Kinder Morgan Investor Conference 8:00 - 8:20 Vision Rich Kinder 8:20 - 9:30 Operational Excellence Steve Kean 9:30 - 9:45 Break 9:45 - 10:30 Financial Excellence Kimberly Dang 10:30 - 11:30 Q&A iii
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Vision Rich Kinder Executive Chairman
Unparalleled Asset Footprint Largest Energy Infrastructure Company in North America 18.2 billion of currently identified organic growth projects Largest natural gas network in North America Own an interest in/ operate 69,000 miles…
KMI Overview Management Aligned with Investors; 14% Stake in KMI Simple Public Structure Management / Public Original S/H(a) Float Simple Structure: 317MM (14%) 1,920MM (86%) One equity base Kinder Morgan, Inc. One dividend…
19 Years of Stable Growth Strategy Has Led to Consistent, Growing Results KMP Annual LP DCF per Unit(a) KMI Annual DCF per Common Share(c) 6 5.61 2.50 5.39 5.07 2.14 2.10 2.00 5 4.43 4.68 2.00 4.15 4.25 1.65 4 3.65 1.46 3.38…
Stable Assets, Self-reliant Funding Well-Positioned for Challenging 2016 Market Same stable assets: Cash flow growth in 2015 despite historic fall in oil and gas prices Stock performance significantly underperformed strong business…
Built for the Long Term Positioned to Succeed in the Future Secure and growing cash flows World class set of midstream assets Reducing growth capex through elimination of less profitable projects and selectively joint venturing…
Some Perspective Dislocation Between Business Performance and Stock Performance Stock Performance Inconsistent with Fundamentals Strong Business Performance Despite challenging backdrop, fundamentals remain KMI Share 50 5.0…
Some More Perspective Correlation to Oil Prices not Warranted Production of crude oil generated only 10% of our 2015 segment EBDA(a) However, KMIs correlation to WTI increased tremendously during 2015 This correlation added to KMIs…
Compelling Value Prospect Attractive Relative Value, Best in Class Coverage and Scale Attractive Relative Value(a) Insulated from Capital Market Risk(b) 21x Peer group median year-end 2014 5x KMIs 2016 coverage eliminates Price/ DCF…
Valuation: DCF/share vs. EPS Distributable Cash Flow (DCF) has consistently been an accurate proxy for Kinder Morgans sustainable excess cash flow The main differences between KMIs net income and DCF are non-cash items which impact…
KMI: Attractive Value Proposition Unparalleled asset footprint Diversified energy infrastructure platform with stable, fee-based cash flow Industry leader in all business segments Focus on strong balance sheet and enhanced credit…
Operational Excellence Steve Kean President and Chief Executive Officer
Our Strategy Focus on stable fee-based assets that are core to North American energy infrastructure Market leader in each of our business segments Maintaining a strong balance sheet is paramount Our primary investing entity has been…
Asset Integrity and Safety are Top Priorities Consistent, Better-than-industry Performance Across our Businesses Safe operation of our assets is mission critical to our long-term success Continuous reduction in risk to the public,…
Segment Overview The Markets that Actually Drive our Business Natural Gas Pipelines 2016 Budgeted Segment 72% interstate pipelines EBDA = 8.0 billion(a) 20% gathering, processing & treating 87% fixed-fee(b) 13% other CO2 S&T KM…
KMIs High Quality Cash Flow Not all fee-based cash flow is created equal 2016 Budgeted Segment Composition of 91% EBDA = 8.0 billion(a) Fee-based Cash Flow 3% Commodity- based CO2 S&T 0.3 / Other 6% Hedged…
Natural Gas Transportation & Storage 57% of 2016 Budgeted Total Segment EBDA Natural gas transport & storage is KMIs largest business U.S. Natural Gas Supply & Demand(a) (Bcf/d) U.S. natural gas demand expected to rise 27% through…
Energy Toll Road Security of Cash Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada Interstate & LNG: take or pay Liquids & Jones Act: Refined products: S&T: primarily Intrastate: 73% take or pay(a)…
Business Risks Regulatory Products Pipeline FERC rate cases Natural Gas FERC rate cases Legislative and regulatory changes CO2 crude oil production volumes Commodity prices 2016 budget price assumptions: 38/Bbl for crude, and…
Overview of Business Segments
Natural Gas Pipelines Segment Outlook Long-term Growth Drivers: Shale-driven expansions / extensions LNG exports Liquefaction facilities Pipeline infrastructure Gas demand for power generation Coal plant retirements Regional…
Natural Gas Pipelines Contracted Capacity and Term by Region Contracted Average Term Region Capacity Remaining Storage 130 Bcf 3 yr, 4 mo East Transport 21.5 Bcf/d 7 yr, 8 mo LNG 18 Bcf 16 yr, 5 mo Interstate Storage 45 Bcf 6…
Natural Gas Pipelines Liquefaction at Elba Island Elba Liquefaction Company (ELC) / SLNG Capacity: LNG output capacity equivalent to 350 MMcf/d Capital (100%): 2 Billion Estimated In-service: 2018 Project Scope: Facilities for…
Products Pipelines Segment Outlook Opportunities for growth from increased liquids production Miles of Pipe: 9,900 Transmix: 6 facilities with process capability of Long-term Growth Drivers: Terminals: 69 32.5 MBbl/d Increased…
Products Pipelines Volumes/ Markets(a) Refined Products: Refined Product Pipelines Volume Summary, 2015 vs. 2014 2015: Total refined product volumes 1,679 MBbl/d, up 3.1% West Coast: vs. 2014 Pacific: +3.8% Arizona +4.8% N. Cal.…
Products Pipelines Historical Demand and 2016 EIA Outlook U.S. Product Consumption MMBbl/d EIA Demand Outlook 10 2014 2015E 2016E 9 Mogas 0.9% 2.6% 1.1% 8 7 Distillate 5.5% -1.9% 2.1% 6 Jet Fuel 2.5% 4.8% -0.5% 5 Total…
Products Pipelines KMCC/ Double Eagle Location, Contracts, Connectivity Kinder Morgan Crude & Condensate (KMCC) 2015 Milestones Capacity 300 MBbl/d, expandable to 360 MBbl/d; 90% of current capacity committed KMCC/ Double Eagle…
Terminals Segment Outlook Well-located in refinery / port hubs and inland waterways KM Terminal Facilities* Long-term Growth Drivers: Bulk 59 Terminals Refined product supply and demand growth Liquids 52 Terminals Gulf Coast…
Terminals Contract Diversification Liquids Revenue Breakout (a) Bulk Revenue Breakout (a) Fertilizer 6% Soda Ash 5% Other Liquids 2% Salt 4% Veg Oils 1% Cement 3% Fuel Grade Chemicals Ethanol 8% Aggregate 2% 14% Other Bulk…
Terminals Liquids Terminals 76% of segment EBDA is based on our liquids business segments 100% Liquids Revenue 90% Volume- based 20% Other 80% Liquids 1% 70% Bulk Take-or-Pay 79% 60% 50% 40% 79% of liquids revenues…
Terminals Houston Ship Channel Market: Worlds largest integrated refined product terminaling system Infrastructure: 43 million barrels of capacity connected to 10 refineries Customers: Refiners, integrated majors, international…
Terminals Houston Ship Channel Connectivity Irreplicable integrated assets offering unparalleled optionality and market access 20 inbound pipelines 10 Houston area refineries and local chemical plants 15 outbound pipelines Texas,…
Terminals Tanker Contracts Average Remaining Contracted Charter: 3.6 years(a) 5.8 years with renewals 2 vessels being marketed for time-charter fixture Q3/Q4 2017 delivery Golden State Current Fleet: Vessel Delivery 2016 2017…
Terminals Bulk Terminals 24% of segment EBDA is based on our bulk business segments 100% 38% of revenues supported by Take-or-Pay contracts Minimum throughput commitments 90% 19% are supported by requirements contracts 80%…
CO2 Segment Outlook(a) Own and operate best source of CO2 for EOR Long-term Growth Drivers: Demand for scarce supply of CO2 drives volume and price Expect to maintain current CO2 production levels with minimal incremental…
CO2 KM CO2 Current Outlook Development Plans 2016-2025 SACROC Group Forecast 10 Year KM Share Cap CO 2 & Continue platform development plan; production Net BOE(a) CapEx Overhead forecast is based on existing recovery…
Kinder Morgan Canada Segment Outlook Sole oil pipeline from Oilsands to West Coast / export markets Long-term Growth Drivers: Expand oilsands export capacity to West Coast and Asia Following successful open season, major TMEP 5.4…
Kinder Morgan Canada Trans Mountain Expansion Project Expansion to 890 MBbl/d Continue to serve local markets 630 MBbl/d tanker export capacity 13 Companies, 708 MBbl/d Take-orpay contracts, 15 & 20 years Commercial Terms NEB…
Budget: Reconciliation of Original to Revised (millions) On December 8, 2015, KMI announced a summary 2016 budget including DCF available to equity of slightly over 5 billion In light of continued commodity price declines and our…
KMI Counterparty Exposure Strong Customer Credit Profiles Limit KMIs Risk Top 25 Customers(a) Insulated from Market Headwinds Top 25 Customers Represent Over 45% of KMIs Scale and Diversification Protect Cash Flows Revenues…
Self-Reliant Funding No Need to Access Capital Markets During 2016 (millions) Free cash flow and revolver can fully cover funding needs Recently completed 1 billion term loan and 1 billion upsize to our credit facility (now 5…
5-year Growth Capex Program(a) 18.2B of Attractive, Fee-based Projects World class asset footprint has helped secure growth projects with attractive returns, secured by long-term, fee-based contracts with creditworthy counterparties…
Capital Invested 54 Billion of Asset Investment & Acquisitions Since Inception(a,c,d) ( in billions) Total Invested by Type(a) Total Invested by Year(b) 28.8 (c,d) 30 25.0 11 25 Expansion 9.8 (d) 20 10 Acquisition 15 9 10…
Cost & Allocation of Capital Disciplined Capital Allocation Our historical targeted minimum after-tax, unlevered project return was 8-12% for pipelines and terminals and higher for CO2 Assumed unlimited capital for returns that met…
2016 Budget Guidance Supported by Diversified, Fee-based Cash Flow 2016 Budget Commodity Price Sensitivity KMI 2016 budgeted distributable cash flow available 2016 budgeted coverage of 3.6 billion to common shareholders of 4.7…
2016 Budgeted Distributable Cash Flow (DCF) (millions, except per share) 2016 2015 Change Distributable cash flow Budget Actual % Net Income before certain items 1,752 1,649 103 6% (a) DD&A, including KMI share of JV DD&A 2,620…
2016 Budgeted Income (millions, except per share) 2016 2015 Change Earnings Budget Actual % Natural Gas Pipelines 4,220 4,125 95 2% CO2 916 1,141 (225) -20% Products Pipelines 1,232 1,096 136 12% Terminals 1,195 1,055 140 13%…
2016 Budgeted Quarterly Profile (millions, except per share) Total segment EBDA plus JV DD&A(a) Q1 Q2 Q3 Q4 Total 2016 Budget 26% 23% 24% 27% 8,040 2015 26% 24% 24% 26% 7,885 Distributable cash flow(b) 2016 Budget 26% 22% 23%…
2016 Budget Assumptions/ Highlights Business segments(a) Natural Gas Pipelines +3%: Growth driven by TGP expansion projects, full year of Hiland Midstream acquisition, Elba Express expansions and additional interest in NGPL Growth…
2016 Cash Tax Budget Calculation Detail (millions) 2016 Budget Segment EBDA 7,689 Noncontrolling interest (22) JV earnings from c-corps (161) JV distributions from c-corps (net of 80% DRD) 30 JV Book DD&A (pass-thru entities)…
2016 Budgeted Sustaining Capital (millions) 2016 2015 Sustaining capital expenditures(a) Budget Actual Change Natural Gas Pipelines 309 283 26 CO2 12 10 2 Products Pipelines 48 57 (9) Terminals 163 159 4 Kinder Morgan Canada…
2016 Budgeted Growth Capital (millions) 2016 2015 (a) Growth capital Budget Actual Natural Gas Pipelines 1,565 1,528 CO2 - S&T 9 163 CO2 - EOR 213 449 Products Pipelines 344 431 Terminals 935 854 Kinder Morgan Canada 215…
Credit Ratios and Liquidity(a) ( in millions) 2016 Leverage metrics 2012 2013 2014 2015 Budget (b) Net debt to EBITDA 5.4x 5.0x 5.5x 5.6x 5.5x EBITDA to interest 4.0x 3.9x 4.1x 3.5x 3.6x (c) (d) Revolver capacity Long-term…
Financial Excellence Disciplined capital allocation Strong return on investments Hedge direct commodity exposure Maintain strong balance sheet Transparency to investors 19
Appendix
Incidents & Releases Liquids Pipeline Right-of-way Liquids Pipelines Liquids Pipelines Incidents per 1,000 Miles(a) Release Rate(a) 1.0 50 Barrels per billion barrel miles 0.8 40 Incidents per 1,000 Miles 0.6 0.57 30…
Incidents & Releases Natural Gas Pipeline Right-of-way Natural Gas Pipelines Natural Gas Pipelines Incidents Rate All Reportable Incidents(a) Incidents Rate Onshore Ruptures-only(c) 1.0 0.5 0.8 0.4 Incidents per 1,000 Miles…
Employee Safety Statistics(a) KM Lost-time Incident Rate (DART) OSHA Recordable Incident Rate 6 7 6.4 Lost-time injuries per 200k hours OSHA Recordable Incidents per 5 4.9 6 5.2 200k Hours Worked 5 4 4 worked 3…
Business Segments Supporting Slides
Natural Gas Pipelines Natural Gas Segment Projects Placed Into Service - 2015 6
Natural Gas Pipelines East Region Assets Growth Drivers: Marcellus/Utica: TGP provides access for Marcellus and Utica shale plays to Gulf Coast and Northeast markets NE/Canada Demand: New gas service and conversions in New…
Natural Gas Pipelines West Region Assets Growth Drivers: Supply Access: Access to all Rockies basins with diverse geology and hydrocarbon mix; opportunities for new builds and conversions Mexico Exports: Leading connectivity for…
Natural Gas Pipelines Central Region Assets Growth Drivers: Supply Access: Large, strategic footprint connected to major shale plays and supply basins Opportunities to attach new supply NGPL Gulf Coast and Chicago Market…
Natural Gas Pipelines Midstream Assets Growth Drivers: Mexico Exports: Leading connectivity for increased deliveries into Mexico (Texas Intrastate) Storage Demand: Significant storage capacity and connectivity enable premium…
Natural Gas Pipelines New Firm Transport Capacity 11
Natural Gas Pipelines East Region Project Backlog 12
Natural Gas Pipelines West Region Project Backlog 13
Natural Gas Pipelines Central Region Project Backlog 14
Natural Gas Pipelines Midstream Project Backlog 15
Natural Gas Pipelines Projects Supporting LNG Exports Transport for LNG 4.8 MMDth/d of contracted transport capacity Total capital of 1.1B Avg. contract term: 18 years Eight projects on five KM pipelines, including: 1. EEC for…
Natural Gas Pipelines Projects Supporting Mexico Growth KM deliveries to Mexico 2.36 MMDth/d(a) through 13 interconnects Upstream Up 22% from 2014 Sierrita 82% of U.S. total (EPNG) Sierrita Gas Projects placed in service for…
Natural Gas Pipelines TGP Northeast Energy Direct (NED) Project Market Path - Wright, NY to Dracut, MA Capacity: 718 MDth/d, scalable up to 1,300 MDth/d Capital (KM 95% Share): 3.1- 3.6 Billion, depending upon capacity Estimated…
Natural Gas Pipelines NGPL Overview Extensive, Strategically Located Footprint NGPL Provides a Critical Link Between: Large Existing and New Demand Markets Traditional and Newly Developed Supply Regions Large and Stable LDC Market…
Products Pipelines Products Segment Projects Placed Into Service 2015 Project Description In-Service Cost (MM) West Various Terminal Projects Includes tank upgrades, jet filtration systems, Air Force Throughout 2015 6.3…
Products Pipelines Products Segment Project Backlog Project Description In-Service Cost (MM) West Various Terminal Projects Includes various Air Force base upgrades, tank expansions, Varies 15.8 filtration systems and biodiesel…
Products Pipelines Kinder Morgan Condensate Processing Facility Facility Specifications Strategic Value 100 MBbl/d of Processing Capacity Engineered for Eagle Ford 1.9 MMBbls of new tankage on 60 acres within KMs Galena Park…
Products Pipelines Utopia East Pipeline Project Scope New 240-mile, 12-inch pipeline originating in Harrison County, OH and connecting with Kinder Morgans existing pipeline in Fulton County, OH to transport ethane and ethane-…
Products Pipelines Palmetto Pipeline Project Scope Total project cost = 1.1 billion Palmetto Pipeline construction of new 360 mile pipeline with 167 MBbl/d capacity delivering to N Augusta, SC; Savannah, GA; Jacksonville FL…
Terminals Terminals Projects Placed In-Service in 2015 Modeled Capital First Full Year Expected Avg. Contract (a) (b) (c) (c) (d) Project Name Product Capacity (MM) EBITDA In Service Length BULK Grain System Upgrades (Vancouver)…
Terminals Terminals Backlog Modeled Capital First Full Year Expected Avg. Contract Project Name Product Capacity (a) (MM) (b) (c) EBITDA (c) In Service Length (d) South Hill Tankage Methanol 0.1MM Bbls 6 Q1/16 7 Greensport Ship…
Terminals Liquids Throughput Variance to Budget Actual Budget Amt % 2015 2016 Gasoline 352,595,615 487,843,244 135,247,629 38.4% Petroleum Feedstocks* 200,330,534 289,137,294 88,806,760 44.3% Distillate 129,602,361…
Terminals Bulk Tonnage Variance to Budget Actual Budget Amt % 2015 2016 Coal 15,099,038 15,835,043 736,005 4.9% Ores/Metals (Bulk & Break-Bulk) 17,147,271 17,225,294 78,023 0.5% Petcoke 12,443,913 13,044,241 600,328 4.8%…
Terminals Industry-Critical Liquids Hubs North 40 Edmonton South Alberta Rail Edmonton Rail Van Wharves Edmonton Carteret Carteret Truck Rack Linden Spring Valley Staten Island New Argo Perth Amboy Argo Harlem…
Terminals Downstream Market Target Liquids business is core to North American downstream Commodities: crude, refined products, chemicals and renewables Infrastructure: hub terminals, rail terminals, tankers and market terminals…
Terminals Houston Ship Channel Projects Market-driven customer-committed intrinsic growth Increasing demand for access to export markets Constructing 3 new ship docks and 1 new barge dock with associated tankage Reduces customer…
Terminals KM and BP Joint Venture Transaction Overview: JV Partnership Overview: KM acquires 15 refined products terminals from BP KM and BP (75:25) 9.5 million Bbls total capacity KM will operate and market terminals on behalf of…
Terminals New York Harbor Market: A New York Harbor trading hub for refined products, renewables, chemicals and veg-oils Tank Infrastructure: 15.5 million barrels of capacity Capacity Customers: Refiners, integrated majors,…
Terminals Edmonton Market: Largest merchant crude terminaling system in Edmonton Infrastructure: 7.2 million barrels of connected capacity with 2 rail facilities Base Line Terminal will add 4.8 million barrels 50:50 JV with…
Terminals Edmonton Base Line Terminal North 40 Market-driven, customer-committed, intrinsic growth Market-driven, customer-committed, intrinsic growth Edmonton South 50:50 JV with Keyera for merchant crude terminals Phase…
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