KMI - Earnings call transcript Q3 2019

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Operator

Welcome to the Quarterly Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Today's conference is being recorded, if you have any objections you may disconnect at this time.

Now, I would like to turn the meeting over to Mr. Rich Kinder, Executive Chairman of Kinder Morgan. you. Thank

begin. may You

Rich Kinder

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

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

over opening it calls with I try our our and share statements these the Steve, financial rest for Kim, the future before vision on always to and turning strategy. team, you my of Dax In the to

the and believe XXX% our continue to Canada U.S. on in interest On decision the financial in front, I Pipeline and our of plans of interest portion Morgan we Cochin indicative Kinder our to that execute sell XX% the is our execution.

on trading a above whole the multiple Exchange. our asset, well Cochin are a the York we on Stock receiving is which KMI know, XXx multiple New you EBITDA of As which is as

strong later, and what sheet, these expand a core the proceeds to about talk of interest that opportunistically healthy expression multiples in Now, previously uses assets, our EBITDA. higher our benefit consistent with at we we're similar stock, able manner should a buyback more I from add dividend, all maintain Steve indicated sales, balance in a assets our will we pay have or shareholders. these use to growing and of and received this believe we other

And just whether governance these will good discipline. of of evaluate a That matter of let as transactions. difference said, result me no interest a EBITDA. certainty substantial and capital whole company such All interest will we there of when absolutely individual say, to this the multiple as is expressed indicates a as expressions and valuation as between a the that assets of in

outlook natural for to XX% Turning America we future, in on positive gas, in now quarter's the future And natural where to gas our between renewable is last will vision energy of very projects which I incidentally, natural all that the rises our consumption move September dramatically. report Administration, on of the our important was of even about described the a call, through as gas positive pipelines. Information that Energy XXXX, and which outlook U.S. XX% by increase in the reinforced case us

the I'd growing utilization. impact this though, talk gas natural to about like Today environmental of

from XXXX of dropped electricity in have that XXXX, increase in about approximately side dropped U.S. electric – story. to the the from the reported impressive emissions more have The of same power XX% positive not an Even absolute EPA COX the First, total during the sector COX has notwithstanding generated. without period the of emissions XX%. time amount

utilizing environment fossil them compared power. much gas-fired coal a largely older new approximately natural burned minimizing most fuels isn't since banning impact to result and our that plants, to demonstrates the accomplishment but when this This responsibly. plants, natural the dirtier huge the is as to answer power on simply and COX of gas half is know, As you of emits replacing coal

but production transportation some methane emissions, atmosphere. of much disagreement too naysayers LNG are as in that natural its gas. America production its primarily cleaner emphasize are the coal-fired be they shipment The drop, around and these with over world continue across and landscape, used industry-led natural low generation gas it's in consistently the These the the growth in developments replace part countries tremendous electricity large also to into that gas emit the political extent to to positive natural developing due There's on clear to has to pretty initiatives. but led to accepted

as gas Let emissions, me all over in between period. also share increase methane a same some period. across and XXXX whole, industry XXXX, over methane XX% decreased systems declined with than natural U.S. emissions the U.S. more XX% natural you XX% that numbers. a from despite production gas by

period. be might to tract enteric key Google from to that, do that may fermentation, of emissions animals with know, digestive want to phrase, it combined it suffice You has you same interested and the that but time to that manure XX% rose say another during methane by management, farm actually

methane those of were actually XX% U.S. equation, frame. out the time emissions that took two you categories total If during down

chain Now our needs we to along industry continue member entire committed achieving methane leakage or a KMI a issue XXXX. Future, address of this is industry are. all the of and X% to rate initiative that founding gas ONE by less said, still natural to a supply voluntary

that now target. In well fact, is X% our members rate below

that segment for X.XX%. emissions substantially XXXX. negatives. continue methane In will has More X.XX% and segment emissions storage gas is outweigh is at in XXXX view emissions KMI X.XX% positives with the issue of our in is us, the that solvable, the summary, natural improve the target and to environmental in of to from the to improving specific far goal outperformed already group's transportation that

Steve. And I'll to over it turn now,

Steve Kean

to it an start President, I'm Rich. performance. Thanks, give our KMI, going over then to Okay. Dang, Kim segment with turn on update our to

CFO, you will the update and Our take Dax we'll David then your take Sanders on Michels through numbers; you will KML, and questions.

KMI that we previously this, on out is summary the you. adhering principles are laid So to we've for

with three agencies. from met having sheet and strong a approximately ratings now target debt-to-EBITDA our balance X.X ratings all times have upgrades We

through capital our a criteria, of discipline our track maintaining our and return execution, self-funding record by good are investments. We

increase, We attractive capital by. evidenced and shareholders shareholders, operate Again, to returning we are year-over-year to additional principles to growth discipline, value sheet, XX% and opportunities. continue dividend opportunities, and/or the balance strong finding divestiture the those we returning find value as are by

QX we During had that announced Pipeline interest, that sell agreement KML of the reached would the of including equity KMI an would quarter, all KML Pembina and acquire with where KMI's XX% Pembina common for Corporation the the $X.XXX quarter cross pipeline closing conditioned The of closing on XXXX. late of to year or the remains transactions U.S. Pembina first portion a billion. track this for are and Cochin

expects shares. I debt reduce repurchase And to use our being to of and reduce its proceeds net debt EBITDA investments KMI approximately in ratio proceeds to projects times net principles as these remaining to Consistent to with the we attractive for said the opportunistically to before to invest use said maintain just proceeds we we debt-to-adjusted stated, announced -- when transaction, initially and/or KMI put used repurchases. be will X.X the

the XX% a the the of from is Other September Facility in XX. first plant, of Kim Island financial as We been milestones earning obviously unit delayed that on Liquefaction Elba one of revenues. our in and has balance along project are unit but We now service a here with and meaning our you'll drag that placed we for quarter. were David, performance service on hear

KMI's specifically, project that own about the of both as you we And the share at the level the venture also XXX% facilities it's count the own XX% as revenues, facilities that when joint we well to total XXX%.

the more place the in three six island next remaining units on and expected The we service service in the remaining -- year half to are are in year first nine online with three year. of year the coming more this this

service Pipeline Gulf placed a another This It's was to days X one. full. We That also Highway market me another And progressing or in project that few early. GCX a our We Coast well. project BCF The needs day is Project. September. Permian brings Express one. in need

We timely need. of the expect currently right-of-way easements have acquire and about we're we XX% to the going that acquired

permitting made We've good progress also the on front.

construction more are progressed authorizations than a plan little efficient instead still a our project early in that XXXX. what -- the later However, plan some we of has need obtaining what bit we in we the in our anticipate contemplated. that currently That little regulatory we means plan, kick-off we'll XXXX service, order that that construction, means of to quarter fourth and put do slowly and a

a Both system that returns about today. attractive combined of X fully Permian on Gas our they and basis both subscribed X to day additional moves opportunities generate are BCF us incrementally projects contracts a day bring Pipeline a downstream a BCF under as pipelines, that bring in our projects long-term

for opportunities Those downstream projects expansion. bring

and expand be pipeline our and and order fact million backlog improve hitting system. power, In Texas industrial us Coast the our includes about along in volumes enable and hitting incremental LNG demand network now two our to $XXX will that our are to Texas facilities, petchem place connectivity in to system fact, Intrastate Gulf

are X are working activity may is on -- as a work ago. point. in Permian Pass. this we quite their the soon has pipeline months expecting since as in We not pipeline slowed, customers commercial of second needed, at needed a three with the the we backlog activities. on but It's currently a some quarter it third be continues. slowed This this It progress. a it BCF We still we called but And Permian in reported producer call, day not is retrenchment the believe as result on were

day BCF well be of XXXX. to three needed third-party With over new X Permian may total online a the Pipeline coming both not as XXXX Pass a ours The projects of period, pipeline. as XXXX the in

extensive long-term needed capacity In work customers position. pipeline Permian our the believe a of and gas with meantime, and Basin potential network us the of in the good we're in out takeaway partners continuing and put to Texas dynamics

us Texas Premier the large These supply Texas. State a on our of in large Texas, Permian of We bridge growth Gulf There's can positive the and Coast stay commercial for connect within Texas in our growth demonstrate Intrastate to entirely taking the more have where demand business. two projects situation very network advantage and pipeline we and flexibility.

XX% at conference, demand projected now from the to Texas, natural and in systems of is well-positioned are benefit between out Louisiana that. gas be pointed and and we XXXX to growth As our

our TGP we did largely we the and The process together several hard other last project us XXX-G settlements for to in FERC's said budget of we XXXX quarter, we them putting were believe our have systems. predict, were on not XXXX, EPNG behind As the we we when outcomes did budget. and so with

about strongly However, these us a as rate done, as we we if risk. here even or we things came resolve positive got it our out statement in January, We of or it, it to -- feel announced the I strongly about when feel even help that sitting more networks long-term value today. said we would when be would more

last the has which meeting systems honoring. XXX-G delighted Kinder filings Morgan rate largely pending pipelines two the tomorrow's the are The are been headwind us. of have Again currently commission notwithstanding on those with risk behind both moratoria, FERC XXXX, to XXX-G to we are agenda, under

-- on stands quarter. now in billion. service deploy that will cost placed remain in backlog, We backlog at Elba one capital our and seek because order the at of our returns We disciplined and well primarily the remain are here. the GCX largest quarter-to-quarter we end in of above fell of to capital. $X.X products we Unit Finally, our the backlog That's two

particularly we'll network We size invest to attractive $X a $X that in play, of historical to the billion on our return dynamics our on opportunity based experience at gas natural and expansion provide and billion projects. the in year to in continue the market believe

opportunities, find new in we importantly, But are if it. we much going don't force to not that

to shareholders other expect opportunities our have to and to our value We maintain deliver discipline. we

our maintain will We discipline.

With that, over Kim. to it I'll turn

Kim Dang

gas sound I this like quarter, had day by XXXX. X% approximately Steve. to X this it outstanding record, increase broken natural Natural year was but expected over a demand Thanks Okay. another BCF up gas a quarter.

our been it's case is year, all on increases volume And pipes. so driving the this growth

XX%. refer which exceeded our This large marks on more. prior the approximately BCF volume in quarter to period the diameter a pipes seventh day how increased row or a we transmission or in pipes comparable X.XX by volumes XX% Transport is our by

up, showed Bcf So, on volumes up California increased storage these volumes under day, just if X.X you and our due to were Permian to refill. volumes look system see where a primarily EPNG

day due expansion volumes Louisiana were XXX cubic exports. to due volumes up were projects. a XXX million Kinder TGP a LNG day approximately Morgan feet up to

LNG were Kinder a Bcf overall, XXXX. So, X.X Bcf increase approximately the of That's third for Morgan, day. deliveries exports almost an quarter for of over X

coal a so GCX DJ gas flowing feet to production due XXX volumes went cubic day September, into and at August CIG end million service of full day volumes day. XXX averaged increased about to were And the in increased switching. production. up approximately XXX flowing GCX started and the feet and X volumes Basin million up feet is were quarter. a due cubic to then a Powder a over River million day Bcf DJ currently rig cubic

key On basins increase. or Haynesville Gas feet increased XX%. Bakken Haynesville quarter gas XX% the and higher third third we Overall, Ford. the in primarily XX% driven of XX%, XXX up serve, Permian out Eagle gathering continues the Eagle volumes increased increased the assets, increased million and the to volumes XX% a Wellhead Ford XXXX. natural were Natural wellhead cubic quarter day, versus volumes of in the by in volumes the

quarter. the Our was product segment in up nicely also

business, nice higher up just product our EIA SFPP which pipes on Here under across were the our versus lower primarily products X% tariff down we were saw average on expenses. and refined increases Refined in to our X.X%. due approximately volumes increased numbers --

and flat. Contributions KMCC. offset was business by crude from were Our from condensate Bakken contributions essentially our reduced asset

has X% in all by lower offset condensate volumes year, and quarter. were the about rate. volumes more than up case the As were Overall, on been crude KMCC increased

The down expansion about in was expansion it liquids baseline that X% business had increases from Terminals from projects. our largest of quarter. was coming The about accounts And the in Edmonton. segment. business terminal nice XX% project for

Mountain which sale Edmonton these a variety post increased than of obligation the Trans were offset South more a by the However, terminal, items. expense and lease at third-party increases smaller our became

of added of quarter XXX,XXX tankage XXXX. barrels We the third versus about

we baseline in periods XX all of our Island capacity over taken Total leasable addition. project have was removed from out barrels. I'd Our Canada barrels that Staten highlights. and in largest service point the is now volume million out also those

business. structure, have do New Houston up the don't business some which material give Harbor. York volumes, but into fundamentals our distillate We're on and contract the nicely impact underlying in given insight our Gasoline a our of and

business X% volumes. modestly pet and bulk lower were approximately up was coal Our bulk and down volumes to due coke

our Finally, NGL prices. the to prices, down primarily lower and due COX power but quarter, segment higher volumes crude lower due also to was in and commodity

NGL of oil lower was prices approximately realized down was $X.XX Net barrel. fields. price Our approximately due crude to net production oil approximately. were across primarily crude $XX down production per barrel all our down per X%,

the X.X%. is on We numbers. at However, timing did produced the field had SACROC some crude we period these Yates, the maintenance, Production And of sales down impacted during wide skewing the approximately items. at which performance. adjusted for was

segment Cotton proceed improvement to DCF We elected is expect to for lower X return our million XXXX, which primarily due flow the better $XX to free expenditures budget than cash meet budget. not from versus we it million plus CapEx did requirements. not at is $XXX approximately our This because with approximately Phase expansion Tall capital that's be as

With that, Dave to I'll turn over Michels it

David Michels

per we full XXXX. million earnings that of is per of declared share from last DCF per quarter in the over $X.XX a We third $XXX of the for Kim. declare generated both XX% XXXX, adjusted $X year a approximately dividend and same dividend. share, is Thanks, to DCF year's or for per share which which with in grew share share our and budget increase line per $X.XX declaring quarter. times two declare last $X.XX, the per the excess right. share KMI's All we're of Today as

addition our In provides outlook. update XXXX performance, quarterly our release the to an press to

experienced placing XXX-G X% and service; budget. in the adjusted to our that year discrete EBITDA in We slightly Island delay Elba are DCF we below contributed variance of expecting to budget items facility our were; Two and now settlements. our one, the the with about end the below

largely The delay behind while Elba now. disappointing is us

Now XXX-G for that Steve Morgan. project positive was the wasn't a we're that as for budget revenues recognizing just majority it while in of And Kinder outcome our the resolution, mentioned.

So, moving quarterly on to results. our

third for performance earnings, of improved using are to GAAP X% improved than amount, the of start updated prior gross XXXX, our presentation to on lower the find move we down cost from sales period. can then I'll that you performance. the see, I'll with but our an decline meaning financials. hope be quarter we you revenue format As from in this actually so more non-GAAP Revenues our offset of our were margin

margin gross non-cash from came quarter that we we losses items from non-GAAP treat of benefit in that Some third as the XXXX, certain which metrics. exclude our experienced of and

stockholders our of took third in XXXX as treated item. to we margin or $XXX was on Excluding available a quarter certain million also is certain common Pipeline, and sale the Net down income XX% a the which Trans gross largely items, period-over-period. due during to Mountain was of gain line

materials, for In we shareholders common call certain net to our items, adjusted income available adjusted earnings.

third for prior million resulted share to of our the that $X.XX adjusted adjusted per were XXXX year. shares that the preferred the earnings in additional And the last the Our or and up of equity of common period. up or from X% compared earnings conversion $XX $X.XX from October includes to X% quarter securities was quarter, shares

offset Natural benefited to up, the on year the X% multiple assets. impacts. was performance case interest the $XX greater the our Excess that Moving across which XXX-G it gas from performance. Permian from EPNG driven GCX supply quarter. up rate million We versus in-service, DCF growth, was and unfavorable by commissioning or saw rates for impact more last than experience

was the contributions increased expansion. contributions Kinder had projects higher multiple placed Louisiana Pass from had rate. Morgan, TGP and Cochin up to pipeline Sabine expansion from increased volume in-service. due

sale as million, segments, terminals touched the our Canada Pipeline there. For performance the behind drivers was products financial Trans Mountain COX last Morgan a and year. result on $XX main of our Kim of down Kinder

as are those as And capitalized lower to by due higher million, Mountain G&A $XX non-cash projects. lower our G&A was higher G&A partially pension Trans overhead from to sale. our by offset resulting well in expense expenses,

So million, that was below the main X% explains QX or which XXXX. adjusted EBITDA, changes and $XX

EBITDA, of lower interest pipeline integrity expense million was by debt mainly was lower timing that, $XX capital work. in below the due Moving our XXXX, year. to are year, to QX to versus $XX lower, million our year. forecasted the full We Sustaining versus balance. to still more in for year last this driven capital budgeted full spend we we're do trending budget come year favorable for And sustaining the though to

$XX million conversion Preferred or down unfavorable contribution of is X%. our items, million securities larger stock so were year a convertible up million cash year. by $XX to Other our last $XX our versus dividends mandatory total as of the this result pension driven $X.XXX last, DCF billion, of plan a

To Pipeline contributions expense cash from natural capital, segments, lower in sale Trans COX dividends, offset the summarize drivers, Mountain from partially interest lower stock the contributions lower and our of and our a driven preferred by prices, segment, product main greater gas lower sustaining pension contribution. commodity by higher

drivers impact shares version. result $X.XX was X% issued the but of stock DCF as incremental from our per share of that DCF, $X.XX year. last includes or from a preferred up as the The same

EBITDA full from delay include back segment, I as X% Permian year is offset Elba strong mentioned and the from NGL our by versus in as lower the of volumes supply and For variance that lower resulting partially growth. settlements, budget, COX the expected XXX-G impacting the contributions EPNG, well greater oil our as below to drivers prices the be

as be below the same an is slightly DCF benefit back expenses. of to interest year Full of well EBITDA due pension favorable items expense impacting as and budget, to add non-cash expected the

debt slightly of we the with we and the X.X ended the quarter sheet, year is to level billion billion, the Moving X.X Adjusted from announced at than XXXX the about which net of balance end same from last debt-to-EBITDA, forecast times up we $X.XXX on at times, higher beginning X.X increase quarter year-end year-end $XX.X leverage to a times the the year at and $XXX million quarter, last the ended quarter. an XXXX.

million, million the reconcile we growth that dividends quarter, the of you so We mainly interest of out on $XXX increase to a quarter, expense the had to joint debt close in capital approximately $XXX million DCF spent change quarter. and We the working million use $XXX we paid our generated payments the for contributions and $XXX in $X.XX To capital about billion. to of gets ventures. in

venture generated Trans million of we growth out taxes largely paid For $X.XX billion. being and the you year. full Mountain of and billion. net paid billion the capital increase We of in we also $X.X use We year, adjusted the contributions. $XXX the on interest for pieces gets use. million to dividends $X.XXX $X.XXX We spent DCF largest capital $XXX sale debt joint had of billion working the a of payments main that And the on about

back now to turn it I'll Steve.

Steve Kean

Okay. as on update financial progress the And on stats. we're going well results transaction, you to KML, the as

Rich Kinder

Steve. Thanks,

with longest on point, the which KML the condition close. this we period, the received Before next remaining a be few we still quarter of pending the close lead we stand the court current and a Canadian brief regulatory to quarter including the related will include comments Pembina. and expect or of late I'll approvals Competition termination The on other year. comments, we U.S. which approval item. deal in At first conditions have early will numbers, review Hart-Scott-Rodino the you shareholder to to update by on previous Bureau, KML either where approvals the of Consistent close sale expect in is

and With the respect meetings shareholder scheduled XXth. approval, are preferred to shareholder common December for

the while on preferred, a shareholders preferred will preferred exchange be not that to of of transaction transaction, reminder, dependent vote preferred Pembina of a itself the part upon As closing proposal as is or a shareholders. approval KML vote the the of any there for

we the Pembina bureau's are respond requests Bureau the for information Competition to engaged to Bureau, review. and order facilitate in With Canadian respect proactively by approval the to Competition with to

is net voting results. income is in Income from for are continuing consistent same from previous $X.X the Earnings restricted quarter same that operations approximately toward for per the declared versus KML restricted of of the annualized, which a million the approximately moving continuing X.XXXX third per income. Board million dividend $XX.X share Today, with Now the derived as voting operations, guidance. which from share quarter from third is $X.XX continuing XXXX. the operations and is down $X.XX or quarter

of Line revenue being most across incremental Terminal Base assets Looking from and of the fully at online the increase assets, Cochin volumes variance, KML's contribution Tank and due drivers and that increased -- in the the rates was XXXX. by in and from largest indexing to led of an Cochin of timing the

revenue more smaller of However, than Trans associated There several with other expense. income interest in due the increase cost DD&A in lower was moving income offset O&M tax income slightly received on by higher pieces the and the proceeds and including and G&A, of Mountain KML to lower non-recurrence XXXX. the were mostly higher selling sale

quarter for $XX.X million approximately in $X.X XXXX. is from from continuing DCF operations comparable which is the the million, period Total up

received of for the quarter Beyond a refund That of taxes the items, million. netted taxes representing million $X.X in driven were cash I've is cash by overpayment third million made by XXXX. XX.X, XXXX $X.X already installments for of $X mentioned, favorable the against

the we approximately million $XXX be our EBITDA the budget in Looking in DCF. of with for forward, results said in expect we approximately $XXX million as year consistent our and to release,

this of Finally, point. we following and to due to up not our program will the at course the announcement buyback, as issuer the bid we release, utilize said any of normal it in lead that our transaction

back I'll that, Steve. it turn with to And

Steve Kean

Brittany, been got the back person And we're follow-up. ask ready up. one we've right, here to it you both on your additional if open to you. going to a that All question to we queue you'd and unanswered with questions as answer you’ve But recently, We're questions, get Okay. will get doing questions per back in limit if entities.

Operator

will question begin Colton first now Bean Pickering, Company. And from Instructions] our Holt & We question-and-answer [Operator session. Tudor, our comes from

line open. now Your is

Steve Kean

afternoon. Good

Colton Bean

Good afternoon.

as PBL cash when backlog So, I in XXXX? both have dividend regarding decisions scenario program sufficient on, operating a place is and capital follow that fund guess, would proceeds to the you just Cochin make you today, from flow the expect is there all and in the a where to shares? given

Steve Kean

Okay.

XXXX budget and our level here yet. answer started the it dividend we this know year but at haven't We so we -- that had what the what's we've was, projected $X.X of we quick, taking mean program our our to JV of final up billion, dividend the cash be billion means about to right won't self-funding were we I that out call a with around question. entirely So, $XXX we of that gap and process $X.X almost which that generate. contributions funded capital the the million, we

with next in we’ve we a know we a year, specific until could tighter. little be But Obviously, capital up answer. going what don't dividend that have got exactly for the plan next year,

will self-funding the with think CapEx it's our I paying be we safe along next increased to say dividend year. largely

probably about we mention, in, net to timing, Cochin we that of take would themselves X.X the should transaction, times said debt-to-EBITDA when On announced X.X as earlier. proceeds our so -- versus come should the proceeds by we -- talked one Cochin we'll have us the Cochin projected well, the when the times the we

share it you the hold the sheet and again well I've be if expect We'd would on will attractive said, at of or to opportunity. And capital when right repurchases. looking wait returns cost for above that right capital projects at that comes turns at our we'll we opportunity, -- as we -- balance have that the very

opportunistically The share we will and repurchases do programmatically. not

we're at but available. proceeds prices not so, anything have talking or specific like that, which we'll the we about transact would And

stock. would trading course, in outstanding expect of convert Pembina to -- the those we cash X% to point. than to We comes particular, it of When represent the at some shares Pembina's proceeds less represent

to and we'll that So, to very we non-disruptive opportunistically. as convert a And those way, in cash so. in said think can do I we repurchases hurry the deploy into in capital don't be a shares share we have then

Colton Bean

just quick And helpful. follow-on. Got then it, a that's

maintenance from in And field so, the any rates the program? there should were decline capital the in reductions quarter EOR the understanding business, that from expect for base impacts at we impact

Steve Kean

can Goldsmith, we're fields, flow you invest believe current that most That those expecting we having our at that oil would on think to case. -- and capital on any be that's prices, smaller right for in probably if SACROC we free managing if them. focus current Yates. our But the in And prices Katz, that and is be of of to the most I would not at oil those, production anyway, attention for think cash going -- Tall now change Cotton, plan we change. will about considerable the where and

and the then declines And see in so, fields. we'll us set available expect to larger return two to at I the thresholds smaller the that see in fields are projects we've would what

Operator

And question from from our Shneur Gershuni comes UBS. next

is line open. Your now

Shneur Gershuni

Hi, everyone. good afternoon,

Steve Kean

afternoon. Good

Shneur Gershuni

your I bring previously had $X worth -- the contemplate would point. But lower this valuation rate or I CapEx point guided this X.X drivers realize of you versus through was -- not $X your talking you wondering as at program backlog? as you run capital at what about you've of end you of that program if And the upper of the the number can capital been you're kind billion for talk sort to XXXX billion the end Steve, about. to to

previously and lower third Permian end? the your of both slowing sort give discipline around bit wondering of you of little of the than of You commercial CapEx us pipeline upper if given? lower how around Does potentially bring move mentioned the can you've bound will CapEx what I'm to the -- a between earlier. just color things the discussions

Steve Kean

Yeah short end sanctioned. Permian to yeah would on until and question lower it the gets that toward that it bring ultimately answer the is Pass the your

products, in you the projects if the the Permian of additional gas look to where facilities So, in are from, the to that share got come aren't road the wave clearly And as about down we some opportunities natural capacity second sector. project are refined right now of terminals lion's well the as we've relate in they are backlog likely think things in but and feeding takeaway as these the LNG. LNG

-- of I sanctions years and FIDs as project it's backlog concentrated will Louisiana our And timing capital so Texas the ahead. capital mostly that and in on budgets -- in said, those drive sanctioning and our our or the

Shneur Gershuni

the KML-Cochin on would forma at pro -- a that this a clarification, times, in basis forma include that X.X quick end be if sale coming and X.X of a that pro is Is on then Pembina basis, that the Colton’s And year the the for mentioned did in just shares? already the sold would Great. cash the you those technically shares times that's as question just lower versus X.X sale not on too? theory you you times before well

Steve Kean

cash That's year and assume the end just proceeds, which Cochin is on certainty. Yeah. does a an not it close, the of

number. close of close said, or early that get this XXXX, of the we've alone that of you and where use make receipt this billion able assumption quarter you $X.XXX Cochin as as As U.S. the end if -- in maybe the the we of but soon that's a to of and year proceeds

Operator

And question from from JPMorgan. our Tonet next comes Jeremy

Your line is now open.

Jeremy Tonet

Hi. Good afternoon.

or the the to flat production we take wanted low, I provide wondering COX that up side, much you thoughts does decline just can was Any it there? keep to the there. estimates Just should pick there X.X% expect to our continue? bit on was that rate a how CapEx

Steve Kean

Yeah.

required business investing be in our the if of produces way to invest what the we're investment So, that if would based sell to flat we production level is, free our invest a capital the grow on we return, keep capital to clears we production don't The or and oil invest. that as in then aggregate. we up expect return criteria, that and that it, result a COX

we it's continue just SACROC's We've maintain production. And to down. to had do been to when things SACROC. times year-over-year. But at so, certainly up It's we've times that don't specifically we been invest when had find

in there. earlier, mean, see would and for As capital you tend make And fields, a sense as to Yates. at said, going opportunities capital discipline we're smaller expect think I look the that investment to decline said continue I I there you can will and to without we to I SACROC the maintain

Jeremy Tonet

your over assets Got then, north the indications of of it to M&A at was you're opportunities it. XX interest some seeing, of And like there going times. the in seems

you just of kind If you citrus? FERC-regulated color on something from like thought what's back this of that? trade that holding provide process anything in the So Is at, assets could what this than wondering, kind I you any Is was is can better you monetized GMP? there. more if of the there more there? Or doing

Rich Kinder

that to we've whole not we're home individual Jeremy, a point assets does Well, trading. expression drive made I also, government of on above is interest interest there's transaction Cochin simply again I well had. of KMI as in think EBITDA that specific that the at as multiple where

Operator

next Spiro from And Dounis Suisse. question comes Credit our from

open. now Your line is

Spiro Dounis

are won't the think Obviously, help Maybe just M&A from equity interest is be to the following deals specific but maybe the question. may out coming you ask seen assets. just in done. I strategic where also, on about, good some point from. now getting But up private we've Hey, us interest space, afternoon.

buyers retaining as sale who you of control And there some curious, room of any think could you -- the or an Can is you just a be? interest asset, potential operational the be for them? may describe the So about portion of while it? to

Rich Kinder

and of That's entertain an asset what certainly and I safety continue as believe operators every KMI good control. from position are We fit really in Steve to doing selling to a efficiency. would portion a the respect maintaining good to team with operational

so, all We're looking of the that you But where for going the section. not energy I entertain. lot a there in certainly of on to money something is from. that's there know out further the of think is home we interest And area comment midstream a

Spiro Dounis

around side. the on Permian customer color the Yes, appreciate understood. I And Pass, just then

just JV associated spread levels Just And is be curious, quick across up if missed interest sorry start early you're cost if Highway I And with but any is incremental any seeing or a and tag of on show there the that equally? it, the to going along on. express partners to Permian delay? partner

Steve Kean

one slope. And, and partners. the no in moderately, the out project shippers second there growth Yes. across maybe not -- to following Permian people definitely by I partners came Taking it's secret, how the of plans as you on there's last earnings. would saw, What growing as particularly part borne It's as still Yes, is that, On The laid get same is from out yes, of the well as or there. interest I trying say. first. sector, investors. there producing quarter its capital prospective was people, Pass, there's all and

still naturally need I And later later the so, a for a in-service and implies, still perhaps but FID. that date pipeline need, project, think, both, a

Operator

And our next question comes Research. from Keith Wolfe from Stanley

Your open. line now is

Keith Stanley

of more currencies Curious, just flexibility on next maybe Hi. lot acquisitions terms. year, part just better relative a on afternoon. a you’re equity little updated Good have the strategy, as financial going to growth views

there? thoughts updated Just

Steve Kean

It's hard what very in that really see the things update, we we our to offense field. in always -- the on on, no are and continue What leave makes very shots and are project, to sense predict to looking those makes sense. call your particularly to sector sense but hard but the

Keith Stanley

Okay.

just here? so clear I this follow-up How side the one would at leverage besides sales sale from as well. And with sales have on your you buybacks. assess proceeds around asset of maybe little a not already time It's different asset target, use a

financially where you So just given how sales are now? would you assess asset

Steve Kean

look we look you think at at same other proceeds. it sales way we'd look I would mean, I at, the any

target maintained be those of leverage we've achieved. have proceeds use to make sure that first The that would we

first. that's so And

again opportunistically proceeds. on it's and same And capital It's order kind to initially sheet fund our then other the that balance of operations or sits talked then we’ve repurchases the and from on share there, about probably proceeds of program. KML

Operator

Tristan Richardson from question comes next our from And SunTrust.

now open. is line Your

Tristan Richardson

Appreciate marking annual approval XXXX and your stringent do afternoon. outlook you do kind comments end multi-year way similar look about Good returning shareholders. think the all a basis criteria in on an plan the a guys When you at project multi-year you plan cash of period, on or of -- outlining to similar this your on now?

Steve Kean

specifically be if decision dividend, that's of asking evaluating first like a well, I we will and that. Board you're the about think, all,

before, think dividend I is business, a right grows assumption long-term underlying said line that program. I in growth line, but to with multi-year a expect in we've the more As the the assume in wouldn't

Rich Kinder

we've plan. what and this after we We're we've the the achieved year, when during absolutely the think a Board clear those for is pay Steve all been objectives next the promised. gave I at year-to-year we And the opportunities right. as $X.XX at we think year and out Now will very the set plan looking are future. not I But look out multi-year three-year

Steve Kean

those sheet, will principles well principles to the which shareholders returning strong will occur. having But a be is – returning and projects dividends. investment and through share will attractive in dividend, Those or multi-year, principles value balance repurchases a covered

Rich Kinder

right. Exactly

Tristan Richardson

points cetera. the being then about there of the areas The regulatory process talk that see you. pinch PHP, of this rearview of quick and of permitting, talked now on Thank just mirror regulatory comfort as over you helpful. Very in such gave one do the most on et sort And the right-of-way largest sort follow-up they delays, that XXXX the you brought last those the the early in date? about to stretch that way

Steve Kean

Yeah.

have But We've that decision as proceed and as we’ve domain, we second right-of-way as avoid good insurmountable. in that on front the a we have do. We court permitting more done project in We large lately to in permits that still made part. of point. is to anyway do had don't getting something cleared the So, well using. where that to quarter getting our the way to that it’s to got in lot progress for some see well anything we proceed work work eminent as the

we've done plans it's I thoroughly think conclude work. But now assuming to that not our would things little we and an think It was a thoroughly process conclude done. be earlier, being But taking needs In upon. that longer. production. processed and projection, reviewed But assumed and would this we fact, we that, our already ruled agency's made

Operator

of Ujjwal question from Bank Pradhan America next Securities. Our Instructions] [Operator from comes

open. Your line is now

Ujjwal Pradhan

for Thanks afternoon. taking my question. Good

maybe for have and to BBB lower have rating with target how I maybe a this your here free First and growing conversations sight flow, leverage higher line about of age credit have And rating terms given do aim a clear cash actual regard? your see in one into have potential a on and accretion? And of you thinking in been rating leverage just me, and the then your proceeds agencies a high that follow-up. you any target, the

Steve Kean

so or the that David create we sense do fact, in on really opportunities don't think shareholder do, evaluation get target extra ask think has we to or BBB Anthony fill capital that getting class But it a in. feel then warranted. forestall improve far from is that to deleveraging shown – very benefit upgrade that extent We fill to I and and minus. an But we that David? start would good I'll cost Well, the would little evaluate makes and of to being BBB value Kim to Okay. we very, whether and

David Michels

of on your terms what Well, Steve -- more said add just terms in – We rating just got conversations our by us. within to upgraded a to get upgraded. agency to wouldn't They I'll just the just that had. that I thorough of recent But year. say, very analysis provided. we've would all upgrading three It's add of went last answer to anything part that I in difficult

approach. they cautious very So a take

leverage. current with we're our So current I standing target with think leverage – in and them good real our

Ujjwal Pradhan

business you although environmental I smaller EOR Got your versus a of their you. missing And other business was related was your But talked area, the one natural comments, about and business. the Rich positives scale introductory in think your especially on COX side. gas your

we that some about it have do your wanted And incentives? carbon there? underground thoughts for to the of trapping the get one your your business and seen process, in dioxide talk eligibility you competitors in so think at length, you just are governmental of operation Given qualify ESG any

Rich Kinder

it man-made right. valuable activity. ground exclusively COX COX. geologically we you're put there. help There it are out of that geologically a to been tax And and capture So, primarily credits and consequence there get sourced has COX the some to we support that. potentially opportunities We That capture really sourced COX and stays as in are oil

that going from some sizable often any be you be of -- large for -- economic to quantity to carbon opportunity. ethanol say, we example, take plants, capacity in sequestration sources or is the to far think be about not that that way, of to it you valuable, term COX have something know found to be advantage think a take for and of it's we tax found not the of have long and of else, at us to available advantage But enough numerous point, how do. to So if sufficient high something full the COX certainly, because and

Operator

from comes Cho question next from our Christine Barclays. And

open. is line now Your

Christine Cho

Good evening, everyone.

we I wanted leverage X.X stock on, capital think your we So stays start assume in When allocation. that guess, I on you buybacks, at the to should about what could follow-up potentially do times? targeted

and So, maybe your looks would And CapEx buyback likely would want to your than should we that you takes be to may leverage that like higher Do or falls like that? opportunities? year, shakes for you net light lower out potential stock? why next higher what are it that below debt M&A the you think that, and take puts with think

Steve Kean

metrics as I repurchase our maintain that's share target our we above and to leverage okay? come pricing the we’d program. specific said before, as order likely when that that we'll the And let as we're our it’s we not those We said But opportunities when on I've look -- -- opportunistically. share repurchases telegraphing balance use use looking And be proceeds, KML right or in we're increasing So, then for. the sheet it. expect to would anticipate initially repurchase don't to we target, on for shares

Christine Cho

okay were your you take potentially the higher leverage you would with opportunity M&A And Okay. agencies good and if saw rating a it?

Steve Kean

way it, purely with okay were this okay? yes, that's theoretical, is agencies the rating an but it's and the -- I if, think If

Christine Cho

Right

Steve Kean

way metrics that a I execute is, could only would and in one rapid be would one it work And saw having back these confidently those think you if to and the on. clear path yourself a you that circumstances. But very

Rich Kinder

very a factor happen be make. decision committed can that you maintain -- just But we of is sheet let to strong that, what get lot philosophy we that will a a our we let might fundamental of and about that's me a strong good and say amount it took And to any obviously, are we maintaining a in want me certainly in us time sheet. speculate say certainly of where balance part now. is Board all just to but balance work the would M&A, And really a big

And so there them many four as money again, and last the times are our said to the said, of can amplify years, three what over we've shareholders. with benefit all we Steve do things

dividend, shown we've returning increasing value the by to think, I shareholders. we're the real

you if stock equivalent it's on If out. the one its price, $X.XX dividend turning you take the bar XX, look return year

ability We own capital to, fund Steve the our substantially said, as have projects.

balance back ability, a sheet strong at maintain we to buy have opportunistically, ability to the some and have point, We shares. the

in the here. that the So, going is make that decisions assure you of I are Board interest to best shareholders can

large of ownership Board. insider We have on a amount the

out for going best certainly look what's we're for So, our to shareholders.

Operator

no time. And further there this are at questions

Rich Kinder

Okay. Thank good very evening. Have much. you a

Operator

your participation conference. in at All may time. you today's disconnect Thank for participants this

Kinder Morgan (KMI) 16 Oct 192019 Q3 Earnings call transcript