Kinder Morgan Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: John Mackay - Goldman Sachs - Analyst : Hey, everyone. Thank you for the time. Look, you spent a lot of time again talking about the growth potential that you're seeing coming back across power, et cetera. You've a couple of projects that are floating around, not quite in the backlog yet. I guess we used to call it shadow backlog. I guess I'd just be curious if you could frame up the size of that relative to, let's say, this time last year. And then if you could maybe touch on, in that context, maybe Mississippi Crossing and Trident, that would be great. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 8:30PM, KMI.N - Q3 2024 Kinder Morgan Inc Earnings Call

Question: John Mackay - Goldman Sachs - Analyst : No, that's great color. Appreciate all that. I think just second question, we're going into guidance two months from now. Obviously, I'm not going to ask you on specific numbers or anything. But if we look at where '24 has trended versus initial guidance, a big part of that has been commodity softness. We can debate over how much of that is transitory or not, but could you talk about maybe other puts and takes inside the business that are trending better or slightly softer than expected outside of commodity and just, maybe generally, how they'll trend into '25?

Question: John Mackay - Goldman Sachs - Analyst : No, that's fantastic. Appreciate the time.

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Thanks. Good afternoon, everybody. I wanted to just stay on the topic of the percolating gas demand, gas projects. Given just the growing potential backlog of projects that you're looking at, where do you see CapEx trending over the next few years? I know you, last quarter, raised it from $1 billion to $2 billion up to $2 billion plus or minus of growth CapEx. But do you see that trending even higher over time? And any idea of where that could go? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 8:30PM, KMI.N - Q3 2024 Kinder Morgan Inc Earnings Call

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Got it. That's great color. Thanks. And then my other question was really about expected returns. So obviously, the backlog has lots of different projects, different sizes, types of projects. But let me just talk about -- trend wise, are you seeing better returns on this project? It seems like the South System 4 expansion was a really attractive multiple versus your total backlog. So just wondering if you're seeing that trend overall. Thanks.

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Thank you.

Question: Theresa Chen - Barclays - Analyst : Can you hear me now? Sorry about that. So looking at your Mississippi Crossing project, can you give us some color on the commercial drivers that would allow Kinder to win this project, assuming the binding open season is successful? Do you think this is, in part, driven by customers' desire to diversify sources of supply beyond the typical Northeast Mid-Atlantic corridor? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 8:30PM, KMI.N - Q3 2024 Kinder Morgan Inc Earnings Call

Question: Theresa Chen - Barclays - Analyst : Got it. And then turning to a different part of your portfolio. With the recent success of one of your competitors in spinning out their liquids business, any thoughts on separating your products business from your natural gas assets to potentially reflect better value in each?

Question: Theresa Chen - Barclays - Analyst : Thank you very much.

Question: Zack Van Everen - TPH&Co. - Analyst : Hey, guys. Thanks for taking my question. Maybe to start, could you guys touch on the recent decision of the US courts on your Cumberland projects and what the process is there going forward?

Question: Zack Van Everen - TPH&Co. - Analyst : Perfect. That makes sense. And then maybe one on the FID on Gulf Coast Express. I think when looking back to Permian Highway, that took about a year. Is that a similar timeline you guys are looking at for this expansion?

Question: Zack Van Everen - TPH&Co. - Analyst : Got it, makes sense. Appreciate the time, guys.

Question: Jean Ann Salisbury - BofA Global Research - Analyst : Hi. Between the Gulf Coast expansion in Blackcomb, there's a lot of gas heading to the Agua Dulce area. Is there a risk that there won't be enough demand in the area in 2026, especially if LNG projects get delayed? And how do you see the GCX expansion is positioned for that risk?

Question: Jean Ann Salisbury - BofA Global Research - Analyst : That makes sense. Thank you. And then at your Investor Day, you mentioned that you have 200 Bcf of market rate storage. Bringing that up to current market rates is going to be a tailwind. Is that still a tailwind that you see over the next couple of years? Is that mainly still below current rates, if that make sense?

Question: Jean Ann Salisbury - BofA Global Research - Analyst : Great. That's helpful. That's all for me. Thanks a lot.

Question: Neal Dingmann - Truist Securities - Analyst : [Ned for Neal]. First -- my first question, just more general on backlog, Kim. I'm wondering, is it fair to assume that we should think of your backlog maybe staying around that $5 billion, given, number one, it seems like you have a lot of opportunities you discussed. But you also have, I know, a number of projects that should come on to service in the coming quarters. I just wonder how you would expect us to think about this. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 8:30PM, KMI.N - Q3 2024 Kinder Morgan Inc Earnings Call

Question: Neal Dingmann - Truist Securities - Analyst : That's great to hear. And then just secondly, I know a bit smaller, just anything you could add on the CO2 portfolio, specifically. I know I think last quarter, you mentioned just likely no material change in capital spend there. I'm just -- will this continue to be the case? I know you've got what -- given the development of SACROC and North (inaudible), different things, how should we think about that portfolio?

Question: Neal Dingmann - Truist Securities - Analyst : Very good. Thank you, both, for the details.

Question: Jeremy Tonet - JPMorgan - Analyst : Hi, good afternoon. I also wanted to give a belated happy birthday to David.

Question: Jeremy Tonet - JPMorgan - Analyst : I don't think I'm allowed to ask that. But I just want to kind of pick up on a couple of pieces that were touched on a bit during the call. Kim, I recognize this is a kind of an impossible question. But just at a high level, when we think about operating leverage for Kinder, there's waiting capacity on the gathering side, there's waiting capacity on the pipe side. And just want to get a sense for, I guess, capital-light growth there. If the G&P really takes up, if there's a coal on gas, higher gas prices. If the peakers are really pulling because they have to run more given high power prices, how does that, I guess, impact KMI?

Question: Jeremy Tonet - JPMorgan - Analyst : Got it. That's helpful there. And then I just want to kind of to touch on a little bit more as it relates to the power demand, large customers as well as data centers potentially. How far upstream could you guys see Kinder going? Could Kinder provide behind-the-meter gas solutions, be it providing the gas or if there was a contract structure that was attractive, even providing the power itself with the gas generation. Just wondering how you think about the opportunity set here?

Question: Jeremy Tonet - JPMorgan - Analyst : Got it. That's helpful. Thank you for that.

Question: Keith Stanley - Wolfe Research - Analyst : Hi, thank you. Just two clarification questions. So -- the first one, I think you said you could fund $2.5 billion a year of growth CapEx out of cash flow. Would you be comfortable even going higher than $2.5 billion a year on a recurring basis? Or do you view $2.5 billion as kind of a cap within your financial framework?

Question: Keith Stanley - Wolfe Research - Analyst : Thanks. Makes sense. Second one, just on this. I wanted to follow up on the courts question. I mean some of your peers have been affected a little more, but do you see more risk generally with court reviews on projects post the Chevron decision? And are there different things you can do on permitting strategy timing of when you deploy capital, thinking about return requirements to deal with it if the courts are becoming a little more problematic on new infrastructure?

Question: Keith Stanley - Wolfe Research - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 16, 2024 / 8:30PM, KMI.N - Q3 2024 Kinder Morgan Inc Earnings Call