Poised for Success Same Reliable Assets; Improved Financial Profile January 24, 2018 2018 Analyst Day
Kinder Morgan 2018 Analyst Day Management and Agenda Time Discussion Presenter 8:00 8:20 Vision Rich Kinder Executive Chairman 8:20 9:30 Operational Excellence Steve Kean President & CEO 9:30 9:45 Break 9:45 10:30 KMI:…
A. Vision Rich Kinder Executive Chairman 5
The Need for Hydrocarbons Hydrocarbons Are Essential To Our Way Of Life Hydrocarbon fuels are affordable, dependable, and plentiful And given advancements in technology, hydrocarbon fuels are becoming even more affordable, plentiful,…
Hydrocarbon Fuels Remain Resilient Reports of the Hydrocarbon Industry Death Have Been Greatly Exaggerated These charts exclude coal, which is only a small portion of Kinder Morgans business Both domestic and global projections…
Hydrocarbons Are Critical To Daily Life Multiple Domestic Uses and Growing Exports U.S. demand is varied and growing Exports are expanding U.S. Demand by Sector, 2017 and 2046 (a) U.S. Import / Export of Oil, Liquids and Nat. Gas…
Why Do Hydrocarbon Fuels Remain Resilient Substantial Embedded Global Infrastructure and Boundaries of Physics Global Energy Demand(a) Hydrocarbon Fuel Resiliency(b) Hydrocarbons meet 75% of The worlds transition from basic fuels…
Recent Market Trends Hydrocarbon Fuel Demand Remains Strong U.S. Natural Gas Demand, 2015-2019(a) U.S. Refined Product Demand, 2015-2019(b) NET U.S. LNG EXPORTS Continued steady, modest volume growth 17.3 18.0 18.1 18.2 5.6 16.9…
Natural Gas is Positioned for Continued Growth Critical to Supporting Climate Goals and Meeting Demand Total Demand w/ Net LNG Exports Industrial(a) 30 Natural gas and its derivatives U.S. Natural Gas Demand (Bcfd) 25 are used…
KMI Positioned to Support Future of Natural Gas Kinder Morgan Transports 40% of all Natural Gas Consumed in the U.S. Utica/Marc. Supply (Bcfd) Net LNG Export Demand (Bcfd) INCREASED U.S. VOLUMES = INCREASED NEED FOR KINDER MORGAN…
KMI Natural Gas Assets Are Critical to Many Needs Kinder Morgan Transports 40% of all Natural Gas Consumed in the U.S. KMs Natural Gas Assets Provide: Building blocks for critical, every-day products Backstop to enable renewable…
Financial Philosophy Enormous Cash Flow Provides Substantial Strength and Flexibility Generate and grow cash flow 2017 results and projected budget for 2018 illustrate KMIs enormous and growing cash flow Live within that cash…
B. KMI: Operational Excellence Steve Kean President & CEO 15
Kinder Morgans 2018 Goals Operational and Financial Excellence Operational Excellence Continue to maintain and operate our assets safely, reliably, and efficiently Cash Flow Growth Grow 2018 DCF to 2.05 per share Grow 2018 EBITDA…
Questions Youve Asked: Answers to Frequently Asked Questions Q1. What is managements Our first priority is a healthy balance sheet: Long-term target for Debt / EBITDA is 5.0x or below; capital allocation Year-end 2018 budget is 5.1x…
Unparalleled Asset Footprint One of the Largest Energy Infrastructure Companies in North America Natural Gas Pipelines Largest natural gas transmission network in North America Own or operate 70,000 miles of natural gas pipeline…
KMI & KML Overview Management is Aligned with Investors 14% MANAGEMENT STAKE IN KMI MANAGEMENT IS ALIGNED WITH INVESTOR INTERESTS Management & Public Public Directors(a) Float Float 321mm (14%) 1,907mm (86%) 103mm (30%)…
Kinder Morgans Strategy Focus on stable, fee-based assets that are core to North American energy infrastructure Core Fee-Based Market leader in each of our business segments Assets Fees largely independent of commodity prices and…
2018 Budgeted EBDA by Business Segment 93% of 2018B EBDA is Generated from Pipelines and Terminals Kinder Morgan Canada 100% petroleum pipelines CO2 66% oil production related 34% source & transportation 4% 3% 7% Terminals…
Contracts & Asset Footprint Protect KM Cash Flow 96% of 2018B Cash Flow is Independent of Commodity Price 2018B Segment EBDA of 8.1 Billion (a) Stability of Cash Flows Hedged (6%): disciplined approach to managing price volatility…
KMIs Evolution Adjusted Course in Early Response to Industry Catalysts Industry Catalysts KMI Actions and Achievements Oil prices declined from over 100/bbl in KMI became a pure C-corp and eliminated 2014 to below 30/bbl in 2016 2014…
KMIs Evolution Was Ahead of the Curve But Stock Has Been Impacted as Sector Continues to Adjust Stock Price Dislocation from Business Performance Announced 60% dividend 2018 C1.75 billion guidance in- KMI achieved consistent,…
KMIs Compelling Investment Thesis Attractive Relative Value, Best-in-Class Dividend Growth and Coverage Price / 2018E DCFPS(a) EV / 2018E EBITDA (b) ATTRACTIVE RELATIVE VALUE UNDERVALUED RELATIVE TO PEERS 16.4x 14.8x Med: 12.1x…
KMIs Compelling Investment Thesis (Contd) Returning Significant Value to Shareholders 60% dividend increase for 2018 to 0.80 per share from 0.50 per share in 2017 25% dividend growth annually for 2019 and 2020: 1.00 in 2019…
KMI Business Risks Summary Business Risks 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…
Well Positioned for Long-Term Success Disciplined Capital Allocation and Operational Excellence Poised for Success Best is Yet to Come Cornerstone of management philosophy since inception: World class midstream assets deliver value to…
C. KMI: Overview of Business Segments Steve Kean President & CEO 29
Natural Gas Pipelines Segment Outlook and Asset Overview Well-Positioned: Connecting Key Natural Gas Resources with Major Demand Centers Long-Term Growth Drivers Asset Summary Natural Gas Pipelines: 70,000 Miles Shale-driven…
Natural Gas Pipelines Growth Driver: Exports Liquefied Natural Gas Kinder Morgan Leverages Asset Footprint to Facilitate Booming U.S. LNG Exports Global Demand Drives Opportunity for U.S. to Export KM Plans to Participate 18.5 Bcfd…
Natural Gas Pipelines Growth Driver: Exports Mexico Kinder Morgan Delivers 71% of U.S. Exports to Mexico (2017 YTD through October) Mexico Natural Gas Market KM Plans to Participate U.S. Exports to Mexico are expected to grow by 2…
Products Pipelines Segment Outlook and Asset Overview Products Pipelines: Stable, Strategic Assets Long-Term Stability Asset Summary Steady demand for refined Pipelines: 10,000 Miles 2017 Throughput: 2.1 mmbbld products volumes…
Products Pipelines Stability: U.S. Refined Product Demand(a) KMs Refined Products Business Continues to Enjoy Stable Conditions Stable U.S. Refined Products Consumption (a) Stable Conditions Expected in Medium Term(b) 16.00 16.00…
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…
Terminals Terminals Fee-Based Business Earnings Predicated on Stable, Fee-Based Business Other 1% Take-or-Pay Term leased tank capacity (monthly) Term tanker charters (monthly) Other Fee- 74% Term volumes (per bbl or ton)…
Terminals Liquids Terminals 5.8 Billion Invested Capital since 2010 Houston, Edmonton & Jones Act Tankers Edmonton North 40 Alberta Edmonton South Alberta Crude Terminal Rail Edmonton South Rail Terminal Base Line Tank Terminal Van…
Terminals Terminals Core Business Values Infrastructure and Service Solutions Much More than Storage Hub Market clearing point between global buyers and sellers Multimodal connectivity and value added services Terminals Critical to…
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 CO2 drives volume and price Production: Gross 2018 CO2 SW Colorado 1.3…
CO2 CO2 Segment Significant Returns and FCF Generating High Returns and 6 Billion in Cumulative Free Cash Flow IRR% 2000-2017 Cumulative FCF Generation bn 5.8 30.0% 5.3 4.9 25.0% 4.2 20.0% 3.7 3.1 15.0% 2.7 10.0%…
CO2 Continued Focus on High-Return Projects 2018 Project Returns at Various Flat Pricing Levels Yates HZ Drain Hole Program SACROC Conventional 80% 75% 80% 65% Long Lateral Bullseye Phase 2 60% 60% 48% 46% 40% ATIRR%…
CO2 Big Fields Get Bigger Successful Track Record of Extending SACROC Production Life Big Fields SACROC Net Oil Production Forecasts SACROC 2.8 billion barrels of original oil in 35,000 place Yates 5.0 billion barrels of original…
Kinder Morgan Canada Segment Outlook and Asset Overview Sole Oil Pipeline Providing Oilsands Production Access to West Coast / Export Markets Long-Term Growth Drivers Asset Summary Pipeline Miles 2017 Throughput Constrained pipeline…
D. KML: Operational Excellence Steve Kean Chairman & CEO of KML 47
KML Overview Integrated Network of Strategically Located Assets KML Summary KML Assets(b) A premier integrated network of pipeline systems Asset Summary and terminal facilities serving Western Canada Miles of Pipe: 1,435 Miles…
KML Overview (Continued) Significant Canadian Midstream Entity; Unparalleled Growth Potential TRANS MOUNTAIN EXPANSION PROJECT COULD GROW ADJUSTED EBITDA BY C1.1 BILLION(b) C474 C395 C388 Adjusted EBITDA Cmm(a) C369…
Project Highlight: Trans Mountain Expansion Only Crude Oil Pipeline Serving Canadian West Coast Trans Mountain Expansion Project (TMEP) TMEP Overview Project Scope Expansion to 890 mbbld from 300 mbbld today 615 miles new pipe; 12…
Trans Mountain Expansion Project Status Actively Evaluating Mitigation Efforts Current TMEP Status Original estimated in-service date of December 2019 Slower than expected permitting process thus far could result in a delay…
Trans Mountain Expansion Project Status (Contd) Milestones Along the Way to Clarity That We Can Finish What We Start Favorable outcome on NEB motion for an efficient, fair and timely process for resolving provincial and local permits…
E. KMI: Financial Excellence Kim Dang Vice President & CFO 53
KMIs Recent Evolution: Corner Has Been Turned Results in Strong Financial Profile that Matches Portfolio of Stable Assets Year-End Net Debt / Adjusted EBITDA Dividend Coverage 5.6x 4.0x 4.0x 5.3x 2.6x 5.1x 5.1x 1.3x 2015…
KMI: Self-Reliant Funding No Need to Access Capital Markets During 2018 Disciplined Capital Allocation 2018 STRATEGY: LONGER-TERM STRATEGY: DCF fully funds dividends and growth capital Continue living within cash flow needs in 2018…
Tax Reform Not Expected to Pay Significant Cash Taxes Until After 2024 Primary provisions that impact KMI: Lower corporate tax rate (21% vs. 35%) Interest limitation equal to 30% of EBITDA for four years, 2018-2022 (no expected impact…
5-Year Growth Project Backlog 12 Billion of Attractive, Substantially Fee-Based Projects High-Quality Growth Projects Driving Value Cumulative Adjusted EBITDA 1.6 billion World-class asset footprint has driven attractive growth…
KMIs Limited Counterparty Exposure Strong Customer Credit, Valuable Services Limit KMIs Risk High-Quality, Diversified Customer Base Top 25 Customers(a) In 2017, KMIs budgeted DCF had 0 impact due B- or Below to bankruptcies BB+ to…
Deployed Over 60 Billion of Capital Asset Investment & Acquisitions Since Inception Total Invested by Year(b,c,d) 8.0 70 6.8 6.7 Expansion / Acq. bn 7.0 60 Cumulative bn 6.0 50 5.0 3.4 3.4 40 3.3…
Returns on Invested Capital Targeted Returns for New Capital Investment Are Substantially Above Cost of Capital Commentary Segment ROI(a,b) Items leading to decline in 30% Nat Gas returns since 2012: Products Natural Gas Segment 25%…
Attractive Results on Recent Expansion Projects Capital Invested / Year-2 EBITDA(a) THE CAPEX MULTIPLE FOR PROJECTS COMPLETED DURING 2015 2017 HAS SLIGHTLY EXCEEDED OUR EXPECTATIONS 0x 15 9.0 bn 7.9x 0x 7.6x 10 4.6 bn 0x 1.5 bn…
Capital Allocation Philosophy Disciplined Approach GENERALLY, DCF AVAILABLE IN EXCESS OF OUR DIVIDEND AND DISCRETIONARY CAPEX WILL BE ALLOCATED FIRST TO NEW PROJECTS THAT MEET OUR CURRENT RETURN HURDLES, WITH ANY REMAINING CAPITAL…
KMI 2018 Guidance: Published Budget Supported by Diversified, Fee-Based Cash Flow KMI 2018 Budget Commentary 2018 from After dividend and Capex, excess cash flow Budget 2017 will be invested in: Additional high-return projects…
KMI: 2018B Distributable Cash Flow (DCF) Millions, Except Per Share 2018 2017 Change Distributable Cash Flow Budget Actual % Net Income available to common stockholders before Certain Items 1,853 1,472 381 26% (a) DD&A and…
KMI: 2018B Segment EBDA before Certain Items Millions, Except Per Share 2018 2017 Change Budget Actual % Natural Gas Pipelines 4,117 3,879 238 6% CO2 915 887 28 3% Terminals 1,249 1,214 35 3% Products Pipelines 1,216 1,193 23 2%…
KMI: 2018B Adjusted EBITDA 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…
KMI: 2018B Sources and Uses Millions 2018 2018 Sources Budget Uses Budget DCF 4,567 Dividends declared 1,784 LT Debt Issuance 2,000 Growth capital 2,215 ST Borrowing (net of cash)(a) 322 Debt maturities 2,322 Discretionary free…
KMI: 2018B Quarterly Profile Millions, Except Per Share Segment EBDA before Certain Items plus JV DD&A Q1 Q2 Q3 Q4 Total 2018 Budget 25% 24% 24% 27% 8,093 2017 Actual 26% 24% 24% 26% 7,741 Adjusted EBITDA 2018 Budget 25% 24% 24%…
KMI: 2018B Assumptions and Highlights Our Budget Estimates EBDA Growth Across Business Segments YoY in EBDA(a) Business Segment Commentary Natural +6% Contributions from Elba Liquefaction expansion project Gas Increased Haynesville…
KMI: 2018B Cash Tax Calculation Detail Millions 2018 Budget Segment EBDA before Certain Items 7,707 Noncontrolling interests (120) JV earnings from c-corps (214) JV distributions from c-corps (net of 65% DRD) 67 JV book DD&A…
KMI: 2018B Sustaining Capital Millions 2018 2017 Sustaining Capital Expenditures(a) Budget Actual Change Natural Gas Pipelines 316 269 46 CO2 17 13 4 Products Pipelines (b) 74 76 (2) Terminals (b) 211 194 17 Kinder Morgan…
KMI: 2018B Growth Capital Millions 2018 2017 Growth capital Budget (a) Actual Natural Gas Pipelines 1,633 1,602 CO2 - S&T 32 19 CO2 - EOR 420 410 Products Pipelines 86 267 Terminals 44 629 Kinder Morgan Canada - 55 Total…
KMI: Credit Ratios and Liquidity(a) Millions 2018 Consolidated leverage metrics 2014 2015 2016 2017 Budget Net debt(b) to Adjusted EBITDA 5.5x 5.6x 5.3x 5.1x 5.1x KMI revolver capacity(c) KMI long-term debt maturities(d)…
Well Positioned for Long-Term Success Demonstrating Financial Excellence Improved Financial Profile Self-Funding Disciplined Capital Allocation Attractive Return on Investments Hedge Direct Commodity Exposure…
F. KML: Financial Excellence Dax Sanders KML CFO and VP of KMI Corporate Development 75
KML: 2018 Published Budget Supported by Fee-Based Cash Flow KML 2018 Budget (C) 2018 Budget Highlights from YoY in Business Segment 2018 Budget 2017 EBDA Commentary Adjusted EBITDA(a) C474 million 22% Additional capitalized equity…
KML: TMEP Funding Visibility Toward Meeting TMEP Capital Needs TMEP Summary Funding Expectations We previously announced a potential unmitigated project delay to Dec. 2020 Construction delays typically entail increased costs, but…
KML: 2018B Sources and Uses in Millions of CAD 2018 2018 Sources Budget Uses Budget DCF 349 Dividends declared, net of DRIP 170 KML equity issuances / preferred equity issuances 750 Growth capital 1,899 ST borrowing (net of…
KML: 2018B Distributable Cash Flow (DCF) in Millions of CAD, Except Per Share 2018 2017 Change Distributable Cash Flow Budget Actual % Net Income after tax before Certain Items (a) 242 164 78 48% DD&A 154 142 12 8% Book taxes 88 66…
KML: 2018B Segment EBDA before Certain Items in Millions of CAD, Except Per Share 2018 2017 Change Budget Actual % Pipelines 299 235 64 27% Terminals 246 219 27 12% Total Segment EBDA before Certain Items 545 454 91 20% General…
KML: 2018B Capital in Millions of CAD 2018B KML Sustaining Capital (a) (C Millions) 2018 2017 Sustaining Capital Expenditures Budget Actual Change Pipelines 45 26 19 Terminals 19 17 2 Total Sustaining Capital Expenditures 64 43…
KML: Credit Ratios and Liquidity(a) in Millions of CAD 2017 2018 Leverage Metrics Actual Budget Net debt(b) to Adjusted EBITDA 0.1x 2.7x Revolver Capacity(c) Long-term Debt Maturities(d) Committed revolving credit facility…
G. Natural Gas Pipelines Segment Presentation 83
Natural Gas Pipelines Segment Outlook and Asset Overview Well-Positioned: Connecting Key Natural Gas Resources with Major Demand Centers Long-Term Growth Drivers Asset Summary Natural Gas Pipelines: 70,000 Miles Shale-driven…
Natural Gas Pipelines Long-Term Growth Drivers: Natural Gas Pipelines Kinder Morgan Capitalizes on Industry Trends Shale-Driven Expansions/ Greenfield projects providing outlets for increasing supply to growing markets…
Natural Gas Pipelines Growth Driver: Exports Liquefied Natural Gas Kinder Morgan Leverages Asset Footprint to Facilitate Booming U.S. LNG Exports Global Demand Drives Opportunity for U.S. to Export KM Plans to Participate 18.5 Bcfd…
Natural Gas Pipelines Project Highlight: Liquefaction at Elba Island Elba Liquefaction Company (ELC)(a) / SLNG Project Overview Asset Overview Project Scope Facilities for liquefaction (10 modular units) Ship loading facilities;…
Natural Gas Pipelines Growth Driver: Exports Mexico Kinder Morgan Delivers 71% of U.S. Exports to Mexico (2017 YTD through October) Mexico Natural Gas Market KM Plans to Participate U.S. Exports to Mexico are expected to grow by 2…
Natural Gas Pipelines North Region Assets Extensive Footprint Serving Major Domestic Markets and Gulf Coast Exports Relevant Growth Drivers New infrastructure to support existing and future LNG plants 8 Bcfd(a) of additional demand…
Natural Gas Pipelines South Region Assets Transporter to Growing Southeast Markets; Elba LNG Liquefaction Begins Service in 2018 Relevant Growth Drivers KM participation in LNG liquefaction LNG infrastructure Exports Elba Island…
Natural Gas Pipelines West Region Assets Transporter from Rockies and Permian Basins to Western Markets and Mexico Relevant Growth Drivers Significant connectivity for incremental supply to Mexico 6.1 Bcfd of exports to Mexico…
Natural Gas Pipelines Midstream Assets TX Intrastate Systems Serving Growing Demand; G&P in Growing Basins Relevant Growth Drivers KM participating in new infrastructure for growing Shale-Driven Permian basin supply to reach growing…
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…
Natural Gas Pipelines New Firm Transport Capacity Tracking FT Capacity Commitments Since 2013 FT Capacity Commitments by Capacity Type New Existing Committed Total Capital, Wtd Avg. Capacity Capacity Capacity KM Share (a) Contract…
Natural Gas Pipelines Projects Placed Into Service During 2017 New Projects Expected to Generate 88 Million of EBITDA Annually Capital, In-service Capacity KM Share EBITDA Region Asset Project Date (mDthd) (mm) (mm) Susquehanna…
Natural Gas Pipelines Project Backlog: Natural Gas Segment North and South Regions Capital, KM Share Capacity In-service Asset Project (mm) (mDthd) Date Project Status Project facilities placed in service (Nov 2017). Customer…
Natural Gas Pipelines Project Backlog: Natural Gas Segment West and Midstream Regions Capital, KM Share Capacity In-service Asset Project (mm) (mDthd) Date Project Status Wink Station Expansion 3 71 2/2018 Modifications commissioned…
Natural Gas Pipelines KM Projects / Long-Term Commitments to LNG Kinder Morgan Leverages Asset Footprint to Facilitate Booming U.S. LNG Exports Contracted In-Service Project / Capacity KM Capital Date KM Asset Transportation…
Natural Gas Pipelines KM Projects & Long-Term Commitments for Exports to Mexico (Since 2013) Contracted In-Service Project / Capacity KM Capital Date KM Asset Transportation Shipper (mDthd) (mm) Oct-14 Sierrita Sierrita Gas PL CFE…
H. Products Pipelines Segment Presentation 101
Products Pipelines Segment Outlook and Asset Overview Products Pipelines: Stable, Strategic Assets Long-Term Stability Asset Summary Steady demand for refined Pipelines: 10,000 Miles 2017 Throughput: 2.1 mmbbld products volumes…
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