Kinder Morgan Q4 2024 Earnings Report

Venus Concept EPS Results

• Actual EPS: $0.32
• Consensus EPS: $0.33
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: N/A

Venus Concept Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $4.13 billion
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Venus Concept Announcement Details

• Quarter: Q4 2024
• Date: 1/22/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, January 22, 2025
• Conference Call Time: 4:30PM ET

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Venus Concept Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Please note that today's conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to Mr.

[Operator]

Rich Kinder, Executive Chairman of Kinder Morgan. Sir, you may begin.

[Richard Kinder, Executive Chairman at Kinder Morgan]

Thank you, Michelle. And before we begin, as we always do, I'd like to remind you that KMI's earnings release today and this call include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities and Exchange Act of 1934 as well as certain non GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosure on forward looking statements and use of non GAAP financial measures set forth at the end of our earnings release as well as review our latest filings with the SEC for important material assumptions, expectations and risk factors that may cause actual results to differ materially from those anticipated and described in such forward looking statements. I usually kick off these earnings calls with an overview of developments present and future in the midstream energy space with special emphasis on the various growth drivers for natural gas demand. These drivers are creating enormous opportunities for expansion of the natural gas pipeline and storage system across America and especially in the Gulf Coast and Southeast regions.

[Richard Kinder, Executive Chairman at Kinder Morgan]

At the beginning of this new calendar year, I thought it might be appropriate to be a little more specific about Kinder Morgan's response to those opportunities. In the last few months, we have announced the FID of 4 new major projects, the expansion of our GCX system out of the Permian Basin, our SS4 expansion on our Southern Natural Gas System, our Mississippi crossing line which will serve SS4 and other increased demand in the Southeast and our Trident line which we announced today which will serve growing demand in the Southeast Texas region including the new Golden Pass LNG facility. Altogether, these new projects will entail capital expenditures net to us in excess of $5,000,000,000 and will have the capacity to transport over 5 Bcf a day of natural gas. And all of these projects I would point out are supported by long term contracts with creditworthy customers almost entirely on the demand side. While for obvious reasons we're not disclosing specific IRR targets for these projects, I know you realize our Board would not have approved without returns that are significantly above our cost of capital.

[Richard Kinder, Executive Chairman at Kinder Morgan]

In addition to these projects, we are seeing other sizable opportunities to grow our business as exemplified by our recently announced Outriggers transaction, which will expand our position in the Bakken. In fact, this is the most exciting time to be in the midstream natural gas market that I've seen in my long decades in this business. We believe that our investments as they come online will drive growth in EBITDA and EPS for years to come. With that, I'll turn it over to Kim.

[Kimberly Dang, CEO at Kinder Morgan]

Okay. Thanks Rich. 2024 was a very good year in terms of our financial performance. We grew EBITDA and EPS and we improved our leverage metrics. And we set the company up for future success, securing commercial contracts to underpin $6,300,000,000 in new expansion projects that will add growth for the future.

[Kimberly Dang, CEO at Kinder Morgan]

Today, we announced we're proceeding with the $1,700,000,000 Trident project as Rich just said. And we also announced today that we successfully secured contracts to upsize our previously announced MSX project by 300,000,000 cubic feet a day to 1.8 Bcf a day. For the quarter, we added $3,500,000,000 in expansion projects to the backlog, which is primarily comprised of Trident and MSX. For the year, we have added $6,300,000,000 in projects to the backlog and placed $1,200,000,000 of projects in service, growing the backlog from $3,000,000,000 at the beginning at the end of last year to $8,100,000,000 today. These projects will pay benefits for many years to come.

[Kimberly Dang, CEO at Kinder Morgan]

As a result of the projects added to the backlog, we now expect to spend approximately $2,500,000,000 per year in expansion CapEx for the next several years, up from our prior estimate of approximately $2,000,000,000 per year. During the quarter, we also agreed to purchase a natural gas gathering and processing system in the Bakken, which is complementary to our existing Bakken assets for $640,000,000 dollars The system is backed by long term contracts from creditworthy counterparties. On a GAAP basis, the purchase price translates into an 8 times multiple. So based on the cash we receive in 2025, the multiple is approximately 6 times. In addition, in the future we expect the acquisition to reduce CapEx that we would have otherwise had to spend to expand for our customers.

[Kimberly Dang, CEO at Kinder Morgan]

As we look to the future, we continue to see additional growth opportunities in natural gas between LNG exports to Mexico, power and industrial growth. Our internal number for growth in the overall natural gas business is roughly 28 Bcf a day of growth between now and 2,030. Our assets are well positioned to serve this growth. We currently serve approximately 45% of the export LNG demand, 50% of the exports to Mexico and 45% of the power demand in the combined region of the Desert Southwest, Texas and the Southeast. 2024 was a successful year that brought numerous opportunities and nice growth and we're looking forward to further growth and capitalizing on additional opportunities in 20 25.

[Kimberly Dang, CEO at Kinder Morgan]

And with that, I'll turn it over to Tom to give you more details on the business performance.

[Tom Martin, President at Kinder Morgan]

Thanks, Kim. Starting with the Natural Gas Business Unit, transport volumes were essentially unchanged in the quarter versus the Q4 of 2023. Natural gas gathering volumes were down 7% in the quarter compared to the Q4 of 2023 driven by lower Haynesville and Bakken volumes partially offset by higher Eagle Ford volumes. Sequentially, gathering volumes were flat quarter over quarter. For the year, our gathering volumes averaged 8% below our 2024 plan, 6% over 2023.

[Tom Martin, President at Kinder Morgan]

We have budgeted for a 5% increase in gathering volumes in 2025 versus 2024 actuals. We view this slight pullback in gathering volumes to the lower prices as temporary given that higher production volumes will be necessary to meet the demand growth from LNG expected in the second half of twenty twenty five. Looking forward, we continue to see significant incremental project opportunities across our natural gas pipeline network to expand our transportation and storage capabilities in support of the growing natural gas market. On our products pipeline segment, refined products volumes were up 2% and crude and condensate volumes were down 5% in the quarter compared to the Q4 of 2023. For the full year, refined products volumes were down 3% below our plan, but 1% over 2023.

[Tom Martin, President at Kinder Morgan]

We have budgeted for a 1% increase in refined product volumes in 2025 versus 2024 actuals. In December 2024, BP North America exercises unilateral right to extend their contract for 5 years at existing rates for all of the petroleum condensate processing capacity at our facility on the Houston Ship Channel. The extension is recognition of the strategic value of Kinder Morgan's 100,000 barrels per day processing capability at our facility and the locational value of Kinder Morgan's footprint in the area. In our Terminals business segment, our liquids lease capacity remains high at 95%. Though refining cracks and blending margins have softened, they remain constructive and supportive of strong rates and utilization at our key hubs at the Houston Ship Channel and New York Harbor.

[Tom Martin, President at Kinder Morgan]

Our Jones Act tanker fleet is fully leased today, 97% leased through 2025, 94% leased through 2026 assuming likely options are exercised. We have opportunistically chartered a significant percentage of the fleet at higher market rates and extended the average length of firm contract commitments to 4 years. The CO2 segment experienced 3% lower oil production volumes, 4% lower NGL volumes and 3% lower CO2 volumes in the quarter versus the Q4 2023. For the full year, oil volumes were down 6% versus 2023, but within 1% of our budget. With that, I'll turn it over to David Michaels.

[David Michels, VP & CFO at Kinder Morgan]

All right. Thanks, Tom. So for the quarter, we're declaring a dividend of $0.2875 per share, which is $1.15 per share annualized and up 2% from 2023. During the quarter during the Q4, we generated net income attributable to KMI of $667,000,000 or up 12% from the Q4 of 2023. We generated EPS of $0.30 up 11% from last year.

[David Michels, VP & CFO at Kinder Morgan]

And on an adjusted net income basis, which excludes our certain items, we generated $708,000,000 of net income and adjusted EPS of $0.32 Those two items are 12% 14% up from last year, respectively. This year over year growth was driven by a greater contributions from our natural gas products and terminals businesses with the main growth drivers being contributions from our acquired South Texas Midstream assets, which we acquired at the end of 2023, greater contributions from our Texas intrastate natural gas system as well as from natural gas projects that were placed in service. For the full year, we generated EPS of $1.17 which was up 10% over last year and our adjusted EPS was up 7% from last year. As we've messaged for the last two quarters, we finished 2024 a little bit below our budget mainly driven by commodity prices lower than what we had budgeted and lower production from our RNG plants. But despite those headwinds, we still experienced nice growth from 2023.

[David Michels, VP & CFO at Kinder Morgan]

Moving to our balance sheet. We ended the year with $31,700,000,000 of net debt and a 4.0 times net debt to adjusted EBITDA ratio, which is right in the middle of our leverage target range of 3.5 times to 4.5 times. Our net debt decreased $112,000,000 from the beginning of 2024. And here's a high level reconciliation of that change. We generated $5,600,000,000 of cash flow from operations.

[David Michels, VP & CFO at Kinder Morgan]

We spent $2,600,000,000 in dividends. We spent $2,700,000,000 of capital, and that's growth sustaining and our contributions to our joint ventures. And then we had about $200,000,000 of other uses and that gets you pretty close to the $112,000,000 decrease in net debt for the year. For 2025, as we previewed in December, we expect another good year of growth. We expect net income growth of 8% from 2024, EBITDA growth of 4% and adjusted EPS growth of 10%.

[David Michels, VP & CFO at Kinder Morgan]

We also expect to see our balance sheet improve further, ending the year at 3.8 times. As we say in the press release, we'll be publishing our budget materials on February 5, and that will provide more detail behind the summary budget that we provided in December. Our budget does not include the recently announced Outrigger acquisition, which we expect to close in the Q1, and we expect that acquisition to be immediately accretive. And we expect to our year end leverage will remain at 3.8 times even after taking into account that transaction. With that, I'll turn it back to Kim.

[Kimberly Dang, CEO at Kinder Morgan]

Okay. Michelle, if you'll come on, we'll take questions. And if everyone can ask one question and one follow-up, and if you have further questions, please get back in line.

[Operator]

Thank you. Our first caller is Theresa Chen with Barclays. You may go ahead.

[Theresa Chen, MD - Equity Research at Barclays]

Good afternoon and thank you for taking my questions. When we look at the last update at the backlog, including CO2 and GMP, comparing the backlog today, the implied multiple of 6.4x, it's pretty compelling. So for projects like Mississippi Crossing and Trident and future natural gas infrastructure projects, can you talk about the economic moat that you have, competitive moat that you have, the financial considerations and how you can maintain these types of multiples and returns for growth projects under development?

[Kimberly Dang, CEO at Kinder Morgan]

Sure. And let me just say, there's been no change in our return criteria and the way we think about and the way we look at these projects. As you know, required returns, our required return moves around a little bit depending on the risk inherent in the cash flows. And so we do have different returns for different risk projects that make up the overall multiple of the backlog that is less than 6 times. I think that these projects are competitive.

[Kimberly Dang, CEO at Kinder Morgan]

And as you know, we on MSX, we were competing for that project. We also competed on the Trident project with other people that were attempting to build. I do think that having the infrastructure that we have, having the reputation that we have as an operator, and our ability to bring these projects in, in a timely manner, does help us to be successful as we go out and try to get new projects and new business. But this return is consistent with the returns that we have achieved over time on these projects.

[Theresa Chen, MD - Equity Research at Barclays]

Understood. And related to the Outrigger acquisition, can you expound a bit on the strategic rationale behind this and outlook for downstream synergies if Y Grade eventually flows onto Double H once converted to NGL service for example?

[Kimberly Dang, CEO at Kinder Morgan]

Yes. Let me make a couple of comments on that. So there are these assets fit in well with our existing system. So there are potential capital synergies and commercial synergies with our existing assets in this acquisition. At this point in time, we're not quantifying exactly what those are just because those can move around based on a number of different factors including the producers drilling schedule.

[Kimberly Dang, CEO at Kinder Morgan]

But I think that we're in a good position to deliver at least some of those synergies and hopefully we will get significant synergies from that. In terms of downstream synergies, I think that there are some existing contracts in place and we may have a potential for downstream synergies, but I think that will come later in time. There's nothing immediate with respect to downstream synergies.

[Theresa Chen, MD - Equity Research at Barclays]

Got it. Thank you.

[Operator]

Thank you. Our next caller is Manav Gupta with UBS. You may go ahead, sir.

[Manav Gupta, Executive Director at UBS Group]

Good morning. A quick observation. I think on December 9, when you announced your CapEx, you were looking for an adjusted EPS growth of 8% and today it's already 10%. And I'm hoping as the year progresses, this number just moves up. And can you help us understand some of the macro trends or favorable factors, which could help you push even higher than 10% EPS growth in 2025?

[Kimberly Dang, CEO at Kinder Morgan]

Sure. So I think, one, that we have some sensitivity to commodity prices. And currently commodity prices are a little bit higher than what we budgeted. Now there's crude, there's natural gas and then we have some rent sensitivity. And so we've got upside on the first two.

[Kimberly Dang, CEO at Kinder Morgan]

We've got a little bit of downside on the last one. But when you net all those together, today there's some upside on the overall commodity picture. Now it's early in the year and commodity prices can move. And so I don't think you can take that to the bank at this point. The Outrigger acquisition, as David said in his comments, is not in the budget.

[Kimberly Dang, CEO at Kinder Morgan]

And so there's that's going to be accretive and will be a positive versus our budget. There's the potential I think first some upside on the Jones Act tankers that we've got. Right now I think interest expense, the rates that we budgeted are largely in line with where the current market is. So I think there If the prices stay high, I mean, you could see some upside on GMP volumes over time. And if we continue to deplete the inventory that's in storage as a result of winter weather, I think the winter weather, we probably did a little bit better than what we budgeted with respect to winter weather.

[Kimberly Dang, CEO at Kinder Morgan]

But again, it's early in the year. There's a lot of different moving parts in our budget. And so I'd just say at this point in time, we are not changing our guidance. We're sticking to our budget, but it is a nice start to the year.

[Manav Gupta, Executive Director at UBS Group]

Perfect. My quick follow-up is, it looks like we have a new administration, which is really pushing the AI goals here, dollars 500,000,000,000 investment announced yesterday. And I'm trying to understand, in terms of this execution, are we still in very early stages of this positive macro trend where this trend could continue for like 5, 7, 8 or 9 years as these data centers come on and the demand for power just keeps rising and how Kyndra fits into that? Thank you.

[Kimberly Dang, CEO at Kinder Morgan]

Yes. I think we are early in the data center trend and the power that's going to be needed there. And so I think that the encouragement that this administration has given on the data center development, their desire to see American Energy do well. I think all plays into a nice long term trend for natural gas demand. So I said in my opening comments, we think the natural gas demand is going to grow by 28 Bcf a day between now and 2,030 and part of that is power demand.

[Kimberly Dang, CEO at Kinder Morgan]

And those numbers though we only have power demand up about 3 Bcf a day. And I think there are a lot of numbers that are much higher than that 3 Bcf a day in terms of power demand. I've seen numbers at 10 Bcf a day. And so I think there is a potential for upside above the 28 Bcf of growth that we are projecting.

[Manav Gupta, Executive Director at UBS Group]

Thank you.

[Operator]

Thank you. Our next caller is Michael Blum with Wells Fargo. You may go ahead, sir.

[Michael Blum, Managing Director at Wells Fargo Securities]

Thanks. Good afternoon, everyone. So maybe staying on President Trump's recent AI infrastructure announcement, it does one of the projects involved there seems like it's going to be a large data center campus in Abilene, Texas, which if I'm not mistaken, but

[Kimberly Dang, CEO at Kinder Morgan]

hang on. Can

[Michael Blum, Managing Director at Wells Fargo Securities]

you talk? Sorry, can you hear me?

[Kimberly Dang, CEO at Kinder Morgan]

Yes. Now I can. You guys hear me?

[Michael Blum, Managing Director at Wells Fargo Securities]

Okay, great. So sorry about that. So you hear me okay?

[Kimberly Dang, CEO at Kinder Morgan]

Yes. Something in Texas.

[Michael Blum, Managing Director at Wells Fargo Securities]

Okay. Trump's AI data center announcement includes a large data center in Abilene, Texas, so which I think is pretty close to some of your pipelines. I'm wondering if there's an opportunity there for you and do you have availability to address it?

[Sital Mody, President - Natural Gas Pipelines at Kinder Morgan]

So Michael, this is Stifel. 1, it's a good announcement. Our intrastate footprint or NGPL footprint, it's all in and around the area. I think it's an opportunity. But once again, there's a lot of folks that are going to be chasing the opportunity.

[Sital Mody, President - Natural Gas Pipelines at Kinder Morgan]

So I think we're well positioned to partake in some of that growth.

[Michael Blum, Managing Director at Wells Fargo Securities]

Okay, great. And then, I also want to ask about the open season on Kindermore, Louisiana, like a Texas header project. Can you just tell us how that's progressing and the potential scope of that project? Thanks.

[Sital Mody, President - Natural Gas Pipelines at Kinder Morgan]

Absolutely. So part of one, I think the open season closed and we do have binding commitments to build that segment. Part of the overall strategy here is there is a lot of interconnectivity needed with all the gas coming from multiple directions. And so I think this is a good platform for us to establish that kind of initial leg with the prospective possibility of extending that into the Louisiana corridor. And so I think that when you think about it, this first phase here is contracted and ready to go and this will position us well for future growth.

[Kimberly Dang, CEO at Kinder Morgan]

And let me just further on that. The existing header is in the TriNet project in terms of the economics that we get from that. And then future, it's there we have future expansion potential, but that would be another project that we would get approved at that time.

[Sital Mody, President - Natural Gas Pipelines at Kinder Morgan]

Yes. So just to clarify, the KMLP expansion is one of the pipes that it will connect to is Trident. It's separate from the part from Trident itself and it can potentially be a leg into the Louisiana corridor down the line.

[Kimberly Dang, CEO at Kinder Morgan]

Right, but in the future.

[Sital Mody, President - Natural Gas Pipelines at Kinder Morgan]

In the future. That's right. Michael, does that make sense?

[Michael Blum, Managing Director at Wells Fargo Securities]

Yes. Thank you.

[Operator]

Thank you. Our next caller is Neal Dingmann with Truist Securities. You may go ahead, sir.

[Jack Wilson, Equity Research Associate at Truist Securities]

Hey, good afternoon. This is Jack Wilson on for Neal. Can you please speak to your positioning in regards to LNG export specifically?

[Kimberly Dang, CEO at Kinder Morgan]

Yes, sure. We serve about 50% of that market. So it's just under that, it's 45%. I think our total contract that we've got in place for LNG exports is about 10.7 Bcf a day. Not all of that is online today, but that's the position that we will grow into over time.

[Kimberly Dang, CEO at Kinder Morgan]

I think it's a little less than 10 today. And then the opportunity set is in the range of 15 Bcf a day is the future capacity that is included in the 28 Bcf a day of growth that we see between now and 2,030. And that's so we'll be focused on trying to capture some of those opportunities. And then a lot of times as we said before, there's the initial opportunities to connect to the header systems or directly to those facilities. And then a lot of times, LNG export facilities and customers are looking for to go back further back up stream to get more competitively priced supply.

[Kimberly Dang, CEO at Kinder Morgan]

And in addition sometimes some of them are looking for some insurance capacity and therefore they contract for more than just the capacity of the facility to make sure that they can get molecules there. So a lot of times those initial projects lead to future projects. So there's a lot of opportunity on the export LNG side.

[Jack Wilson, Equity Research Associate at Truist Securities]

Thank you very much.

[Operator]

Thank you. Our next caller is Keith Stanley with Wolfe Research.

[Keith Stanley, Director at Wolfe Research, LLC]

Hi, good afternoon. First question, just curious, you just did an acquisition a couple of weeks ago. How you're thinking about incremental acquisitions at this point? So on the one hand, you have greatly increased organic investment opportunities. So you probably want some excess financial capacity.

[Keith Stanley, Director at Wolfe Research, LLC]

But you also have a much improved currency. And it's probably pretty easy to make deals accretive at this point. So just how are you balancing those factors and thinking about M and A?

[Kimberly Dang, CEO at Kinder Morgan]

Yes. So we think about M and A on a very opportunistic basis. And so we can't predict that. And therefore it's hard to budget or schedule for it. Our criteria in terms of acquisitions hasn't changed.

[Kimberly Dang, CEO at Kinder Morgan]

So it's still the same. So we're not modifying the criteria and then we just evaluate each one as it comes to fruition. So right now, we are able to fully fund all of our CapEx with internally generated cash. We have no need to issue equity. If we saw some big huge acquisition, not opposed to issuing equity, but it would have to make economic sense.

[Kimberly Dang, CEO at Kinder Morgan]

And so we would just have to view it in the context of the overall deal when that opportunity came before us.

[Keith Stanley, Director at Wolfe Research, LLC]

Thanks for that. The second one just wanted to follow-up on the quarter. So Q4 EBITDA was is about $100,000,000 below the initial quarterly budget and you talked about commodities, volumes and some of the RNG headwinds. Is there anything else you'd flag for the quarter in particular? Are those the main factors?

[David Michels, VP & CFO at Kinder Morgan]

The commodity headwind was part of it. We had some the RNG sales were down relative to what we had expected. And then we had some of the RINs that we produced in the quarter were pushed out of the year into the next year because there was a lack of liquidity in the market. So that also contributed to it, but you hit the main ones.

[Keith Stanley, Director at Wolfe Research, LLC]

Thank you.

[Operator]

Thank you. Our next caller is Jean Ann Salisbury with Bank of America.

[Jean Ann Salisbury, Managing Director at Bank of America]

Hi. Most of what Kinder Morgan has announced over the past year has been typical large diameter, big CapEx projects, so S and G, GCX, MSX, Trident. From here forward, do you see any shift in the type of the future projects to being mostly more like end user projects like laterals to power plants or data centers, which might be lower absolute CapEx, but better multiples or you're not really ready to call that shift yet?

[Kimberly Dang, CEO at Kinder Morgan]

That's it's hard to call. I think we're going to have opportunities on both fronts. I think more of the opportunities probably come in what I call the singles and doubles connecting the power plants that types of things. And that's largely just because the larger projects to do those, you've got to put together a lot of customers. It's just a lot more complicated and a lot harder to do.

[Kimberly Dang, CEO at Kinder Morgan]

But that being said, we do have some large scale opportunities that we're evaluating and looking at, that have the potential to come to fruition. It's just harder to call your shots on those, again because you face competition and you've got to bring a lot of different factors have to come together to make those possible. So, it could it's going to continue just to be a combination of things, Jean Ann. But I do think that the larger ones will are going to be more infrequent than we'll just have a lot of smaller opportunities, singles and doubles. Got it.

[Kimberly Dang, CEO at Kinder Morgan]

It's harder than home run. We just we were very fortunate this year that we got a number of them in 1 year.

[Jean Ann Salisbury, Managing Director at Bank of America]

Yes. That makes sense. Great. And then as a follow-up, can you kind of talk about how you're forecasting the cadence of Haynesville volumes coming back? I think rig count in that basin is falling more than most would have thought and you've seen some producers saying that you need far higher prices than today's strip for them to come back.

[Sital Mody, President - Natural Gas Pipelines at Kinder Morgan]

Gene, this is Seifel. Yes, so I think last year we did see a little pullback in the Haynesville as a result of kind of the price environment. In light of what we're seeing currently and the expectation of the LNG demand coming on, we are seeing activity pick back up in the Haynesville. And if any of this price is sustained as kind of we hope it is, I think you'll see a lot more activity in the Haynesville.

[Jean Ann Salisbury, Managing Director at Bank of America]

Okay. That's helpful. Thank you. That's all for me.

[Operator]

Thank you. Our next caller is Spiro Dounis from Citi. You may go ahead, sir.

[Spiro Dounis, Director at Citigroup]

Thanks, operator. Good afternoon, team. Just want to go back to the project backlog again. Now at $8,100,000,000 largest we've seen in a while here and Kim you mentioned the $2,500,000,000 a year annually and I guess if we sort of track that through 2028, gets you to about $10,000,000,000 all in. So just curious is that the right way to think about maybe your visibility on the sort of unsanctioned backlog from here at least through 'twenty eight?

[Spiro Dounis, Director at Citigroup]

And in that context, kind of what GM was getting at, you added over $5,000,000,000 of projects in this last year. It's not hard to repeat, but at the same time, you also did mention being in the early stages of data center demand and potentially some new LNG FIDs coming this year. So when do you think we do see a year like that again? I know it's hard to predict, but just thinking about it, you think it's coming

[Kimberly Dang, CEO at Kinder Morgan]

to us. Well, I hope next year. But this has been a pretty spectacular year is what I would say in terms of backlog additions and then 4 really big projects. So, but again we have outlined there's going to be a lot of growth in natural gas 28 Bcf a day again between now and 2,030. That's a large amount of demand growth and it's all happening across the Southern United States where we've just got a really good position of assets whether that's in Texas or that's going across to the Southeast or that's going out to the Desert Southwest.

[Kimberly Dang, CEO at Kinder Morgan]

And so I think we've tried to give you $2,500,000,000 a year, yes, that we filled in a few things there. But in terms of our expectations on what's going to happen, but I think there is the opportunity for that to grow over time, I believe. And so I think that's what we would expect to happen, is that we continue to add to this backlog. But we're also going to be placing projects in service. And so not sure how to tell you exactly how much we can add over time.

[Spiro Dounis, Director at Citigroup]

Okay. Yes, understood. That's helpful. Second question quickly, just thinking about some weather events that have kind of occurred so far here in the Q1. Obviously, you have the LA fires, I know you guys have assets out in that region.

[Spiro Dounis, Director at Citigroup]

We've also had some cold weather just along U. S. Gulf Coast. So just curious how much either of those events has kind of impacted operations so far in the Q1?

[Kimberly Dang, CEO at Kinder Morgan]

Yes. In terms of California, no impact on our assets. I mean, we were down for 2 days on some pipes, but I think those volumes will largely be able to make up. And then on the cold weather, I mean our operations guys have done a fantastic job. We went out and manned stations and we had something go off, but they would get it right back on.

[Kimberly Dang, CEO at Kinder Morgan]

So really no impact in terms of being able to operate from the fires or from the cold weather.

[Spiro Dounis, Director at Citigroup]

Great. I'll leave it there. Thanks for the time.

[Operator]

Thank you. Our next caller is Zach VanEveren with TPH. You may go ahead, sir.

[Zack Van Everen, Director - Equity Research at TPH&Co]

Hey, thanks for taking my question. Maybe first one on the Bakken acquisition. Can you maybe touch on a high level, what type of contracting that plant in the pipeline had? Is it MVCs? Is it mostly contracted?

[Zack Van Everen, Director - Equity Research at TPH&Co]

Or just any more color there would be great.

[Sital Mody, President - Natural Gas Pipelines at Kinder Morgan]

Yes, sure. So this is Stifel. One, I think the asset fits well in our kind of overall integrated strategy. Most of the contracts are kind of MVC backed with some firm obligations there. As we think about the footprint, one of the things that this asset does for us is it gives us processing north of the river.

[Sital Mody, President - Natural Gas Pipelines at Kinder Morgan]

We've always been kind of south of the river, if you're familiar with that area. And so I think it opens up some potential flexibility that we can leverage as we move forward.

[Zack Van Everen, Director - Equity Research at TPH&Co]

Got you. That makes sense. And then maybe just one on Trident. I know that shortly after announcing it, Golden Pass came out talking about them being one of the anchor shippers. I know in the press release today, you kind of know LNG and industrial demand.

[Zack Van Everen, Director - Equity Research at TPH&Co]

Could you touch on maybe just the high level makeup of the demand contracts? Is it mostly LNG or is there also some power and industrial demand you're seeing as well?

[Sital Mody, President - Natural Gas Pipelines at Kinder Morgan]

So I will tell you this, since the last time we've spoken, I can't I won't say any names, but we've got some power behind power demand behind the contracts and we continue to work with industrials and the large some of the large end use customers on the ability to potentially even expand the pipe from the 1.5 that we've got it at now all the way up to the 2.8 Bcf that we think we could get through some capital efficient expansion.

[Zack Van Everen, Director - Equity Research at TPH&Co]

Got you. Super helpful. I appreciate the time today. Thanks.

[Operator]

Thank you. Our next caller is John McKay with Goldman Sachs.

[John Mackay, VP - Equity Research at Goldman Sachs]

Hey, thanks for the time. First one,

[John Mackay, VP - Equity Research at Goldman Sachs]

I want to go back to, I think

[John Mackay, VP - Equity Research at Goldman Sachs]

it was Spiro's question just on touching on the $2,500,000,000 a year. Can you kind of frame up, is that a ceiling on how much

[John Mackay, VP - Equity Research at Goldman Sachs]

you think you can spend

[John Mackay, VP - Equity Research at Goldman Sachs]

a year? Can that number move higher? And I guess, generally speaking, how do you think about setting that? Is that a leverage question? Is that a free cash?

[John Mackay, VP - Equity Research at Goldman Sachs]

Is that a dividend? Just frame that up for us would be helpful.

[Kimberly Dang, CEO at Kinder Morgan]

Sure. So the $2,500,000,000 is generally what we think based looking at all the projects that we have in the backlog and other things that we think are probably very highly likely what we think we can spend. And it's I mean it's over the next several years, 3 to 4 years. That $2,500,000,000 is on average per year. I mean are you going to have years where it could be 3 and others where it could be 2, yes.

[Kimberly Dang, CEO at Kinder Morgan]

I mean it's not going to be perfectly allocated $2,500,000,000 each year. So it can be lumpy and that depends on the project timing. But we're trying to give you a sense of what we see in terms of our opportunities to invest capital over time. We can fund $2,500,000,000 per year out of internally generated cash. So no concerns that we need external capital for that.

[Kimberly Dang, CEO at Kinder Morgan]

We can find in some years a little bit more than that. If it's lumpy during that timeframe, we've got our balance sheet in good shape and in this year 4 times and expected at the end of 2025 at 3.8 times. And so we can absorb that lumpiness on the balance sheet and once those projects come on, we'll grow out of that. So I think we will continue to look at that number and update it. And if we add significant new projects to the backlog, then I think we have the potential that that number increases over time.

[Kimberly Dang, CEO at Kinder Morgan]

But we have made some pointed out earlier, some estimate of some additional growth beyond what's in the backlog because as someone noted the backlog adds up to 8.1 and if you take 4 years of 2.5 you get 10. So there is a little bit of capital that we're assuming based on our opportunities that we'll be able to fill out.

[John Mackay, VP - Equity Research at Goldman Sachs]

I appreciate that. Thank you. Maybe just second one for me. We've talked a lot about these big kind of marquee projects you've added. Is there anything you can share on kind of knock on effects across the rest of the Kinder system now that you're going to be moving a lot more gas?

[John Mackay, VP - Equity Research at Goldman Sachs]

Is there some kind of operating leverage on the rest of footprint that you could think about adding to these returns?

[Sital Mody, President - Natural Gas Pipelines at Kinder Morgan]

Sure. This is Sifel again. So as we think about as you put these arteries in across with the developments that are coming in and around data centers and just power in general, there's opportunities for us to kind of leverage our footprint to kind of establish capillaries to these facilities. One of the things that Jean Ann talked about was kind of the small capital efficient projects. There's opportunities on top of these large expansions for those type of projects in strategic areas that we can further expand.

[Sital Mody, President - Natural Gas Pipelines at Kinder Morgan]

And that really applies across the footprint. We're also looking at some opportunities moving out west to the desert Southwest. Those might be that might be an area where we can see some primary and secondary expansion opportunities.

[Kimberly Dang, CEO at Kinder Morgan]

And the other thing I'll point out is like MSX, they'll connect our 3 legs of the Tennessee gas pipeline. Over time, that could that's going to give us some operating flexibility and potentially upside to help our customers. And then on TriNet, it will come into the intrastate market and it will integrate well with our Texas intrastates and hopefully over time that will give us the ability to deliver more value to our customers and sharing some of that.

[Richard Kinder, Executive Chairman at Kinder Morgan]

I think the message here that all the team is trying to deliver is we have an unparalleled system that bridges the part of the country that needs the most new natural gas delivery system. We have that and all of what we're saying I think lends itself to lots of expansion opportunities coming off of this great footprint that we have. And That's really our whole strategy over the next several years is to move forward with the system we have expanded, extended and drive home real nice earnings growth and growth in EBITDA.

[John Mackay, VP - Equity Research at Goldman Sachs]

That's great. Thank you, Rich. Thank you, team. Appreciate the time.

[Operator]

Thank you. Our next caller is Gabe Moreen with Mizuho. You may go ahead, sir.

[Gabriel Moreen, Managing Director at Mizuho Financial Group, Inc.]

Hey, good afternoon, everyone. I just want to start out by saying that I think Pete's based on how the share price has performed, Pete's making a good case for saving himself work and not holding analyst days in future years too. But with that said, I wanted to ask a question on the MSX project timeline being 4 years plus or minus and being almost 2 years longer than similarly sized intrastate project. I have a question of permitting, right of way, conservatism, is there any conservatism built into that? And fitting into the regime change in DC with the new administration, is there anything on the permitting wish list for discussions you've had that you maybe think can expedite something, which I think is your first kind of greenfield ish interstate in some time?

[Kimberly Dang, CEO at Kinder Morgan]

Yes. So I mean the difference just horseshoes and hand grenades, we generally think about interstate pipes take us 4 years, 2 years in permitting and 2 years to build. And intrastate pipes where we don't have to go get a FERC certificate is usually 2 ish years. And that's sort of the timeline that you see the difference in the timeline that you see between Trident and MSX or South System IV. We came up with these schedules when we sanctioned these projects.

[Kimberly Dang, CEO at Kinder Morgan]

So late last year, I would say that they were done in line with what we thought we would get under the prior administration. And so to the extent that FERC speeds up and it's really the FERC permit that is going to be the primary duty item. To the extent that FERC speeds up their timeline, we could get it potentially in service earlier. But I think the flip side of that is we want to make sure that we get a good FERC permit that we can defend in court. And so we don't want them to skip or shortcut any of their processes.

[Kimberly Dang, CEO at Kinder Morgan]

So we want to make sure that we get a good dependable FERC permit out, but hopefully they can do that faster under this administration.

[Gabriel Moreen, Managing Director at Mizuho Financial Group, Inc.]

Thanks, Cam. And I know there'll be some more details on 'twenty five guidance in the not too distant future, but could I ask maybe just one on your nat gas sensitivity that you've got to the $0.10 change in gas prices, it's a bit higher this year than last, kind of what's behind that?

[Kimberly Dang, CEO at Kinder Morgan]

Yes, sure.

[Gabriel Moreen, Managing Director at Mizuho Financial Group, Inc.]

I know some of the big pieces of things.

[Kimberly Dang, CEO at Kinder Morgan]

That's the sensitivity that we've had in the past. So it's not anything new, Gabe. It's been hard to quantify, because some of our producers on the gathering side, the contract can move the price they pay, the tariff that they pay can move up and down with some gas prices. And so that's what's this year we are right in the middle of the range and we've been trying to find a way to quantify it for investors and this year we were able to do it. So again no difference from prior years.

[Gabriel Moreen, Managing Director at Mizuho Financial Group, Inc.]

Thanks, Ken.

[Operator]

Thank you. Jeremy Tonet with JPMorgan. You may go ahead, sir.

[Jeremy Tonet, ED - Equity Research Analyst at JPMorgan Chase]

Hi, good afternoon.

[Kimberly Dang, CEO at Kinder Morgan]

Good afternoon, Jeremy.

[Jeremy Tonet, ED - Equity Research Analyst at JPMorgan Chase]

Just want to circle back,

[Jeremy Tonet, ED - Equity Research Analyst at JPMorgan Chase]

I guess, new administration, new look out there. Just wondering, Kinder has looked at expansions in the Northeast before, but state level permitting issues has impacted the calculus of moving forward with those type of projects. Just wondering if you're tracking anything on the federal side that maybe would change, I guess, the permitting process or laws otherwise that would kind of, I guess, change your outlook. I mean, clearly, the need for more gas logistics in the Northeast is there, but just you see anything on the permitting side that might make you kind of look at things differently?

[Kimberly Dang, CEO at Kinder Morgan]

Yes. No, it's not the federal permits that are the real problem in the Northeast. I mean we can get the federal permits to stay permits and I don't see anything changing there. The other thing I'd say about the Northeast is the commercial structure. It's the commercial structure with the operator, RTO operator, does not allow for pass through of the fixed demand charges if you're an IPP.

[Kimberly Dang, CEO at Kinder Morgan]

And so it makes it harder for the IPPs to contract on a firm basis for that capacity. And so those are the 2 largest hurdles and we have not seen any change.

[Jeremy Tonet, ED - Equity Research Analyst at JPMorgan Chase]

Got it. Understood. And might be dating myself a little bit here, but if I go back, I think, to around the 2,009 timeframe with Rockies Express, I think it was described as the pig in the boa constrictor at that point. And there was a big move in the industry as far as unconventional production, supply push out of basins and everyone was running on the same steel and construction at the same time and led to some cost inflation issues. At that point in time, we see inflationary environment in the background now.

[Jeremy Tonet, ED - Equity Research Analyst at JPMorgan Chase]

Just wondering how you think about, I guess, those risks going forward and what E and Cs you see out there that you think can best protect you? Just wondering, I'm sure you guys are very thoughtful in all this, but wanted to see your way of thought.

[Kimberly Dang, CEO at Kinder Morgan]

Yes. We are already engaged in procurement on all 3 big pipes. I'm not going to go pipe by pipe, but on some of the pipes we have already have an agreement to purchase steel, purchase the compression and on others I think we will do so in the not too distant future. So we are I think we're working hard to try to mitigate that risk.

[Jeremy Tonet, ED - Equity Research Analyst at JPMorgan Chase]

Got it. Okay. Thank you.

[Operator]

Thank you. At this time, I am showing no further questions.

[Richard Kinder, Executive Chairman at Kinder Morgan]

Okay. Thank you all very much. Have a pleasant evening.

[Operator]

Thank you. This concludes today's conference call. You may go ahead and disconnect at this time.

Participants

Analysts

• Richard Kinder, Executive Chairman at Kinder Morgan
• Kimberly Dang, CEO at Kinder Morgan
• Tom Martin, President at Kinder Morgan
• David Michels, VP & CFO at Kinder Morgan
• Theresa Chen, MD - Equity Research at Barclays
• Manav Gupta, Executive Director at UBS Group
• Michael Blum, Managing Director at Wells Fargo Securities
• Sital Mody, President - Natural Gas Pipelines at Kinder Morgan
• Jack Wilson, Equity Research Associate at Truist Securities
• Keith Stanley, Director at Wolfe Research, LLC
• Jean Ann Salisbury, Managing Director at Bank of America
• Spiro Dounis, Director at Citigroup
• Zack Van Everen, Director - Equity Research at TPH&Co
• John Mackay, VP - Equity Research at Goldman Sachs
• Gabriel Moreen, Managing Director at Mizuho Financial Group, Inc.
• Jeremy Tonet, ED - Equity Research Analyst at JPMorgan Chase