Kinder Morgan, Inc.

You may disconnect at this time. You have been placed on a listen-only mode until the question and answer session of today's call. If you would like to ask a question at that time, please press star 1 on your phone. Please make sure your phone is unmuted and record your name and company name clearly when prompted. I would now like to turn the call over to Mr. Rich Kinder, Executive Chairman of Kinder Morgan. Thank you, sir. You may begin.

Okay, thank you, Michelle. Before we begin, I'd like to remind you, as I 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. Let me begin by today we formally announced our dividend increase for 2022. taking the annual payout to $1.11. That's the fifth consecutive annual increase. Also, as Steve Koehn and the team will tell you, the year is off to a good start. But I want to talk about broader issues that impact all of us. Since our last call in January, seismic events have occurred. The Russian invasion of Ukraine has shaken the world order as we know it, with a dramatic impact on the economy of Europe and indeed the entire world. Predicting how this whole tragic situation will be finally resolved is far beyond my capabilities, but I'm pretty certain the impact on the energy segment of the economy will be significant, at least over the next several years. This crisis has demonstrated the continued dependence of the world on fossil fuels, especially natural gas, and the inability to develop a satisfactory substitute in the short to intermediate term. This situation is illustrated by the frantic efforts of Europe to wean itself from its overwhelming reliance on Russian natural gas. Beyond that, we are shown once again how tight the world market is for oil, natural gas, NGLs, and even coal as we look at the dramatic escalation in prices since the war began in late February. What does this mean for the energy space in America? In my judgment, the crisis plays to our strengths. The U.S. is a reliable supplier with the ability to grow its production modestly in the near term and more robustly in the intermediate term. We operate under a transparent legal system, and we have technical expertise from the wellhead to the burner tip that is unmatched anywhere in the world. For all these reasons, the United States will be a major part of the solution to adequately supply the world with oil and natural gas it needs to surmount the present problem. In particular, the US will be a major supplier of additional LNG to Europe to replace, at least in part, Russian gas. I anticipate that all of our present LNG export facilities will be running at capacity for the foreseeable future, and the contracts necessary to support the construction of new facilities in the next few years will be more attainable than they've been in the past. By way of caution, I'm still concerned that our federal government will not properly expedite the permitting of these new facilities, but I'm reasonably hopeful that at some point this administration will recognize the importance of playing its energy card to support its allies and sanction its adversaries. The impact of these developments will benefit the midstream energy segment and Kinder Morgan specifically in both the short term and the long term. At Kinder Morgan, we remove about 40% of all the natural gas in America and about 50% of the gas going to LNG export terminals. As volumes increase, throughput will increase, as will the need for selective expansions and extensions of the network. In short, it's a good time to be long natural gas infrastructure.

Steve? All right, thanks, Rich. So after wrapping up a record year financially in 2021, we're off to a strong start in 2022 with strong performance in our base business and attractive opportunities to add growth. We're keeping our balance sheet strong, exceeded our plan in the first quarter, and even though it's early in the year, we are projecting to be above plan for the full year. In addition to commodity price tailwinds, we experience very strong commercial performance in our gas business with continued improvement in our contract renewals, especially on our flexible gas storage services, good performance during the winter, and new emerging project opportunities in our Bakken, Haynesville, and Altamont assets, and increasing interest in new Permian transportation capacity. On the Permian, we are working on the commercialization and development of compression expansions on our PHP and GCX pipelines while we will need to do a small amount of looping most of the expansion can be accomplished with additional horsepower compression expansions are low risk from a siting and permitting perspective and they are very capital efficient so they do come with a higher fuel rate for the customer most importantly in today's environment Compression expansions allow for speed to market. Once we have contracts and make FID, we believe we can get to in-service in about 18 months. We believe the market will need that capacity in that timeframe and see one or both of these expansions as the near-term solution, pushing out our potential greenfield third pipeline further in time. Combined, the two expansions can add 1.2 BCF per day of capacity out of the Permian. Finally, for gas, our Stagecoach storage asset, which we acquired in 2021, helped us with our strong winter performance and continues to perform above our acquisition model. Our CO2 business was aided by commodity prices and also operational outperformance versus our plan. We continue to advance our three renewable gas projects, which we picked up in the Connetrix acquisition last year, and we are advancing additional opportunities in our energy transition ventures group. Our products pipelines were modestly above plan for the quarter, and while terminals misplanned by a bit, we started to see good recovery in our Jones Act charter rates and continued strong performance in our bulk terminals business. For the balance of the year, commodity prices continue as a tailwind, and we have locked in enough such that our updated sensitivity is about 4 million. We expect continued strength in our base business, but we also expect to experience some negative impact from cost pressures, due both to additional higher costs on certain materials, chemicals, parts, and vehicle fuel. Still, taking all of this into account, we are predicting that we will be above planned for the year. In summary, we're... Okay.