Kinder Morgan, Inc.

Welcome to the Quarterly Earnings Conference Call. Today's call is being recorded. If you have any objections, you may disconnect at this time. All participants are in a listen-only mode until the question and answer session of today's call. At that time, you may press star 1 on your phone to ask a question. I would now like to turn the call over to Mr. Rich Kinder, Executive Chairman of Kinder Morgan. You may begin.

Thank you, Jordan. Before we begin, I'd like to remind you, as we always do, that KMI's earnings released today and this call include forward-looking statements. within the meaning of the Private Securities Litigation and 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 sent 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. About the most important thing a board of directors does is to structure and implement orderly succession planning, and I'm proud of the job we've done at Kinder Morgan. In our 26-year history, we've only had two CEOs, and we'll welcome our third on August 1st. This will be Steve Koehn's last investment call as CEO And I want to thank him for all his dedication and hard work in that position for the last eight years and for his service to the company over the past two decades. He's been a fine leader of the organization with the ability to understand the big picture and still pay attention to the details. And I can assure you that's a unique combination. We're happy that Steve will stay on our board, and I'm sure he will continue to contribute to our success in that role. As all of you know, Kim Dang, our current president, will succeed Steve, and Tom Martin, the long-term president of our natural gas segment, will replace Kim as president. Kim, Tom, and I will constitute the office of the chair. We announced all this back in January, and the transition has proceeded very smoothly. Kim joined Kinder Morgan in 2001 and Tom in 2003, so they both have long experience at the company and in the midstream energy business. They've both been outstanding contributors to our success, and I know they'll be great leaders of the company in the coming months and years. In short, the board and I are very comfortable that we will march forward without missing a beat. Now, as we make this change, it's important, again, to emphasize why we're bullish about the long-term future of Kendra Morgan. The single most important reason for optimism is the role natural gas will play in this country and around the world in the coming decades. We forecast U.S. natural gas demand will grow by about 20 BCF a day between 2023 and 2028 to about 121 BCF a day, and that's a 20% increase. We expect 13.5 BCF a day of that growth to come from LNG and Mexico exports with moderate growth in the power, residential, and commercial sectors. Almost all of that LNG and Mexico growth will occur in Texas and the Gulf Coast, where we have a superb and multifaceted pipeline system. That's why we believe that growth in demand, combined with the strategic location of our network, will drive expansion and extension opportunities for our network and significant bottom line growth for years to come. And with that, for the last time, I'll turn it over to Steve.

Thank you, Rich. Thanks for the kind words. It's been an honor. to work for you, for the board, for our shareholders, and to work with this great management team that we have around the table. And I can only double down on what you said about Kim and Tom. They work extremely well together and with the rest of the management team. And this is going to be very good for the company. And so we had a good quarter and a solid year so far. We beat our budget for the second quarter. And although our outlook predicts slight underperformance on a full year basis, That is all more than explained, more than explained by commodity prices coming in lower than our budget year to date and according to the forward curve for the balance of the year. Put another way, our business is performing better and that is partially offsetting the lower commodity prices. We also continue to see a strong market from our business development standpoint. While our backlog is roughly even with the first quarter update at $3.75 billion, That's the net result of having placed about $450 million of projects in service during the quarter, while adding roughly $500 million of new projects to the backlog during the quarter. As we have noted many times, these projects are getting done at attractive returns well above our cost of capital. Notable among the projects brought into service was the first of our Wabash Valley RNG projects. Those projects were part of our Connetrix acquisition from 2021. The first one went into service on June 27. The project was later than planned and a little more expensive, but still a nice return, and we expect the whole portfolio of Connetrix projects to yield a very attractive return on our overall investment, even with the delays we've experienced. I'll note also on our RNG business that we got a favorable outcome from the EPA. Those are four or five words that you don't often hear from an energy executive. favorable outcome from the EPA on its June order establishing the renewable volume obligation for the next three years. That pushed D3 RINs, those are the RINs values that matter most to us, up over $3. And we held off on selling RINs until after that ruling came out. More significantly, our natural gas and terminals businesses are leading the way without performance versus plan. One other performance highlight to note Our CO2 business is beating plan on production. Kim and David will give you the percentages there, but we're actually up year over year. Now, that's more than offset by lower commodity prices, as I mentioned, but it's a significant accomplishment given the significant outage that we had at our SACROC, our largest field, in the first quarter. That's very strong work by our EOR team. Other than that, the song remains the same. We're maintaining a strong balance sheet originating new projects and attractive returns, and returning value to our shareholders through a well-covered dividend and opportunistic share repurchases. And now I'll turn it over to our president, soon to be CEO, Jim Dang.