Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Investor Presentation (November 2018)
40 slides from Kinder Morgan's investor presentation, Nov 13, 2018
Slide 1: Investor Presentation
Investor Presentation November 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 Energy Infrastructure Holding
A Core Energy Infrastructure Holding Unparalleled asset footprint: one of the largest energy infrastructure companies in North America CO2 S&T KM Canada Natural Gas Pipelines CO2 EOR 4%3% Largest natural gas transmission network in North America 7% Own or operate ~70,000 miles of natural gas pip
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 (14% ownership) Investment grade rated debt Placed on positive outlook for upgrade to m
Slide 5: Delivering on Objectives
Delivering on Objectives Key milestones reached De-lever balance sheet Given strong operational performance, ― Reduced net debt by close to $8 billion since Q3 2015 we expect to exceed 2018 financial targets ― Finished Q3 2018 at 4.6x net debt / EBITDA(a) ∆ from ― Ratio excludes ~$0.9 billion of ca
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 EXCESS CASH FLOW GENERATION(a) lower leverage $ Millions $0 KMI equity issued since 2015 and none expected for the foreseeable future $5
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 – ~96% of cash flows from take-or-pay and other fee-based contracts or hedged(a)
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. U.S. NATURAL GAS SUPPLY U.S. NATURAL GAS DEMAND Bcfd Bcfd Growth Marc./Utica, 24 Sector 2017 2027E Bcfd % Permian, 7 LNG Exports 2 14 12 600% 2017 Haynesville, 6 Eagle Ford, 5 Power 25 3
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 (Bcfd) 2017 2018E 2019E CIG throughput = Growing supply area U.S. Natural Gas Demand 80 89 95 TGP benefitting from benefitting from = Key areas of demand growth Vol
Slide 10: $6.5bn of Commercially Secured Capital Projects Underway
$6.5bn of Commercially Secured Capital Projects Underway Significant opportunities primarily resulting from expansive natural gas footprint Demand Pull / KMI Capital Estimated Commercially Secured Capital Projects Supply Push ($ billion) In-Service Date Capacity Natural Gas Permian takeaway projects
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 capabilities in the U.S. KM Network Reaches Multiple Export Facilities U.S. LNG exports reached over 3.1 Bcfd in Ju
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 Stat
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 connectivity into all major KM Positioned to Serve Current and Future Production 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 Mainline: 447.5 miles of 42” pipeline originating at the Waha Hub and terminating near Agua Dulce, Texas Midland lateral: 50 miles of 36” pipeline 214,280 HP of ins
Slide 15: Project Highlight: Permian Highway Pipeline (PHP)
Project Highlight: Permian Highway Pipeline (PHP) PHP provides broad U.S. Gulf Coast market optionality for Permian production Project Scope Mainline: ~430 miles of 42” pipeline from the Waha to Katy, Texas areas with connections to the U.S. Gulf Coast and Mexico markets 257,450 HP of installed
Slide 16: Solid Liquids Fundamentals
Solid Liquids Fundamentals Attractive opportunities to supply U.S. products to consumers here and abroad GLOBAL LIQUIDS CONSUMPTION EXPECTED TO EXCEED GROWTH LED BY CHINA AND INDIA OVER NEXT TWO YEARS 100 MILLION BARRELS PER DAY BY 2019 World Petroleum and Other Liquids Consumption (mmbbld) +2.3 Res
Slide 17: Positioned to Support U.S. Gulf Coast Exports
Positioned to Support U.S. Gulf Coast Exports The Houston Ship Channel is the premier refined products aggregation and market-clearing terminals hub KM’s HSC position represents the largest independent refined Integrated Houston Ship Channel Terminal Footprint products terminalling system in U.S.
Slide 18: Beyond the Backlog
Beyond the Backlog Long-term natural gas fundamentals drive value on existing assets and new projects Northeast and southbound Storage to support capacity expansion for renewable power Downstream connectivity significant Marcellus generation and LNG for Permian volumes growth exports Transport addit
Slide 19: Potential Valuation Upside
Potential Valuation Upside Median valuation metrics imply ~30% share price upside for KMI 2019 DCF YIELD(a) 2019 EBITDA MULTIPLE(b) 15% 12.2x 12.1x 11.7x Med: 11.1x 13% Med: 10% 11.2x 11.1x 12% 10.8x 10.6x 11% 9.6x 10% 10% 10% 9.1x 8% 6% ET KMI TRP-CN WMB ENB-CN EPD SEP MMP PAGP MMP ET ENB-CN EPD SE
Slide 20: Key Takeaways
Key Takeaways Run for shareholders, by shareholders Diversified energy Positioned for growth Financial flexibility to execute Delivering shareholder value infrastructure One of the 10 largest energy $6.5bn backlog primarily Commitment to maintaining a Significant cash flow companies in the S
Slide 21: Appendix
KINDER/MORGAN Appendix
Slide 22: 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 23: Long-Term Growth Drivers
Long-Term Growth Drivers Summary Natural Gas Pipelines Products Pipelines Terminals CO2 Exports Steady demand for refined North American Logistics Solutions CO2 Supply LNG exports: liquefaction facilities products volumes on strategically Crude and NGL growth Demand for scarce supply of CO 2
Slide 24: 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: Includes certain projects placed in service prior to 2015, but continued to incur project-related
Slide 25: Stable, Multi-Year Fee-Based Cash Flow
Stable, Multi-Year Fee-Based Cash Flow ~96% of 2018B cash flow are from take-or-pay and other fee-based contracts or hedged(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
Slide 26: 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 Asset Mix 61% refined products 64% terminals 66% oil prod
Slide 27: 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 Published first stand-alone ESG Report in October 2018 Intentional, routine risk management activities established to maintain Fo
Slide 28: Asset Integrity and Safety are Top Priorities
Asset Integrity and Safety are Top Priorities Kinder Morgan’s EHS metrics consistently outperform the industry Safe operation of our assets is mission critical to our long-term OUR SAFETY PERFORMANCE VS. INDUSTRY(a) success # of safety metrics We continue to reduce operational risks, which in turn
Slide 29: 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 30: 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 Project Backlog: $4.6 billion of identified growth projects over the 2018-2022 time period(a) Permian takeaway, including de-bottlenecking and new builds LNG liquefactio
Slide 31: 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 32: Products Segment Outlook and Asset Overview
Products Segment Outlook and Asset Overview Products pipelines: stable, strategic assets Project Backlog: $0.1 billion of identified growth projects over the 2018-2019 time period(a) Additional condensate splitter processing capabilities and connectivity for existing throughput Biodiesel blendin
Slide 33: Terminals Segment Outlook and Asset Overview
Terminals Segment Outlook and Asset Overview A diversified system across liquid and bulk hubs and services Project Backlog: $0.1 billion to be completed in 2018-2021(a) Primarily remaining Base Line tanks Diesel tank expansion at Van Wharves Other small investments to expand services at existi
Slide 34: CO2 Segment Outlook and Asset Overview
CO2 Segment Outlook and Asset Overview Own and operate CO 2 for Enhanced Oil Recovery (EOR) Project Backlog: $1.7 billion of identified growth projects over the 2018-2023 time period(a) $1.3 billion related to Enhanced Oil Recovery (EOR) production and $0.4 billion related to Source & Transportati
Slide 35: 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(a) 30% $ Billions $5.8 $5.3 $4.9 $4.2 $3.7 $3.1 25% $2.7 20% 2012 2013 2014 2015 2016 2017 2018B 15% DISTRIBUTABLE CASH FLOW(b) $ Millions $1,500 10%
Slide 36: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures The non-generally accepted accounting pr inciples (non- GAAP) financ ial measures of distributable cash flow (DCF), both in the aggregate and per share, segment earnings before deprec iation, depletion, amortization and amortization of excess cost of equity investm
Slide 37: KMI: 2018B Adjusted EBITDA
KMI: 2018B Adjusted EBITDA ($ in millions) 2018 2017 Change Adjusted EBITDA Budget Actual $ % Segment EBDA before Certain Items $ 7,707 $ 7,359 $ 348 5% Natural Gas Pipelines JV DD&A (a) 375 378 (3) -1% CO2 JV DD&A 8 8 0 0% Products Pipelines JV DD&A (a) 8 2 6 300% Terminals JV DD&A (a) (5) (6) 1 -1
Slide 38: KMI LTM Net Debt / Adjusted EBITDA Reconciliation
KMI LTM Net Debt / Adjusted EBITDA Reconciliation ($ in millions) September 30, December 31, 2018 2017 Net Debt (a) $ 33,410 $ 36,409 Adjusted Net Debt (b) 34,544 36,624 Adjusted EBITDA Twelve Months Ended September 30, December 31, Reconciliation of Net Income to Adjusted EBITDA 2018 2017 Net incom
Slide 39: 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
Slide 40: Kinder Morgan
KINDER/MORGAN 40
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