KMI - Earnings call transcript Q3 2018

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Operator

Thank you for standing by and welcome to the Quarterly Earnings Conference Call. All lines have been placed in listen-only mode until the question-and-answer session. Today’s call is being recorded. [Operator Instructions] I would now like to turn the call over to Mr. Rich Kinder, Executive Chairman of Kinder Morgan. begin. may you Sir,

Rich Kinder

Kim. you, Thank

the we as Exchange begin, that and to you Canadian territorial of statements I’d call Exchange and Private Litigation provincial Reform as of as earnings releases XXXX certain usual, Act non-GAAP within outlook today’s financial KML Securities forward-looking like of by financial the include Securities well and remind measures. XXXX, and Before laws, meaning Act KMI this applicable securities and and

for factors encourage non-GAAP strongly KML’s on the of we to set and from filings such assumptions, decisions, read and expectations outlook our may a that those disclosures investment material any KMI’s earnings making at in forward-looking with full to you forward-looking review outlook to statements SEC latest securities our Before financial and forth list and anticipated Canadian of the end important differ and financial risk and actual financial provincial cause releases, statements. and results use of and described materially and commissions territorial measures

and buying sheet number our use our future I balance large do talked I long-term flow; over and our of of cash Kean strategy Steve in regarding our me the financial benefit few team, cash turning amounts let and philosophy. projects As shares. to a the to and grow make to that about dividends; our generate call ways, repeatedly in a before ability usually it shareholders to cash expansion to through comments reinvesting back paying delevering have

by Kean view, was third that. In team, KMI and ways, all and Company. fine demonstrates the utilizing for a quarter many job quarter We whole a in are our one the my past these cash respects, pivotal in Steve because done the this

from Trans Columbia, to of have cash problematic have opposition we continue to and the performance, view in in developed additional financial our terms the the unrelenting from projects government extricated British which favorable balance and sheet grow improved us substantially expansion operational allow future. good that significant expansion Mountain ourselves on our financial Beyond was flow we should

develop on $X we our I in to shareholders. generate the year. Regarding prospects, higher In billion billion the I’m appropriately and to we reflect over cash return in rational that demonstrating projects cash term, and but our financial I long-term you per it of does I outlook, many at value of of strong our assets And range generating will good that call, we is not $X benefit do future flow short, believe will our be progress puzzled cash believe and our Kinder true employ that this valued. infrastructure the markets frustrated growing are like with and stock and that turn Morgan. and strong That essence of can are price that strategy growth can Steve. And that our long the

Steve Kean

Thank Okay. you.

it performance. high KMI, KML to we With year. Mountain in of our significant going very sell over both government a a transaction respect Canada, the a usual, providing KMI of you give update with will and uncertainty, having and the KML couple will your questions level I had update CFO a will schedule President, KML through update topics turn We take KMI, both to on will high David closing shareholders. and Dang, and to the numbers. early by segment will which this KML, I’m we outlook are level start companies. on pipeline to pivotal quarter Then, there. strong you answer give Trans considerable Then, numbers our while highlighted the you to take other removed on and KMI on you of Michels, on the a KMI KMI value through covering be call. afternoon’s with As we on then to our Kim and

financial well I we leverage that DCF, the full-year are our that above targets. XXXX. for We metric plan for EBITDA, targets think first now includes and our quarters And and exceed will three our project

We that is expect contribution our contract venture, Trans delay underlying to termination absence from is Elba, the we assumed the together. Mountain, outperformance, none achieve put business LNG this when the very the that was strong. of of notwithstanding our joint which tells a in the you of budget of completion What in earnings and Gulf

gas quarter. the We also project on made our third Highway in our natural pipeline EagleClaw partner Permian investment final the with decision along

the We have we all as a long-term we contracts, under sold day out when Bcf project. FID of now available to capacity projected

secured already that big approximately X.X $X we KMI environment. times debt supply, apply with mitigation EBITDA also billion the will announcement in and trade the of our a approximately debt is share from risk pipe our to announcement down reduction. have We proceeds revised We which X.X U.S. target of KMI’s regarding to use current to KML

are We target. leverage our achieving

We’re on year, to KMI. network having finding the very This has assets. quarter of deploy our sheet, opportunities a good great a we’re balance on pivotal financial capital been in performance, progress tremendous for good strong attractive project

condition indications advancement Mountain proceeds positive positive agency Looking all the from turning our continue continue we our on distribution questions executing here unparalleled on a with and priorities: and our project and KML into particularly and of on shareholders Coast have the of are with add continue our Gulf dividend. well-covered Express there. to of PHP; Complete and with ahead, of actions; the that Elba the completion now this gas benefit to transaction respect as our rating backlog, discussions to ratings value to three possible of to return continue growing network, Trans seek attractive And projects maximizing returning quarter backlog our PHP; did the the we

KML was of flows and Mountain from no purpose longer another that options to with use assets expansion. as Simply hold purpose Clearly operate of As value news The we’ve available, a assets is provide potential KML to balance KML KMI. the enterprise. that set we previously, sheet the self maximize them. strong other are a to strategic The the shareholders its assets including sell Trans midstream exists. a which is and good cash options standalone mechanism funding of like set the of that we assets evaluating those But, following have put, shareholders. Trans said possibly good include to strong to remaining the Mountain, all the outcomes company is sale there continuing for to a among to don’t original combination and for midstream

and consistently options a the demonstrated, in have sale, not available our an Because coming more as strategic certainty to likely with KML to are evaluating forecast, use a say. will into that this difficult further points We we something will possibility, strategic will proceeds few focus that. have means of updates decision. the be outright until board another on But not though KML maximizing on we’ve A months. may of be exploring transaction transactions have KMI enter on shareholder definitive all value. that KML The including can we

increasing we’re for continue KMI the say leverage now there leverage add We’ve transaction. at believe fund to Trans evaluate projects portion share is available shareholders would fund We value that expect to KMI cash or again repurchases. And equity to may for dividend. I’ll our the consistently we attractive to use the growth additional with with of the around backlog that we to that Mountain cash it target I’ll projects, or also the of available of to attractive buybacks And current over said we price value return With that, to in repurchases. attractive achieved, Kim. would updated times turn use our share the and to our target form we share that have X.X an

Kim Dang

an quarter, Overall, had Steve. X%. good outstanding third a Natural segments X%. quarter, was Thanks, up up had it our gas

think spending versus nice And show a for approach Bcf a over moment transfer is the worth growth volumes going X XX%. on XXXX, Current overall which on that to results U.S. XX% day, diameter gas XX XXXX. Bcf large market. estimates where it’s driving This is overall so, market our up is natural are pipes that’s the I

on X term of nice exports total the overall will pipes capacity. third and the came power at Bcf of quarter the in XX% lot natural XX%; were as Mexico third the day. cubic gas XX% of look system Exports in our demand need on up growth capital, quarter longer the million from opportunities under reach a XXX in XXXX to our higher a up comprises in resulted it utilization with Overall, of market, or our Mexico was you or X.X our the to pipes without feet in significant approximately now of total XX% system, which the up day versus bottom-line quarter a power our XXXX. If generation, Bcf just systems, drive spend of expansion to on up quarter

supply the side, growth. nice also volume we’re On seeing

gathering by and in volumes the Haynesville Our versus In driven higher and gathering the XX%, in crude Bakken doubled production up quarter XX% were XXXX. Fort. the sorry, gas were and respectively, and -- XX%, up Haynesville, the volumes the Eagle our

in gas, Gulf XX% natural the side Steve service. on away. this for On the on is Express, approximately On update October had gave and remain starting noteworthy we’ve you of project we the XXXX secured few a target right in Construction developments. Coast month we PHP.

Liquefaction we anticipate in XXXX. now Project, in the of service Elba Our quarter be will first it that

gas delay construction a is material we its our to the budget commercial our expected budget, delay DCF are to year. costs, way impacting for impact natural versus segment on the our the expect And contracts exceed Although construction have given structured. do the not still and the is

higher are second evaluating find versus extend of ways this and volumes they’re year was our year-to-date, as prices. our above Currently, versus Our versus life were up Cotton SACROC. Tall the up as we’re of COX volumes we and X% to last were oil and NGL to up quarter they’re production higher transition NGL X% that off-unit volumes plan from continue segment X% last opportunities budget. benefited zone the opportunities also as COX well below but and adjacent Net XXXX. crude crude year deal. SACROC

in the price WTI hedges have increase we as Our despite WTI place quarter, WTI. differential in price. in increase offset the higher net realized a for The as well crude the relatively flat the Mid-Cush is

of balance the this and hedged Mid-Cush differential. the substantially we’ve XXXX, for For year

and now at that new by expirations liquids subject benefited Our Jersey by in full-year on customers, offset to at benefit economic Jones contract for Act in labor weakness the and These that Ship in coal we factors up other tankers X%, getting a we’re that include Staten in came in Island facility Huston and XXXX our more was our spill of in benefits terminals is rail pet New facilities York facility, Channel, coke. XXXX. options particularly business, largely Edmonton expansions Northeast, the steel from asset fuel quarter were number making non-core driven New in and tonnage Edmonton primarily the costs business. our tax, higher a and our which actually divestitures, in Bulk

by tanks out mentioned but higher for contributions that, API we Ford, up those In much increased was way utilization the was are lower due Although volumes you impact Double Double X%, through operating down somewhat result, increased lesser by contributions Staten pipelines and I primarily don’t and that the of to lower ago. were H, to at Island over moment segment, largely see to go which due the in to was and Eagle and the it H, Bakken numbers. revenue pricing rules a a pricing. Michels, our contribution service benefit from with to this from our I’ll Pacific benefited GAAP contracts the offset Liquids from higher though Cochin and David on Crude the condensate extent, volumes the structured, And some CFO, and costs. recognition offset XX%, in drove that the from in turn facility, due products volumes given is changes. our inspections

David Michels

and consistent XXXX robust cash increase, distributable that again, with right. July we’re $X.XX Thanks, of per is XX% for a dividend XXXX full-year of budget generate per share, Kim. share what with is $X.XX to that laid annualized very X.X Once expect investors the a $X.XX represent we our we to out more than Today, the per declared Net plan that times of dividend All declaring XXXX. XXXX. for we which in increase, would share in our level. dividend flow despite declare we and expect

already heard As Kim, another you’ve great I had quarter.

was third and performance last Our budget above year’s quarter. above

DCF, all our budget expect As basis, and EBITDA year Steve full to on beat mentioned, a leverage. we with

Now, I’ll revenues or walk million of quarter are up page, $XXX cash the third balance X% from Operating XX%. XXXX. through costs on sheet. the are GAAP flow and the million the financials, $XXX earnings distributable or down Earnings,

the on gain that include Trans the However, recorded does Mountain sale.

which Excluding or or Mountain $X.XX quarter would growth up revenues. that in largest, the share, X%, is an quarter operating Trans consistent income is is certain is gain $X.XX actually Trans increase which million the cost the Net be $XXX $XXX of items, the increase; third also per million, the which Much for per XXXX. is with versus share attributable Mountain sale. $XXX of from the to million

of $X.XX Adjusted at is $X.XX $XXX XX% which basis, take earnings, looking XXXX. in adjusted earnings earnings an The or quarter per $XXX million the on than a higher out would the million, period. be adjusted higher share Looking $XXX earnings prior items. at adjusted third certain in million, is

flow which X% XXXX, natural yet or is is up that the per Moving for of on to benefited X% multiple fronts. is performance up growth distributable on -- gas Natural from $XX $X.XX, quarterly million segment nice cash benefited strong segment. quarter increase. XXXX another share That very DCF. was in gas our and $X.XX was third that DCF

volumes You’ve benefited gathering were Texas Haynesville, Ford and assets. already South shale Eagle heard and Hiland Bakken and and up processing KinderHawk, that

had contributions, from greater and Our NGPL growth. EPNG Permian supply pipelines driven

a lower the $XX lower due loss as G&A from contract during by production. million is lower placed projects strong NGL Gulf Our or million CIG was Tennessee Kinder DJ items was Gas our due up of the $XX capitalized driven offset well the is down Pipeline of Canada Interest service. Partially which Trans million a debt income balance expense one by termination. experienced offsetting interest Trans versus year, was of sales will lower segment due sale and capital proceeds. due LNG to to the Mountain contribution which million, contracts month from sale. And greater our a to up by prices from driven was greater to expansion Morgan and rates Sustaining million higher those $XX greater from due XXXX. we quarter. benefit well higher earned as and some COX $XX that’s interest volumes. were basin to growth higher, pipeline Mountain G&A as last segment on overhead the $XX that as XX% was in

would have sustaining actually be budget. higher expect CapEx XXXX budgeted We to than and and it XXXX, in our favorable

XXXX period-over-period very explains million. track which was DCF. up Morgan. down So, sustaining to driven million. reduction summarize, million; million. $XX million Kinder X is for adds a the were segments were items the DCF $XX $X That CapEx in taxes up increased $XX change contribution million; the higher interest $XX $X G&A variances Other main Cash year and by pension for million, $XX to costs million to $XX a be remains in were to to on good was by

of expect lower cash and Mountain offset of well here. the as contributions a lower and targets from driven partially sustaining to G&A, the One year, capacity as expected throughput. gas a financial Canada northeast segment COX reduced as to contributions and lease Trans capital Kinder our note Morgan lower more terminal due Gulf than result in lower sale, We for expenditures, segments, exceed by our natural from taxes by budgeted

of year in of the ahead While be quarter gas to and Steve does mentioned. project natural as delayed finish expected Kean our Elba of to service in is segment budget impacted year-to-date, LNG by fourth expect to plan nicely ahead the the relative the as plan,

balance Moving on the sheet. to

we to EBITDA. X.X debt the -- times net ended quarter We at expect

the net to -- expect we debt ended Just to EBITDA. repeat we at times, X.X quarter that,

and from very and XXXX. So the improvement X.X at times last milestone important nice quarter times X.X year-end

Mountain also pending of year driver sale, The forecast Trans proceeds X.X has KML. of current this was reside largest that at Our The times. that improvement. they’ll the sale at

January $XXX reflection and consolidates and page, public KMI’s to cash more at that to the amount public XXXX, KMI’s the proceeds approximately from XXXX, those quarter. including KMI In net of use occur share debt proceeds cash will as we on distribution Including those we will all see leverage. a debt. debt, the We sheet you balance X, a our that can subtract from shareholders. million of the pay of receive. expect go down adjustment, quarter net believe KML billion that’s year-end out We the KML the expect it Therefore, of in the from will to that January last shareholders of accurate $XX.X billion, $X.X that ended meantime, decrease

shareholders $X.XXX for that contributions $XXX the We flow. generated We JVs took had capital billion. We of use refund EPNG and reduction result million of to received We a out million. And capital we proceeds proceeds billion reconcile to of of the of in to of X.X $X.XXX that growth of KML of paid those cash primarily Mountain for portion net we public debt $XXX the our sale quarter, XXX. had And quarter. reconciles million. $XXX $X.XXX So, a payments. the as million, Trans distributable dividends working

received For dividends growth billion. We to flow. of back billion reconciliation, use portion and reduction as billion. paid payments, or that generated the Steve. to reconcile the debt million. million We includes sale had that, the year-to-date. and net that -- shares. excluded shareholders proceeds of that $X.XXX refunds, we interest to EPNG $XXX it $XXX And the reconciles also X.XXX. billion $XXX public We in cash million of at KML I’ll JVs working full-year $X.XXX capital of We we of of $X.XX a the contributions Trans year-to-date turn as well With repurchased had the X.XXX CapEx year-to-date, And Mountain distributable we of

Steve Kean

Thanks. Okay.

on now. Trans KML, KML we to closed talking -- the turning We transaction So, Mountain about close transaction. the

$XX.XX at shareholders time we As expansion, on strong little to strategic midstream per amounts and a that, as share. as a no of sales said combination. of have with remaining investment close, KML’s assets the the an with And top for of debt entity or Canadian the for in price about opportunity KML set well potential

We of over couple as turn on that expect that, vote it will coming of January, with our in distribution you and Sanders. CSO, on And through, shareholder the occur matters November mentioned. take a up XXth proceeds David to to have Dax I’ll a Dax

Dax Sanders

Steve. Thanks,

Before a items. you do want results, general I on couple I the to of get update into

Steve anticipate both press net a the as XXXX, release on shareholder to First, sale the second. More the associated in following amount with the mentioned, November X, on we distributing be on in proceeds vote January distributed XXth.

Specifically, to things. vote the approve two shareholder is

First, is reduction is a capital, law. the with the fully ensure reduction in we law which with overall stated proxy. copacetic of the in And corporate our is that concept stated stated Alberta will in capital described concept. distribution Alberta more capital, in The reduction corporate

reverse is affect post approval of three-for-one the to Second payment demand. split, special

reminder, a has KMI, in approximately in of the majority shareholders outstanding about agreed XX% favor. vote subject thirds As which the to two is a owns

business XX XX service of XX the tank as We Line on-time the Base place were the all or now tanks have during front. remaining after and to in tanks just service into Moving Overall, X tanks placed the of in early. QX quarter-end. service we in X last the service

The $XXX compares a the on mentioned of with spend the approximately savings end $XXX approximately million original I is And $XXX of project. of quarter, million As on million approximately of QX, million. $XX with spent estimate have last $XXX result share as cost total of our remaining we million. the of

Obviously, there up sale the quarter dividend are XXX per of big declared Now, the $X.XXXX which results. quarter large approximately the and voting is was versus pipeline. with $X.XX restricted the driver from on the of billion are Mountain per the of KML third continuing gain both share for third previous Today, annualized, Earnings the from approximately board same restricted and guidance. derived voting is $X.XX of of XXXX billion discontinued ops, share consistent operations from in income, net the going towards $X.X a Trans quarter $X.XX XXXX. which for

on certain $XX.X income associated So, from big online the interest proceeds compared sale the approximately and from in with Line let excludes quarter tank associated driving terminal a the same operations. million coming to approximately Trans are focus earnings, increase Adjusted Mountain what’s and me $XX items revenue Stronger from the in income drivers. XXXX. the $XX continuing for minute million were with Base which million

the course, big Mountain. Of is quarter in Trans the $XX.X Total certain ops which for not DCF on the item million, sale adjusted is was discontinued of for gain quarter the comparable of XX%. DCF million for which in $X period coverage of million, and approximately budget. is up million within our the ratio approximately XXXX reflects $X.X That the payout provides $X of the

loss compared at was flat. pipeline pipeline in segment is O&M the place Segment $X.X variance. due The up components the Line management activities rates with non-recurring of million into assets Terminals going up $X.X some notes project underlying that segment contract It terminal to Edmonton intercompany lower Cochin compared XXXX XXXX to from Trans terminal and to Terminal the by service and were Looking the Mountain essentially Base South as million items the timing to QX favorable dividends the G&A to Sustaining Interest for approximately fourth the million Mountain million, The of primarily line. FX main the capital to due in Same on the $X.X G&A the FX removal coming million tranches the The before we on given outstanding the expiration line approximately $X.X was the quarter. segment with QX away expense. segment. billion, the million Edmonton segment Trans were $XX and DCF of interest favorable EBITDA XX augmented compared had and the Mountain spending net. $XX was JV. and is government. on the approximately completed. the and essentially in up essentially proceeds being tax the of and XXXX at payment unrealized favorable integrity due primarily terminals Mountain the offset by mentioned flat. the and that the certain I South by North the renewals XXXX by term dynamic that with flat a was lease by interest Preferred approximately offset cash terminal but higher is lower pipeline non-routine tank segment to is both Imperial were contract and Trans exclusion XXXX the of XXXX Trans lower $X.X facility in items on was had some driver

as purchase will the received, to $XX focus related Looking almost Mountain associated more and we are of call. I’m you comments we to sale. if that, such we the when also, quarter that year-end the earnings you the for KML, the call. paid to our X/XX, behalf power and increased billion XXXX payoff we distributions million retained approximately XXXX the assets on Cash increase feel on for through we price moving during service comparing from to billion, release, the change net But as past of the sale going on liabilities lot the the which and less stemming Generally, CapEx DCF sheet forward, in that practice, or on there to expansion proceeds spend $XX and color take less $X.XXX credit receive prepare will government government, residual to budget of million items a mentioned that detail, want debt not to tanks balance consistent give my adjustments, assets less a Base the for expect communicate adjusted plus going of a of line and CapEx, fourth the of and we to will the I’ll net more the is and only the free quarter provide other held not have with the quarter. forward. generate And Trans with growth of facility, of billion fourth and $X.XX the With the move proceeds. Line pieces EBITDA $X.XXX this in full us generated assets

with The the pay then accounts importantly, $XXX cash associated several increased receivable we’ll that’s the approximate over where $XX.XX we million that assets KML QX look More with Other tax in let’s dividend per primarily increase in approximately just to January of and approximately $X is $XX.X in will gains forward share, be and an current pay will capital going. transaction billion due items in million, XXXX. largest the to in coming depreciation to by facility JV. we Imperial charges and a of with Deferred that component decreased service. costs placed of of the Imperial issuance of as billing PP&E from million, unamortized $XX Net in million assets net result a $X excess the by decreased other a associated is canceled. assets of approximately which result a TM debt write-off the that related

to turn balance increased of With outstanding the of the by Trans the a $XXX result on back note, payable liabilities any liability to gain quarter liabilities sheet, the sale $XXX primarily deferred a tax million, million, the taxes On the release, Other it I’ll Mountain other of Steve. due primarily a without that Trans on the Also of result as long-term debt. we hand side Mountain. of sale. current ended decreased right as

Steve Kean

Okay.

We’re going to to go Q&A.

limit something different follow-up, questions, we’ll We’re with questions and courtesy going the as time. some do. to do of to slightly others person some feedback that per prefer with one got what we one to this that’s would you We a that

you than and the you to around will queue, invite in back question we and get if back you. more have to we come However, a follow-up, one

the we’ll -- With over Okay. that, and operator, it questions. turn please start come on back

Operator

first And Thank comes question Jean from Instructions] you. Thank you. Ann with our [Operator Bernstein. Salisbury

Jean Ann Salisbury

XXX-G downside potential the productions be book the [ph] outcomes? Do share what have we case? of any in EBITDA of in internal should you How Hi. for lose could KMI the can that worst you

Steve Kean

project, to in $XXX assets. because that tax try you give effect interstate million our uncertain, outcome parameters. hard the across some the is very it’s I’ll We’ve the said but about to Yes. alone, It’s highly past looking at

factors mitigating -- are. And very it’s Beyond understand you difficult that predict. you the what to know

We moratorium many our systems. rate of have place in on

many business. We have transactions of rates our negotiated interstate the in for

discounted all effect. have gas segment rates our is Not We of interstate. in

is obviously it all their of Some our of our which in interstate we’re business earn regulated intrastate assets growing. Texas, And not a service. of cost

Okay.

If the So, forward, if together actions just and for max here. subject talking max rate are the really to to some of way, off you comes would revenues lack you’re which rate and put subject the doing on do, And that several which the that tariff commission us you underscores what is foundation roll to about our about rate what adjustment. interest amounts all down, business XX%, years is they adjustment. by be that to the anyway

If you monopoly they’re action gas since franchise they treating the been hasn’t look they’re interstate that natural That XXXXs. the pipelines the case regulated if utilities. at as were taking,

XX administrations, a the another various has in commission the Over create years, market, pro competition last competitive service carefully market between competitive a one crafted pipelines. in order competitive after We in territory. to the through operate rulemaking franchise not

process. bring rate-making go We XXX-G other expect bear to through the that arguments as we to and

chance So, thanks on a stay giving for to me result. the

Kim Dang

interstate. whole is -- thing interstate XX% just of there. of that not the is the And one The segment, it follow-up one of the gas you revenues, mentioned

Jean Ann Salisbury

going think we That sense. away to as Yes. or... worst start about maybe multiple it, million makes a XXX of a the And and if case

Steve Kean

over confidence over we our We’ll are we to hard work our And spread process we this and here be very mitigate quite and actively be mitigate a statement. actively think spread with to in are hands what as few Again, customers And it the there it it. regulator this able we mitigate Yes. gave I numbers us to to will through I I with and gives time. we some able play time. you that it, think work work and because project,

Jean Ann Salisbury

years? your mentioned and as last And update the for on then, a the NGPL, get to you at rates follow-up, re-contracting call next come on Permian potential intrastate share roughly negotiated on you pipe. would the of negotiated re-contracting over I what the up willing that couple share believe out EPNG, be we of volumes rate your and of Could an higher

Steve Kean

quantification of have not a It’s Yes. we that.

David Michels

number that I upside. a $XX we’re all year-over-year somewhere range kind I of on put to It’s Yes. think that. talking hard about of in million, mean,

Operator

Gershuni our comes question UBS. And Shneur next from with

Shneur Gershuni

was follow just if is wondering you of just it, on this informational purpose confirm that stage couple that And case right Is a you another find long in I for on mean, this at the you if you market given now, ago? as on more on price can clarify right I there’s request asking that opine point the discussion can last now filing wondering that of ROE. that and that’s place? rate so for things. of that. it’s FERC out XXX ROE, I the can the context question. at making Maybe mid-teens request given just first the like a speculate was the this to the Especially, for the it effectively to can there actionable? up pipeline sort of part was not then,

Steve Kean

ROE, bad overlooks, It informational view cap has mentioned. in as of On very it template way it into past. it -- we information uses that consistent kind I number a with the negotiated rate the is rates -- the frankly, a commission it that appropriate. structure things forces is don’t informational the and litigated first, the uses particular think are And old we think commission a as other forces a an filing. done There we filing. that including the things that we don’t And it view making of

about to to going of of be And get are we’ll that to point ought be this, that sure the uninformative. out. written, these you have what get in I’m I you as so, course submit But, all thinking is, going many numbers all to you’re opportunity an would

because out, XXX-Gs account you and take these at looking you’re need to roll as our precedent. as have policy into particularly them, that past of in in they light So, flaws commission view,

their protected way to again, that franchise way a that I it last based some Tax not it the But, a leading franchise, late think that was informational the fairly are. information. we But, find process in companies they -- monopoly customers. On won’t FERC’s this a that them. same from think way the way, they’re income competitive we market, And year on the or local their desire passed up of one found make utilities distribution are gas benefits a not electric customers. speak regulated to and in utility the Cuts much very for another, So, do to to or was sure purpose, I clear

so, And I similar will, appropriate. make you commission. think our that approach, And the continue to that point if isn’t using a with us to circumstances we’ll given

Shneur Gershuni

an dollars remarks we year spent? basis. question. a Rich an to as Highway, kind it looking do some more And those mentioned billion prepared Where scale do to in to $X being capital million And million $X projects, I Permian of on at his follow-up Are ability series if like you Express $XXX so, a ongoing billion you envision spent? invest being $XXX believe more of type where the you do see large of or a Great. projects? see

Steve Kean

collection we’ll it system but projects smaller million to see we $XXX net due at a putting primarily was to would if directed more there. expect of the We on we a the gas look a capital of you took several good But, I And put through, to would Kim think, backlog fundamentals the opportunity gas. grew It’s hard you it’ll service many of natural after and put what at looking how we’re million million ones natural big addition increased ones. -- quarter-to-quarter the say utilization those largely be. be have little work. only think that not be $XXX that versus multi-hundred opportunities to segment. existing backlog the the And in will of to we to projects

Operator

you. Thank

next comes from JPMorgan. Your Tonet question Jeremy with

Jeremy Tonet

afternoon. Good Hi.

here. And growth Just bit have moving favor to business as little far you is some want kind like it as in to things seems turn natural of your the segment. a gas concerned,

or those there that cropped You differentials recently could and seems wide up basis is as for and crude And to just possibly Ford, a Bakken, there the as the kind you far Ford that there. been like that like to that of you bit noted with you guys It like as do Have want more of activity to H like areas. putting work? quite kind Bakken, touch Haynesville, what mean looking nicely. expanding on Eagle well more the there. have. trough seems Haynesville and And resurgence guys are activity other more. off Double might in coming The might be conversations BP infrastructures Eagle then, seems wondering of the capital

could see wondering you Just opportunities. as as on if three where the those areas far you growth comment

Steve Kean

lot feels one than a that like Jeremy, question. more

to all think touched is opportunities. be on, you areas there in three going -- So, I’m I that going to think I

but at need Bakken. I think, -- is residue south we don’t side, are the there volumes on additional there crude projects on for the to speak is some Cushing. the crude -- some to side, additional looking Potentially looking we’re want to I at there too are out take clearly solution of that much a

So, Haynesville, take but point, expand well. Ford I the in volumes area as a then, capital a exploring particularly may opportunity be going be more expansion will our capacity, Clearly, to take we’ll to think expand I to in NGL building we well. think pockets as an I certainly there at of which And we’ll existing existing be -- think our of there largely on the that additional the system is as pockets the capacity side, that’s to there, Eagle the look be we’re deployed need will Haynesville there.

going of So, long-term contracts. our to it’s think the already not I up capacity, extent value sold the capacity clearly in existing is

for As in we up those do areas. renewal, those should better come deals

think good. So, look I prospects

Jeremy Tonet

you. queue. trouble, interest Great. Permian opportunities. I’ll about hope not debottlenecking in for back I to was Thanks that. getting brownfield Got But the of in in going ask the

Operator

Pickering, And from Bean Tudor, your next Holt with Colton question comes & Company.

Colton Bean

Good afternoon.

consideration the of is KMI to asset inclusion fit that on exit steps were Cochin? on U.S. there Kinder next to guess, from the As any network specifically KML maybe that, does level, how portion I the you potential And portfolio? the into of KML, evaluate touch if

Steve Kean

Yes.

does divided not or the Cochin commercially really quarter. otherwise So,

to other. end sense makes it for how handle to or the So, And that. we’re evaluating best it side one

possible of some be. that as prospective who a candidate function of might or purchaser the And

full. as So, to we our have but it. contract, it’s it to -- resolve put It you service your attractive a full, is under that’s valuable an runs on under It’s still to It that nearly out, contract. long-term it customers. runs be of something And worked providing part have is finger asset.

think on. I whichever it side it’s So, valuable, gets up

Colton Bean

guess, just And a helpful. That’s I as it. follow-up. Got

had filed on that abandonment So, you XXXX. in mentioned a away TGP moving portion for UMTP, on think the from you project, I there

thoughts to incremental, commercial and pursue filing, Northeast to given need more And is on to any anything abandonment more Gulf there? you there you the capacity Coast appetite of project do permitting, if Given on just were where spreads a to? kind would move for

Steve Kean

Yes.

another in south Utica take currently is long Marcellus potential our that importantly, haven’t that the lot not interest the TGP accounting any in We’re is market gas to of and sign just pursuing quarter And now cetera. project gotten of order service as But that have where is, series the the et And we that in service, and further. the which on a to customer UMTP. done reflected we remaining of up that for gas we reason in for growing. pipe, on in we’ve gas for reversal part projects the

the a the but the of it’s of so, And hand, on one function a opportunity very lack emergence a good other. on of thankfully opportunity

Colton Bean

Okay.

in no Southbound real, no a for even bit And real basis tighter? capacity being downtick so, appetite with

Steve Kean

Yes.

but capacity, around. know capacity For don’t is it few the opportunities the and which turn it’s this I take one, -- existing it’s last remaining among to if Northbound

haul not it’s Greenfield So, pipe. brand new long

not pipeline one of the last reversal projects. last, So if the it’s

price. think, Greenfield can attractive capacity, actionable. think it’s doesn’t it’s to Bcf, Clearly, a X range, commitment, that Bcf if compared we that attractive [indiscernible] pretty of in -- require we market I pocket nice it costs it So, it’s and is this of

trade. good So

Operator

question Our next comes Spiro Suisse. Dounis Credit with from

Spiro Dounis

back how the at here, really driving as the something beat your Curious guidance what much had. is maybe to ability issue despite getting versus Steve, And go earlier, meet actually ultimately, based? end headwinds into and what just you just said is is, give to of do a you I’m of to that just XXXX and some get around wanted around can we sustainable the just I of more shrink if that commodity it? little ability detail your exactly year, unforeseen, the you all to

Steve Kean

uptick is it’s demand the Yes. the Kim important had even note It’s point really the volumes faster that Texas. in And and side we’ve volumes natural -- as both there gas of the in that I said, supply and growing on utilization. are mean, one

-- market, seeing XX% on sales regulated for That’s we’re XX% that’s So, the is a us. that were that’s which intrastate FERC XX% transport position and Texas a up in is that number thing. on XX% good not

growth the they’re we’re gas And we’ve least there long next another very really, time very, So, good the a never like supply side. the year year year-over-year, to at continue. expected markets to going on good had have demand looks it seen, -- in there, we’ve like of in and tailwinds is and and growth another

looks that on. a So, like trend good, us, beneficial carrying for

Tom Martin

tailwind about gas, the to, of for And really at think, the just essence largest Kinder what on driving that’s network in we’re what trying and in really would Steve quarter, it’s whole that Kim at all the kind year as and and come huge good pipes tailwind Kinder performance. are this referring Company. you it’s And system. that fruition, natural particularly dynamics Morgan. add when to of tremendously is of of I Morgan I gas moving looking to this do Again, seeing moved the have we’re natural our guts And the a you’re XX% in

Spiro Dounis

And if going, Permian but that I question. is not was then, sure that. where this pick appreciate I’ll up Jeremy

a current out add last the for tossup to expand on terms of Steve a talked you being In it one. I do maybe or about between need the pipe the of a just pipe of potential the kind third third gas there, need call, think

was last think time. unclear I said you it

to more like it’s pipe wondering, a clear Permian X.X needed see rest you maybe other Bcf process, as through of you getting one on the Permian? way Just Do third yourself feel you’ve is is now? do clear gone that the you the Highway or day that or

Steve Kean

Yes.

much inch. said, was supply locked We X.X the as to more on secure, there. Permian Bcf for gone chain XX if XX the pipe we So, was Highway start that, our went inch had in the for I’ll the X.X with pipe Kim because -- and we XX inch,

And care of risk. took that so, we

our to be and We to additional doing is, docks types the are you pipeline, going cetera. they’re out pipeline, to there’s come point They’re taking if more people on of two continue be Tom it’s growth out a at at opposed may view diversion elaborate, places, think rigs break think, need waiting the think a not right to But I think our time. now, Permian where there’ll takeaway maybe for we et more as but or having. third view you’re the and that. other of years they brief I in a they’re breakneck were over more a but third as and three we doing after

Operator

Richardson from with And Tristan comes next you. our SunTrust. Thank

Tristan Richardson

X on curious from for Just Bcf infrastructure into two as a supply projects anticipation the in your of XXXX? opportunities incremental of sort day large of we new look downstream

Steve Kean

good Yes. very Well, a point.

together X really about if we’re of you projects short these a look put So, Bcf day a a bringing period system. here another today, to two that system has Tom’s team at very time, with it’s And in system. Texas Bcf that our X

opportunities follow-on demand do Mexico arrangements gas, et arrangements to with additional create, as Texas on the comes for see that it cetera. on capacity Texas LNG accommodate come and rise, expansions system additional projects lot believe, certain will all to existing a to of exports which those pipeline Now, as we of lease comes or to on with our downstream system. But debottlenecking intrastate we us continue

So, and the market is has very shape the right in -- fine outlook. whole our good very Texas in now market Texas a position and it

Tristan Richardson

just And follow-up. a then,

PHP, to project curious sort growth additions Just terms of of areas of the what you’re sort in backlog additions? outside seeing where of

Steve Kean

Tennessee Okay. pipeline Well, touched we the with on reversal. one

but those very Louisiana to additional projects all find near our we’ll as pipeline. the Morgan valuable, Coast have that on. on capital, may are certainly up which look continue goes time as term. the In we in looking necessarily at Texas not LNG that have serving a We’ll NGPL opportunities, is full also at debottlenecking on coming West, Gulf of the I think bunch Kinder capacity well as some We

And so, the business, question, of and we can our so the monetize again system. is G&P bottlenecked is that. part it moving our then, the And Bakken on earlier

to room capital our as Eagle so, on and and market. small that are we’ve with not the take system potentially volume in to, to additional our intensive Ford, capital And get Haynesville existing expansion. Tom debottlenecking, we the investing systems to debottleneck customers’ product alluded But, got in

free, but So, grows in as we’ll for volume, for free, get Haynesville. nearly the it some not

than in so, in more basins. other And Bakken two the the

Operator

comes question Research. from Stanley next Wolfe Our Keith with

Keith Stanley

the process, is On want a reason in until the shareholder payment vote you’d the two special make wait not Trans you in KML November on strategic decision those items early or any or there before are KML, to all? January review connected Mountain at

Steve Kean

now. to a necessarily wait even We on work have for decision, don’t that and process we can our starting

Keith Stanley

follow-up on Okay. And one backlog. just the

added what and is quarter. interest much How you there? million in ownership You the assuming are of Highway $XXX that Permian

Steve Kean

Yes.

were we I interest. So, conservative, believe, the on ownership

full to a we system So, the on the have that exercise the take assuming shippers it took equity. options large of

backlog Tom, gas. to and like was of that, the XXX, addition that? So, the isn’t something So, most it

Operator

you. Thank

next Our Morgan Abrams comes question Tom from with Stanley.

Tom Abrams

West the somewhere, Coast, the all Coast that we or past you Where has and go just there, development that? of Try to Gulf about Intrigued go? you’re LNG residual fight where? but thinking this does Thanks. get with it out to how coming gas, just began Bakken Permian gas to idea, the to associated ground, get need

Tom Martin

to and considering but think both. considering I options the Yes. I both think Rockies area, more mean, I we’re likely down

Tom Abrams

the are across New in maybe over out and on as still of wind getting things on then, is in the Island. that But tightening look there you have And your would to you New there the and suggest headwinds kind bottom face starting you anything where are York some seeing up terminaling, Jersey, less Staten improve?

Steve Kean

barrels billion at up now. New We Carteret at quarter XXX% last X.X and Staten a an we Jersey saw improvement basis Amboy. Island. to and quarter-to-quarter facilities utilized in two actually, we’re on at Perth had XXX,XXX And

short-term got to good So, head though. still a issue Spill over above huge tax keep is plan water a there. our we’ve

looking we’re strategic could so, And the at for side. the of facility kind long-term, options looking alternatives include for which at

Operator

Lapides comes Sachs. from Goldman question Michael next Our with

Michael Lapides

necessary thinking quick, and now it’s returns expectations? a project versus you for LNG a about on And move project How that’s for the about you process, original to Real to of Gulf bit Elba are real think become that how of a forward Island sequence outside two of for of FERC EIS for should guys? the little something we steps kind kind of one.

Steve Kean

Okay.

First on Elba.

the So, project, we in certain you has we’re joint didn’t and unlevered time. since a venture other and have things still originally have go a in actually at double-digit But, partner return. The we improved way didn’t to we time, after-tax, sanctioned that have place. return when back looking

was of we and change Now, part of was brought is brought investment that a it in our our about what and partner promoted, development it promoted.

There’s important three there here. being there, project cetera. thing other units us the the liquefaction. are the Michael, who Shell, is is our There that’s provider parties the is protected et in do have manager is The as developer to arrangements, that of contractual us we provided and

an And something So, us. that’s EPC that then, Shell contract not, into you EPC That’s entered with is will, we’ve on if contractor. providing. our

associated on line as of that’s bottom is pain with of the would it normally some think So, you from delay. of what all that us the insulates cost

and eroded, returns our standpoint surprisingly not that notwithstanding acceptable So, delay. not really a much our fairly from have significant

Okay. Gulf was LNG? The on second question

Michael Lapides

the steps the do LNG next you for EIS of about How Gulf process? outside Yes. FERC with think obvious

Steve Kean

Yes.

information have JV is you order lot Xc, of opportunity the the EIS liquefaction includes are next the a other talk the our Gulf need There’s a or we’re for get Gulf with some market. looking who a about that shippers explore as year. gave mid-July in facility; get been the brownfield commission at things. current the expected options last to timeframe re-gas the LNG. on next did So, in the just LNG, potentially date not opportunity. and We we marketing on we which said, just to and of I is mean, situation actually resolved there of LNG need on our our wave And

Operator

with Capital from comes Robert question Catellier CIBC next Markets. Our

Robert Catellier

likely at just -- think sure And was some tanks. of they I understand tanks rates was I to is I recall the Mountain expectation completed. to original right KML hoping if understand recall they recall they I the TMX too. could have the the make on were Trans recall

is So, is to KML fact going impact my that in a And question if what the is, concern, on expectation? that still happens? EBITDA the as

Steve Kean

time the expectation. still The still Yes. the the few that That’s project the expectation into are actually tanks comes at play.

at and requirements, recall time the the the ability additional into obviously that’s got of of so, project also play. regulated after existing give comes notice that meet notice. to two They’ve tanks years their years give notice they to And two additional can’t extent they regulated -- requirements,

don’t And to have we that. anticipate so,

Robert Catellier

us And on some the the color quantification, give impact?

Steve Kean

Yes. Go ahead.

Tom Martin

we what actually there. depends in out third-party business terms It upon of have

so, would depend specific And on the situation. it

Robert Catellier

the contracts expiration on then question Similar the rail terminal. Edmonton Okay. at

that I of sort on think, customer. impact renewal What rates you can have? there’s with might the color provide in that favorable an us XXXX expires the important contract for

Steve Kean

It switches to a cost plus contract.

will that place fee have time. we in So, at a management

switches term. paid at just April off in would And XXXX contract. management initial this we So, of its that a contract in that looked it be over to

Robert Catellier

So, material impact that’s then? a

Steve Kean

it’s like looks million. about it now, $XX Right

Operator

Your next Kwan Robert question Capital with RBC comes from Markets.

Robert Kwan

Hi.

to both you’ve just on no that inflows $XXX fair? no outflows the debt, to other the Is pretty million Dax that gave, then with wanted numbers going got are to sure means over the -- $X just on cash. major is tax, the confirm, much dividend you’re billion there and make be Just no

Dax Sanders

forma of the dividend or for Pro right. XXX about about the That’s right. taxes that’s -- over cash Yes. just were

Robert Kwan

baseline, on yet the $XX Okay. that all that the pretty to so ongoing quarter. And part fourth the at lease, in rate full run it Does the the phase factors? of $XX you million quarter sweeps the as then what also there and any future million much includes G&A kind is, rail think incorporate highlighted second up of of of tank of contract least just the are this quarter,

Dax Sanders

No.

run think one came quarter. beginning last of I in going that’s I in the after fourth The sort quarter, -- tank the a pretty of fourth last clean forward just baseline said, rate. the the came

a it’s pretty good So, rate got run forward. going pretty,

Operator

comes Our Shneur UBS. from next Gershuni with

Steve Kean

again. Hello,

Shneur Gershuni

Hey.

seven situation. with respect I said total and to revenues questions. had wanted an rules, that XX% clarify to something the I earlier of Following Kim has about interstate that just adverse

Just that wondering if you us can sort of walk through again.

Steve Kean

Yes.

adjusting what would way, rate would be rate tariff. down be if think FERC if ultimately they to So, make of our adjustment, max were it a you this

the max so, negotiated it’s And largely that of some could that reduction have it. rates potentially by paying rates, not if affected, the some with discounted And in primarily but it, and shippers definition, are associated goes rate that’s would some they affected. possibility the below the rates be always pull not in get the could who revenue that a come down elimination reduction max be they’re enough they There very discounts that rates discounted affected, is rate. max rate, not But, small. the that

interstate in for turn of regulated subset a adjustment to our of XX% a potential adjustment an really the gas convey. That’s for it’s trying so, which an we’re that revenues, the And subset to what potential is segment. natural are

Shneur Gershuni

Okay.

clarify. So just to

your So, is saying sorry, would that’s max -- of rate subjective where you XX% then see is adjustment. what XX% and you’re revenues basically an

So, far if would not revenues, less that? a hit XX% it to be the than

Steve Kean

settlements in it’s we’ve other Correct. where then what that had able you the X%, or X%, that. for a from rate something achieve That’s reduction, regulated been reduction settlements. then that XX% interstate -- we’ve if example, And to about. Very of And rate a had we’ve yes, like and Yes. X% taken important. X, revenues goes we’re so, talking

whole XX%. you Thank the not whole clarification. Not that it’s the XX%. for So,

Shneur Gershuni

as And appreciated. you. Thank Much follow-up second Okay. a question.

where earlier update then, would in is proceeds you the of you fair buybacks, example, asset proceeds you’re elsewhere? to similar go selling, if sort some were ended and remarks your buyer an that asset thinking market in up an And on forth. sales, you Canada just I sellers selling so or impairment around whether year. where if assets terms thoughts you in You this of playbook are if was of assume can any for it’s a had Canada. about a opening terms about other to And on it Oklahoma get the gave talk assets wondering there in sales

Steve Kean

Yes.

proceeds them were with that maintain respect talking proceeds of First we all, kind from. otherwise of were apply wherever we’d of buybacks. would sure ratio, use projects, We’d but go the for make them. there available what would use If share came use projects, we then about would we to to that they same leverage but

So, thinking. that’s our current

asset. a to this Pipeline And to Canada. like that a to rare position asset Edmonton. in terminal great period. good or is team come rare Vancouver the good they’re market are On the very the fairly Cochin a a Wharves packages market did over development. we assets. And anywhere, are KML come We’ve in rare asset assets, but built are think -- we XX-year Western XX merchant and and the John is asset, They to they think it’s very they largest his new that are

seller’s market so, of we it assets. that these bit tends be to think a And for do a

Shneur Gershuni

assets Oklahoma assets? or The any other

Steve Kean

Yes.

have So, said, G&P Oklahoma, as good we we assets.

most we someone to instances, them. in We one look more we else’s may and those, But Oklahoma price, whole might the price have be could monetize those value. the that, what’s at specific be the assets. That’s right, that to driver of specific commenting going at a here processes on hands and shareholder it. Everything some where that find is or right valuable not assets -- create beyond

so, we we’ll And asset pieces the of have if find base past, in those. opportunities we certainly facilities, on those evaluate our as some

Operator

Thank you.

next JPMorgan. comes from Tonet with Our question Jeremy

Jeremy Tonet

Hi.

that gas about natural debottlenecking. Permian So,

Texas that that was drill that could buck have seems that can guess or think, gross intrastate, of down -- Is NGPL. added EPNG I connectivity on building. about are guys pipes specific between new number, X on based out touched downstream any you the talked about egress capacity really recently be Waha a drill into is more And kind like talked there, and X if be I you ever is the to with Bcf guys Waha and that to your down would just past, day you in trying that how assets Bcf wanted -- more more takeaway? these given squeeze to challenged? you that the just there employed,

Tom Martin

those may economic make really that sense. this downstream certainly And existing demand extend higher what we the those were are of of look all time far Steve market. by those There by to petrochemical smaller really to horizon. Mexico it certainly, be exports, components for are low-hanging the kind that our we the Bcf growth Bcf Bcf the expansion. think X to of as would and Gulf earlier, to projects really, Texas for LNG they driven which of if side capacity anywhere potential today. markets a costs, of talked be clearly post low X of still cost is we’re projects we’re the support as mean, a But, is all at is I activities. PHP I have. about And has will that is harvested monetizing along lot looking supported at deployed, growth well a been And exports, as from fruit the as done much opportunities network and Texas And expand -- in Coast the market it intrastate

Jeremy Tonet

be clear, like talk that’s of that’s about X way about, downstream that Waha. it? market, right to a the more kind getting PHP, X to kind just out mile So, getting that you that to of and really of Bs last of think the to Is not

Tom Martin

Permian. more That’s

Jeremy Tonet

of getting But, it is Waha? out

Tom Martin

Yes.

Jeremy Tonet

Okay. more… But that’s

Tom Martin

by I’ve Permian But pieces to supported Paso bigger get of on that, in we El subsets looking potentially Colorado. the into anyway, -- of up are, Waha market via today. or for prices again, probably as certainly those of done. quantities Rockies again, the those we’re North mainline not up that smaller not places at or Trans the North But,

Steve Kean

even -- and the grow market continues support built, the future to pipe getting pipe out. Permian filled as the the that’s gets may And them in capacity

Jeremy Tonet

just H And follow-up we before. a Double quick, then, talking were real about and

a is If done that, thing you pumping that year in kind that take be within nature? would of term how can kind of could projects a do? longer expand that or Is long to this

Steve Kean

H? Double On

Jeremy Tonet

Yes.

Steve Kean

is be expansion a station. small Yes. that’s done, There to remaining pump

Tom Martin

That’s right.

Jeremy Tonet

if of you you I quarters, do commitment? could So, got a think that couple

Tom Martin

Yes.

do could within X X to You months. that

Operator

show no And you. I Thank further questions.

Rich Kinder

into hours. very Okay. Well, much. a Good night. all you thank in couple the Hope baseball you’ll of tune game

Operator

you. conference. This concludes today’s Thank

disconnect You this time. may at

Kinder Morgan (KMI) 17 Oct 182018 Q3 Earnings call transcript