Good morning, everyone. My name is Theresa Chen, and I am the North American Midstream and Refining Analyst here at Barclays. It is my pleasure to host a fireside chat with Kinder Morgan, one of the premier U.S. midstream companies under my coverage, with assets spanning across the country, covering multiple commodity value chains across natural gas, crude oil, and refined products. With us is President of Kinder Morgan, Dax Sanders. Welcome, Dax. Thank you, Theresa. Really, really happy to be here. I've also got with me Peter Staples and Sean Pogue, our three-person, massive European entourage here. Great to be here, and thanks for hosting. Love it. Diving right in, maybe we look at the macro side of things first, Dax. Over the past two months and change, into the U.S.-Israel war with Iran, how do you think the energy landscape has fundamentally changed with respect to the U.S.'s role in liquids energy supply in particular? Right now, what is the tone like in your conversations with producer customers amid the emergent call on U.S. onshore production? Maybe bridging that to your near-term expectations as well, what is your view on the time you're likely to see a step-up in activity across Europe? Yeah, great question. I think, you know, all of us, certainly within the energy scope, are reacting to news that changes seemingly by the hour. You know, I think it, with respect to long-term changes, it's pretty early to tell exactly what's gonna change. I think certainly our conversations with our direct conversations with producers haven't suggested yet that there's gonna be a massive change. I think producers generally are looking for, and this is part and parcel with the substantial, you know, cashflow discipline that's been imparted on U.S. producers over the past 10-15 years, are looking for really, you know, long-term price signals before making substantial changes. In fact, I saw an interview with Mike Wirth yesterday saying, you know, Chevron wasn't really making any changes at this point. I did see, and I haven't digested all the news in the last couple of days, I did see, I believe, Diamondback, who's a large Permian producer, as part of their reporting yesterday, suggested that they were gonna increase production, crude production in the Permian. You know, I think if you see sustained price signals, I think you will see incremental production by U.S. producers. Now, you know, that's really with respect to overall price response. If you look at the overall structural underpinnings of, you know, world energy production, world energy supply, I think there are probably gonna be a lot of, you know, thoughts and conversations on where people are sourcing, you know, molecules of gas and barrels of oil, vis-à-vis sovereign risk. You know, if people are looking at places and deciding that a particular place, with, you know, the Strait of Hormuz being, you know, being front and center, has a lot more risk than it maybe did three or four months ago, then and they're looking for places that have less perceived sovereign risk, I think the United States is, you know, is probably one of the first places they look. I think I mean, my personal view is, over the long term, you know, this is gonna be a substantial catalyst for incremental development, both with respect to production and associated infrastructure, you know, in the United States. In the first place you probably look from an oil perspective is the Permian Basin. I mean, the Permian produces roughly, you know, it's the most prolific U.S. basin, of about, you know, U.S. produces somewhere around 13.5 million barrels a day of oil. I wanna say about 6.5 million barrels of that comes from the Permian Basin. It also is a substantial provider of gas, roughly 23 Bcf a day of gas coming out of the Permian, and that really is all driven by oil production. It's, you know, we call it associated gas because oil is what drives, you know, the production decision, but gas comes out and, you know, a couple things. First of all, you can't flare it, you can't burn it. It also has value. You know, that's led to a pretty substantial build-out of gas egress out of the Permian over the past, you know, call it 10-15 years. That's probably the first place you look from a crude perspective. With respect to gas, you know, I think of the world gas, the world LNG ecosystem as being roughly, you know, 60 billion cu ft a day, something like that. I think nameplate's greater than that, but if you factor in, you know, utilization rates, it's probably somewhere around 60, maybe 65. You know, right now, the best numbers at least, I think, that we have are that roughly a couple, 2- 3 Bcf a day of liquefaction capacity in, you know, in the Middle East coming from Ras Laffan, slash the North Field is out and gonna be out for roughly 3-5 years. That could change. I mean, the amount that's out could, you know, could change tomorrow, that seems to be what the number is right now. U.S. liquefaction capacity is expanding. It's about 21 Bcf a day right now, up from a blending of about 15 Bcf a day in 2025. It's effectively maxed out right now. There's incremental capacity coming online. If you look at the basins that could provide that, the Permian is certainly one of those. The Marcellus, which is the biggest in the U.S. at about 36 Bcf, but it's reasonably constrained with egress capacity. You've got the Haynesville, which is right next to LNG Corridor at about 15 Bcf or 16 Bcf. You know, that's the landscape as we see it right now. Super helpful lay of the land, as far as, you know, the key drivers and where everything is coming from. Dax, I wanna double-click on the commentary related to the call on U.S. LNG, supporting incrementally, you know, positive long-term growth outlook for feed gas operators like Kinder Morgan. We're still somewhat early days in the, you know, next wave of announcements and proliferation beyond what's been already under development. What are you hearing from your liquefaction customers at the end of your pipelines in terms of additional expansions from here as a result of this call and the war? Do you anticipate further upward revisions to your already bullish outlook for feed gas demand growth as a result of all of these developments? Yeah. You know, I think so. I think it goes. It's part and parcel with, first of all, the capacity that's actually been taken off right now, and I think, you know, as well as kind of the thing I touched on with respect to, you know, the people's perception of, you know, sovereign risk. You know, I think that, you know, we think that, you know, right now the U.S., U.S. gas market is about 115 Bcf a day, roughly, you know, 115 Bcf, 116 Bcf. We think that's gonna grow, or rather, you know, the latest WoodMac numbers suggest that's gonna grow, by roughly, I wanna say 19 Bcf, over the next four or five years. Our numbers are actually a little bit more bullish. LNG growth is you know about 13 Bcf of that, so a pretty substantial piece of it. We think that is you know that that's gonna continue. You know you take one specific, and I don't have any information from this group, but you know you take Golden Pass LNG, which is one of the largest facilities coming on here pretty soon. That's 30% owned by Exxon and 70% owned by the government of Qatar. You know, the government of Qatar clearly owns and runs Ras Laffan and is the developer of the North Field, largest presumably the largest field you know in the world. I think that it's probably reasonable to assume that their calculus over the last, you know, 3 to 4 months about what, you know, what's the most practical to further develop is, you know, has probably changed a little bit. We feel, we feel good about that. We've got, you know, one of the ways we're playing it, and we think that, you know, our angle in this is, as an infrastructure company, is to build the infrastructure around, the assets, like LNG, that are gonna be, you know, key, you know, key assets. We, you know, we have the largest natural gas network in the United States, and we transport about 40% of all the gas around the United States about 40% of the liquefaction capacity or gas going into liquefaction. You know, we've got right now we've got a backlog of projects, and these are projects that are board approved, that have signed binding agreements with creditworthy counterparties that we are deploying capital, actively deploying capital against. That capital is about 60% of that backlog is actually related to power in the U.S., but about 20% of it is related to LNG. One key pipeline we have on the LNG front is we call it the Trident Pipeline, is a pipeline that originates in Katy, Texas, and goes north of Houston, goes to the Texas-Louisiana border, ties into our network and some other pipes in the Texas-Louisiana corridor. It'll transport about 2 billion cu ft a day of gas, this is gas that's coming out of the Permian, I talked about it earlier, that's moving into the Houston area. It, you know, there's only so much that Houston can absorb. It needs to move east into the markets east. We're building this pipe. It'll start to come online towards the end of next year, it's under active construction right now. It'll come in over the next year sort of following that, get to a full run- rate after that. It'll be a connector for Permian egress gas and moving it into the LNG and even to a lesser extent, power consumption corridors. On that pipe, we will have the ability to expand that pipe by an additional Bcf a day with just compression, you know, should the need, should the basin continue to expand and the need arise. Okay. On that brownfield expansion, would that be rather quick in terms of turnaround and commercialization in your opinion? Yeah. We haven't fully scoped out what it would be. Generally speaking, you know, compression expansions, as you noted, a brownfield compression expansion can be done a lot more quickly than a greenfield expansion where you're putting new pipe in the ground. We would be able to get it done a lot more quickly than the timeline for this pipe, which is all greenfield new pipe in the ground. Understood. In addition to your sanction backlog, of which consists, Trident and other things, I'd like to touch on your $10 billion of shadow backlog, natural gas projects and other projects. Can you share more details on these proposed opportunities? Which are closer to, you know, reaching FID, even from a value chain perspective, without naming individual ones? How much more of this shadow backlog could you realistically sanction in the year ahead? Yeah. Just again, a little bit of a recap on, 'cause these are measures we use to communicate with investors on sort of what the future looks like and what we think we can develop. Again, starting with what we call our project backlog, which to reiterate what I mentioned a minute ago, those are projects that have been board-sanctioned, that have binding proceeding agreements, long-term agreements, that we are actually actively developing spending money on. That stands right now at $10.1 billion. We just updated it recently. You know, that consists of projects, as I said earlier, about 60% related to power. Again. Your mic. You can use this please. Oh, yeah. Sure. Yeah. Excellent. Yeah, about 60% of our projects are power-related. Within that, you know, I mean, data centers get a lot of conversation and airtime, but the power demand that First of all, these contracts are generally with utilities. They're not directly with data center providers. They're with utilities that have generally solid investment-grade ratings, generally sort of an A- kinda level. They're for power related to, you know, everything from demographic changes, migration into the U.S. Southeast, coal to gas switching and power, re, reshoring of industrial demand in the United States, as well as data centers, you know, data centers as well. I think the point is that there are a lot of drivers that we're seeing in our markets for incremental power that are beyond beyond data centers. About, you know, roughly 20% is LNG, and the balance is, you know, other stuff, industrial, you know, miscellaneous other things. That's our backlog. Our shadow backlog that Theresa mentioned is another, you know, measure. I mean, investors have constantly asked us, "Well, what's next behind that?" We've developed what we call our shadow backlog, which are projects that are under active development by our business development teams. You know, what they are not are, you know, an idea that's a, that's a hope and a prayer that somebody just kind of came up with over lunch and sketched out on a napkin. What they are are opportunities that we are in active conversations with customers on. We know that there's a demand. We know that there's a possibility of a project, but they haven't been approved by the Board. We don't actually have signed agreements yet. It may be a situation where we've got competition, and there's a lot of competition out there. We have competition with other potential providers or, you know, a customer may just decide to go in a different direction. These are projects that we believe have a really good chance of being developed. Generally, what will happen is over kind of a year's period of time, the projects on that list will work themselves out, and we will either get Some of them we will get. A lot of them we will get. Some of them we won't. There'll be new ones added. Some of them will go away. As we sit here right now, our shadow backlog looks a lot like our existing backlog. There's a lot of potential power. There's a lot of potential, you know, power demand out there. Largest area demand is probably the United States, as I mentioned, Southeast, which is where we have our Southern Natural Gas pipeline, which is a joint venture with Southern Company, the big southeastern utility, which has a lot of power demand. There's also the desert southwest, where we have our EPNG pipeline out west. Again, there's a lot of competition out there with the Transwestern Pipeline and in the mid-continent as well, where we have our NGPL, Natural Gas Pipeline Company of America, that we own 37.5% of. Those are really the drivers behind kinda what we're seeing in our shadow backlog. There's a lot of opportunity in the U.S. infrastructure market. Got it. Between shadow and sanction, $20 billion of potential opportunities out there, 10 and change of which has been officially sanctioned. Yeah, that's right. Looking at the data center side specifically, can you talk about Kinder Morgan's role in the SoftBank consortium, organized to develop a 9.2 GW data center project in Ohio? Will KMI need to expand your existing footprint in the region? What will you need to do to serve this project? Yeah. Great question. What she's talking about is there was an MOU that was released by, so I can't remember if it was actually released by SoftBank or the U.S. federal government. It effectively is a consortium of people led by SoftBank and led by a big source of capital from the government of Japan, as well as a host of other people looking to invest a substantial amount of capital in the United States for data center development in, you know, different places. We were named in that as part of that consortium. We are thrilled to be part of it, and we're thrilled to be working with SoftBank and the other members of the consortium. There hasn't been, you know, and the potential opportunity associated with that is not part of any backlog anywhere. We don't have any signed, binding, definitive agreements. We do continue to work with the consortium and, you know, we hope that that's gonna lead to something at some point because the development is real and, you know, we think that we think there's a good opportunity. We haven't announced anything. We haven't put any direct releases out ourself and again, just to reiterate, there's nothing associated with that in any one of our backlogs. Understood. It is interesting that you're the only midstream company named within that consortium, period. Yes, that's right. We were very happy to be the only one named in there. We talked a lot about your organic growth opportunity stacks. I'd like to touch on the inorganic side. Looking at your recently announced acquisition of Momentum Pipeline, can you shed more light on the strategic benefit that this asset will bring to your system, as well as the rationale behind purchasing an asset that is comparatively more expensive than what you typically build on your own? Yeah. A great question. Just to be clear, it's the Monument Pipeline. Sorry that we, no, it's all good. There's a lot of M's out there. Yeah, the Monument Pipeline, which we announced with our earnings a couple of weeks ago, and we actually just closed on that last week, it's an acquisition just north of $500 million. This is a short haul piece of pipe just outside of Houston that ties really nicely into our existing network. It's got a set of customers, a small set of customers with the largest customer being a customer that is one of our largest existing customers on the same asset. You know, we look at a lot of M&A, potential M&A transactions. Anything that's close to what we do, we look at. We're always looking at something. Most things we're not gonna get. Most things we are, you know, we're just. There's some buyer that's probably willing to take more risk, or underwrite, you know, more, less concrete assumptions than we are. If you look back over the last 5 years, I would say about every, you know, somewhere between, call it every year, but call it 6 months to 18 months, something will come along that is just an absolute fat pitch right down the middle of the plate. This was one of those. You know, it's a pipe that, again, ties right into our existing network. There's an existing storage contract associated with this that the asset is at the seller had been using to supply storage service to the existing customers. We've got our own storage assets over time. We will transfer the storage, the providing of the storage service, from the third party to our existing assets, and we've got some incremental capacity there that we're not using. It's a really nice, you know, tuck-in acquisition. Exactly to your point, you know, we are, you know, we're, I think, as you noted, when we build new pipe, we generally are able to construct it at a multiple, at a very attractive, you know, at a very attractive multiple. Our existing backlog, as we talked about, is about 5.6x build multiple. Our history suggests that we can do that or better with new projects. Now, you know, even in the M&A market, even when we find an asset, that we think is a really good fit, there's a lot of competition out there. Generally, you know, the price and the valuation for M&A assets is, you know, not as attractive as we would see on new build multiples, but still very attractive. As we said, you know, in the medium term, this will be, you know, sort of an eight times, you know, asset and, it's something we're very excited about and, think it'll be a really good tuck-in over time. Great. It'll be a really good tuck-in day one, but it'll be really good over time. Understood. We talked a lot about your Gulf Coast assets as it relates to natural gas. In terms of the Permian, needing additional residue gas egress, you clearly have a strong footprint there as well. Can we talk about your ability to execute on incremental expansions of GCX or any other flavor of Permian egress, as you see fit as this demand grows over time? Yeah. Great macro question, and as it relates to us. The interesting thing about Permian, we talked about the Permian at the beginning of the conversation, but the interesting dynamic about Permian gas is Permian gas egress, is that it has, you know, egress was needed. There was almost no egress, call it 10 years ago. Gas production started to grow, and egress was needed. Egress, you know, a decent bit of egress was built. There was a lot of speculation and worry that the egress was getting overbuilt. Guess what? Gas production just continued to grow as the Permian grew, and egress grew as well. We've kind of had this, you know, sort of, you know, one step, one foot in front of the other, incremental egress, incremental production growing. As we sit here today, you know, today the Permian is short gas egress. You know, and really what you do is you look at the difference between the Waha price, and the Houston Ship Channel price, and Waha is pretty consistently negative, which is again, is the price in West Texas. You know, we've got an expansion of our GCX pipeline, and we own, we've got several, two main and then a couple of ancillary pockets for egress out of the Permian heading eastward. We also have our El Paso Natural Gas pipe, which moves gas westward out of the Permian. We've got a 570 a day expansion of our GCX pipeline, which is coming online sort of like, you know, it's in the process of coming online right now. It'll be in later this quarter. With that, our pipes moving eastward are generally at capacity based on, you know, the amount of, you know, steel in the ground. There's also an additional 11 Bcf. I wanna say it's about 11 Bcf of capacity, egress capacity coming online with some other pipes. Hugh Brinson, that Energy Transfer is building, Eiger, a couple of other pipes. You know, as those come online, you know, it feels like, you're gonna have enough egress capacity out of the Permian. Now, again, if you go back to what we started talking about at the very beginning, if there is a call on additional Permian crude capacity or Permian crude production, and Permian gas grows, you could be short again. I think if there is a new, greenfield pipe that needs to be built out of the Permian, I think we certainly would be there, and be ready to participate in that. You could, you know, potentially even see another, you know, pipe, not compression, but, looping of one of our systems coming out of there. Again, just to reiterate, I think we are very well-positioned to be able to take the gas. As it comes out of the Permian and moves eastward, it moves right into our network, into our Texas intrastate system, potentially our Trident pipeline that we talked about. We're very well-positioned to move it even, move it further eastward. Yeah, I think, Dax, empirically speaking, the supply and demand balance for Permian egress has only surprised one side. Yeah. We'll see. Well said. Turning to the liquid side of your portfolio, I want to give some attention to this too because you have some major development and projects here. Maybe first on what's recently been in effect. Your conversion of your Bakken system from crude oil to NGLs. Looking at that recent pipeline conversion, how do you think about the incrementally positive macro backdrop, the potential, you know, uptick in production at large for the U.S., what that means for the Bakken, and how that alters expectations for subsequent phases of your NGL system as it stands? Yeah. Just to put a little finer point on what Theresa's talking about, we've historically had a crude pipe, a crude egress pipe out of the Bakken that originates in the Bakken and goes down to Guernsey, Wyoming. We announced a couple of years ago the intention to convert that into a natural gas liquids line to bring natural gas liquids out of the basin. And that's in the process of coming online right now. We've talked about potential future phases of that. You know, and we don't have anything that we've announced on that. You know, I think, as we've said before, given how competitive it is up there, that's not something that we've elaborated on a lot. you know, although I would say we are putting a lot of energy in, you know, in, you know, sussing out the next opportunities there. With respect to the overall macro, you know, we don't see the Bakken is having a, you know, a tremendous amount of growth associated with it. That's, that's okay from a gas. We also have a crude oil, as well as gas gathering operation in the Bakken. you know, we don't necessarily see that as absolutely necessary to potentially drive, you know, growth. I think the wells up there are getting a little bit gassier, so we are seeing incremental gas, and we are seeing, you know, incremental, you know, NGLs. We think that there's opportunity to, you know, to further develop our phase I, and we continue to work on that, but we haven't announced anything beyond that. Fair enough. Elsewhere on the liquid side, touching on your refined products project, Western Gateway, following the conclusion of a successful second open season, can you provide color on early learnings from both open seasons and whether your expectations for the project have changed at all relative to initial expectations? Yeah, a great question. I would say, first of all, expectations right now are reasonably consistent with what we thought about from the beginning. You know, the interesting thing is the plumbing for refined products in the Desert Southwest and California has been in a relative state of equilibrium for the past 70 years. What we're attempting to do with our partner P66 is completely change that plumbing via this Western Gateway project that we're talking about. The dramatic change that's happened, you know, over the past handful of years is you're seeing refineries in California shutting down. You've seen a couple have convert to renewable diesel. You've seen a couple shut down. Refining capacity in California that has traditionally provided refined products to California and even moved products eastward into Nevada and Arizona, you know, is changing pretty dramatically. The other thing that you're seeing is the relative economics of PADD 2 refiners and even PADD 3 refiners, you know, has increased. What this project will do is reverse the flow of one of our pipes that's moving refined products from Southern California into Arizona to take products that will be brought from PADD 2 and the Texas Gulf Coast westward into the Phoenix area and take product from Phoenix to supply California. What this does, what it would do is, you know, provide really, you know, the next, the next phase of refined product security for consumers in the desert Southwest, in Arizona, in California. You know, it's a big undertaking, but it's something we're excited about. The open season, as we said, was successful. Yeah, the next phase, as we said, as I said on the earnings call a couple of weeks ago, is to negotiate a successful joint venture with our partner, P66, which we're working on. You know, we're optimistic that we'll get there and that we'll get it done. I mean, there's enough big enough slice of the pie to make this project work. You know, I mean, again, I think it's likely that we do, but if we weren't able to work something out, then, you know, we would go back to I mean, these are great assets that we have, and we would go back to, you know, the state of equilibrium that existed for the past 70 years. But we think this is a project that the market needs and, you know, we're excited about it. On behalf of all Californian residents, we greatly welcome incremental refined products flowing into our state, and well, I certainly hope this project passes FID. To your point about the state of SFPP at this point, there is a lot of debate on the value of SFPP as it stands, either as contribution to this project or on a standalone basis. Can you talk about the EBITDA and earnings outlook for SFPP if this project was not to come to fruition? How do you see that evolving over time? Yeah. First of all, these are really good solid assets. They're good cash flowing assets. They are assets in markets that have existed for a very long time with solid demand. There are certain places that they serve that have really favorable demographics. I mean, Maricopa County, both our east line and west line serve Maricopa County, which is where Phoenix is, which is a very fast-growing metropolitan area. You know, we in part also serve the Calnev Pipeline, which is serving Clark County, Nevada, which is growing as well. These are really good, solid, growing assets. They've got really good traditional fixed cost economics associated with them. Those of you that know the way refined products and oil pipes work in the United State evey five years, the FERC sets an index adder or subtractor that you apply to the Producer Price Index that sets effectively how much you can raise your tariffs each year. You know, it's an inflation plus or minus. The past 5 years, it's been PPI plus 0.78. FERC just reset it for the next 5 years at minus, roughly - 0.5%. Again, that's off PPI, which is a substantially positive number. What that does is it provides, you know, an inflation escalation component to your tariff that allows you to basically grow revenue each year. These are really strategically important assets. They cannot be replicated. You're not gonna build a new gasoline pipeline in California, you know, anytime soon. They are absolutely critical to meeting the demand that exists today. These assets are gonna be worth, you know, a decent valuation, whether they go into part of this JV or continue to operate as they have for the last 70 years. Fair enough. We spent, you know, the bulk of our time talking a lot about your fee-based assets, the fee-based contracts and the long-duration nature of those cash flows. You do have a modest amount of torque within your system as it relates to this macro backdrop that I don't think we can ignore given the current environment. I'd like for you to, you know, talk about this potential uptick, if either producer activity materializes or the elevated and volatile commodity price environment persists. Can you elaborate on the specific sources of earnings upside across your diversified footprint? Yeah. Well, the first thing I would say, you know, one of the most important aspects of our entire network, and this, and this goes for the entire United States natural gas grid, but the utilization of our network, back in 2016, 10 years ago, was about 74%. Today, that number is at or north of 90%. What that says is, you know, the competition for the, you know, the incremental space molecule in our pipelines just continues to increase. You know, we are able, we are able to benefit from that, when, you know, when situations, when the right situation presents itself in extreme events like extreme weather events. You've got that. That's probably the most fundamental thing associated with our business. You know, to your point about specific items related to torque, we do have our CO2 business, which is a tertiary oil production business. You know, that business is a small part of our overall company. You know, it generates about $300 million a year free cash flow. We generally hedge about 90% of our budgeted barrels going into a particular year. We've got 10% that are generally floating throughout the year. To the extent that we outperform, we have the ability to capture that. We are outperforming in our crude production this year. You know, we have a transmix business, where we are, you know, buying downgraded product and then upgrading it back to what it was before it was downgraded, so we get to capture that spread. You know, we've got some blending businesses. And then we've also got businesses that are, you know, kind of specific. We do not have a lot of commodity exposure as an overall company, but that just highlights some of the areas where we have a little bit of commodity exposure. With respect to volumetric exposure, you know, I think to the extent you're seeing a lot of incremental volumes, if you're talking about torque. If you have high prices and then you have volumes that are driven by that, we've got gathering and processing. We've got a couple of gathering and processing businesses. I mentioned the crude business in the Bakken. We've also got a gas business there. We've got a gas gathering and processing business in Haynesville. We've also got probably the largest number of export docks that accommodate refined products exports in the United States and those are running about as full as they can possibly run right now. We've also got crude pipes that have some exposure to the crude export market. Those are all things that again, the fundamental piece of our business is we are a fee-based energy infrastructure business. That's our core business. To your point about where do we have some torque, we do have a little bit of torque around the edges that we're able to capitalize on. Wonderful. Well, we are about at time. Thank you all for participating and coming. Thank you very much, Dax, for this lovely discussion. Thank you. Thoroughly enjoyed it.