2020 Investor Day – Kinder Morgan, Inc.

Kinder Morgan, Inc. · Jan 29, 2020 · 131 slides

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2020 Investor Day January 29, 2020
Kinder Morgan 2020 Investor Day Agenda and presenters TIME DISCUSSION PRESENTER 8:00 8:20 Our Vision Rich Kinder Executive Chairman 8:20 9:00 Strategy Steve Kean CEO 9:00 9:40 Business Review Kim Dang President 9:40…
Our Vision Delivering energy to improve lives & create a better world Rich Kinder Executive Chairman 4
Hydrocarbons Required to Meet Long-Term Global Demand U.S. energy infrastructure will be critical for decades GLOBAL PRIMARY ENERGY DEMAND BY FUEL Broad-based natural gas demand growth across all billion tons oil equivalent sectors…
World is Expected to Grow by Nearly 1 Billion People by 2030 Over 90% of population growth occurs in developing economies 2018 billions of people 2030 billions of people Non-OECD: 6.3 BILLION Over 80% of people Over 850 million…
Many People Still Lack Basic Needs & Technologies Developing countries, led by Asia, are the main engines of global growth SAFE AIR QUALITY(a) CLEAN COOKING(b) GDP PER CAPITA ENERGY DEMAND PER CAPITA % of population (2017) % of…
U.S. Expected to Produce More Energy than it Needs Surplus of affordable energy to meet demand abroad U.S. OIL & LIQUIDS U.S. NATURAL GAS million barrels per day billion cubic feet per day 25 120 supply supply net exports 20 net…
Developing Economies Drive Energy Demand Growth Energy consumption much more than just power & electric vehicles rest of world non-OECD other industry only 2% of expected growth such as India, China, Sub- agricultural, asphalt,…
Hydrocarbons Are Essential to Our Quality of Life Fueling our modern materials & conveniences Natural gas & petroleum heat our homes & water, generate much of our electricity & are inputs to products we use every day: Note: Text…
Significant Environmental Concern in Developing Economies Ambient air pollution accounts for an estimated 4.2 million deaths per year ENERGY-RELATED CO2 EMISSIONS DELHI, INDIA billion metric tons 26 million people Air quality statistic:…
U.S. Greenhouse Gas Emissions are Declining Meaningful progress led by natural gas replacing coal-fired power generation U.S. GREENHOUSE GAS EMISSIONS BY ECONOMIC SECTOR billion metric tons of CO2 equivalent Since 1990: 2007 peak 8…
Natural Gas is a Critical Partner to Renewable Energy Evidence shows natural gas is preferred backup for renewables 7 DAYS OF ELECTRICITY GENERATION IN TEXAS (megawatt-hours by source) Natural gas works hand-in-hand with 30,000 nuclear…
Conclusions Developing economies will drive energy demand growth U.S. excess supply will serve (population growth & global demand growth satisfaction of basic needs) U.S. greenhouse gas Long runway for hydrocarbon emissions…
Strategy Steve Kean CEO 15
Kinder Morgan: Leader in North American Energy Infrastructure Unparalleled & irreplaceable asset footprint built over decades CO2 & transport Largest natural gas transmission network CO2 EOR oil & gas production Natural gas 6% 4%…
A Core Energy Infrastructure Holding Generating significant cash flow & returning significant value to shareholders 40 billion market capitalization One of the 10 largest energy companies in the S&P 500 15% owned by management…
Key Milestones Reached in 2019 Sold KML & U.S. Cochin pipeline for 2.5 billion Created 1.2 billion balance sheet flexibility by beating leverage target Placed major projects in service GCX & Elba(a) Demonstrated capital discipline…
Our Strategy Stable, fee-based assets Financial flexibility Disciplined capital allocation Enhancing shareholder value Core energy 4.3x 2020B Net Debt / Conservative Attractive projects infrastructure Adjusted EBITDA(a)…
Substantial Growth Projected for U.S. Natural Gas Supply Our network connects key supply basins to multiple demand points along the Gulf Coast KEY BASINS DRIVING U.S. GROWTH 2019 to 2030 growth in bcfd 12 Additional 32 bcfd expected…
Our Unmatched Natural Gas Network & Deliverability Strong fundamentals drive value on existing assets & create investment opportunities U.S. NATURAL GAS DEMAND = Growing supply area bcfd = Key areas of demand growth 103 Bakken 101…
U.S. Natural Gas Demand is Concentrated in Gulf Coast 84% of forecasted 2019 2030 growth is in the Gulf Coast, where we have significant assets in place Other regions Gulf Coast 16% 84% 28 bcfd demand growth GULF COAST DEMAND…
U.S. LNG Exports are Growing Expected to more than triple by 2025 GLOBAL NATURAL GAS DEMAND PROJECTED U.S. LNG EXPORTS bcfd bcfd 54 457 21 6 7 13.5 bcfd of capacity already 8 operating, commissioning or 382 under construction…
Full Cycle Emissions in Electric Power Generation U.S. LNG is one of the lowest emissions fuels for electricity in Asia & Europe ESTIMATED GREENHOUSE GAS EMISSIONS kg of CO2-equivalent emissions per megawatt-hour based on 100-year global…
Replacing Coal is Critical to Global Emission Reductions Power sector contributes 40% of energy-related CO2 emissions globally Natural gas is a more efficient & lower carbon ELECTRIC POWER SECTOR GENERATION MIX % based on terawatt-hours…
3.6bn of Commercially-Secured Capital Projects Underway 1.3 billion added in 2019 Demand Pull / KMI Capital Estimated (as of 12/31/2019) Supply Push ( billion) In-Service Date Capacity Natural Gas Permian takeaway projects (PHP, TX…
Leading the Way Out of the Permian Successfully completed GCX on time & budget PHP well underway Leveraging existing footprint into new takeaway capacity that reaches Natural Gas Pipelines across Texas & the Desert/Southwest (DSW),…
Supporting the Buildout of U.S. LNG Exports Serving significant liquefaction capacity & well-positioned to capture more Kinder Morgan network advantages: Natural gas transportation leader 70,000 miles of natural gas pipelines Move 40% of…
Beyond the Backlog Strong long-term fundamentals to drive additional opportunities Northeast natural Storage to support Infrastructure to gas demand & renewable power Natural gas for Organic growth support U.S. long-term supply…
Prioritizing Environmental, Social & Governance (ESG) Protecting the public, our employees & the environment Invest millions of dollars each year on integrity SUSTAINALYTICS ESG RISK RATING(a) management & maintenance programs to…
Contributing to a Lower-Carbon Future with Natural Gas Long-standing commitment to reducing methane emissions Ongoing enhancements to ESG disclosures 25+ years of commitment to reducing methane emissions, SUCCESSFUL METHANE EMISSIONS…
Business Review Kimberly Dang President 32
Natural Gas Segment Overview Connecting key natural gas resources with major demand centers Asset Summary Natural gas pipelines: 70,000 miles NGL pipelines: 1,200 miles Natural gas transported 40% (U.S. consumption & exports) Working gas…
Long-Term Growth Drivers: Natural Gas Segment Capitalizing on industry trends LNG exports: pipeline infrastructure & liquefaction facilities Exports Exports to Mexico: additional volume with ramp up of in-country infrastructure Outlets…
Products Segment Overview Strategic footprint with significant cash flow generation Asset Summary Pipelines(a): 9,500 miles 2019 throughput(a) 2.4 mmbbld Terminals: 65 terminals Terminals tank capacity 39 mmbbls Pipeline tank capacity 16…
Products Segment Overview Supplying a diverse mix of feedstock & finished products critical to refining & transportation sectors 2019 DELIVERY VOLUMES(a) Robust economy & consumer preference supports demand growth partially offset by…
Consumer Preferences Suggest Product Demand Growth Both U.S & global demand trending higher EV MARKET SHARE SUV MARKET SHARE U.S. TRANSPORTATION DEMAND GLOBAL AIR TRAVEL 2018 global car sales by manufacturer % of sales in key car markets…
Terminals Segment Overview Diversified terminaling network connected to key refining centers & market hubs of capacity Asset Summary terminals (mmbbls) Terminals Segment Bulk 32 Terminals Segment Liquids 50 79 Products Pipelines Segment…
Integrated Terminaling Network Focused on Refined Products Irreplaceable collection of assets, capabilities & market-making connectivity Our unmatched scale & flexibility on the Houston Ship Channel: KM terminals & assets refined…
Leading Exporter of U.S. Gasoline & Distillates Our Houston Ship Channel exports have grown faster than the broader U.S. market over the last several years U.S. EXPORTS KM EXPORTS FROM HOUSTON SHIP CHANNEL Millions of barrels per day…
CO2 Segment Overview World class, fully-integrated assets CO2 source to crude oil production & takeaway in the Permian Basin KMI Est. OGIP CO2 Reserves Interest NRI Location (tcf) McElmo Dome 45% 37% SW Colorado 22.0 Doe Canyon 87% 68%…
CO2 Free Cash Flow & Attractive Returns Long history of generating high returns & significant CO2 free cash flow with minimal acquisitions CO2 IRR% 2000-2019 SIGNIFICANT CO2 FREE CASH FLOW millions 1,458 Oil & Gas 18% 1,326…
Significant & Stable Cash Flow Generation Opportunistic asset monetization enabled meaningful debt reduction Self-funded all capex & all dividends with 19 billion of cash flow from operations since 2016 Borrowing, net Cash from BS…
Incremental 2020B Cash Flow Returned to Shareholders Multiple attractive capital allocation opportunities 2.7 billion excess cash flow 5.1 billion of DCF less 2.4 billion of discretionary capital less 25% increase planned for 2020…
Stable, Fee-Based Cash Flow from High Quality Customers Underpinned by multi-year contracts with diversified customer base STABLE CASH FLOWS(a) HIGH QUALITY CUSTOMERS(b) Not rated 4% 5% 12% 3% B- or below 7% BB+ to B 27% 78%…
Secure Cash Flows Across Our Segments 2020 budgeted segment cash flows by contract type NATURAL GAS SEGMENT: 97% take-or-pay or fee-based PRODUCTS SEGMENT: 93% fee-based or take-or-pay Unhedged, 2% Hedged, 1% Unhedged, 7% Stable…
Historical Discretionary Capital Spending Levels Averaged 2.7 billion per year since 2010 billions Discretionary Capital Average 3.6 3.6 3.5 2.7 3.0 2.8 2.8 2.4 2.4 2.1 1.7 1.6 2010 2011 2012 2013 2014 2015 2016 2017…
Successfully Achieving Attractive Build Multiples Established track record of leveraging our footprint & project management expertise Competitive advantages: INVESTMENT MULTIPLES: PROJECTS COMPLETED 2015-2019 Capital invested / year 2…
Stable Foundation of Cash Flows through Commodity Cycles 6-year change in Adjusted EBITDA billions 0.6 1.8 7.6 7.4 0.6 0.3 0.1 0.1 0.1 Helped achieve 9.4 billion Net Debt reduction(a) 4.3x YE Net Debt / Adj. EBITDA, down…
Compelling Investment Opportunity Strategically-positioned assets generating substantial cash flow with attractive investment opportunities 90% take-or-pay or fee-based earnings(a) 7.6 billion 2020B Adjusted EBITDA(b) 5% current…
Panel with Business Unit Presidents Tom Martin President of Natural Gas James Holland President of Products John Schlosser President of Terminals Jesse Arenivas President of CO2 51
2020 Budget David Michels Vice President & CFO 52
2020 Guidance Published budget change ADJUSTED EBITDA billions Key Metrics 2020 Budget over 2019 7.6 7.6 7.6 After normalizing for sold assets, Adjusted EBITDA 7.6 billion 0% Adjusted EBITDA has grown Distributable Cash Flow 5.1…
2020B Assumptions & Highlights YoY EBDA(a) KEY DEVELOPMENTS FROM 2019 Full year contribution from Elba Liquefaction, GCX & Bakken G&P expansions TX Intrastates growth projects & increased margin Sale of Cochin Natural Gas Pipelines…
2020B Adjusted EBITDA in millions 2020 2019 Change Budget Actual % Natural Gas Pipelines 4,707 4,610 97 2% Products Pipelines 1,254 1,258 (4) 0% Terminals 1,051 1,174 (123) -10% CO2 763 707 56 8% Adjusted Segment EBDA(a) 7,775…
2020B Distributable Cash Flow (DCF) in millions, except per share 2020 2019 Change Budget Actual % Adjusted EBITDA 7,582 7,618 (36) 0% Interest, net (a) (1,690) (1,816) 126 -7% Cash taxes (b) (71) (90) 19 -21% Sustaining capital…
2020B Adjusted Earnings in millions, except per share 2020 2019 Change Budget Actual % DCF 5,099 4,993 106 2% Cash taxes (a) 71 90 (19) -21% Sustaining capital expenditures (b) 716 688 28 4% Income tax expense for DCF(c,d) (745)…
2020B Capital Expenditures in millions 2020 2019 Sustaining Capital Budget Actual Change Natural Gas Pipelines (a) 363 339 24 Products Pipelines (a) 81 87 (6) Terminals (a) 230 222 8 CO2 16 17 (1) Corporate / other 26 23 3 Total…
2020B Sources & Uses in millions 2020 Sources Budget SOURCES & USES ( in billions) DCF 5,099 9 Revolver Borrowing/Debt Issuances (a) 1,778 8 Taxes on After-tax proceeds from Pembina stock sale 764 PPL stock sale TMPL sale 7…
Leverage & Liquidity(a) in millions 2020 Budget Net Debt (Year End) 32,964 Adjusted EBITDA 7,582 Financial flexibility with 4 billion of capacity on our Net Debt(b) to Adjusted EBITDA 4.3x credit facility & manageable future debt…
2020B Quarterly Profile in millions, except per share Adjusted Segment EBDA Q1 Q2 Q3 Q4 Total 2020 Budget 26% 24% 24% 26% 7,775 2019 Actual 26% 24% 24% 26% 7,749 Adjusted EBITDA 2020 Budget 26% 24% 24% 26% 7,582 2019 Actual…
2020B Cash Tax Calculation Detail in millions 2020 Budget Adjusted Segment EBDA 7,775 Net income attributable to NCI (67) JV earnings from C corps (325) JV distributions from C corps (net of 65% dividend received deduction) 88 JV…
2020 Budget Sensitivities Limited overall commodity exposure 2020B assumptions Change 2020B DCF impact (full year) CO2 Natural Gas Products Total company 55/bbl WTI 1/bbl WTI 0.8 million NGL 0.8 million 1.2 million 5 million 0.6…
KMI: Then & Now Celebrating our 20th investor day 2001 2020 Key metrics Investor Day Investor Day Increase Market capitalization 6 billion 49 billion Over 700% Enterprise value 9 billion 84 billion Over 800% Miles of pipeline…
Natural Gas Segment Presentation 65
Natural Gas Segment Overview Connecting key natural gas resources with major demand centers Asset Summary Natural gas pipelines: 70,000 miles NGL pipelines: 1,200 miles Natural gas transported 40% (U.S. consumption & exports) Working gas…
Long-Term Growth Drivers: Natural Gas Segment Capitalizing on industry trends LNG exports: pipeline infrastructure & liquefaction facilities Exports Exports to Mexico: additional volume with ramp up of in-country infrastructure Outlets…
U.S. LNG Exports are Growing Expected to more than triple by 2025 GLOBAL NATURAL GAS DEMAND PROJECTED U.S. LNG EXPORTS bcfd bcfd 54 457 21 6 7 13.5 bcfd of capacity already 8 operating, commissioning or 382 under construction…
Supporting the Buildout of U.S. LNG Exports Serving significant liquefaction capacity & well-positioned to capture more Kinder Morgan network advantages: Natural gas transportation leader 70,000 miles of natural gas pipelines Move 40% of…
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…
Key Market: Exports to Mexico Expect to maintain market share of growing Mexico market 55%(a) in 2019 Extensive footprint offers diverse supply options to multiple Mexico interconnections Including 12 direct & 4 indirect U.S. natural…
Leading the Way Out of the Permian Successfully completed GCX on time & budget PHP well underway Leveraging existing footprint into new takeaway capacity that reaches Natural Gas Pipelines across Texas & the Desert/Southwest (DSW),…
Growth Driver: Supporting Increasing Variable Demand Opportunities for increased throughput, short notice high deliverability services & gas storage PERCENTAGE LOAD FACTOR GAS VS. WIND(a) Market dynamics & KM response daily ERCOT…
Natural Gas: Interstate Pipelines Key statistics Capacity Storage Avg. Remaining Effective Date of Rate Moratorium Ownership Miles (bcfd) (bcf) Contract Term (yrs) Next Rate Case Through Date 100% KMI-owned: TGP Tennessee Gas Pipeline…
Natural Gas: Intrastate, G&P and NGL Assets Key statistics Capacity Avg. Remaining Storage Treating Processing Ownership Miles (bcfd) Contract Term (yrs) (bcf) (GPM) (bcfd) 100% KMI-owned natural gas pipelines: KMTP / Tejas 100% 5,850…
Manageable Natural Gas Re-Contracting Exposure Analysis of existing contracts that renew during next two years EXPECTED ANNUAL NET RE-CONTRACTING EXPOSURE (KM SHARE): % of 7.8bn 2020B KMI Total Segment EBDA(a) Expiring contracts are…
Projects Placed Into Service During 2019 New natural gas projects expected to generate 431 million of annual EBITDA Capital, EBITDA, In-service Capacity KM Share KM Share Asset Project Date (mDthd) (mm) (mm) ELC Elba Liquefaction - 3…
Project Backlog: Interstate Pipelines Natural Gas Capital, KM Share Capacity In-service Asset Project (mm) (mDthd) Date Project Status East 300 Upgrade 246 110 11/2022 FERC filing expected 6/2020 TGP Line 261 Upgrade 58 128…
Project Backlog: Intrastates and G&P Natural Gas Capital, KM Share Capacity In-service Asset Project (mm) (mDthd) Date Project Status Permian Highway 600 2,100 1Q 2021 Under construction Intrastate Network Expansions * 326…
LNG Contract Overview Contracted capacity (online / to come) & Elba Liquefaction Remaining Contract KM Asset Contracted Capacity (mDthd) KM Capital (mm) Term (yrs) TGP 1,250 281 KMLP 1,545 278 NGPL 1,975 236 Intrastate 740 114…
Products Segment Presentation 81
Products Segment Overview Strategic footprint with significant cash flow generation Asset Summary Pipelines(a): 9,500 miles 2019 throughput(a) 2.4 mmbbld Terminals: 65 terminals Terminals tank capacity 39 mmbbls Pipeline tank capacity 16…
Products Segment Overview Supplying a diverse mix of feedstock & finished products critical to refining & transportation sectors 2019 DELIVERY VOLUMES(a) Robust economy & consumer preference supports demand growth partially offset by…
Stable U.S. Market Demand for Refined Products Volume growth on strategic assets consistently outpaces national average REFINED PRODUCTS VOLUMES(a) mmbbld Unmatched connectivity between major refining centers & key demand markets 1.8…
Refined Products Assets Generate Stable Cash Flows Steadily growing volumes complemented by indexed tariff structure REFINED PRODUCTS EBDA BY REGION(a) millions Volume growth translates to earnings growth 792 800 771 743 Potential…
Project Highlight: Roanoke Expansion Securing refined products delivery for the Roanoke / Montvale area Market Drivers Historically, both the Colonial Pipeline Montvale Lateral & Plantation Roanoke Lateral have served the Roanoke,…
Strong Volume Growth Across Crude Pipelines 84% of 2020B volumes reflect re-contracted market rates CRUDE OIL PRODUCTION BY BASIN SERVED(a) THROUGHPUT VOLUMES BY CRUDE PIPELINE mmbbld mbbld 3.0 + KMCC recently connected 800 to Permian…
Texas Crude Oil Assets: KMCC, Double Eagle & Splitter Valuable connectivity to Corpus Christi & the Houston Ship Channel Assets offer connectivity to the Corpus Christi & Houston Ship Channel markets Permian Flexibility to reach…
Bakken Crude Oil Assets: Hiland Gathering & Double H Strong production growth in the Bakken translating into higher transport volumes BAKKEN BASIN PRODUCTION(a) & KM BAKKEN CRUDE VOLUMES(b) mbbld Bakken 1,600 350 oil production 1,400…
Products Segment Snapshot Asset statistics Crude oil assets: Statistics Origin Destination KM Crude & Condensate pipeline (KMCC) 264 miles Eagle Ford Shale Field in South TX (Dewitt, Karnes, Gonzales Houston Ship Channel Refining…
Terminals Segment Presentation 91
Terminals Segment Overview Diversified terminaling network connected to key refining centers & market hubs of capacity Asset Summary terminals (mmbbls) Terminals Segment Bulk 32 Terminals Segment Liquids 50 79 Products Pipelines Segment…
Terminals Segment Product Mix Diverse, liquids-focused product mix other Domestic terminaling in both hub & regional markets coal bulk Premier refined products terminaling system in the Houston Ship Channel 4% 7% Complementary…
Terminals Segment Contract Model Earnings driven by long-term contractual use of our assets Leased tank capacity (pre-paid monthly) take-or-pay Jones Act tanker charters (pre-paid monthly) requirements 11% 70% Minimum volume…
Terminals Segment Services Providing customers with value-added service solutions & access to markets Concentrated in key markets terminaling Primary Hubs: Houston & New York Harbor Jones Act services Secondary Hubs: New Orleans area…
Terminals Segment Key Hubs Strategically located Houston Ship Channel New Premier refined product terminaling & blending system York Harbor Chicago 9 terminals providing 43 million barrels of capacity(a) 364 million 2020B EBDA(b)…
Integrated Terminaling Network Focused on Refined Products Irreplaceable collection of assets, capabilities & market-making connectivity Our unmatched scale & flexibility on the Houston Ship Channel: KM terminals & assets refined…
Full Service Offering in the Houston Ship Channel Industry clearinghouse for production & markets Unmatched inbound connectivity Value-added services Outbound market access Truck Rack Local truck rack Jefferson Street Refineries…
Positioned to Meet Domestic Maritime Demand American Petroleum Tankers (APT) fleet of 16 medium-range tankers Improving charter rate environment Favorable supply & demand fundamentals Committed Charters Renewal Options Refined product…
Bulk Commodities Diversified product & services offerings Handle 40% of Midcontinent & Gulf Coast production Petroleum Coke 8% In-plant refinery bulk-handling 2020B Segment Revenue One of the nations largest handlers Export…
Meaningful Growth in Exports of U.S. Petroleum Liquids Competitive & growing U.S. supplies reach a diverse mix of global customers U.S. EXPORTS OF PETROLEUM LIQUIDS DESTINATIONS OF U.S. PETROLEUM LIQUIDS EXPORTS Millions of barrels per…