UBS 011 Natural Gas, Electric Power and Coal Conference David Kinder VP Corporate Development & Treasurer March 3, 011
Forward-Looking Statements This presentation contains forward looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. In particular, statements, express or implied, concerning future actions, conditions or events, future operating results or the ability to generate revenues, income or cash flow or to make distributions are forward-looking statements. Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future results of operations of Kinder Morgan Energy Partners, L.P., Kinder Morgan Management, LLC and Kinder Morgan, Inc. may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond Kinder Morgan's ability to control or predict. These statements are necessarily based upon various assumptions involving judgments with respect to the future, including, among others, the ability to achieve synergies and revenue growth; national, international, regional and local economic, competitive and regulatory conditions and developments; technological developments; capital and credit markets conditions; inflation rates; interest rates; the political and economic stability of oil producing nations; energy markets; weather conditions; environmental conditions; business and regulatory or legal decisions; the pace of deregulation of retail natural gas and electricity and certain agricultural products; the timing and success of business development efforts; terrorism; and other uncertainties. There is no assurance that any of the actions, events or results of the forward-looking statements will occur, or if any of them do, what impact they will have on our results of operations or financial condition. Because of these uncertainties, you are cautioned not to put undue reliance on any forward-looking statement.
Use of Non-GAAP Financial Measures The non-generally accepted accounting principles ("non-gaap") financial measures of distributable cash flow before certain items (both in the aggregate and per unit), segment earnings before depreciation, depletion, amortization and amortization of excess cost of equity investments ("DD&A") and certain items, segment distributable cash flow before certain items, and earnings before interest, taxes and DD&A ("EBITDA") before certain items are included in this presentation. Our non-gaap financial measures should not be considered as alternatives to GAAP measures such as net income or any other GAAP measure of liquidity or financial performance. Distributable cash flow before certain items and EBITDA before certain items are significant metrics used by us and by external users of our financial statements, such as investors, research analysts, commercial banks and others, to compare basic cash flows generated by us to the cash distributions we expect to pay our unitholders on an ongoing basis. Management uses these metrics to evaluate our overall performance. Distributable cash flow before certain items also allows management to simply calculate the coverage ratio of estimated ongoing cash flows to expected cash distributions. Distributable cash flow before certain items and EBITDA before certain items are also important non-gaap financial measures for our unitholders because they serve as indicators of our success in providing a cash return on investment. These financial measures indicate to investors whether or not we typically are generating cash flow at a level that can sustain or support an increase in the quarterly distributions we are paying pursuant to our partnership agreement. Our partnership agreement requires us to distribute all available cash. Distributable cash flow before certain items, EBITDA before certain items and similar measures used by other publicly traded partnerships are also quantitative measures used in the investment community because the value of a unit of such an entity is generally determined by the unit's yield (which in turn is based on the amount of cash distributions the entity pays to a unitholder). The economic substance behind our use of distributable cash flow before certain items and EBITDA before certain items is to measure and estimate the ability of our assets to generate cash flows sufficient to make distributions to our investors. We define distributable cash flow before certain items to be limited partners' pretax income before certain items and DD&A, less cash taxes paid and sustaining capital expenditures for KMP, plus DD&A less sustaining capital expenditures for Rockies Express and Midcontinent Express, our equity method investees, less equity earnings plus cash distributions received for Express and Endeavor, two additional equity investees. Distributable cash flow before certain items per unit is distributable cash flow before certain items divided by average outstanding units. Segment distributable cash flow before certain items is segment earnings before certain items and DD&A less sustaining capital expenditures. In certain instances to calculate segment distributable cash flow, we also add DD&A less sustaining capital expenditures for Rockies Express and Midcontinent Express, our equity method investees. We define EBITDA before certain items as pretax income before certain items, plus interest expense and DD&A, including the DD&A of REX and MEP, our equity method investees. 3
Use of Non-GAAP Financial Measures Cont d "Certain items" are items that are required by GAAP to be reflected in net income, but typically either (1) do not have a cash impact, for example, goodwill impairments, allocated compensation for which we will never be responsible, and results from assets prior to our ownership that are required to be reflected in our results due to accounting rules regarding entities under common control, or () by their nature are separately identifiable from our normal business operations and in our view are likely to occur only sporadically, for example legal settlements, hurricane impacts and casualty losses. Management uses this measure and believes it is important to users of our financial statements because it believes the measure more effectively reflects our business' ongoing cash generation capacity than a similar measure with the certain items included. For similar reasons, management uses segment earnings before DD&A and certain items and segment distributable cash flow before certain items in its analysis of segment performance and managing our business. We believe segment earnings before DD&A and certain items and segment distributable cash flow before certain items are significant performance metrics because they enable us and external users of our financial statements to better understand the ability of our segments to generate cash on an ongoing basis. We believe they are useful metrics to investors because they are measures that management believes are important and that our chief operating decision makers use for purposes of making decisions about allocating resources to our segments and assessing the segments' respective performance. We believe the GAAP measure most directly comparable to distributable cash flow before certain items and to EBITDA before certain items is net income. Segment earnings before DD&A is the GAAP measure most directly comparable to segment earnings before DD&A and certain items and segment distributable cash flow before certain items. Our non-gaap measures described above should not be considered as an alternative to GAAP net income, segment earnings before DD&A or any other GAAP measure. Distributable cash flow before certain items, segment earnings before DD&A and certain items, segment distributable cash flow before certain items and EBITDA before certain items are not financial measures in accordance with GAAP and have important limitations as analytical tools. You should not consider any of these non-gaap measures in isolation or as a substitute for an analysis of our results as reported under GAAP. Because distributable cash flow before certain items and EBITDA before certain items exclude some but not all items that affect net income and because these measures are defined differently by different companies in our industry, our distributable cash flow before certain items and EBITDA before certain items may not be comparable to similarly titled measures of other companies. Segment earnings before DD&A and certain items and segment distributable cash flow have similar limitations. Management compensates for the limitations of these non-gaap measures by reviewing our comparable GAAP measures, understanding the differences between the measures and taking this information into account in its analysis and its decision making processes. A reconciliation of these measures to the most comparable GAAP measures is provided on our website at: http://www.kindermorgan.com/investor/presentations/. 4
Kinder Morgan: Three Securities Kinder Morgan Energy Partners, L.P. Market Equity $.7B (a) Debt 11.4B (b) Enterprise Value $34.1B LP & GP Distributions (e) $1.3B Kinder Morgan, Inc. Market Equity $1.6B (f) Debt 3.B (g) Enterprise Value $4.8B 011E LP Distribution per Unit 011E Total Distributions $4.60 (c) $.6B (d) 011E Dividend per Share 011E Total Dividends $1.16 (h) $80MM (h) Distributions in additional i-units / shares Cash distributions KMR (LLC) 94 million shares (a) KMP (Partnership) 4 million units (a) KMI (Inc.) 707 million shares (f) 13MM 81MM 0MM MM 110MM (16%) 340MM (48%) 57MM (36%) KMI Public Float KMI Public Float Sponsors Management / Original S/H (a) As of /8/011; KMP market equity based on ~4 million common units (includes 5.3 million Class B units owned by Kinder Morgan, Inc.; Class B units are unlisted KMP common units) at a price of $73.65, and ~94 million KMR shares at a price of $65.61 (b) Debt balance as of 1/31/010, excludes the fair value of interest rate swaps, net of cash (c) The estimate of limited partner cash distributions per unit declared by KMP for 011 (d) The estimate of total distributions paid by KMP to the LPs and GP for 011 (e) The estimate of total cash distributions received by KMI from KMP for 011 (f) As of /8/011; KMI market equity based on 707 million shares at a price of $30.50 (g) Debt of KMI and its subsidiaries, excluding KMP and its subsidiaries as of 1/31/010; excludes the fair value of interest rate swaps, purchase accounting and Kinder Morgan G.P., Inc. s $100 million of Series A Fixed-to-Floating Rate Term Cumulative Preferred Stock due 057, net of cash (h) The estimated dividend per share and in total paid by KMI in 011 5
KMR 101 (a) KMR is KMP KMR shares are pari passu with KMP units KMR dividend equal to KMP cash distribution, but paid in additional shares; effectively a dividend reinvestment program (b) Like KMP units, KMR shares are tax efficient but with simplified tax reporting (no K-1s, UBTI) KMR is a significant entity KMR market cap = $6.1 billion, >5% of total KMP capitalization (c) ~$0 million in daily liquidity KMR has generated strong returns for investors and trades at a significant discount to KMP 14% compound annual total return since 01IPO vs. 15% for KMP Current 11% discount compared to historical 7% discount since IPO Insiders prefer KMR Management has purchased KMR at a rate of over :1 vs KMP, or almost 7:1 excluding one transaction (d) KMR Discount to KMP Management Purchases of KMR / KMP (d) (a) All figures through / as of /8/011; see footnotes on slide 10 for explanation of total return calculations (b) Calculation of share dividend: KMP quarterly cash distribution per unit KMR 10-day avg price prior to x-date = fractional share paid for every KMR share owned, e.g. $1.13 $64.969 = 0.017393; example reflects actual KMR share dividend calculated for 4Q 010, paid on /14/011; refer to KMP 010 10-K for more information (c) KMR market equity based on 94 million KMR shares outstanding (includes /14/011 KMR share dividend) (d) Purchase of KMR shares and KMP units by directors and officers of KMR/KMP since the KMR IPO in 001, as reported in SEC Form 4 filings; 7:1 ratio excludes one open market purchase of KMP units relating to an arrangement requiring cash distributions for payment of interest 10% 5% 0% -5% -10% -15% -0% IPO 5/14/001 Dec-00 Dec-0 Dec-04 Dec-06 Dec-08 Dec-10 (millions) $10 $8 $6 $4 $ $0 $8.1 KMR $4.5 KMP 6
The Kinder Morgan Strategy Focus on stable fee-based assets that are core to North American energy infrastructure Market leader in each of our businesses Control costs It s the investors money, not management s treat it that way Leverage asset footprint to seek attractive capital investment opportunities, both expansion and acquisition Since 1997, KMP has completed $10.4 billion in acquisitions and $1.0 billion in greenfield / expansion projects Maintaining a strong balance sheet is paramount Enables continued access to capital markets to grow the business KMP accessed capital markets for over $.5 billion since inception Keep it simple Same Strategy Since Inception 7
Kinder Morgan Asset Footprint Largest independent transporter of petroleum products in the U.S. Transport ~1.9MMBbl/d (a) nd largest transporter of natural gas in the U.S. Own an interest in / operate over 4,000 miles of interstate / intrastate pipeline Connected to many important natural gas shale plays including Eagle Ford, Haynesville, Fayetteville and Barnett Largest provider of contracted natural gas treating services in U.S. Largest transporter of CO in the U.S. Transport ~1.3 Bcf/d of CO nd largest oil producer in Texas Produce ~54 MBbl/d of crude oil gross (~36 MBbl/d net) Largest independent terminal operator in the U.S. Own an interest in or operate over 180 liquids / dry bulk terminals (b) 107 MMBbls domestic liquids capacity (c) Handled ~9 million tons of dry bulk products in 010 Largest handler of petcoke in U.S. Only Oilsands pipeline serving the West Coast TMPL transports ~300 MBbl/d to Vancouver / Washington state (a) 011 budget (b) Excludes 33 transload facilities (c) Includes leased capacity Trans Mountain Pacific Puget Northern TransColorado 3 Platte CALNEV FEP 3 Pacific NGPL KMCO Katz SACROC KinderHawk ESPL MEP Claytonville Wink Cypress KMTejas Yates 4 KMTP 9 5 KMLP Eagle Ford NATURAL GAS PIPELINES NGPL GAS STORAGE (KMI) CO PIPELINES PETROLEUM PIPELINES NATURAL GAS STORAGE PRODUCTS PIPELINES CO OIL FIELDS NATURAL GAS PROCESSING PRODUCTS PIPELINES TERMINALS CRUDE OIL PIPELINES (,3,8) PETROLEUM PIPELINES TERMINALS INDICATES NUMBER OF FACILITIES IN AREA GAS TREATERS TRANSMIX FACILITIES TERMINALS KM HEADQUARTERS NGPL (KMI) REX Express Cochin KMIGT Trailblazer Horizon 4 REX 3 3 Plantation 7 3 3 4 Central Florida 4 8
Delivering 14 Years of Consistent Growth $3,000 $,500 $,000 $1,500 $1,000 $500 $0 KMP Total Distributions (GP + LP) ($MM) GP $17 $30 LP $87 $701 $548 $333 $153 $198 $1,469 $1,65 $1,16 $978 $1,854 $,13 $,648 $,40 (a) 1996 1997 1998 1999 000 001 00 003 004 005 006 007 008 009 010 011E 4.5x 4.0x 3.5x 3.0x.5x.0x 1.5x 1.0x 0.5x 0.0x 3.5x 3.x 3.9x 3.9x 3.5x 3.7x 3.8x 3.5x $5.00 $4.00 $3.00 $.00 $1.00 $0.00 KMP Net Debt to EBITDA (c) 3.x KMP Annual LP Distribution Per Unit (b) $1.4 $1.43 $1.71 $0.94 $0.63 $4.60 $4.40 $4.0 $4.0 $3.48 $3.13 $3.6 $.87 $.63 $.44 $.15 1996 1997 1998 1999 000 001 00 003 004 005 006 007 008 009 010 011E 3.3x 3.4x 3.4x 3.8x 3.7x 3.6x 1997 1998 1999 000 001 00 003 004 005 006 007 008 009 010 011E (a) In 010, total distributions paid were $,50 million. These distributions would have been $,40 million ($170 million greater) if all distributions paid in August 010 had been cash from operations, rather than a portion being a distribution to the LPs of cash from interim capital transactions; the GP receives only % of distributions of cash from interim capital transactions (b) Annual LP distribution, rounded to decimals where applicable (c) Debt is net of cash and excludes fair value of interest rate swaps 9
Significant Historical Returns (a) KMP: 6% CAGR Since 96 (b) KMR: 14% CAGR Since 01 (c) $3,000 $,500 Dollars KMP = $,781 $450 $375 Dollars AMZ (d) = $404 KMR = $376 $,000 $300 $1,500 $5 $1,000 AMZ (d) = $938 $150 $500 S&P 500 = $30 $0 Dec-96 Dec-98 Dec-00 Dec-0 Dec-04 Dec-06 Dec-08 Dec-10 $75 S&P 500 = $18 IPO 14-May-001 $0 Dec-00 Dec-01 Dec-0 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Total Return 010 -year (e) 3-year (e) 5-year (e) KMP 3% 78% 61% 108% KMR 3% 97% 60% 114% S&P 500 Index 15% 46% -8% 1% Alerian MLP Index 36% 140% 5% 115% MSCI REIT Index 8% 64% % 16% Philadelphia UTY Index 6% 16% -15% 1% Source: Bloomberg (a) Total returns calculated on daily basis through /8/011, except where noted; assume dividends / distributions reinvested in index / stock / unit (b) Start date 1/31/1996 (c) Start date 5/14/001; KMR initial public offering; KMP CAGR over same period is 15% (d) Alerian MLP index (e) Calculated through 1/31/010, start dates for -year, 3-year and 5-year return calculations are 1/31/008, 1/9/007 and 1/31/005, respectively 10
Promises Made, Promises Kept Promises Made KMP Budgeted Distribution per unit: 000: $1.60 001: $1.95 00: $.40 003: $.63 004: $.84 005: $3.13 006: $3.8 007: $3.44 008: $4.0 009: $4.0 010: $4.40 Promises Kept KMP Actual Distribution per unit: 000: $1.71 001: $.15 00: $.435 003: $.63 004: $.87 005: $3.13 006: $3.6 007: $3.48 008: $4.0 009: $4.0 010: $4.40 Missed LP distribution target 1 time in past 11 years 11
Kinder Morgan 011 Goals KMP Distribution Target $4.60 per unit (4.5% growth) Excess coverage of ~$37 million KMI Dividend Target $1.16 per share (a) $80MM in total 011 dividends Maintain Solid Balance Sheet Yr-end 011 debt / EBITDA = 3.6x Expansions / acquisitions financed 50% equity, 50% debt Maintain Solid Balance Sheet Yr-end 011 debt / distributions received less G&A =.3x Operate all of our assets in a safe, compliant and environmentally sound manner (a) KMI expects to pay an initial quarterly dividend of $0.9 per share of common stock, which equates to $1.16 per share on an annual basis, and anticipates that the first dividend will be paid in May 011 that dividend will be prorated for the portion of 1Q 011 that KMI is public 1
KMP
Well-Diversified Cash Flow CO $1,098MM segment EBDA (a) 8% CO transport and sales 7% oil production related Production hedged (b) : 011=79% ($69/Bbl) (c) 01=53% ($87) 013=34% ($9) 014=16% ($91) 015=% ($94) Terminals $713MM segment EBDA (a) 56% Liquids 44% Bulk KMP Segment Earnings before DD&A 011E = $3.8 billion (a,d) 9% 19% 5% 8% 19% Kinder Morgan Canada $193MM segment EBDA (a) Natural Gas Pipelines $1,079MM segment EBDA (a,d) 50% Interstate 50% Intrastate (e) Products Pipelines $730MM segment EBDA (a) 56% Pipelines 39% Associated Terminals 5% Transmix (a) Budgeted 011 segment earnings before DD&A excluding certain items (b) Percent of estimated net crude oil and heavy natural gas liquids production (c) 011 budget assumes an $89/Bbl price on unhedged barrels (d) Includes JV depreciation for REX, MEP, FEP and KinderHawk (e) Includes upstream segment 14
Stable Asset Base Volume Security Remaining Contract Life Pricing Security Regulatory Security Commodity Price Exposure Natural Gas Pipelines Interstate: virtually all take or pay Intrastate: ~75% take or pay (a) Products Pipelines Volume based CO S&T: primarily minimum volume guarantee Transportation: 9.0 yrs Not applicable S&T: 4.7 yrs Interstate: primarily fixed based on contract Intrastate: primarily fixed margin Interstate: regulatory return mitigates downside; may receive higher recourse rates for increased costs Intrastate: essentially market-based Interstate: no direct Intrastate: limited PPI +.65% Pipeline: regulatory return mitigates downside Terminals & transmix: not price regulated (d) No direct S&T: 76% fixed O&G: volumes 79% hedged (c) Primarily unregulated Terminals Liquids: take or pay Bulk: minimum volume guarantee, requirements Liquids: 4.3 yrs Bulk: 3. yrs Based on contract; typically fixed or tied to PPI Not price regulated Kinder Morgan Canada No volume risk 1.4 yrs (b) Fixed based on toll settlement Regulatory return mitigates downside S&T: 4% tied to oil price O&G: volumes No direct No direct 1% unhedged (c) Barriers to Entry High High High High High (a) Transportation for intrastate pipelines includes term purchase and sale portfolio (b) Assumes 1-year rate settlement on Trans Mountain (c) Percent of 011 expected production, includes heavier NGL components (C4+) (d) Terminals are not FERC regulated, except portion of CALNEV 15
$1.4 Billion 011 Growth Expenditures Planned KMP Growth Expenditures 011E = $1.4 billion (a,b,c) CO Natural Gas Pipelines (a) 34% 31% Terminals (b) 4% 11% Products Pipelines (b,c) (a) Includes equity contributions to joint ventures (b) Includes acquisitions; $174 million for Terminals and $50 million for Products Pipelines (c) Includes growth capital expenditures for Kinder Morgan Canada of $3.0 million 16
011 Financing Plans ($ in millions) 011 Budget Equity Secondary offerings / ATM $70 KMR 43 Total equity $70 Debt Long-term debt issuance $1,700 Decrease in revolver (a) (35) Debt maturity (700) Incremental debt $675 (a) Excludes any changes in working capital 17
Sources Of Future Growth Natural Gas Products Pipelines / Terminals CO Kinder Morgan Canada Growth Drivers Cheap, abundant, domestic and clean natural gas is the logical fuel of choice Shifting supply from multiple basins Diversity of product specs Two-fold increase in use of renewable fuels through 0 (a) Customers desire for optionality at terminal Billions of barrels of domestic oil still in place Continuing technology improvements Demand for CO Move Canadian crude and refined products to West Coast KM Opportunity Leverage Footprint Pipeline / storage expansions and extensions (e.g. Eagle Ford) Acquisitions (e.g. KinderHawk) Greenfield development (e.g. FEP) Expansions and higher rates at well-located, high-connectivity terminals Ethanol / biofuel expansion Buy terminals from mom and pop owners and from majors Continue buildout of SACROC / Yates / Katz New CO S&T contracts; potential expansions Potential oilfield acquisitions Flexibility for staged expansions (a) RFS (U.S. Renewable Fuels Standard) requires increase from 13 Bgal/yr in 010 to 36 Bgal/yr in 0 18
Over $B Of Growth Capital Invested (a,b) ($ in billions) Total Invested by Type (a,b) Over $11 Billion Invested in Last 4 Years (a) $15 $3.5 $3.0 $.5 $.0 JV Contributions Expansion Acquisition $.9 $.4 $3.3 $.5 $1 $9 $6 $3 $0 $.7 $9.3 $10.4 Expansions Acquisitions $1.5 $1.4 Total Invested by Segment (a,b) $1.0 $0.5 $10 $8 $6 $.7 $- 007 008 009 010 011E (a) Includes equity contributions to joint ventures (b) 1998 010, does not include 011 budget $4 $ $0 $6. Natural Gas Pipelines $4.3 $4.1 $3.8 Products Pipelines $1.3 Terminals CO Kinder Morgan Canada 19
Balance Sheet Remains Solid (a) ($ in millions) Credit Summary Debt / EBITDA (b,c) 3.7x (d) EBITDA / Interest (c) 6.1x L-T Debt Rating Baa / BBB / BBB (e) Revolver Capacity Total Bank Credit $,000 Less: Borrowings Outstanding (5) Letters of Credit (37) Excess Capacity $1,41 Long-Term Debt Maturities (f) 011 $707 01 $957 (g) 013 $507 014 $501 015 $300 (a) All figures as of 1/31/010 (b) Debt balance excludes fair value of interest rate swaps and is net of cash (c) EBITDA and interest are trailing 1 months, includes our proportionate share of REX, MEP and KinderHawk DD&A (d) Debt/EBITDA at 1/31/010 reflects a partial contribution from the 5/1/010 acquisition of a 50% interest in the KinderHawk Haynesville JV (e) As rated by Moody s, S&P and Fitch, respectively (f) Maturities of long-term debt; excludes commercial paper (g) Excludes 10-yr bond with optional put in 01 (stated maturity 019) 0
Focused on Distribution Growth Annual LP Distribution Per Unit (b) History of Delivering Distribution Growth (a) : 1-year growth = 4.8% 3-year growth = 8.1% 5-year growth = 7.0% $1.71 $1.4 $1.4 $0.94 $0.63 $3.48 $3.6 $3.13 $.87 $.63 $.44 $.15 $4.60 $4.40 $4.0 $4.0 1996 1997 1998 1999 000 001 00 003 004 005 006 007 008 009 010 011E Target 5% LP distribution growth going forward (a) Compound annual growth in KMP LP distributions per unit for the 1-year, 3-year and 5-year periods ending 1/31/010 (b) Annual LP distribution, rounded to decimals where applicable 1
KMI
Overview Interests in KMP (b) General Partner interest receives incentive distributions from KMP KMI owns ~11% of total limited partner interests KMI Total Cash Receipts 011E = $1.36 billion (a) GP Interest 86% NGPL A major interstate natural gas pipeline and one of the largest natural gas storage operators in the U.S. KMI owns a 0% equity interest and operates the pipeline FERC regulated Primary customers are in Chicago NGPL % LP Interest 1% Limited capital expenditures above KMP level Post the IPO, new public stockholders own ~16% of KMI, the sponsors own ~48%, and Rich Kinder, other management and original stockholders own ~36% In 011, KMI is projected to receive $1.36 billion in distributions, and after paying cash taxes, cash interest and G&A, is projected to have $80 million to distribute (a) 011 budget (b) Includes: (i) general partner interest, (ii) 1.7 million KMP units and (iii) 13.1 million KMR shares 3
Growth In KMP Distributions Leads To KMI Growth Hypothetical KMP Distributions of Cash from Operations Received Total Hypothetical Distributions to KMI ($ in millions) $1,500 $1,50 $1,000 $750 $500 $50 LP Interests GP Interest Additional 14MM units $1,111 $1,179 $1,48 $1,316 $974 $1,035 $1,097 $1,158 $1,0 $1,81 $53 $1,369 with incremental 14MM units outstanding (+$53MM) $1,384 $1,453 $0 $137 $144 $151 $158 $165 $17 Hypothetical Annualized $4.00 Distribution per Unit $4.0 $4.40 $4.60 $4.80 $5.00 010 011E A 4.5% increase in the annualized LP distribution per unit from $4.40 to $4.60 with the budgeted 14MM unit increase in KMP units outstanding results in an increase of 9.7%, or $11MM, in total distributions to KMI in 011 4
Liquidity Summary (a) ($ in millions) Credit Summary Net Debt Net Debt / Distributions Received Less G&A L-T Debt Rating $3,195 (a).4x (b) Ba1 / BB / BB+ (c) Revolver Capacity Total Bank Credit $1,000 Less: Revolver Drawn (377) (d) Letters of Credit (41) Excess Capacity $58 Long-Term Debt Maturities (a) 011 --- (e) 01 $839 013 --- 014 --- 015 $50 (a) As of 1/31/010; represents debt of KMI s subsidiary, Kinder Morgan Kansas, Inc. excluding the fair value of interest rate swaps, purchase accounting and Kinder Morgan G.P., Inc. s $100 million of Series A Fixed-to-Floating Rate Term Cumulative Preferred Stock due 057, net of cash (b) Calculation: net debt (as of and as calculated in footnote (a) above) 011 estimate of distributions received less G&A (c) Kinder Morgan Kansas, Inc. as rated by Moody s, S&P and Fitch, respectively (d) 1/31/10, adjusted for repayment of $750MM 1/5/011 maturity referred to below (e) Remaining 011 maturities; $750MM maturity was refinanced 1/5/011 with proceeds from 1/0/010 $750MM bond offering 5
KMP Drives KMI Growth KMP Cash Distributions Received by KMI Substantial cash flow Minimal capital expenditures at KMI level Strong balance sheet Growing distributions and investment at KMP drive KMI dividend growth GP LP Units Owned $3 $4 $31 $57 $55 $90 $1,079 $1,0 $1,330 $68 $1,169 $63 $1,054 $574 $940 $477 $783 $406 $333 $58 $536 $47 $45 $385 $33 $19 $59 $186 $95 $34 $59 $74 $83 $9 $10 $96 $100 $119 $139 $148 $161 1996 1997 1998 1999 000 001 00 003 004 005 006 007 008 009 010 011E (a) 5% LP distribution growth generates 10-11% growth at KMI (a) In 010, total distributions paid to KMI (GP + LP) were $1,03 million. These distributions to KMI would have been $1,0 million ($170 million greater) if all distributions paid in August 010 had been cash from operations, rather than a portion being a distribution to the LPs of cash from interim capital transactions; the GP receives only % of distributions of cash from interim capital transactions 6
KMP Risks Regulatory Pacific Products Pipeline FERC/CPUC cases Periodic rate reviews Unexpected policy changes Crude Oil Production Volumes Crude Oil Prices 011 budget assumes $89/Bbl realized price on unhedged barrels 011 sensitivity is ~$5.5 million DCF per $1/Bbl change in crude oil prices Economically Sensitive Businesses (e.g., steel terminals) Environmental Terrorism Interest Rates ~50% floating rate debt The full-year impact of a 100-bp increase in rates equates to an approximate $54 million increase in interest expense (a) (a) As of 1/31/010 7
KMI, KMP & KMR: Attractive Value Proposition Unparalleled asset footprint Established track record Industry leader in all business segments Experienced management team Supportive general partner Transparency to investors Attractive returns driven by combination of yield plus growth 8