Barclays Investment Grade Energy and Pipeline Conference February 28, 2018 Steve Kean, President and CEO Anthony Ashley, Vice President and Treasurer
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…
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…
KMI 2018 Guidance: Published Budget Supported by Diversified, Fee-Based Cash Flow KMI 2018 Budget Commentary 2018 from 2018B excess cash flow of 568 million Budget 2017 After dividend and Capex, excess cash flow Adjusted EBITDA…
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…
5-Year Growth Project Backlog(a) 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…
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…
KMI Positioned to Support Future of Natural Gas Kinder Morgan Transports 40% of all Natural Gas Consumed in the U.S. Demand (Bcfd) 2017 2022 2027 5-yr 10-yr Net LNG Export Demand (Bcfd) Utica/Marc. Supply (Bcfd) INCREASED Total U.S.…
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…
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)…
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…
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 15.6x Med: 11.9x 14.0x…
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…
Appendix Corporate Slides 19
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…
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…
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…
Energy Toll Road Cash Flow Security Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada Interstate & LNG: take-or-pay Liquids & Jones Act: Refined products: S&T: primarily Intrastate:76% take-or-pay(a,b)…
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)…
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%…
Compliance is Important to Kinder Morgan Kinder Morgans On-Time Compliance Metrics are Consistently High Operate in Compliance Kinder Morgans On-Time Compliance Performance On-time compliance is a critical leading indicator for In…
Asset Integrity and Safety are Top Priorities Kinder Morgans EHS Metrics Consistently Outperform the Industry Operate Safely & Efficiently Kinder Morgans Safety Performance vs. Industry(a) Safe operation of our assets is mission…
Appendix KMI Business Segment Overview 30
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…
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…
Products Pipelines Segment Outlook and Asset Overview Products Pipelines: Stable, Strategic Assets Long-Term Stability Asset Summary Pipelines: 10,000 Miles Steady demand for refined 2017 Throughput: 2.1 mmbbld products volumes…
Products Pipelines Project Highlight: Utopia Pipeline Project Supported by Long-Term Volume Commitment Project Overview Asset Overview Project Scope 50/50 JV with Riverstone Holdings 267-mile12 pipeline Will transport ethane from…
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 Jones Act Tankers Largest, Most modern and Efficient Fleet in the United States APT Overview Jones Act Tankers: Contract Schedule American Petroleum Tankers (APT) 2018 2019 2020 2021 2022 Vessel 0 12 24 36 48 60 Final 4…
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 CO 2 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% ATIRR% 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…
Appendix KML Overview 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: 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…
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…
KML Business Risks and Key Assumptions Summary Business Risks Project cost overruns and in-service delays Regulatory Legislative and regulatory changes Federal, provincial, state and local Regulatory cost and indexing approvals…
KML Business Risks and Key Assumptions Base Business Our base business is expected to be relatively stable, though it is subject to re-contracting and other risks 2018 Adjusted EBITDA Includes 71 million of capitalized equity…
Appendix Other 54
KMI GAAP Reconciliation in Millions Yr. Ended Yr. Ended Reconciliation of DCF 12/31/17 Reconciliation of Adjusted EBITDA 12/31/17 Net Income 223 Net Income 223 Certain Items 1,445 Certain Items 1,445 Net Income before Certain Items…
KML GAAP Reconciliation in Millions of CAD Yr. Ended Yr. Ended Reconciliation of DCF 12/31/17 Reconciliation of Adjusted EBITDA 12/31/17 Net Income 160 Net Income 160 Certain Items 4 Certain Items 4 Net Income before Certain Items…
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Steve Kean, President and CEO Anthony Ashley, Vice President and Treasurer
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