Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Investor Presentation (February 2021)
38 slides from Kinder Morgan's investor presentation, February 2021
Slide 1: Investor Presentation February 2021
INVESTOR PRESENTATION February 2021
Slide 2: Disclosure
Disclosure Forward-looking statements / non-GAAP financial measures / industry & market data General – The information contained in this presentation does not purport to be all‐inclusive or to contain all information that prospective investors may require. Prospective investors are encouraged to con
Slide 3: Leader in North American Energy Infrastructure
Leader in North American Energy Infrastructure Unparalleled & irreplaceable asset footprint built over decades Connecting major U.S. natural gas resource plays to key demand centers Largest natural gas transmission network Move ~40% of U.S. natural gas consumption & exports — ~70,000 miles of natura
Slide 4: KMI: a Core Holding in Any Portfolio
KMI: a Core Holding in Any Portfolio Generating significant cash flow & returning significant value to shareholders >$35 billion market capitalization One of the 10 largest energy companies in the S&P500 ~13% owned by management Highly-aligned management with significant equity interests ~7% current
Slide 5: 2021 Budget
2021 Budget Committed to maintaining a strong balance sheet & returning value to shareholders Variance to Key metrics 2021 Budget 2020 Net income $2.1 billion ~$2 billion Increase due primarily to impairments taken during 2020 Lower re-contracting rates (mainly Ruby & FEP, as noted for the last coup
Slide 6: Strategy
Strategy Maximize the value of our assets on behalf of shareholders Disciplined Enhance Stable, fee- Invest in a low Financial capital shareholder based assets carbon future flexibility allocation value Core energy $1.5 billion backlog 4.6x 2021 budgeted Conservative Maintain strong infrastructure w
Slide 7: Highly-Contracted Cash Flows
Highly-Contracted Cash Flows Stable cash flows with ~72% take-or-pay or hedged earnings(a) Contract type Payment feature Example assets CONTRACT MIX(a) Jones Act tankers 100% Natural gas interstate / LNG 93% Entitled to payment regardless of throughput Natural gas intrastate (b) 83% 68% Take-or-pay
Slide 8: Customers Are Primarily End-Users of the Products We Handle
Customers Are Primarily End-Users of the Products We Handle Net revenues underpinned by investment grade counterparties & credit support | Ratings as of January 11, 2021 CUSTOMER TYPE CREDIT RATING End-user IG or substantial credit support Producer - IG or substantial credit support BB+ to B Produce
Slide 9: Self-Funding Capex & Dividends Since 2016
Self-Funding Capex & Dividends Since 2016 Opportunistic asset monetization enabled meaningful debt reduction Generated $1.9 billion of free cash flow after dividends over last 5 years Borrowing, net Cash from BS Debt repayment Cash from BS Buybacks Asset sales, Cash to BS Other(a) net Other(a) Cash
Slide 10: Our Business is Resilient throughout an Energy Transition
Our Business is Resilient throughout an Energy Transition what we do today… is valuable & will be needed for a long time helps meet environmental goals “energy transitions take decades” infrastructure supporting the - Vaclav Smil, Distinguished Professor Emeritus displacement of higher emissions ene
Slide 11: All Available Sources Required to Meet Demand Outlook
All Available Sources Required to Meet Demand Outlook Even as the energy mix gradually shifts, hydrocarbons projected to remain essential to meeting demand GLOBAL PRIMARY ENERGY DEMAND BY FUEL billions tons oil equivalent (btoe) | 2019, 2030, 2040 total demand & % mix 5 Overall energy demand 3% 5% e
Slide 12: Substantial Growth Projected for U.S. Natural Gas
Substantial Growth Projected for U.S. Natural Gas KEY BASINS DRIVING U.S. GROWTH 2020 to 2030 growth in bcfd Additional 24 bcfd expected from three areas 9 9 6 Haynesville Permian Northeast DEMAND in bcfd Exports & industrial driving majority of growth 2020 31 0 22 5 31 6 96 >80% of forecast demand
Slide 13: Our Infrastructure is Important to Fueling the Future
Our Infrastructure is Important to Fueling the Future Leveraging our long-term investment in the substantial assets & expertise required to responsibly deliver energy BENEFITS OF NATURAL GAS LOW EMISSIONS ABUNDANT & LOW COST Natural gas is the cleanest burning fossil fuel with Cost-effective generat
Slide 14: U.S. CO2 Emissions Declined Since 2007 while GDP grew ~50%
U.S. CO2 Emissions Declined Since 2007 while GDP grew ~50% Primarily due to converting coal power generation to natural gas generation U.S. ELECTRICITY GENERATION MIX U.S. CO2 EMISSIONS % of total generation billion metric tons U.S. emissions declined ~14% or ~860 million metric tons 6.0 6.0 6.0 5.9
Slide 15: Well-Positioned to Move Potential Fuels of the Future
Well-Positioned to Move Potential Fuels of the Future RNG & hydrogen can utilize much of the existing natural gas infrastructure network RNG is a pipeline-quality gas Hydrogen could be shipped Hydrogen is energy dense & Pipelines can transport that is interchangeable with on natural gas pipelines in
Slide 16: Opportunity for Natural Gas Infrastructure
Opportunity for Natural Gas Infrastructure Renewable alternatives are small in scale today, but could grow to meet nearly 20% of current U.S. demand as costs decline U.S. SUPPLY COST ESTIMATES bcfd, 2020 & 2050 potential $ per Dth | 2020, 2030, & 2050 $33.44 120 $29.00 100 $25.50 80 $22.00 $21.55 60
Slide 17: Attractive Potential for Liquid Biofuels
Attractive Potential for Liquid Biofuels Policy support & efficient infrastructure important to increasing adoption of ethanol, biodiesel & other low-carbon fuels GLOBAL BIOFUELS DEMAND OUTLOOK million barrels per day Stated policies scenario projects: ~75% or 1.5 mmbbld increase by 2030 6 ~150% or
Slide 18: Substantial Existing Capabilities at Our Terminals & Products Assets
Substantial Existing Capabilities at Our Terminals & Products Assets Includes substantial blending, pipeline, terminaling & export capabilities for ethanol & other biofuels Ethanol Biodiesel Renewable Diesel Our existing assets Fuel-grade ethanol breakout (e.g., Biodiesel services include Services i
Slide 19: West Coast Renewable Fuels Projects
West Coast Renewable Fuels Projects Developing infrastructure to secure renewable fuels Market drivers — Renewable Diesel (RD) has been driven by California subsidies — RIN credits — Low Carbon Fuel Standard (LCFS) credits — Blender’s Tax Credit — Currently averaging approximately $3.00/gal for tota
Slide 20: Carbon Capture Utilization & Storage (CCUS)
Carbon Capture Utilization & Storage (CCUS) Positioned to leverage our existing expertise & capabilities to provide CCUS services in the future Our experience & current operations cover the CCUS value chain CURRENT ESTIMATED U.S. CARBON CAPTURE COST $/tonne $300 — Design, manufacture, install & oper
Slide 21: Our Multi-Faceted ESG Approach
Our Multi-Faceted ESG Approach Recognized as an industry leader & for ongoing improvements INVEST integrity management & maintenance programs Sustainalytics ESG risk rating(a) – Safety-focused – Outperform industry averages in almost all safety & release related categories #1 #1 – Projects to minimi
Slide 22: Long-Standing Commitment to Reducing Emissions
Long-Standing Commitment to Reducing Emissions 25+ year track record Evaluate new opportunities SUCCESSFUL METHANE EMISSIONS REDUCTIONS(a) – Work with organizations like DOE, EPA, & PRCI on studies & technology bcf, cumulative across our operations reported to EPA Natural Gas STAR & evaluations Meth
Slide 23: Compelling Investment Opportunity
Compelling Investment Opportunity Strategically-positioned assets generating substantial cash flow with attractive investment opportunities Stable cash flows with ~72% take-or-pay or hedged earnings(a) ~7% current yield & almost 2x coverage(b) Top 10 dividend yield in S&P500 Dividends & capex funded
Slide 24: Appendix
APPENDIX
Slide 25: Energy Toll Road
Energy Toll Road Cash flow security with >90% from take-or-pay & other fee-based contracts Natural Gas Products Terminals CO2 2021B EBDA %(a) 62% 16% 15% 7% Refined Liquids Jones Act CO2 & Interstate / LNG Intrastate G&P products Crude terminals tankers Bulk terminals EOR Oil & Gas Transport 4% & 1%
Slide 26: $1.5 Billion Project Backlog as of 12/31/2020
$1.5 Billion Project Backlog as of 12/31/2020 Primarily focused on contracted natural gas opportunities DEMAND SUPPLY CAPITAL ESTIMATED PIPELINE PULL PUSH ($ billion) IN-SERVICE CAPACITY Supply for U.S. power & LDC demand (TGP, FGT & SNG) • $ 0.4 Q1 2021 – 2023 0.6 bcfd Supply for LNG export (KMLP,
Slide 27: Supporting the Buildout of U.S. LNG Exports
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 U.S. natural gas consumption & exports Supply diversity Conne
Slide 28: Manageable Natural Gas Re-Contracting Exposure
Manageable Natural Gas Re-Contracting Exposure Analysis of existing contracts that renew during next two years KMI ADJUSTED SEGMENT EBDA $ millions Expiring contracts are assessed for volumetric & Adjusted Segment EBDA Interstate pipelines Intrastates & G&P rate risk based on November 2020 market $8
Slide 29: Products Segment Overview
Products Segment Overview Supplying a diverse mix of feedstock & finished products critical to refining & transportation sectors 2021B volumes Volume by 2021B DELIVERY VOLUMES(a) mbbld region(b) West 74% — Budget averages 2% below 2019 gasoline Gasoline 1,054 volumes & reaches 2019 level by Q4 2021
Slide 30: Our Integrated Terminal Network on Houston Ship Channel
Our Integrated Terminal Network on Houston Ship Channel Refined products focused with an irreplaceable collection of assets, capabilities & market-making connectivity Our unmatched scale & flexibility: KM terminals & assets refined products terminals Colonial local refineries & processing Explorer 4
Slide 31: CO2 Segment Consistently Generates Free Cash Flow
CO2 Segment Consistently Generates Free Cash Flow Low cash cost structure yields healthy margins through multiple commodity price cycles OIL & GAS CASH OPERATING COSTS & AVG. PRICE CO2 SEGMENT FREE CASH FLOW $ millions $ per net barrel Cash costs Avg. realized oil price FCF Capex Acquisitions Adj. S
Slide 32: Non-GAAP Financial Measures & Reconciliations
Non-GAAP Financial Measures & Reconciliations Defined Terms Reconciliations for the historical periods 32
Slide 33: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures We use the non-GAAP financial measures of Adjusted Earnings and Distributable Cash Flow (or DCF), both in the aggregate and per share for each; Adjusted Segment EBDA; Adjusted EBITDA; Net Debt; Net Debt to Adjusted EBITDA; Project EBITDA; Free Cash Flow; and CO2 Se
Slide 34: Use of Non-GAAP Financial Measures (Continued)
Use of Non-GAAP Financial Measures (Continued) Adjusted Segment EBDA is calculated by adjusting segment earnings before DD&A and amortization of excess cost of equity investments (Segment EBDA) for Certain Items attributable to the segment. Adjusted Segment EBDA is used by management in its analysis
Slide 35: GAAP Reconciliations
GAAP Reconciliations in millions 2021 2020 Change Budget Actual $ % Net income attributable to Kinder Morgan, Inc. (GAAP) $ 2,109 $ 119 $ 1,990 NM Total Certain Items (11) 1,892 (1,903) (101%) Adjusted Earnings(a) 2,098 2,011 $ 87 4% DD&A and amortization of excess cost of equity investments for DCF
Slide 36: GAAP Reconciliations
GAAP Reconciliations $ in millions 2020 Certain Items in Segment Adjusted Adjusted EBDA Segment Segment Reconciliation of Adjusted Segment EBDA (GAAP) EBDA EBDA Certain Items 2020 Natural Gas Pipelines $3,483 $983 $4,466 Fair value amortization $ (21) Products Pipelines 977 50 1,027 Legal, environme
Slide 37: GAAP Reconciliations
GAAP Reconciliations $ in millions Reconciliation of DD&A and amortization of excess cost of equity investments for DCF 2020 Reconciliation of income tax expense for DCF 2020 Depreciation, depletion and amortization (GAAP) ($2,164) Income tax expense (GAAP) $ (481) Amortization of excess cost of equ
Slide 38: Reconciliations of KMI FCF & CO2 Segment FCF
Reconciliations of KMI FCF & CO2 Segment FCF $ in millions a) Includes dividends paid for the preferred shares for the years ended 2016, 2017, and 2018. b) Includes sustaining and expansion capital expenditures. 38
Kinder Morgan — Investor Presentation (February 2021) on 6ix