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UBS 2012 Natural Gas, Power & MLP Conference
| David Kinder | Page 7 of 11 |
December 09, 2016
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KMR Discount to KMP Management Purchases of KMR / KMP (c) -20% -15% -10% -5% 0% 5% 10% Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 ? IPO 5/14/2001 $8.1 $4.5 $0 $2 $4 $6 $8 $10 KMR KMP (millions) __________________________ (a) All figures through / as of 2/24/2012; see footnotes on slide 11 for explanation of total return calculations (b) Calculation of share dividend: KMP quarterly cash distribution per unit divided by KMR 10-day average price prior to x-date = fractional share paid for every KMR share owned, e.g. $1.16 / $78.046 = 0.014863 share; example reflects actual KMR share dividend calculated for 4Q 2011 paid on 2/14/2012; refer to KMP 2011 10-K for more information (c) Purchase of KMR shares and KMP units by directors and officers of KMR/KMP since the KMR IPO in 2001, as reported in SEC Form 4 filings; 7:1 ratio excludes one open market purchase of KMP units relating to an arrangement requiring cash distributions for payment of interest 7 KMR is KMP ? KMR shares are pari passu with KMP units ? KMR dividend equal to KMP cash distribution, but paid in additional shares; effectively a dividend reinvestment program (b) ? Like KMP units, KMR shares are tax efficient — but with simplified tax reporting (no K-1s, UBTI) KMR is a significant entity ? KMR market cap = $8.2 billion, ~30% of total KMP capitalization ? ~$20 million in daily liquidity KMR has generated a 16.1% compound annual total return since ‘01 IPO, vs. 16.6% for KMP Although the KMR trading discount to KMP has narrowed, at 9.9% it still leaves substantial room for improvement EP transaction expected to lead to more KMR issuance ? Highlighting the security and further improving liquidity ? Potential for KMP to become self-funding through KMR dividend ? Possibility of KMR share buybacks if quarterly dividends exceed equity funding needs Insiders prefer KMR ? Management has purchased KMR at a rate of about 2:1 vs. KMP, or almost 7:1 excluding one transaction (c) KMR 101 (a)