Kinder Morgan, Inc.

At that time, you may press star 1 on your phone to ask a question. 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. Rich Kinder, Executive Chairman of Kinder Morgan.

Thank you, Denise, and good afternoon. Before we begin, as usual, I'd like to remind you that KMI's earnings released today and this call include forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995 and the Securities and Exchange Act of 1934, as well as certain non-GAAP financial measures. Before making any investment decisions, we strongly encourage you to read our full disclosures on forward-looking statements and use of non-GAAP financial measures set forth at the end of our earnings release, as well as review our latest filings with the SEC for important material assumptions, expectations, and risk factors that may cause actual results to differ materially from those anticipated and described in such forward-looking statements. Before turning the call over to Steve and the rest of the team, I'll just make a short statement. Because we now have actual results for the full year 2020 and have released our preliminary outlook for 2021, This is a good time, in my judgment, to examine both our current results and future outlook at Kendra Morgan. It seems to me that the clear takeaway is the strength of the cash flow which allows us in both years to fund our dividend and all discretionary CapEx from internally generated funds and still have significant cash left to pay down debt and buy back shares. This remains at the core of our financial strategy and should be comforting to our shareholder base, as it demonstrates our ability to return value to our shareholders, even under adverse conditions like we experienced in 2020. I would make two additional important points. Number one, there is a long runway for the products we move through our pipelines, particularly natural gas. And as the world transitions to a future of lower emissions, my second point is that our assets, are well positioned to participate in that transition. We'll discuss all these subjects in detail at our upcoming virtual investor conference on January 27th, and I look forward to your participation. Steve?

Thanks, Rich. So I'll give you a brief look back on what we accomplished in 2020, a look ahead on 2021 and beyond, which, as Rich said, we'll cover in greater detail at our annual investor day next week. Then I'll turn it over to our president, Kim Dang, to cover the business updates. Our CFO, David Michaels, as usual, will take you through the financials, and then we'll take your questions. 2020 has shown us how important it is to have our priorities and principles straight. We kept our focus throughout the year on keeping our coworkers safe and on keeping our essential assets running for the people, businesses, and communities that depend on us. Like everyone in our sector, we didn't shut down. We kept running, adjusting our operating procedures on the fly to keep people safe while we helped utilities and factories and other businesses keep running and serving our communities during the pandemic. The pandemic and the downturn in U.S. energy markets impacted us for sure, but we were still able to maintain our financial principles which remain the same. First, maintaining a strong balance sheet, we managed to reduce net debt by almost another $1 billion, taking our overall net debt reduction over the last five years to well over $10 billion, 10.8 since Q1 of 2015, and achieving and maintaining our BBB flat credit rating. Second, we maintained our capital discipline through our return criteria, a good track record of execution, and by self-funding our investments. On that front, we evaluated all of our 2020 expansion capital projects and reduced capex by about $700 million from our 2020 budget for about 30% in response to the changing conditions in our markets, while still completing our largest project, the Permian Highway Pipeline, in the face of substantial opposition and in the middle of the global pandemic. We're also maintaining our cost discipline. We achieved about $190 million of expense in sustaining capital savings for 2020. That includes deferrals. We view about $119 million or so as permanent reductions for the year. The result of this work on our capital budget and our costs is that our DCF, less discretionary capital spend, has actually improved versus our plan and when compared to 2019 as well. about $200 million better versus our plan and about $665 million better than 2019, notwithstanding what was going on in U.S. energy. So we more than offset the degradation to our DCF with spending and capital investment cuts in 2020. And the following is noteworthy, too, I think. Our DCF plus discretionary capital was $2.2 billion in 2019. It grew to $2.9 billion in 2020 and is $3.65 billion in our budget for 2021. Finally, we're returning value to shareholders with a 5% year-over-year dividend increase to $1.05 annualized for 2020, providing an increase to the well-covered dividend that the board plans to raise to $1.08 declared in 2021, and as contemplated in our approved 2021 budget. So a strong balance sheet, capital and cost discipline, returning value to our shareholders. Those are the principles we continue to operate by. So in addition to completing the Permian Highway pipeline, we also achieved some other milestones, which we believe are going to lead to long-term distinction. We're already an efficient operator, but we're getting more efficient and cost-effective, as I mentioned. We believe that's one of the keys to success in our business for the long term. During 2020, we completed a full review of how we're organized and how we operate. We centralized certain functions in order to be more efficient and effective, and we made appropriate changes to how we manage and how we're staffed, and we're achieving, as a result, substantial savings, as we described in our guidance release in December and which we'll also cover next week, We're also building what we believe is a more effective organization for the future. The centralization of certain functions will enable us to spread our best practices throughout the organization in project management and permitting, safety, pipeline integrity, ESG, and other core functions. We also published our third ESG report during the fourth quarter. We've incorporated ESG reporting and risk management into our existing management process. Sustainalytics has ranked us number one in our sector for how we manage ESG risk, and our updated MSCI rating also improved dramatically. These things are all important to our long-term success, being a responsible, effective, and efficient operator with the ability to complete large projects under extremely difficult circumstances. That we were able to do all this during a pandemic and a difficult U.S. energy market backdrop is a testament to the strength and resilience of our people, our leaders, and our culture. All this positions us well for the future, and we'll be talking about this in more detail at the conference, but here are a few thoughts on what the opportunities look like. First, there are the things that we're already doing that are likely to grow as time goes on. First on that list is our largest business, natural gas, which will continue to be needed to serve domestic needs and export facilities for a long time to come. And it will continue to reduce GHG emissions as we expand its use around the country and the globe. Related to that is the enabling role that our natural gas assets play in supporting intermittent renewable resources in the generation stack. Most important to us is the value of what we do, which is less about providing the commodity and more about providing the transportation and storage capacity or deliverability. That value increases as more intermittent resources are relied on for power generation. Natural gas is clean, affordable, and reliable, and pipelines deliver that commodity by the safest, most efficient, most environmentally sound means. Also, we're making our low methane emissions performance part of our marketing as responsibly produced and transported natural gas. That's a very good synergy between our ESG performance, which is in part about lowering methane emissions, and our commercial opportunities, distinguishing ourselves as an environmentally responsible provider. This is important, for example, not only to our domestic customers, but to our customers serving international markets. Also among the energy transition businesses that we participate in today is the storage, handling, and blending of liquid renewable transportation fuels in our products, pipelines, and terminal segments. We've handled ethanol and biodiesel for a long time. Today we're handling about 240,000 barrels a day of a 900,000-barrel-a-day ethanol market, for example. We also handle renewable diesel today. That's part of our business. That is a part of our business that is ripe for expansion on attractive returns. Moving out the next concentric circle of opportunities is a set of things that we can largely use our existing assets and expertise to accomplish. Those include things like blending hydrogen in our existing natural gas network and transporting and sequestering CO2. A further step out would be businesses that we might participate in if the returns are attractive, such as hydrogen production, renewable diesel production, and carbon capture from industrial and power plant sources. As always, we will be disciplined, investing when returns are attractive in operations that we are confident we can build and manage safely, reliably, and efficiently. We will not be chasing press releases. Energy transitions, for a variety of reasons, take a very long time. We'll look hard as we leap. You'll hear more details from Kim and the business unit presidents about all this at next week's conference. We believe the winners in our sector will have strong balance sheets, low-cost operations that are safe and environmentally sound, and the ability to get things done in difficult circumstances. We're proud of our team and our culture, and as always, we'll evolve to meet the challenges and opportunities. And with that, I'll turn it over to Kim.