DBRS Morningstar Confirms Kinder Morgan, Inc.’s Issuer Rating at BBB with a Stable Trend and Discontinues Debt Ratings

DBRS Limited (DBRS Morningstar) confirmed the Issuer Rating of Kinder Morgan, Inc. (KMI or the Company) at BBB with a Stable trend. DBRS Morningstar discontinued and withdrew the Senior Notes and Debentures rating of KMI and the Medium-Term Notes & Unsecured Debentures rating of KMI’s wholly owned subsidiary, Kinder Morgan Energy Partners, L.P. DBRS Morningstar notes that the discontinuation of the ratings is unrelated to the credit risk profile of the Company.

KMI’s credit profile reflects the relatively stable cash flow generated from well-diversified, fee-based energy transportation and storage assets. The Company's contractual earnings, scale, presence in multiple resource basins, and a larger focus on natural gas transportation provide resilience to the Company's cash flow. KMI's assets are difficult to replicate, and connect major resource basins to demand centres and export markets. Growing energy demand, particularly from industrial and power generation sectors and global liquefied natural gas exports, continues to drive the Company’s natural gas transportation volumes. As the Coronavirus Disease (COVID-19) pandemic-related restrictions ease, demand for refined products, liquids, and terminal services is also expected to normalize to pre-pandemic levels and support the need for KMI's energy infrastructure.

A majority of KMI's natural gas pipelines and terminal assets are covered by a mix of medium- to long-term take-or-pay contracts or minimum volume commitments with no volume or commodity risk. However, KMI is exposed to volume risk in its refined products transportation and gathering and processing activity. The Company's oil transportation and production operations in its carbon dioxide segment entail commodity price risk, although partially mitigated in the short term through an active hedging program.

KMI's 2022 growth capital expenditures (capex) are primarily focused on low-carbon opportunities in the pipelines and terminals segments and other energy transition initiatives. KMI continues to self-fund capex and dividends primarily from operating cash flow and has not accessed the equity markets for the past several years. Liquidity is considered adequate. KMI's credit ratings are based on a consolidated approach as substantially all wholly owned domestic subsidiaries of the Company are parties to an irrevocable and unconditional cross-guarantee agreement.

A positive rating action can be considered should KMI improve its business risk profile by generating a significant portion of its operating cash flow from medium- to long-term take-or-pay contracts with investment-grade counterparties while maintaining its conservative funding strategy. The rating could be downgraded because of adverse regulatory changes; a rise in counterparty, volume, and commodity risks; and weakened credit metrics to a level that is inconsistent with the Company's BBB rating.

ESG CONSIDERATIONS
There was no environmental, social, or governance factor or consideration with a significant or relevant impact on the credit ratings.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodologies are Rating Companies in the Pipeline and Midstream Energy Industry (November 3, 2021; https://www.dbrsmorningstar.com/research/387443) and DBRS Morningstar Criteria: Guarantees and Other Forms of Support (April 4, 2022; https://www.dbrsmorningstar.com/research/394683), which can be found on dbrsmorningstar.com under Methodologies & Criteria. Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (February 3, 2021; https://www.dbrsmorningstar.com/research/373262).

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at [email protected].

This rating was not initiated at the request of the rated entity.

The rated entity or its related entities did not participate in the rating process for this rating action. DBRS Morningstar did not have access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This is an unsolicited credit rating.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar trends and ratings are under regular surveillance.

DBRS Morningstar will publish a full report shortly that will provide additional analytical detail on this rating action. If you are interested in receiving this report, contact us at [email protected].

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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