=71%
Slide 8: Eleven Years of Consistent Growth
Eleven Years of Consistent Growth Total Distributions (GP + LP) ($mm) LP Distribution Per Unit (b) $2,000 $1,843 $4.50 $4.24-$4.32 GP (a) $1,750 $4.00 $3.68 % LP $1,469 $3.50 R = 17 $3.20 $3.32 $1,500 8% CAG $2.96 =4 $1,265 $1,162 $3.00 $2.72 GR $1,250 $2.50 $1,000 CA $827 $978 $2.50 $1.90 $2.20 $70
Slide 9: Significant Historical Returns
Significant Historical Returns (a) KMP: 29% CAGR (b) KMR: 14% CAGR (c) Dollars Dollars $1,800 $300 $1,721 Alerian $267 MLP Index $1,500 $260 KMP $240 KMR $1,200 $220 $900 $180 $578 $600 $140 $124 Alerian MLP Index $300 $223 $100 S&P 500 S&P 500 $0 $60 1996 1997 1998 1999 2000 2001 2002 2003 2004 200
Slide 10: Promises Made, Promises Kept
Promises Made, Promises Kept Promises Made Promises Kept Budgeted 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: $3.44
Slide 11: 2008 Partnership Goals
2008 Partnership Goals Distribution Target $4.02 per unit (16% growth) Excess coverage of ~$12 million Maintain Solid Balance Sheet Expansions / acquisitions financed 50% equity, 50% debt Deliver Projects on Time and on Budget 11
Slide 12: Growth Opportunities
Growth Opportunities Current Projects (2008-2011) Additional Opportunities Shifting Natural Gas Supply Sources REX Northeast extension, REX/NGPL — Rockies Rockies Express pipeline Chicago project, MEP expansion, KMLP — LNG KM Louisiana pipeline expansion, storage, incremental shipper — Barnett Shale
Slide 13: Shifting Natural Gas Supply Sources
Shifting Natural Gas Supply Sources Natural Gas Supply % Production Volumes (Bcf/d) 2007E 2013 Change Change Rockies Natural Gas (a) 8.6 11.4 2.8 33% Rockies Barnett Shale Natural Gas (b) 2.1 6.4 4.3 200% production Gulf Coast LNG Imports (a) 0.7 2.8 2.1 300% expected to increase 33% 2007-2013 (a) B
Slide 14: Newbuild Natural Gas Pipelines
Newbuild Natural Gas Pipelines Wyoming Nebraska Indiana Ohio Illinois Colorado Kansas Missouri Oklahoma ROCKIES EXPRESS PIPELINE IN-SERVICE Mississippi ROCKIES EXPRESS PIPELINE Alabama MIDCONTINENT EXPRESS PIPELINE Texas Texas Louisiana KM LOUISIANA PIPELINE KM HEADQUARTERS Rockies Midcontinent KM E
Slide 15: Increased Use of Renewable Fuels
Increased Use of Renewable Fuels Renewable Fuels Standard (a) New legislation approximately doubles required use of 40 36.0 renewable fuels over next several years; increases Incremental Impact of EISA - 2007 35 EPACT - 2005 even more dramatically long- long-term 30 R CAG (billion Gal/yr) 25 .5 % 2
Slide 16: Growing Crude Production from Canadian Oilsands
Growing Crude Production from Canadian Oilsands WCSB Crude Production by Type (a) Heavy/Light Crude Differential (b) WTI vs. Mayan Crude Spot Price 4 $20 Oilsands -‘15 Condensate AG R ‘07 ~12 %C 3 Conventional Heavy il sa nds $15 O (MMBbl/d) Conventional Light 3.0 MMBbl/d ($/Bbl) 2 1.2 MMBbl/d $10 O
Slide 17: High Oil Prices Mean Opportunities for Enhanced Oil Recovery
High Oil Prices Mean Opportunities for Enhanced Oil Recovery CO2 Deliveries McElmo Dome 1,500 Premiere Source of CO2 in U.S. Other ~22 years remaining deliverability 45% KM working interest (37% net revenue (MMcf/d) 1,000 Sheep Mtn interest) 9.5 Tcf of remaining reserves (30 Tcf OGIP) Bravo
Slide 18: Increased Production and Use of Heavy Crude
Increased Production and Use of Heavy Crude North American Petcoke Production (a) Refiners are converting to handle 120 Rest of N. America 102 heavier crude; Oilsands, South -‘1 GR 100 U.S. Gulf Coast America… (mm dry short tons) ‘07 CA 5 % 80 … Heavier, sour crude produces 8.5 66 60 43 45 49 51 52
Slide 19: Coal Imports/Exports
Coal Imports/Exports Our terminals are well-positioned on coasts and inland waterways to handle either export or import coal U.S. Coal Imports/Exports (a) Coal Imports 120 111 Appalachian coal production declining, U.S. Coal Imports U.S. Coal Exports 100 93 affecting Eastern Utilities 86 (millions o
Slide 20: Current Projects
Current Projects Over $7.0 Billion In Current Projects Estimated Project Expected Project Cost ($mm) Completion Rockies Express $2,445 (a) 2007-2009 Midcontinent Express 660 (a) 2009 KM Louisiana Pipeline 510 2009 CALNEV expansion 425 2011 Trans Mountain – Anchor Loop expansion 460 2008 CO2 – SACROC
Slide 21: ~$15 Billion in Capital Invested To Date
~$15 Billion in Capital Invested To Date (a,b) ($ billions) Total Invested by Type (a,b) $9.0 $8.2 Total Invested by Year (a) $6.5 $3.5 $6.0 REX/MEP $3.3 $3.3 Expansion $3.0 $3.0 Acquisition $2.5 $0.0 Acquisitions Expansions $2.0 $1.9 $1.6 Total Invested by Segment (a,b) $1.5 $1.3 $1.3 $1.3 $5.0 $1.
Slide 22: Returns on Capital
Returns on Capital 2000 2001 2002 2003 2004 2005 2006 2007 Segment ROI (a): Products Pipelines 11.9% 11.8% 12.8% 12.9% 12.4% 11.6% 11.8% 13.2% Natural Gas Pipelines 13.3 15.5 12.9 13.5 14.0 15.5 16.7 17.6 CO2 27.5 24.6 22.0 21.9 23.8 25.7 23.1 21.8 Terminals 19.1 18.2 17.7 18.4 17.8 16.9 17.1 15.8 T
Slide 23: Balance Sheet Has Remained Solid
Balance Sheet Has Remained Solid Credit Summary L-T Debt Rating Baa2/BBB 2008 Budget Estimates Debt / EBITDA (a) 3.3x EBITDA / Interest 5.4x CP Capacity (b) Long-term Debt Maturities (b) Total Bank Credit $1,850 2008 $5 Less: 2009 $250 Outstanding CP 589 2010 $250 Letters of Credit 538 2011 $700 Exc
Slide 24: Risks
Risks Regulatory Pacific Products Pipeline FERC/CPUC case Periodic rate reviews Unexpected policy changes CO2 Crude Oil Production Volumes Construction Cost Overruns Environmental Terrorism Interest Rates Approximately 50% floating rate debt Budget assumes flat rates at a level above the c
Slide 25: Summary
Summary Stable Cash Flow Own assets core to energy infrastructure Internal Growth Opportunities Critical Mass Well-located assets/favorable demographics KMP/KMR: Fixed Cost Business 6-7% Yield Drop growth to bottom line and Unique Structure 8% Tax Efficient Long-Term Incentive Fee Growth
Slide 26: ‘d1 ‘SUANLYWd ADYANA
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Kinder Morgan Energy Partners — Credit Suisse 2008 Energy Summit on 6ix