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1Q 2018 Earnings Presentation – Kinder Morgan, Inc.

Kinder Morgan, Inc. · May 9, 2018 · 50 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 1
    Run for Shareholders, by Shareholders May 9, 2018 Deutsche Bank Pipeline & MLP 1x1 Conference David Michels, Vice President & Chief Financial Officer
  2. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 2
    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…
  3. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 3
    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 320mm (14%) 1,894mm (86%) 104mm (30%)…
  4. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 4
    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…
  5. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 5
    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…
  6. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 6
    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…
  7. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 7
    KMI 2018 Guidance: Published Budget Supported by Diversified, Fee-Based Cash Flow KMI 2018 Budget Commentary 2018 from On our 1Q18 earnings call, management Budget 2017 indicated KMI expects to meet or exceed its financial targets…
  8. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 8
    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…
  9. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 9
    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 Fee-Based Take-or-Pay (66%): highly dependable cash flow…
  10. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 10
    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…
  11. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 11
    12 Billion 5-Year Growth Project Backlog(a) KMIs Footprint Generates Significant Opportunities for Expansion / Extension High-Quality Growth Projects Driving Value Cumulative EBITDA from Fee-Based Growth Capital 1.7 billion…
  12. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 12
    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 20 18.0 18.5 18.7 16.9 17.3…
  13. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 13
    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.…
  14. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 14
    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…
  15. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 15
    KMIs Compelling Investment Thesis Attractive Relative Value, Best-in-Class Dividend Growth and Coverage 2018E DCFPS / Price(a) EV / 2018E EBITDA(b) ATTRACTIVE RELATIVE VALUE UNDERVALUED RELATIVE TO PEERS 13% 14.0x Med: 11.9x 11% 10%…
  16. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 16
    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 and…
  17. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 17
    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 generate value…
  18. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 18
    Appendix Corporate Slides 19
  19. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 19
    Energy Toll Road Cash Flow Security Natural Gas Products Kinder Morgan Terminals CO2 Pipelines Pipelines Canada Segment Segment Segment Segment Segment Interstate & LNG: take-or-pay Liquids & Jones Act: Refined products: S&T:…
  20. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 20
    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…
  21. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 21
    FERC Issued Three Tax Orders on 3/15/18 Summary of FERC Proposals Affecting Pipeline Ratemaking Regulation Tax Rate NOPR Revised Tax Policy FERC Notice of Proposed Rulemaking interstate and FERC Revised Policy Statement on Treatment…
  22. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 22
    KMIs Expected Impact from FERC Changes Given settlements and moratoria that we have in place on several of our pipelines, we do not expect an incremental impact to our 2018-2019 outlook Reiterating our expectation from January before…
  23. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 23
    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…
  24. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 24
    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…
  25. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 25
    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%…
  26. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 26
    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…
  27. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 27
    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…
  28. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 28
    KMI: 2018B Growth Capital Millions 2018 2017 Growth capital Forecast(a) Actual Natural Gas Pipelines 1,801 1,602 CO2 - S&T 30 19 CO2 - EOR 369 410 Products Pipelines 97 267 Terminals 49 629 Kinder Morgan Canada - 55 Total…
  29. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 29
    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)…
  30. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 30
    Appendix KMI Business Segment Overview 31
  31. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 31
    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…
  32. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 32
    Natural Gas Pipelines Project Highlight: Gulf Coast Express (GCX) Joint Venture Project Satisfying Multiple Growth Drivers Project Overview Project Drivers / Asset Overview Project Scope Project Drivers Mainline: 447.5 miles of 42…
  33. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 33
    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…
  34. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 34
    Natural Gas Pipelines Growth Driver: Exports Mexico In 2017 Kinder Morgan Delivered 70% of U.S. Exports to Mexico Mexico Natural Gas Market KM Plans to Participate U.S. Exports to Mexico are expected to grow by 2 Bcfd to 6.1 KMs…
  35. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 35
    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…
  36. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 36
    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…
  37. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 37
    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…
  38. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 38
    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)…
  39. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 39
    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…
  40. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 40
    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) Vessel 0 2018 12 2019 24 2020 36 2021 48 2022 60…
  41. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 41
    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…
  42. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 42
    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%…
  43. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 43
    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%…
  44. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 44
    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…
  45. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 45
    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…
  46. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 46
    TMEP Status Suspending Non-Essential Spend; Decision Whether or Not to Cancel Expected 5/31/18 On April 8, 2018 KML announced suspension of all non-essential activities and related spending on TMEP Given British Columbias continued…
  47. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 47
    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…
  48. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 48
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  49. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 49
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  50. 1Q 2018 Earnings Presentation – Kinder Morgan, Inc. – slide 50
    Deutsche Bank Pipeline & MLP 1x1 Conference David Michels, Vice President & Chief Financial Officer

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