Kinder Morgan, Inc.

session of today's conference. At that time, you may press star followed by the number one to ask a question. Please unmute your phones and state your first and last name. My pleasure to turn the call over to Mr. Rich Kinder, Executive Chairman of Kinder Morgan. Sir, you may begin.

Okay. Thank you, Michelle. Before we begin, I'd like to remind you, as we always do, that KMI's earnings release today and this call include forward-looking statements within the meaning 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. To kick the call off, in addition to detailing our first quarter results, we made two important announcements in our earnings release today. We've revised our full year 2021 estimates for DCF and EBITDA substantially upward. Steve, Kim, and David will explain the underpinnings of that change. We also increased our dividend to an annualized rate of $1.08 per share, as we promised when we released our original outlook for 2021 back in December. In my judgment, this increase is an indicator of two significant parts of our corporate financial policy. First, it shows we are intent on returning value to our shareholders. Second, it demonstrates the consistent strength of our cash flow. To put this in perspective, this is the fourth consecutive annual increase in our dividends since 2017 when we were paying an annual dividend of 50 cents per share. And we have accomplished that while maintaining a real focus on our balance sheet. having reduced our debt from its peak of almost $43 billion in 2015 to $30.7 billion today, a decrease of over $12 billion, quite an improvement. Now, we're doing all this while continuing to pursue opportunities with our natural gas assets to firm up deliverability and supply to our customers, opportunities that were highlighted by the recent winter storm in Texas, and also while examining opportunities in the energy transition effort. At Kinder Morgan, we remain guided by what we believe is a sound corporate philosophy. Fund our capital needs internally, maintain a healthy balance sheet, and return excess cash to our shareholders through dividend increases and opportunistic share repurchases. We think this is a recipe for long-term financial success for KMI and its shareholders. And with that, I'll turn it over to Steve Cain, our CEO. Steve Cain All right.

Thank you, Rich. I'll focus on our performance during winter storm Uri, which is what drove our financial results in the quarter. Then I'll turn it over to our President, Kim Bang, to cover the business updates. Our CFO, David Michaels, will take you through the financials, and then we'll take your questions. Starting with the performance during the February winter storm, we were prepared, and that preparation served us well. Our previous investments in our assets, particularly on our gas storage assets, were a huge help. We were on maximum withdrawal for days at several of our fields. Also helpful were our investments in backup generators at key compressor stations on our system. Another real key for us was our team. Our operations team deployed in advance to keep our facilities running and quickly repair them if they went down. We deployed additional generators and tested our generators before the storm got here. Our people were at locations that are normally automated, and they were there in the bitter cold, and undoubtedly many of them had their own families at home without power and water. Our team went to key compressor stations, storage facilities, and delivery points to keep gas flowing, including a key delivery point to the city of Austin. Our people kept us going. Our investments, and especially our team, winterized us, against a terrible storm. We also purchased additional gas, some at very high prevailing prices to serve power plants and gas utilities. The result of all this was that we enabled our wholesale customers to serve needs that would have otherwise gone unmet, mitigating the tragedy that too many Texans endured. We performed well operationally and commercially across our entire gas network, but our financial performance was especially strong in our Texas intrastate pipeline and storage network, and as I'll mention in a minute, in our CO2 business for reasons I'll explain. A key difference between our Texas intrastate system and our interstate gas pipeline systems is that we have a purchase and sale business in Texas supported by high deliverability storage assets. In contrast, our interstate pipelines are nearly exclusively selling unbundled transportation and storage services. We do that in Texas, too, but we also have a purchase and sale business. That business is generally done with reference to an index price. For example, we sell gas at the Houston Ship Channel index plus something and buy at Houston Ship Channel minus something. In normal circumstances, we're effectively getting a transport margin on our purchases and sales and using our proprietary storage to extract margin from price differences across time periods. When prices are in a normal range, this is a very stable business, and we view our Texas interest rates as roughly 80% or so take or pay. In February, supply and demand conditions caused prices to go up by more than 100 times and back down by the same order of magnitude over the course of a week. Market volatility, like we experienced that week, reveals the value of reliable pipeline and storage assets and a reliable operations team. It reveals the value of having gas in storage and previous purchase arrangements in place. It also reveals the value of preparation. In such circumstances and with supply and demand conditions causing prices to go up by more than 100 times, we were able to perform well financially as well as operationally. Many of our additional sales, whether as a result of higher takes, under our existing contracts or incremental sales that we were able to do during that week took place at prevailing market prices, which during that week at the Houston Ship Channel ranged from $180 at MMBTU to $400 versus $3 earlier in the same month.