Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Citigroup 2006 Power, Gas & Utilities Conference
28 slides from Kinder Morgan's conference presentation, Mar 2, 2006
Slide 1: Citigroup 2006 Power, Gas & Utilities Conference
Citigroup 2006 Power, Gas & Utilities Conference March 2, 2006
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: Kinder Morgan Assets
Kinder Morgan Assets NGPL (KMI) NGPL GAS STORAGE (KMI) Trans RETAIL GAS DISTRIBUTION (KMI) Mountain Corridor GAS-FIRED POWER PLANTS (KMI) PRODUCTS PIPELINES (KMP) 2 PRODUCTS PIPELINES TERMINALS (KMP) TRANSMIX FACILITIES (KMP) NATURAL GAS 2 PIPELINES (KMI-KMP) Express Cochin NATURAL GAS Pacific STORA
Slide 4: Kinder Morgan: Three Securities
Kinder Morgan: Three Securities Kinder Morgan Energy Partners Kinder Morgan, Inc. Market Equity (a) $10.3 Incentive Market Equity (b) $12.9 Debt (a) 5.2 Distribution Debt (b) 7.1 Enterprise Value $15.5 B Enterprise Value $20.0 B 2006E EBITDA $1,802 mm 2006E EBITDA $1,739 mm 2006E Dist. CF $1,290 mm
Slide 5: Consistent Track Record
Consistent Track Record Total Distributions (GP + LP) ($mm) KMP Distribution Per Unit (b) $1,400 $1,281 $4.00 GP (a) $1,162 $3.32-$3.36 $1,200 $3.20 8% $2.96 LP $978 $3.00 R =1 $2.72 $1,000 = 54% $827 CA G $2.50 $800 AGR $701 $2.20 C $2.00 $1.90 $600 $548 $1.45 $1.13 $1.30 $400 $333 $1.00 $0.63 $153
Slide 6: 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 7: KMP: Solid Asset Base Generates Stable Fee Income
KMP: Solid Asset Base Generates Stable Fee Income CO2 KMP Products Pipelines 2006 DCF (a) 30% CO2 transport and sales Refinery hub to population 70% oil production related center strategy Expected production hedged (b): 68% Pipelines Products 2006=88% CO2 27% Associated Terminals (c) Pipelines 2007=
Slide 8: KMI: Solid Asset Base Generates Stable Fee Income
KMI: Solid Asset Base Generates Stable Fee Income Investment in KMP (b) KMI NGPL 2006 Segment Income (a) General partner interest FERC regulated with 3-year earns incentive distributions average contract life Owns 13% of total limited Primary customers are partner units Chicago local distribution NG
Slide 9: Vision: Where We're Going
Vision: Where We’re Going Trend KM Opportunity Growing Rockies Natural Gas Production Rockies Express, Entrega Increased Supply of LNG on Gulf Coast Kinder Morgan Louisiana Pipeline Canadian Oilsands Trans Mountain, Corridor expansions, Edmonton terminal Increased Use of Heavy Crude Petcoke handling
Slide 10: Rocky Mountain Natural Gas: Basis Spreads Support Need for New Infrastructure
Rocky Mountain Natural Gas: Basis Spreads Support Need for New Infrastructure Basis Spread (a) ($1.04) ($1.42) $1.16 $1.88 ($0.42) ($0.64) $0.46 $0.54 ($0.43) ($0.72) __________________________ (a) Basis differential versus Henry Hub. Sources: Historical Prices – GasDat, Forward Prices – Sempra Oct
Slide 11: Rocky Mountain Natural Gas: Expected Production Growth Supports Need for New Infrastructure
Rocky Mountain Natural Gas: Expected Production Growth Supports Need for New Infrastructure Rocky Mountain natural gas production is growing, but takeaway capacity is limited Rockies Exports 0.4 Bcf/d Rockies Production Growth (a) 0.7 Bcf/d Production (Bcf/d) Wyoming 2004 5.8 2007 7.0 2009 7.6 Utah
Slide 12: Rockies Express
, = D q a q a Montana North Dakota 5 eS. 9 e 9 fe Entrega’ Rockile seExpresseriipelhineseroyect: Canada Zone}! Zone}2) Serco \ aed ME Zonels Kem a ; CIG soutien Star ‘iiaadls A National Fuel]_____ Idaho | Burlington | South Dak mY : \ “—e Penn New Yor Echo Springs Sout! akota Wisconsin 4 \ ransco Lo
Slide 13: LNG: Increased Supply on Gulf Coast
LNG: Increased Supply on Gulf Coast Gulf Coast LNG Projects Under Construction ") ! ") ") Henry Katy ") ") ") ") - & ~8-11 Bcf/d of terminal & -") *# ! ! ") kj capacity under ") ExxonMobil – Golden Pass *# 2008-09 Sempra – Cameron LNG 1-2") Bcf/d, projected in-svc ! 1.5-2.65! Bcf/d, est in-svc 2008-
Slide 14: Kinder Morgan Louisiana Pipeline LLC
Kinder Morgan Louisiana Pipeline LLC Provides key link Texas Louisiana CGT Delivery Point between Sabine 340 Pass Transco Delivery Point ( ( LNG Terminal to TETCO Delivery Point ( ANR Delivery Point ( ( interstate pipeline grid ( ( Texas Gas Delivery Point FGT Delivery Point Cypress Delivery Point (
Slide 15: Canadian Oilsands: Supply
Canadian Oilsands: Supply Canadian Crude Production by Type (a) World Oil & Bitumen Reserves – Top 10 (b) (MBbl/d) (reserves (billions of barrels) 4,000 Oilsands 350 345 315 Pentanes/Condensate 5 300 3,500 Conventional Heavy G R ‘05-‘1 270 Bitumen %CA 250 3,000 Conventional Light/Med sands ~10 Oil O
Slide 16: Canadian Oilsands: PADDs II and IV Have the Most Access to Canada
Canadian Oilsands: PADDs II and IV Have the Most Access to Canada Major Canadian Oilsands Takeaway into the U.S. Bb R ) Trunkline 0 M IDO l/d AIN Fort McMurray NT ( 22 R R U MO l/d) Cold Lake (MMBbl/d) Capacity CO NS MBb A TR (225 Edmonton in to U.S. Hardisty PADD II 2.0 R- l/d) BOWRIVE CENEX RANGEL
Slide 17: Canadian Oilsands: U.S. a Significant Importer of Crude
Canadian Oilsands: U.S. a Significant Importer of Crude U.S. Crude Refinery Inputs by PADD – 2004 (a) Alaskan North Slope Production Declining (b) 2,000 Canadian ANS Crude Oil Production Total Imports as (MBbl/d) Refinery % % of Total 1,500 Inputs Imports Imports (MBbl/d) 1,000 PADD I (E. Coast) 1,5
Slide 18: Trans Mountain Expansion
Trans Mountain Expansion TMX1 – C$595 million additional 75 MBbl/d Pump Station Expansion, C$230 million, 35 MBbl/d, in-svc by April 2007 Anchor Loop, C$365 million, 40 1,100 MBbl/d MBbl/d, in-svc at end of 2008 TMX2 – Loop between Valemont & Kamloops and back to Edmonton, 400 MBbl/d C$900 milli
Slide 19: Identified Future Growth Opportunities
Identified Future Growth Opportunities Nearly $8 billion in identified growth opportunities over next 5 years Estimated Total Project Expected Entity Project Cost ($B) Completion KMP Louisiana Pipeline (LNG) $0.5 2009 KMP Rockies Express 2.9 (a) 2007-2009 KMP CO2 1.1 (b) 2006-2010 KMP East Line expa
Slide 20: $10 Billion in Capital Invested at KMP
$10 Billion in Capital Invested at KMP ($ billions) Total Invested by Type $8.0 Total Invested by Year $6.0 $2.0 $1.9 Expansion $4.0 $7.5 $1.6 Acquisition $1.6 $2.0 $1.3 $1.3 $2.7 $1.2 $1.1 $1.1 $0.0 Acquisitions Expansions $1.0 $0.9 $0.8 Total Invested by Segment $4.0 $3.5 $0.4 $3.1 $3.0 $0.0 $2.0
Slide 21: Attractive Return on Capital (KMP)
Attractive Return on Capital KMP Return on Investment (a): 2000 2001 2002 2003 2004 2005 Products Pipelines 11.9% 11.8% 12.8% 12.9% 12.4% 11.3% Natural Gas Pipelines 13.3 15.5 12.9 13.5 14.0 15.5 CO2 27.5 24.6 22.0 21.9 23.8 25.7 Terminals 19.1 18.2 17.7 18.4 17.8 16.9 KMP Return on Investment 12.3%
Slide 22: Attractive Return on Capital (KMI)
Attractive Return on Capital KMI Return on Investment (a,b,c): 2000 2001 2002 2003 2004 2005 Investment in KMP 11.2% 16.9% 21.4% 25.0% 29.6% 37.9% NGPL 11.4 11.1 10.9 11.4 12.1 12.6 Retail 13.0 11.7 15.0 14.5 13.1 10.6 Power 14.3 20.2 9.7 5.6 4.7 5.8 KMI Return on Investment 10.5% 11.7% 12.4% 13.3%
Slide 23: KMI & KMP Have Solid Balance Sheets
KMI & KMP Have Solid Balance Sheets ($ millions) Credit Summary KMP (a) KMI L-T Debt Rating Baa1/BBB+ Baa2/BBB Net Debt / Total Capital (b,c) 52% 56% 2006 Budget Estimates: Debt / EBITDA 3.1x 4.2x EBITDA / Interest 5.6x 4.0x CP Capacity (c) Long-term Debt Maturities (c) KMP KMI KMP KMI Total Bank Cr
Slide 24: KMP Has Returned Nearly $5 Billion in Cash to Partners, 1996-2005
KMP Has Returned Nearly $5 Billion in Cash to Partners, 1996-2005 ($ millions) KMP $1,400 $1,281 GP (a) $1,162 $1,200 LP $978 $1,000 $546 $827 $492 $800 $701 $406 $336 $600 $548 $278 $400 $333 $208 $670 $735 $153 $198 $113 $491 $572 $200 $423 $38 $58 $340 $17 $30 $115 $140 $220 $0 1996 1997 1998 199
Slide 25: KMI Has Returned Over $3 Billion in Cash to Investors, 2000-2005
KMI Has Returned Over $3 Billion in Cash to Investors, 2000-2005 ($ millions) KMI $4,000 $3,566 $3,500 $473 2000-2005 2006E $3,000 $2,500 $2,000 $1,500 $1,324 $1,369 $3,093 $1,000 $473 $873 $500 $851 $0 Dividends Share Change in Net Total Repurchase Debt __________________________ Note: All amounts
Slide 26: Risks
Risks Regulatory Pacific Products Pipeline FERC/CPUC case Periodic rate reviews Unexpected FERC, NEB, BCUC policy changes Environmental Terrorism Interest Rates 50% of debt is floating rate Budget assumes an increase based on the forward curve The full-year impact of a 100-bp increase in
Slide 27: Summary
Summary Stable Cash Flow Own assets core to energy infrastructure KMP/KMR: Internal Growth Opportunities 6-7% Yield and Critical Mass 8% Well-located assets/favorable demographics Long-Term Fixed Cost Business Growth Drop growth to bottom line Unique Structure Tax Efficient KMI: 3.8% Yield
Slide 28: NVOHOW, HaGNDy
NVOHOW, HaGNDy
Kinder Morgan — Citigroup 2006 Power, Gas & Utilities Conference on 6ix