Kinder Morgan Inc Q4 2024 Earnings Call Transcript

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

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

Question: Theresa Chen - Barclays - Analyst : Understood and related to the outbreak or acquisition, can you expand a bit on the strategic rationale behind this and outlook for downstream synergies if Y-grade eventually flows on to HH once converted to NGL service, for example.

Question: Theresa Chen - Barclays - Analyst : Got it. Thank you.

Question: Manav Gupta - UBS Securities LLC - Analyst : 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?

Question: Manav Gupta - UBS Securities LLC - Analyst : Perfect. My quick follow up is, it looks like we have a new administration which is really pushing the AI goals here with the $500 billion 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 to 9 years as these data centers come on and the demand for power just keeps rising and how Kinder fits into that? Thank you.

Question: Manav Gupta - UBS Securities LLC - Analyst : Thank you.

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Thanks. Good afternoon, everyone. So maybe staying on President Trump's recent infrastructure announcement, it does one of the projects involved there? It seems like it's going to be a large data center campus in Abilene, Texas, which if I'm not.

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Okay. Great. Sorry about that. So you hear me okay?

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : 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 you -- if there's an opportunity there for you? And do you have availability to address it?

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Okay. Great. And then I also wanted to ask about the open season on Kinder Morgan Louisiana, like a Texas Header project. Can you just tell us how that's progressing and the potential scope of that project? Thanks.

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Yeah. 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. JANUARY 22, 2025 / 9:30PM, KMI.N - Q4 2024 Kinder Morgan Inc Earnings Call

Question: Keith Stanley - Wolfe Research, LLC - Analyst : 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. 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&A?

Question: Keith Stanley - Wolfe Research, LLC - Analyst : Thanks for the second one, just wanted to follow up on the quarter. So Q4 EBITDA is about $100 million below the initial quarterly budget and you talked about commodities, volumes and some of the R&G headwinds. Is there anything else you'd flag for the quarter in particular? Or are those the main factors?

Question: Keith Stanley - Wolfe Research, LLC - Analyst : Thank you.

Question: Jean Ann Salisbury - BofA Global Research - Analyst : Hi. Most of what Kinder Morgan has announced over the past year has been typical large diameter, big CapEx projects, so SNG, 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.

Question: Jean Ann Salisbury - BofA Global Research - Analyst : Yeah. 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 and today's strip for them to come back. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 9:30PM, KMI.N - Q4 2024 Kinder Morgan Inc Earnings Call

Question: Jean Ann Salisbury - BofA Global Research - Analyst : Okay. That's helpful. Thank you. That's all for me.

Question: Spiro Dounis - Citigroup Global Markets Inc - Analyst : Hey afternoon team. I just want to go back to the project backlog again. Now at $8.1 billion, largest we've seen in a while here. And Kim, you mentioned the $2.5 billion a year annually. And I guess if we sort of track that through 2028, it gets you to about $10 billion 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 '28. And in that context, kind of what Jan was getting that, you added over $5 billion of projects in this last year. It sounds 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 as you can.

Question: Spiro Dounis - Citigroup Global Markets Inc - Analyst : 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 first quarter. Obviously, we got the LA fires, and I know you guys have assets out in that region. We've also had some cold weather just along the US Gulf Coast. So just curious how much either of those events has kind of impacted operations so far in the first quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 9:30PM, KMI.N - Q4 2024 Kinder Morgan Inc Earnings Call

Question: Spiro Dounis - Citigroup Global Markets Inc - Analyst : Great. I'll leave it there. Thanks for the time.

Question: Zack Van Everen - TPH&Co - Analyst : 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 the pipeline have? Is the MVC, is it mostly contracted? Or just any more color there would be great.

Question: Zack Van Everen - TPH&Co - Analyst : 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. 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 seeing as well?

Question: Zack Van Everen - TPH&Co - Analyst : Got you super helpful. I appreciate the time today. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 22, 2025 / 9:30PM, KMI.N - Q4 2024 Kinder Morgan Inc Earnings Call

Question: John Mackay - Goldman Sachs - Analyst : Hey, thanks for the time. I think the first one I want to go back to. First one, I want to go back to, I think, Spiro's question just on touching on the $2.5 billion a year. Can you kind of frame up, is that a ceiling on how much you think you can spend 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? Is that a dividend? Just from that up for us would be helpful.

Question: John Mackay - Goldman Sachs - Analyst : I appreciate that. Thank you. Maybe just a 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. Is there some kind of operating leverage on the rest of the footprint that you could think about adding to these returns?

Question: Gabriel Moreen - Mizuho Securities - Analyst : Hey, good afternoon, everyone. I just want to start off by saying that I think Pete's based on how the share price has performed, Pete's is making a good case for serving themself, work and the holding Analyst Days in the future. So with that said, I want to ask a question on MSX project timeline being 4 years, plus or minus being almost 2 years marked in single sized intrastate project, is that a question of permitting right-of-way conservative. Is there any conservatism built into that? And fitting into the regime change in D.C. 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 interstate in some time?

Question: Gabriel Moreen - Mizuho Securities - Analyst : Thanks, Kim. And I know there'll be some more details on '25 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 want to know what's behind that? And I know it's not the big piece of things.

Question: Gabriel Moreen - Mizuho Securities - Analyst : Thanks, Kim.

Question: Jeremy Tonet - J.P. Morgan Securities LLC - Analyst : Hi, good afternoon.

Question: Jeremy Tonet - J.P. Morgan Securities LLC - Analyst : Just wanted to circle back, I guess, new administration, new look out there. Just wondering, Kinder's 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, changed your outlook. I mean, clearly, the need for more gas logistics in the Northeast is there, but just do you see anything on the permitting side that might make you kind of look at things differently.

Question: Jeremy Tonet - J.P. Morgan Securities LLC - Analyst : Got it. Understood and might be dating myself a little bit here. But if I go back, I think, to around the 2009 time frame with Rockies Express, I think it was described as the pig and the boar 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 is 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. Just wondering how you think about, I guess, those risks going forward? And with E&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 latest thoughts.

Question: Jeremy Tonet - J.P. Morgan Securities LLC - Analyst : Got it. Okay. Thank you.