Kinder Morgan, Inc. Barclays 40th Annual Energy-Power Conference

Welcome, Kim. Thank you, Teresa.

It is nice to be here.

Sure. Let me start by saying that the natural gas segment is about two-thirds of our business. It is the area where we expect the most growth. As you said, on our second quarter call, we talked about at least $1.4 billion of projects. Just to give a little background for people. At the end of the first quarter, our backlog was about $10.1 billion. Then it reduced in the second quarter to about $9.6 billion as a result of projects that we put in service. For the balance of the year, so the back half of the year, we expect to put another $1 billion of projects in service. What we said is that we think that we will at least get back over $10 billion in our backlog by the time we get to the end of the year.

Expecting the backlog to be $10 billion or likely more by the end of the year. I think it's important also that people understand a lot of different companies have backlogs and General Electric has a certain backlog. Our backlog, so that people understand what it is board-approved projects. Generally, 90% of them are backed by take-or-pay contracts. The ones that are in our CO2 business and some smaller gathering projects that have dedications as opposed to take-or-pay. Generally, those types of projects have higher returns. These are projects that we are moving forward with. I think the reason that we have so much confidence about adding projects to the backlog is just a result of the environment that we're in and all the opportunity set that we're working on.

The opportunity set that we're working on that's not in the backlog is like $10 billion. We won't get all those projects, but we'll get our fair share. It's really driven by the growth in the natural gas market. Wood Mackenzie shows that the natural gas market is going to grow from almost 115 BCF a day in 2025 to 160 BCF by 2035. It's like 46 BCF a day of growth in the natural gas market, primarily driven by export LNG and power. Export LNG number's like 23 BCF and the power number's like 17 BCF. That's just driving enormous opportunities for us. A lot of those opportunities are across the Southern U.S. The $10 billion is composed of some really big projects and then a lot of singles and doubles, kind of like our existing backlog is today.

The growth combined with the asset footprint that we have, the 80,000 miles of pipe we serve, 40% of the natural gas demand in the U.S. We move 40% of the volumes that go for export LNG. We move 50% of the exports to Mexico. Those two things combined, the nature of our footprint and the tremendous amount of demand is what gives us so much confidence that we'll be able to replenish that backlog over the course of this year.

Sure. What we do for people is on the backlog, we give them a multiple, right? If you look at our backlog, 90% of it roughly is in these take-or-pay type of contracts, and that's the ones we put a backlog on. So, 8.5 of the 9.6 is associated with those type of projects, and we have a 5.6 times multiple on those. The 1.2 of other projects is gathering and processing and also the oil and gas production in our CO2 business. Those projects actually come at higher returns than the 5.6 multiple. It's just that the nature of that cash flow is that it increases and then over time it begins to decrease. You get more of your return up front. So actually, the upfront multiple on those projects is even better.

To make it simple, just take the 5.6 on the full $9.6 billion. That's $1.7 billion of incremental EBITDA that we expect. The average in-service on our backlog is really the first half of 2028. Those projects will largely contribute growth, some in 2027, but a lot more in 2028 and in 2029. As we add projects, that will extend out that growth because as you add projects, a lot of them will be FERC-regulated. They'll take a couple of years to get permitted or two to three years probably to get permitted and come online. It'll extend out. The projects that are in the at least $1.4 billion are going to be things that come online in service in the end of 2029 and into 2030. What it does is it extends out the growth trajectory that's coming from the growth backlog.