US Natural Gas Pipelines Up For Sale: CFO Of Kinder Morgan (KMI) Reveals Expansion Plans In This Recent Exclusive Interview

Wall Street Transcript

67 WALL STREET, New York - October 17, 2011 - The Wall Street Transcript 2011 Global Energy Review contains in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online. Topics covered: Expert Energy Sector Equity Information Companies include: Exxon (XOM); PetroChina (PTR); Petrobras (PBR); BHP (BHP); Chevron (CVX); Shell (RDS-A); and many more. This is just one excerpt from over 40 interviews with industry professionals in this Global Energy Report. Kimberly Allen Dang is a Vice President and the CFO of Kinder Morgan, one of the largest pipeline transportation and energy storage companies in North America. The Kinder Morgan companies include Kinder Morgan Energy Partners, L.P. (KMP), Kinder Morgan Management LLC (KMR) and Kinder Morgan, Inc. (KMI). Ms. Dang's responsibilities include debt and equity financings, accounting and tax. She joined Kinder Morgan in 2001 as Director of Investor Relations, and she was named Vice President, Investor Relations, in 2002, Treasurer in 2004 and CFO in 2005. Prior to joining Kinder Morgan, Ms. Dang spent six years at Goldman Sachs working in the company's real estate investment area. Ms. Dang also worked in Washington, D.C., as a Legislative Assistant for Congressman Jack Fields and in Austin, Texas, for a venture capital firm. Ms. Dang earned a bachelor's degree in accounting from Texas A&M University and an MBA from the J.L. Kellogg Graduate School of Management at Northwestern University. TWST: Please start with a brief history of Kinder Morgan and an overview of the company's operations today. Ms. Dang: KMP is a master limited partnership that owns and operates assets that are core to the energy infrastructure of North America. We are a fee-for-service business, similar to toll roads, where our customers pay us a fee to either transport or store their products via our pipelines or terminals. We have five business segments: natural gas, CO2, products, terminals and our Canadian pipelines. Natural gas is expected to account for about 28% of our 2011 segment earnings before DD&A. CO2 is about 29%. Those segments each produce over $1 billion of earnings before DD&A. Our products segment and our terminals segment will produce about 19% each and will both generate over $700 million of earnings before DD&A. Our Canadian segment will account for about 5%. There are two important characteristics of MLPs. First, they pay out virtually all of their cash flow to their investors. And second, they're not subject to U.S. corporate income tax. So they're a very efficient place to own qualifying assets. There are three ways investors can participate in the cash flow that comes from the Kinder Morgan (KMP) assets - KMP, KMR and KMI. KMP and KMR represent our limited partner interests. KMP is yielding about 6%, KMR is yielding about 7% and we usually target to grow the L.P. distributions at about 5%. KMI is the general partner, and it is a higher-growth vehicle. It should grow at about twice the rate of KMP. KMI has a yield of about 3.9%, and based on KMP growing at about 5%, we would expect KMI to grow at about 10%. TWST: In late February KMP announced a new acquisition and joint venture. Would you give us some of the details of that and discuss what the significance of the transaction is for the company? Ms. Dang: We've announced recently three new investments. The Deeprock joint venture is an expansion into a key crude market where we invested in existing terminal assets and are building some new terminals in Cushing, Okla. We also invested in Watco Companies, the largest privately owned short-line railroad company in the U.S., to move crude out of some of the new producing areas, primarily the Eagle Ford, Bakken and potentially Cushing. Another recent announcement was our Eagle Ford joint venture with Copano, CPNO. We have a lot of pipeline assets, Copano has a lot of processing assets, and we're pairing those together to offer customers one-stop shopping. All of these investments are in midstream energy infrastructure, where we are helping to either move or store products for customers on a fee-for-service basis. TWST: What kind of growth prospects - whether it's organic, by acquisition or both - does the company see currently in the market and going forward? The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online . The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations. For Information on subscribing to The Wall Street Transcript, please call 800/246-7673

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