KMI - Earnings call transcript Q1 2020

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Operator

Welcome to the Quarterly Earnings Conference Call. At this time, all parties are in a listen-only mode, until the question-and-answer session of today’s conference. [Operator Instructions] I would like to inform all parties that today’s conference is being recorded.

If you have any objections, you may disconnect at this time.

I will now turn the call over to Mr. of Chairman Executive Kinder, Kinder Morgan. Rich you. Thank

may You begin.

Rich Kinder

you, Denise. Thank

forward-looking I’d to we financial today as of meaning XXXX include Exchange Reform I non-GAAP Securities of Securities Before the and within you, Private of call and release always like certain Act earnings XXXX remind as begin, measures. Litigation as the KMI’s do, this and the statements Act that well

strongly as such use Before factors SEC on for that forward-looking encourage non-GAAP statements. our anticipated investment making differ we you important risk actual filings disclosures cause forth those and and decisions, to results our as well expectations set of forward-looking review with may read measures materially statements latest end our in of release material to described the financial full the from assumptions, and any at earnings

on do with about at financial -- strategy always I our As policy. calls, on do briefly talk let our focus dividend Morgan me Kinder these specific

Ours industry and and is our these times. unprecedented particularly in we is appropriate, a believe especially in that conservative philosophy,

the will As and headwinds, challenges. team addressing Kim describe, face while we Steve, are we our

cash this environment. even strong, flow remains Our in

and CapEx all our that cash from flow. We covering are dividend expansion

$X dividend the in opinion and wherewithal and in talk XXXX those with significant our annualized, of under of is we XXXX our circumstances sheet we met Consequently, confidence in in preserve dividend Nevertheless, me to the of far XXXX and $X.XX, management like strength $X.XX sign to a not July expected proper our dividend We we balance flows, unprecedented XXXX, we said, XXXX to the $X.XX a our our the XXXX. our we to the $X.XX security the shareholders, projected, strength in expectations to we annualized. to wise capacity. we when increasing We the in balance paying of a to Doing dividend let have Now, target of the coverage. and about objective increasing meet we choice remain believe maintaining as $X.XX XXXX to we in said an dividend. value in flexibility and between cash to our our committed struck returning were the increase. XXXX. increasing Board the annual primary sheet Company. the business dividend these, and so, different which $X.XX of to are in X% both have increase that $X.XX financial That remains in balance are times

economic to when normal XXXX. to the expect to return in a Assuming make activity, determine January meets Board XXXX fourth the quarter determination for we dividend would of the that

that, I’ll turn with it to And Steve. over

Steve Kean

right. Thanks, All Rich.

and our you the segment turn to impacts, over Kim response give of the it including Dang business, coronavirus President, an our and to the updates. cover I’ll overview and outlook

David Michels will we’ll the take questions, financials. CFO, usual. And Our as through your take you then,

I’m our glad XXXX way for with we of from attractive our workforce. a December year. in grateful operate I’ll to energy impact worst that us of the right begin markets with our by grateful current the hedged business and double our some model that approach sale that debt note. XXXX. quarter grateful run billion business of glad I’m the a we insulates for have on and now. at investment the we proceeds time. balance cash that capital and the we crude disciplined the business I’m operate culture -- about since strengthened sheet, third we I’m in we on a the glad an early $XX converted to of of the reducing completed KML I’m

strong things current made All have for the storm. these us of

in mind. principles especially it’s these, priorities important keep In like times to and your

has changes enhancing to in the made protect is to Our telecommuting, our and possible, We well, To businesses instituted need In to and worked work field coworkers where we the requirements. employees, infrastructure communities our we our essential assets by cases way, do maintaining are, our keep PPE have. It’s across we astonishingly appropriate keep running enable safe; while which few and number operations to We a priorities physical that and keep is to running. distance. one, their operate country. working. two, businesses not to our are employees distancing our our

All assets our coworkers are we safe. our are keeping of running and

Our financial remain principles the same.

our today revised was with dividend First, approximately maintaining one. estimate, a X.X our a with target. Even are debt-to-EBITDA believe we wise balance times consistent the We made strong sheet. decision

track billion Second, funding maintaining good we are a front, self investments. and we or CapEx through XXXX all in conditions XXXX still $X.X execution investments. for reduced and about projects of record million criteria, by our project of in by good discipline expansion on in capital our the We return expansion our XX%, $XXX XXXX evaluated have On of capital response our our markets. to that capital changing

with commitment $X.XX returning year-over-year conditions recover. market when to get our $X.XX dividend to increase a are annualized to shareholders we to Finally, value X% and the

value times still Rich in an or increase principles our dividend, we returning capital sheet, right these. As the are off to balance, we by said, larger on stronger, balance think shareholders. like the holding in and increase leaving balance that but strikes our showing Those and perhaps especially operate sheet discipline a strong in even

gas shifting assets remains in Natural are several our gas. businesses. from products volumes dry a way serve both. before. going that Here’s coming relatively we’re in impacts year-over-year. we’re This up seen and what storage gas we’ve never Refined strong, associated we are see Over time, in volumes down transport have us and to transportation seeing But ways. to some

are Products refined Our Pipelines carrier pipelines. common

varied a the a throughput X% usually on slightly, So, fee we so throughput. actual paid growing or get Historically, year. only

ancillary MWCs, example, are business, our revenue of services, we In from revenues in Lower throughput translates our but into Terminals for throughput-driven. until most lower comes recovery to blending charges, warehouse more see economy. start the monthly

some under we now contract. we for by Almost is deterioration This So, see partially is capacity. every demand have unleased increased there. offset previously tank

we believe On we this is change. There the of refined side, long are there. get and get how but volumes temporary. all products other not a when kinds to It’s permanent temporary we views is about will specifically, will

For activity. gathering and processing assets, negatively we’ll be by reduced impacted producer

We in interest, take ramp our will up. however, time are assets, seeing increased to but that Haynesville some

impacts this of producer business. Overall, part reduced activity negatively our

put a about products XX% As portion EBDA. you the it of budgeted is our the together processing, only and portion segment gathering gas with reminder, when of

are our negative. prices in COX commodity business, an obvious Finally,

year. a see page price can earnings of we did we exposure And in reduced in going oil to updated included sensitivities you the lot However, hedging is as this that quarter’s in the our forward. changes earlier package,

flow. our capital this are cash XXXX expected free our on XXXX segment focused in reductions offset the to the for in decline And for flow segment. distributable We’re cash

on staff. impacts will through are based That worked bottoms-up on with opportunities. and review take Kim focused our numbers we outlook and you cost on savings margin The of a each units reforecast corporate business

we We in our reviewed think challenge It’s also challenging also giving estimated uncertain sensitivities. you guidance by expenditures, you giving and these. fully capital to our We estimate as like that mentioned. times addressed I give

Kim. to over it turn I’ll that, with And

Kim Dang

Okay. Thanks Steve.

outlook changed Let recently. those the me year quarter and for of balance then, assumptions mention have underlying I’ll for how and And the a quickly the more stats the outlook. on that the most spend of few our time

natural volumes or our up a the X% For transport day. quarter, gas Bcf were X.X

volumes. As April, progress we these to continue strength see through we in

Let contract. me remind you of pipe, though our under are most transport take-or-pay that on our volumes

in volumes a the drop-off extent see impacted. we be not would in do that to So, we future, the

offset decline -- The an Our in in gathering volumes The the than are the associated declines or basins the quarter. slightly the increase volumes X% were the actually, down in dry more up they’re X% in gas plays. in by quarter.

seeing we more in in volume the associated are we April, plays However, May. reductions in expect and

positive quarter. in products an flat we which seeing was Products and March. and about refined impact to decline demand in XX% January Pipeline then Terminals the XX% X% will product both, our saw segment. reduction for we’re volumes, February, our Petroleum Currently, was and in a It

expect the and in petroleum condensate off Crude up But, and coming products, we unlike are degradation May. and stayed quarter, they in more April in strong were volumes March. X% in

below year, about XX% come DCF. budget X% we’re the the on on EBITDA projecting below to and For in about full budget

in roughly EBITDA in roughly billion $X projecting and billion we’re DCF. $X.X So,

We’ve as Steve CapEx, reduced by expansion mentioned, XX%. approximately million or almost $XXX

at is than by approximately X.X $XXX to the in to more expect in in a DCF our offset end DCF currently the resulting that year reduction CapEx debt EBITDA. times reduction budget. than We CapEx, million So, is less better

Now, let everyone understand. help into EBITDA me on variance six buckets, break to X% down

to is are The have commodity first commodities, and all bucket X% a this impact. is prices, expected little less than lower

our for been about oil, sensitivity per in $XX about mentioned, per We’re dollar of assuming an Steve oil price the million And barrel the reduced. average balance price barrel. per year. as the has on X.X There’s change of to

the sensitivity given have much in not here, hedges place. there’s So we

The second natural and processing less gas to volumes, little have impact a bucket, an of X%. projected lower than also gathering

lots QX serve. assuming the assets, they But, variations For a there’s which volume of we’re XX% on reduction. through basin between QX, depending about

assets, well expect other smaller in assets volumes, on on a example, For a we much while we some of decline. project our over decline XX%

declines that gas reasons and natural decline between our higher on year. versus volume projecting the EBITDA decline margin assets, for result one primary greater in discrepancy G&P budget XX% are of the we reduction EBITDA on volume our assumptions the Overall, our for is approximately And assets. the in the

lower third takes The segment. little us Pipelines than the expect that impact our our X%. segment on less volumes, Products and into This products Terminals account refined bucket, both, to a impact

to QX X.X% a in Here each, the balance to for what outlook decreasing natural year gathering volumes X% QX XX% account and for to versus less of and an XX% to the of we’re products and reduction little in in XX% three budget X% roughly a with QX, to in These prices, XX% refined gas XX% at assuming variance. reduction XX% in our is commodity our the QX. than X% buckets, X%

EBITDA. fourth The and X.X% to an lower have bucket, about of volumes, of crude expected impact condensate

both, in budget. and through transport volumes. impact our QX versus We’re assuming numbers pipeline XX% gathering a volumes systems QX These the include our reduction on our

X% buckets, capitalized lower and last overhead, decrease result about The in a is capital volumes, spending the which variance. a of COX account together for two lower

about cost that $XX on directly mentioned, of And fuel is have impact that into that which the determined and I numbers as of we OpEx we the account power to netted and savings, million related we volume. out and lower taken some in the EBITDA, is mentioned

the covers that in pieces forecast most the the and So, largely explains significant EBITDA X%.

lower On the savings expense between lower interest about got we’ve and in a $XXX positive million sustaining side, CapEx.

reduction impact EBITDA. sustaining the gets to you interest on in X% on XX% the roughly savings EBITDA expense CapEx and less So, the

highly difficult and environment. a activity economic normalize. uncertain quickly in operating changing how we’re It’s Now, know to may

provided have that things biggest with we So, release, our forecast. of is our that, impact sensitivities so around pieces you calculate forecast. the the of can in you And table X the press moving on as change,

over And David with to that, Michels. turn it I’ll

David Michels

you, Thank Kim.

accountants, I’d in full-year update, detailed like significant forecast a met a analysis. the work March we processes Relations schedule. remotely financial that and else quarter. the of this result the commitment as of that to our closing to and challenges, our that’s the XXth our First, prepared forecast successfully our been And tax supporting and and and of who recognize time, coworkers. quarter, planners, reporting close Kinder well and and We’ve all reporting Investor as all Morgan’s our had And effectively closed that of our extra in resolve sensitivities performed extra despite a procedures hand control everyone since we’ve department, working our

So, great work.

the Moving quarter. onto

you current DCF. As and events negative impact a income, on expected net EBITDA had -- our

our capital expenditure to cash we However, capital expect with fully with dividends needs, cash our our expenditures reductions, fund able distributable be including identified the and to flow.

Additionally, an ample maturities. facility $X to considering undrawn credit our we billion liquidity, even provide upcoming have

September, in have We grade the us. another remained capital significant been year, debt the first next investment of to open maturing current about $XXX million quarter have in markets market available and turmoil, debt maturing plus, billion despite of generally $X.X have

still budget our the of we change, currently around forecasted X.X, level with but a even target consistent X.X. X.X leverage debt-to-EBITDA of times with Furthermore, project long-term our of from EBITDA year-end

as However, we insulated it’s believe prudent XX%, despite relatively expected. our by financial ample business and not liquidity, to overall increase health, dividend previously our

from or So, per of $X.XX which per are per $X.XXXX annualized. or quarter, of annualized declaring a share budget last X% is $X.XX dividend below we but increase $X.XXXX share our a a share,

a of decline part natural quarter of The last Now, earnings quarter the drove of lower also the moving were to year. the of onto performance XXXX. first Revenues first in million. gas cost gas prices for down by million, natural prices sales $XXX XXXX, driven the compared lower QX versus $XXX of in associated

Texas is we way And that. Intrastates a illustration As in good indicator business, is a our of this margin our than that of better contract, the alone. performance gross the a revenue particularly given reminder,

of pipeline, quarter QX our of which our U.S. about the first Difficulty] Additionally, [Technical collectively of Cochin XXXX [Technical Difficulty] and XXXX. in contribute sale of KML portion EBDA

with Difficulty] the by loss had quarter. that $XXX quarter. that of and sharp same impairments, and our as We million attributable have in Difficulty] of gas impairments includes million goodwill oil divestitures segment. Largely a Difficulty] to a Those associated the KMI and of were [Technical loss [Technical driven we quarter, million [Technical during segment impairments a this experienced the on $XXX impairment we our decline million COX well for impairment net on assets that as producing $XXX

$XXX net million quarter XXXX term compared down for -- $X.XX of the quarter, first certain to down compared income earnings, were Adjusted which adjusted earnings XXXX. per for the to adjusted for non-GAAP first items, $X.XX $XX XXXX. quarter the of is share QX million from Our our was of

Natural Partially and and a Gulf North include contributions sale Island our on of offsetting X% to KinderHawk, projects. Cochin, winter to Oklahoma. and Express than year were for Elba DCF impacts and gas Moving down contributions down and from the those processing Coast being milder impacts was due expected Unfavorable XXX-G the at quarter. Texas liquefaction there TGP last lower gathering performance.

the and sale on down the was condensate KML realized driven was volumes, [ph] oil was driven lower of by mostly terminals. Canadian oil to price by COX by XX%, and Products due X%, crude down COX X%, offset Terminals impacts prices. and assets. oil our higher partially

lower $XX pension both Our to G&A overhead. the and KML, offset partially of lower benefit capitalized the were due non-cash lower and charges by by sale million corporate from expenses

contributions. were explained those Our the Island and $XX adjusted those Elba and non-controlling than our changes the main there And interests, two QX between XXXX. X% million was JV explains by which deductions greater DD&A in in of mainly EBITDA, that are sharing partner lower

pricing greater the impact pension million DCF from $XX sustaining we was down million by Total per the sale Those interest gets change. impacted about share, X%. share the contributions of million. of contributed $XX Difficulty] XXX The million GCX about items were last with by of impacts, XX, which to on segments year. contributions $XX and and weather To on $XX DCF of million had DCF but and by and offset And of million DCF XXX-G is $X,XXX per million. $X the the offsets $X.XX $XX KML the is greater our capital of Elba sale had another about volume in Liquefaction net summarize NCI. G&A on or XXX [Technical $X.XX down impacts that $XXX TGP impacts million, partially projects, and

full projected Gas provided Kim the XXXX to segment by about Now, lower for little impacts. Natural refined processing is volumes some be is levels. segments. expected by X% from year lower crude planned XX%, unfavorable bit the product Products driven by adding and provide year, down volumes, I’ll to lower be pipeline to what guidance, a price activity and gathering for full down driven

revenues COXs Terminals Our businesses while volumes is well. lower ancillary as we oil revenues. price, is lower and mentioned, lower segment to Truck lower driven be X%, lower do rack projected to driven and and throughput. be down oil service down NGL take-or-pay, that by as segment production COX impacted is Steve have by largely by And XX%, throughput. both expected

income overhead, non-GAAP our leads offset capital pension capitalized spend savings. lower and cost G&A, by partially lower but to

mentioned we our a assets potential material potential generally do that by also to services, forecast segment. And risk Kim may as credit at provide as to events. would driving So, items that like don’t X. default be our foresee our the impacts. new as we table I note EBITDA this while point, X% provides our We lower critical main exposed this infrastructure not any

So, see forecast. pressure the if experienced, on could we further

posted as for to assumptions contract also the customers a to draw website. your some that provides assets, information information year, slide on on mix. the and deck That like helpful more I’d to has our supplemental as attention well our been

X.X up we ended consistent to with at the with quarter at Finishing EBITDA, the We were times is the year-end. sheet. where balance which debt

X.X, the by since billion With nearly mentioned, underscore to impact, to I year-end. important think EBITDA debt that to X% increase XXXX. I And events our is current have as we reduced expect by just how $XX the it

bonus, ended capital we the $XXX billion shares million, sale the million. DCF. taxes, $XXX of dividends Pembina the $XXX had growth $XXX million capital of close mainly million. We And back the the bought $XX,XXX quarter Pembina from of the of about and working million you quarter. shares. about million. about on change use, a to interest down $XX in the of we payments, payments property change, We taxes worth year-end. that about quarter. We paid [Technical We sale a debt million. for Trans Difficulty] $XXX in Our taxes paid net Mountain $X.XXX of KMI as reconcile well net some tax received To We million debt as And had quarter of that JV share proceeds gets a contributions from the had million some in deferred $XXX about for sales

to With that I’ll Steve. turn it back

Steve Kean

back been to And will we and up right. back you more, follow-up. queue will you’ve the one here, as into get get have one doing we now David. for And Thanks, you. quarters questions it several for And All if questions. that we ask and then, your open Denise, to past Denise? we hold

Operator

you. Thank

Jean question with question-and-answer We And Instructions] session. Bernstein. our will Ann today Salisbury the from first [Operator comes begin

now is open. line Your

Jean Ann Salisbury

Hi, guys.

only to that’s the XXX%, space new you cash extra that And for that a wanted in persist the just get flow to will the contract terminal On guidance. longer? one clarify capacity I year up did contracting or already to of for

Steve Kean

Yes, variety in new don’t Schlosser, it’s of the you why already we that? on elaborate for a guidance, contracted And terms. and John

John Schlosser

from month. very was goes quarter expect the shrink one, to are the of to as available It at Excuse Sure. zero X.X down those we And to that years. as quarter stand me. as and out small off most or XXX,XXX, we’re we Well, month closer chemical anywhere finish barrels started the we continue We today, on get the of million and to tanks. two -- capacity.

Jean Ann Salisbury

makes that third marketing earnings to also And expect right? sense. the we That a Okay. from as see was exciting KMI, party contango shouldn’t from

John Schlosser

All third party.

Jean Ann Salisbury

Okay. price. And going oil that of can of few CapEx you then, what a to most be business kind Thank the the forward kind Can is us of keep over intact business the minimum you. -- COX amount give you would to of exposed obviously years? sense the next

Steve Kean

the Obviously, and the Again, criteria. stress CapEx other through not that that in returns capital we COX prices Yes. those determine CapEx words, invest our test about hurdle and at it look comes business produces. our meets $XXX down. we associated oil of we there’s we million on with the or we pricing oil we’ve that And it based That’s why whether revenue that the have that come the In invest. taken out. with

to keep incremental investments. it So, those we’re economics based not of to the we flat. What invest in try is on investing

a that But that the would pulling to a that relatively capital business. We economics a investing. exactly, be from incremental us to obviously invest based we’ve away to increase the with bit, that holding with we decline we rate been CapEx capital expect bit the on remains again, increase seen rate but We’ve small been get. decline

is it lower. lifting price that cost COX investments what COX, at -- that now $XX. includes Our COX, for price our of our much about And us produce which COX most costs a market a to for lifting right not is

continue substantial hedged. so, at our sure have portion I And make makes it production, And mentioned, we look it. that of sense to produce that it as we to

Operator

Shneur comes The from question with next Gershuni UBS.

line open. Your is

Shneur Gershuni

experiencing refinery the the was tough sensitivities the the that and carrying and you’re look you’re out that I little When and refined into quarter, refined end that to a of Good from XX% trying refined terms appreciate wondering assumptions products around looking unfold about understand to to product Hi. is inputs watching? utilization if put reduction went what put runs the terminals, that assumptions? guidance budget QX you environment the we environment? be on business segment can it just afternoon, is should your of provide that in those Is you’ve to appreciate some we it trying there product focus as together color everyone thinking everyone. today I today. volumes, here. or things bit second a XX% of can I’m through the for for to I at we for to through the as what at be should when signposts this difficult just relationship in

Steve Kean

Good Yes. question.

a kind it level, month a as we’re customers And with had current in and and based so, as we it the do -- discussions high you at business. current also did on in quarter-by-quarter products sort and of mean, fairly on the both was we did this seeing assets, We our we in of heard current, activity our it quarter-by-quarter. did terminals I that that Kim. from And

informed we assumptions use. so, the And that that

we the have adjust could everyone. that on of we based want I bit informed a But, available Kim, them. again it’s fairly that, experience also data us. based said think anything to on was at you different in but based actual second the you there? quarter, with having early could you to if elaborate the sensitivity, it But, customers. guesswork for informed judgment assumptions conversations least some for it on was right gave And made that then now Now, best you on so

Kim Dang

covers I that it. think

Steve Kean

Okay.

Shneur Gershuni

to ability cash fourth it quarter X% appreciate a if XX%. you chose I the around think, revisit only looking the of the flows this I do versus follow-up year. Definitely, about the to we out comments in to being the of increase it and for you’re prudence appreciate have question, you And dividend actually to that pay

budgeting, you under buybacks Just if currently returning shareholders XXXX an better as to program? the the of would to flows cash returning to you’re cash -- balance turns than under shares existing existing via open buyback the be flow out means returning wondering alternative

Rich Kinder

it to economy we try is answer an is And to anticipation there that I’ll fourth that Again, not are -- the put we never I by while want very when the we our I But carefully. our quarter. think it’s we normalized. $X.XX to to we say normal do why in way excellent is the whole year. intention again, that. will when happen never, did. the That’s situation think we’ll would don’t go chance -- significant the additional buybacks this watch

I said, think, unprecedented really these as times. Steve are has

the to We’re of very flexibility be balance we strength our protective and sheet Company. the and all just the conservative for of provide can trying very

Operator

comes Tonet The Jeremy from JPM. next with question

Your is line open.

Jeremy Tonet

the that would mean this would is invoke kind guys’ Hi. start you thoughts to the before see unusual able prorate for some here. there the be just COX business, action through KMI, this to situation production, realize question, walk type I with is Good to I pipes? forced to on the And want the of event what that and highly Would you off EUR, Texas just wanted taker-or-pays? were. majeure but nat what of gas proceedings afternoon. Commission in Railroad us

Steve Kean

Yes.

majeure provisions. force evaluated variability them. we’ve our -- while there’s some in there And some is So,

of majeure overall excuse particular, in obviously not force If you look a big -- gas is chunk do events a business, to big tariffs the which obligation at business pay. our our transportation natural on interstate

something it technically on the even And qualified as and a so, this if that to not force our obligation I’m force wouldn’t be majeure even a majeure, pay. under but it would, interstate if did tariffs, saying

based they’ll this, would happen actually anyway with that’s it signals in comes economic look tariffs, when the insulated how people fairly anybody’s that getting how with But, there. to Now, happens transportation taking when they’re terms I what’s well think we’re we the and it ahead price guess. and steps, the of it think on from it at our to going right will different least whether market, in go be

I’ll others comes it the mean, anything event but Jesse, sees I supplement with the think expect again, would what normal in in are we just it price and event, I I in to there. can that’s in likely put he don’t very price they probably did we think too it signals COX kind production, to be When to Jesse we anything reacting course, can ask and we’re that? But, as and us. it’s would to that to if want is some with you proration, the telling of comply complying add expect

Jesse Arenivas

Yes.

production I covered you’ve it side. from the there think

perspective, Just not volume on the that do takeaway from we minimum have commitments.

So, contracts our takeaway affected proration. would not the by be

Jeremy Tonet

and you more And you shutting provide right the us declines could there’s what’s G&P if walk in wondering happening on that basins color on was or bit I the in happening any about just actual talked could more through various you’re now? where a basins. you certain detail what ground seeing the in

Steve Kean

I’ll you Okay. Tom, ask that. on to elaborate

Tom Martin

gas I all primarily May so real it’s starting are very time this going probably we’re where I And days. early see seeing I plays associated be we to into the mean, think as we this. more get Yes. that think and now

clearly volumes think that seeing. Some Those well. areas off. or coming Permian impacted we’re the will will Bakken be the as We are two declining be probably biggest

getting Now, already of through activity of network, the Haynesville as inbound think the side about the our part basin I dry inquiries the year, in gas other we’re particularly. we some coin, incremental progress

in potential next year, late maybe those I offset early this some think we’ll year. So, areas see

Operator

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

Colton Bean

your ability a even -- any COX, mentioned below or guys a even basin, settle and if the volumes integrated cost you is extent or defer the to is have acknowledging to just physical integrated hedges you that a the on that think, up have on are drops around $XX not basis business. So, that were question needed? may I on follow there those to there around in lifting the price Steve, barrel. economics, To that you see financial production you purchase economics if EUR

Steve Kean

just and production collect down turn to hedges. ability the on is There Yes. the

those a the have other of on end We customer contracts.

to but we be that. would judicious flexibility there about that, is some So, do

Colton Bean

of just the following up then, And side CapEx on things.

I XXXX, than think quite about you out think, bit you I had all noted a more COX $XXX that million account taken for in it. could

So, the could segment, there? were moving other the pieces you within for frame just us, what

Steve Kean

on And ahead, Kim. go Yes. -- the oh,

Kim Dang

Go ahead.

Steve Kean

Yes.

for look five, slide at page we the that out if David So, break on deck to, referred you that you.

And In really or is $XX removed gathering lot that or And by of we crude million. investments. some either is a that business coming that in about natural deferred products, lot in CapEx of the of -- example, that’s XXX. is pulled gas, the G&P so, segment. about for that part from it down A reduction in is

In Terminals, mentioned -- XXX, add project then, know way, the different XX, I anything to COX, deferrals project a different price was I a -- few about environment. Terminals most if into deferrals about there I was to don’t a COX, by that. there. said is that we see until that? XXX Kim, And of want you in that

Kim Dang

Steve Kean

right. All Okay.

Operator

next Dounis Suisse. Credit with from The Spiro question is

is line open. Your

Spiro Dounis

Glad all everyone. to after, Good doing you’re well. hear Hey.

few you’ll entertain. all a cycles I point. at we’ve been this Just higher question, guess, level if through a

terms of in you And lasting to or you you this normal just back know, But, least view in lead think needs see on KMI don’t but on do got lasting a So, basins your on I here there’s downturn, pivoting the more to want to towards quarter, Rich, shifting gas dry getting to the point what think certainly the one your impact maybe of any side, this. of different And mentioned supply adapt? to does its much. too I meaningful would around broadly, sector? sort just fourth yourselves appreciate at back impact do way? strategy you by feel I here.

Steve Kean

And economic longer OPEC in together supply if natural if coalition, and could throughput. you forced to at the market look doesn’t of temporary ask economic back, near even phenomenon. hold Rich or balance more a could of natural a gas to better that in a a COVID, an impact, I’ll much mean, of which OPEC yet add to And normal combination is gas still COVID temporary, the will on still we’re it’s this to in March today. it with Kim we otherwise just look On products, together is the seeing different, additional you certainly be -- I virus. and make. the will, unless think And gathering this. activity, could the you take that if would start last on not -- Virus unprecedented our fundamentals production those When to on shales demand and return Xth, be to with have a for a expect to That demand, terms term, longer, put when would guess, would refined really tends planned you have anyone’s for we’re Plus what that again, environment demand the investment return and falling together two it crushing it’s comes is separately example. to even I at as apart mentioned, be than if normal situation, it put to two but have we and is degradation duration. the demand. things, Plus impact lasting and the deal things experiencing

able On that have gas do your being plays, we to point dry about ability. to pivot

natural comes assets, dry a and our gas more grow Haynesville, back market Marcellus, extent into standpoint plenty from our got to gas reliance room gas gas the of the Pipeline balance about gas dry a to assets, extent And our that volumes, Gas on transmission think market to as Tennessee plays gas you or serve -- with we associated volume. the on the and dry system. the less the mentioned. Tom We like Utica we’ve storage serve standpoint If with

want cycles? about add anything you else Rich, to

Rich Kinder

No.

agree. it, I covered Steve. you’ve think, I

Spiro Dounis

in pieces natural percentage the back the a is or And about CapEx quarter, backlog on cut can there’s versus the then, an think guess, cut would deferral? of see moving I to reductions. I since down -- know what the there. lot say just there circle say would or $XXX I CapEx reduction CapEx obviously I you million total of fourth is so but actual

guys out on you have understand help a basis just actually So, permanent what trimmed here?

Steve Kean

Yes.

to for when And in CapEx say, on G&P example, back what hard in a on that’s more that’s prices there’s would if Because, that on commodity and So, drive right? depends it and occurs. COX. recovery

this a $X yourself, do -- ask sure we that range, going this billion forward-looking $X We’ve $X to And knows as kind as a the nobody to some is below big below And before ahead back price at is and turnaround. team, I so, guess because for statement, said, that? return activity, kind this X we’re definitely what $X But, real X.X run get better would be as well, billion I driven and for of right guests, we’re the to a to as best environment. by now. some goes obviously, you that just it billion it have about in at billion threshold, And year. our to think, XXXX barring it is commodity of look you we to awhile management about to And it category believe X would point, require, in producer talked of range.

Operator

is from with Mizuho. Gabe Moreen question next The

open. now is line Your

Gabe Moreen

question Good afternoon, everyone. customers concern down, around you’re or exposure areas approaching I specific Maybe don’t guess discussions in negatives you surprises generic some seen on events. could customer to all. of A language? any portfolio I quick to drill here current whether you’ve legal for contractually? maybe portfolio based terms of But some discussions maybe I was having that for, lead just in fish of around with curious just default the maybe credit sort language and at and mean customers, I’m on there,

Steve Kean

and to customer cover -- there credit we evaluate we look the through look credit, difficulty, what has at outstanding also me it at it by fairly how go customer downgrade, tell et our the it’s collateral seek comment, We Gabe. we where Monday and And that we cetera, you to the in so. reject value to been second able we have the we that rights and what them is therefore product they customer to their and to scenario, of be it capacity worst at meetings, will but collateral capacity look the a Monday, we who still do Well, call underlying unlikely has contract. every is But that and we we cetera. what at is topic get et holding, on let some generic are order market receivables, a the case particular a to and also in extent, look need

So, things we take to of into try account. those all

if the similar the impact in look Now, segment, go XXXX. terms something we just at that But, there’s isn’t. good to There on no analogy current back producers was of to year. we

Our $XX bankruptcy defaults about in XXXX amounted to million.

I those to this before, worse Now, is over all shots or -- that, who tip is a going to call it that also on but you we the Maybe over. for was cetera. cetera, hard project don’t forecast. have is And a our instead, tip to difficult that’s bit it’s it why it. think mentioned. it said reasons I to for it It’s a et I because But David revised mitigations for year in your little than not appropriate restructuring et they very do debt us have we think mention

Gabe Moreen

happen as contribution think a capital the partners talk guess that a you would would about let’s the What rating I were follow-up JV credit how you that a also I one about in willing appreciate the the if to pipe producer on Thanks, to be holds project? Steve. unlikely JV Can partner your what capital then, on that. maybe through? work? from not contributions come say for And that I And XX% from of is scenario to PHP. talk then,

Steve Kean

I’m know? answer under dilution ask that agreements. you and I’m to to not how that. Do works Tom, familiar thing sort the you of going with

Tom Martin

I Actually, of the top don’t my off Yes. Steve. head,

Steve Kean

all any capital well, been insight you insights. the but calls? offer on do Anthony, other Okay. have going to any I mean, they’ve

Anthony Ashley

credit, And going as is are the contribution not have the in grade have they there owners put Obviously, support. they the for shipper, support or extent to support unrelated, equity No. well. we that for been did a non-investment

Steve Kean

Credit support contribution? the capital for

Anthony Ashley

Right.

Operator

with comes next Michael The question Goldman Lapides Sachs. from

is Your line open.

Michael Lapides

all you guys. Hey, Thank questions. for my taking

one on better about whole, as is broader States something system your what’s look U.S.? which first the When demand system broader products downtick is your or worse particular your the kind in think relative the the in where you there than of products The you in a United yours to at is is it XX% a business, kind system of happening or proxy second you refined pipeline the good do broader could plus refined for think nation be quarter.

Steve Kean

Yes.

others, markets but system serve, the system. our So, It Michael, largest about serves The I is won’t It California. think for try right? we SFPP serves Arizona. to speak

of Mid system, pipeline airport near you terminus plantation that the national the about If point serves Its DC. think really our Atlantic. is Washington

about markets Tampa system, you’re talking other the so, there. CFPL Mid Atlantic to and And system Central our is Southeast Florida. which serves And

and And so, you playing this response can differences and demand that’s places. in think about in to different out differences in how virus

And, people’s just You for make that how to pipelines. about likely assumptions which trying will to earlier. your can think also own it’s ask to recover and me you other rather speculate about out I’ll than playing be

Michael Lapides

at Got and your the it. their Thank credit and of base XX ratings. you commentary then, customer looking slide about for that. one other kind And one

of energy at are we’re seeing high all XX% credit Meaning, Just migrating these I’m days. how curious, of the And outlined outlook, grade in grade? -- watches? what many many world of credit on curious the be that And investment you or looked just of investment XX% being angels the negative fallen so those lots have might or to you portion -- that from percent how that what yield? think as

Steve Kean

Yes. Okay.

from minus approximately exposure on grade B credit those substantial XX% who other is, are the we is well thing So, of net estimate identified investment X% and as our or our budgeted below. the as revenues support,

ask the of proportion of kind know are there. happen we I XX% Anthony posts know. on those you if I outlook. fence don’t that put will negative out the so, is And that to

Anthony Ashley

incorporated has update. already been I think of into the most that

non-investment probably there’s extent the small small very get investment outlook generally it dropped on But draw negative a and for a us collateral, would trigger negative percentage. a relatively think, I right to outlook. grade but to it’s small, grade, they’re on on from percentage to they that

Operator

from The Ujjwal question Pradhan. next comes

Thank with open. you. is of Ujjwal America. is line Bank Your

Ujjwal Pradhan

have out contracted And there of storage that that options if million oil -- X possibility your you over do to now or Can you crude comment a for if with exploring asset you’re options storage capacity. Act within XX platform. capacity, the regarding there’s using shortage that tankers me, additional given is for one First Jones provide all of any recently? Are potential capacity? of

Steve Kean

customer’s this. Yes. clean being that of there And -- et under don’t because reluctance products, and those But, Jones where on it’s I to I’ll to the dirty in I to dirty our and Right? mostly service, want is And It’s contract add elaborate convert John part John, last dirty all cleaning the you capacity. on products will under have mentioned, control. and of customer’s Act take that? our is it’s control. first. a cetera. It under crude reluctance already there we them as to mean, a products, is to costs But anything

John Schlosser

storage MR is other for You’re sense make the correct. sized the customer be converted economics won’t crude, back it Two-thirds just clean, and the smaller from is in to standpoint. doesn’t vessels on our

Steve Kean

service. the where for to And makes filling our in assets refined storage, it refined crude our out, products is. of as John tankage That’s sense up pointed rapidly. most be then, is I product mean, And it again, on

products pipeline side, business our business, in On do -- the as crude some limited in not have but not storage particularly we as capability material. it’s our it’s COX well

Ujjwal Pradhan

Montana challenge you Keystone there well. the after follow-up, there? legal few ruling week, Can on I headlines a were raising questions highway potential potential permits saw pipeline last to as comment And the in challenge about in bring as

Steve Kean

sure. Yes,

et jobs It’s that hard would are times of that this. operating under of about outside think our to are stake project the to hard that the construction a home it’s just send aware particularly as the Corps, stopping us projects cetera. that the obviously. to, country was we during those Army that decision, at applies that related It Nationwide are point. that of the and from decision that implications XX you continuing when imagine I’ll is decision say all this all from like the various of We Permit at imagine not people

a that under construction to have So, rule to that And look, PHP. stop already an on have we applies our is this there an -- we PHP. wouldn’t authorization, decision nationwide verification fact existing we XX expect important

Operator

The with question Energy. Hammond is next Simmons Pearce from

line is open. Your

Pearce Hammond

on up question. earlier Spiro’s Picking

enterprise it or better those downturn? coming And downturn, are if Company you opportunities to opportunities steps make the there the of out this of are could even During what so, and that some strengthen take?

Steve Kean

Yes.

what have remarks, organization. at I of our the really been. I lot to several of and and we over our way think took my make we’re the said beginning operate operate steps a years it continuing Certainly, As the last stronger. Company we to important strengthens It has well doing, -- operate been

the they balance strengthening the and of And agree we that rating in And really further get that we we’ve of outlined with with that now. are believe priorities terms good we leverage right a I getting done and sheet, have. of But, for I we the allocation In stay to stronger. capital metric supporting do following that. think comfortable that current are terms the our agencies We’ll contact rating Rich outlined. opportunities always we with close to job feel where in look

Pearce Hammond

Thank you, Steve.

Operator

SunTrust. Richardson with Tristan The from next is question

open. is line Your

Tristan Richardson

Hey, guys. Good afternoon.

versus existing much materialize? to expected expected talk to expected how revision in question production either of is With seeing guys now earlier revised follow-up growth about the quick just on to a conceptually, are you Just no an of the what previously due midstream. expectations can there, respect longer that volume you shut-ins to or is

Steve Kean

Yes.

what they understand -- be that’s for look And going time. just right were situation. certain seeing to the period our had activity to customers tried with but think, were, levels also try we as closely what said our conversations to will what coming. wells solution certain Shut-ins current at we to an I looked before, a do, I for evolving of So, was be

I think, prioritization going where on. But, there’ll there’s a be instances

kinds water they because things. of may not other GOR, handling And of shut even that costs, ones are economic, as our all other some customers drill wells out high that in and pointed

what this least of we doing But go best a at is will informed think, considerations that. that our I there captured into So, whole our by guess variety quarter-by-quarter, think and I now, to quarter. customers deep detail we for we’re average that are to expect the as telling as well out additional Kim, negative any right there? seeing us that what the that

Kim Dang

No, I covered you think it.

Steve Kean

Okay.

Tristan Richardson

operating lower Thanks. and Kim, you on do any saving guys million talked about on capitalized the savings in million think, in the $XXX mentioned side? cost opportunity I And But, just see costs? side, you interest the second, you $XX cost G&A further overhead.

Steve Kean

ahead. go Kim,

Kim Dang

G&A that. taken savings, not into account in have these things come mean, I things like traveling, Yes. numbers, from we’ve

-- take $XXX that just have then and about interest tried sustaining savings. half into we half on The million, to on of that account know was CapEx. is so you of G&A So,

interest G&A million in $XXX But, a that take savings So, CapEx. was into we did million. account $XX combination sustaining of and the

Steve Kean

who the early provide on services work people have we and is getting front reflected haven’t of kind phenomenon look going wherever of, seen anxious compromising the sort at costs we’re cycle term and with other the I assets. One can example, and to are good us. the Jesse we’re yet, to integrity those they on and of it They’re providers, for to And the we’re end thing that. getting we’ve and of vendors that of for as I from that end suspect of to save really to safety price his opportunities we’ve add the continue our team in And really all some they’re us. we’re People there part front would and out anxious concessions do -- of their without in COX at service of point. this, business reductions, we is but this reflected just cost to our

as that And the and with so, I But, would think negatives think point there on. forecasts. obviously is savings are capital that can But, on OpEx any I I lead to. as are thing side additional progress there one to other we

Kim Dang

year Steve, know, get gets is lot And our of double that pushed that the work cases. to you in that we’ve certain Yes. done just work the mentioned basically and forecast a assumed we thing other later the can in

just have, at project been haven’t point. year other we the out of there And is to this move that so, potential able we the things that

Operator

with question The is from Capital. next Danilo BMO Juvane

Your open. now is line

Danilo Juvane

you’ll guidance. able have your further objectives revisions you. follow-up conversations that the a the your see on numbers? growth I really was to updated Thank you To are that it informed to target confident And as as dividend well hit extent for your could you how leverage with year? by be customers,

Steve Kean

do take to first want at that? stab Kim, you the

Kim Dang

How to we We bottoms-up all these in we confident all a tried We did in Look, involved units. review. get customers. are we of were the from our our business we that numbers? data what seeing from could

But, it. And is stab a best we said it as our I uncertain so, highly took earlier, market. at

we so, prove to if correct. are know judgments going those be to And don’t

And people, made taking how so, into then, down one, a the about further and we we have volumes; provided that’s we much judgments sensitivity. given clarity why were

better can end our the up in than that future. extent what So, or we to the are what projecting projecting, than volumes worse are numbers adjust people we

Operator

Advisors. question next Followill The from comes U.S. Becca Capital with

open. is line Your

Becca Followill

afternoon. Good

this is know how And difficult together. I detail. helpful. of level put the for it’s thanks to very First, really

business, going know on Second, COX how out. are shake to prices don’t is there uncertainty. huge We

pretty you durable how year. would business to but You do or year, Can are kind it shut on mean it what it it Can in ease in, of COX? next take bring things and would guys to picture you the heavily shut-ins up this kind just terms back? of bigger then much for for curtail about just back hedged as field? bring it capital for you additional that of is talk If not

Steve Kean

be COX earlier. and looking talked supplement those new in talking we’re this. COX at, about price just I’ll our our here comes There fields, turndown production recapturing may oil And the instead in some fields, not fields. cash in we’re on as But and smaller depending Sure. But, of ask for three to signals introducing seeing fields. recycling we a the Jesse shutting it the about market, in we’re example, with that in those out there,

new it about not it. under further why Jesse, comment back on more it It’s COX dialing you about So, don’t introducing down. and the current shutting But, that? it’s into environment, market not

Jesse Arenivas

and good oil obviously highest That’s But, production, Becca Steve. grading we think are, there, ratio. the each high I summary to optimizing where production highest gas field the is, cost we’re in a

So, field taken diagram. reservoirs, production. is different, to that Each steps wellbore, different different we’ve curtail

most will you little those, restart. So, some pull a a you perspective, material have capital come we obviously the where risk you there’s production if pumps, that that back required. think from of with But, have to very

But getting will You just the to restimulate production well have some right profitable instances going. to high-grading you it have it get most to and now, and market. a where over barrels work we’re

Becca Followill

are differential of you basis for what the then, And you. rest the guys year? assuming Thank

Steve Kean

you do want that Jesse, well? you to Are about answer as talking Mid-Cush?

Jesse Arenivas

Yes.

Steve Kean

Go ahead that... We Jesse. hedge

Jesse Arenivas

Yes. XXX% $X.XX. virtually we hedged to With are at there positive respect Mid-Cush, a

So, we’ve taken that the table. risk off

Operator

other Thank And you. this are there questions time. at no

Rich Kinder

Thank you you. Stay very much. safe And evening. and a healthy. stay good have Thank

Operator

participating, you time. conclude post call. silence may allow does conference. of and standby Thank and this conference a you for today’s This moment for at your Speakers, disconnect

Kinder Morgan (KMI) 22 Apr 202020 Q1 Earnings call transcript