Q4 2024 Earnings Call Transcript

Good afternoon, and thank you for standing by, and welcome to the Quarterly Earnings Conference Call. Your lines are in a listen-only mode until the question-and-answer session of today's conference. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to Mr.

Rich Kinder, Executive Chairman of Kinder Morgan. Sir, you may begin.

Hey, thank you, Michelle. And before we begin, as we always do, I'd like to remind you 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 disclosure 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.

I usually kick off these earnings calls with an overview of developments, present and future, in the midstream energy space with special emphasis on the various growth drivers for natural gas demand. These drivers are creating enormous opportunities for expansion of the Natural Gas Pipeline and storage system across America, and especially in the Gulf Coast and Southeast regions. At the beginning of this new calendar year, I thought it might be appropriate to be a little more specific about Kinder Morgan's response to those opportunities. In the last few months, we have announced the FID of four new major projects, the expansion of our GCX system out of the Permian Basin, our SS4 expansion on our Southern Natural Gas system, our Mississippi Crossing line, which will serve SS4 and other increased demand in the Southeast, and our Trident line, which we announced today, which will serve growing demand in the Southeast Texas region, including the new Golden Pass LNG facility.

Altogether, these new projects will entail capital expenditures net to us in excess of $5 billion and will have the capacity to transport over 5 Bcf a day of natural gas. And all of these projects, I would point out, are supported by long-term contracts with creditworthy customers almost entirely on the demand side. And while for obvious reasons we're not disclosing specific IRR targets for these projects, I know you realize our Board would not have approved without returns that are significantly above our cost of capital. In addition to these projects, we are seeing other sizable opportunities to grow our business as exemplified by our recently-announced Outrigger's transaction, which will expand our position in the Bakken.

In fact, this is the most exciting time to be in the midstream natural gas market that I've seen in my long decades in this business. We believe that our investments as they come online will drive growth in EBITDA and EPS for years to come. With that, I'll turn it over to Kim.

Okay. Thanks, Rich. 2024 was a very good year in terms of our financial performance. We grew EBITDA and EPS and we improved our leverage metrics. And we set the Company up for future success securing commercial contracts to underpin $6.3 billion in new expansion projects that will add growth for the future.

Today, we announced we're proceeding with the $1.7 billion Trident project, as Rich just said, and we also announced today that we successfully secured contracts to upsize our previously announced MSX project by 300 million cubic feet a day to 1.8 Bcf a day. For the quarter, we added $3.5 billion in expansion projects to the backlog, which is primarily comprised of Trident and MSX. For the year, we have added $6.3 billion in projects to the backlog and placed $1.2 billion of projects in service, growing the backlog from $3 billion at the beginning -- at the end of last year to $8.1 billion today.

These projects will pay benefits for many years to come. As a result of the projects added to the backlog, we now expect to spend approximately $2.5 billion per year in expansion CapEx for the next several years, up from our prior estimate of approximately $2 billion per year. During the quarter, we also agreed to purchase a natural gas gathering and processing system in the Bakken, which is complementary to our existing Bakken assets for $640 million. The system is backed by long-term contracts from creditworthy counterparties.

On a GAAP basis, the purchase price translates into an 8 times multiple. But based on the cash we receive in 2025, the multiple is approximately 6 times. In addition, in the future, we expect the acquisition to reduce CapEx that we would have otherwise had to spend to expand for our customers. As we look to the future, we continue to see additional growth opportunities in natural gas between LNG, exports to Mexico, power, and industrial growth.

Our internal number for growth in the overall natural gas business is roughly 28 Bcf a day of growth between now and 2030. Our assets are well-positioned to serve this growth. We currently serve approximately 45% of the export LNG demand, 50% of the exports to Mexico, and 45% of the power demand in the combined region of the desert Southwest, Texas, and the Southeast. 2024 was a successful year that brought numerous opportunities and nice growth and we're looking forward to further growth and capitalizing on additional opportunities in 2025. And with that, I'll turn it over to Tom to give you more details on the business performance.

Thanks, Kim. Starting with the Natural Gas business unit, transport volumes were essentially unchanged in the quarter versus the fourth quarter of 2023. Natural gas gathering volumes were down 7% in the quarter compared to the fourth quarter of '23, driven by lower Haynesville and Bakken volumes, partially offset by higher Eagle Ford volumes. Sequentially, gathering volumes were flat quarter-over-quarter. For the year, our gathering volumes averaged 8% below our 2024 plan, and 6% over 2023. We have budgeted for a 5% increase in gathering volumes in 2025 versus 2024 actuals.

We view the slight pullback in gathering volumes due to lower prices as temporary given that higher production volumes will be necessary to meet the demand growth from LNG expected in the second half of 2025. Looking forward, we continue to see significant incremental project opportunities across our Natural Gas Pipelines network to expand our transportation and storage capabilities in support of the growing natural gas market. On our Products Pipelines segment, refined products volumes were up 2%, and crude and condensate volumes were down 5% in the quarter compared to the fourth quarter of 2023. For the full year, refined products volumes were down 3% below our plan, but 1% over 2023. We have budgeted for a 1% increase in refined product volumes in '25 versus '24 actuals.

In December 2024, BP North America exercised its unilateral right to extend their contract for five years at existing rates for all of the petroleum condensate processing capacity at our facility on the Houston Ship Channel. The extension is recognition of the strategic value of Kinder Morgan's 100,000 barrels per day processing capability at our facility and the locational value of Kinder Morgan's footprint in the area. In our Terminals business segment, our liquids lease capacity remains high at 95%. Though refining cracks and blending margins have softened, they remain constructive and supportive of strong rates and utilization at our key hubs at the Houston Ship Channel and New York Harbor.

Our Jones Act tanker fleet is fully leased today, 97% leased through 2025, 94% leased through 2026, assuming likely options are exercised. We have opportunistically chartered a significant percentage of the fleet at higher market rates and extended the average length of firm contract commitments to four years. The CO2 segment experienced 3% lower oil production volumes, 4% lower NGL volumes, and 3% lower CO2 volumes in the quarter versus the fourth quarter of 2023. For the full year, oil volumes were down 6% versus 2023, but within 1% of our budget. With that, I'll turn it over to David Michels.

All right. Thanks, Tom. So, for the quarter, we're declaring a dividend of $0.2875 per share, which is $1.15 per share annualized and up 2% from 2023. During the quarter -- during the fourth quarter, we generated net income attributable to KMI of $667 million, or up 12% from the fourth quarter of 2023. We generated EPS of $0.30, up 11% from last year. And on an adjusted net income basis, which excludes our certain items, we generated $708 million of net income and adjusted EPS of $0.32. Those two items are 12% and 14% up from last year respectively.

This year-over-year growth was driven by a greater combination -- greater contributions from our Natural Gas Products and Terminals businesses with the main growth drivers being contributions from our acquired South Texas midstream assets, which we acquired at the end of 2023, greater contributions from our Texas Intrastate Natural Gas system as well as from natural gas projects that were placed in service. For the full year, we generated EPS of $1.17, which was up 10% over last year and our adjusted EPS was up 7% from last year. As we've messaged for the last two quarters, we finished 2024 a little bit below our budget, mainly driven by commodity prices lower than what we had budgeted and lower production from our RNG plants.

But despite those headwinds, we still experienced nice growth from 2023. Moving to our balance sheet. We ended the year with $31.7 billion of net debt and a 4.0 times net debt to adjusted EBITDA ratio, which is right in the middle of our leverage target range of 3.5 to 4.5 times. Our net debt decreased $112 million from the beginning of 2024. And here is the high-level reconciliation of that change. We generated $5.6 billion of cash flow from operations.

We spent $2.6 billion in dividends. We spent $2.7 billion of capital and that's growth sustaining and our contributions to our joint ventures. And then we had about $200 million of other uses and that gets you pretty close to the $112 million decrease in net debt for the year. For 2025, as we previewed in December, we expect another good year of growth.

We expect net income growth of 8% from 2024, EBITDA growth of 4%, and adjusted EPS growth of 10%. We also expect to see our balance sheet improve further ending the year at 3.8 times. As we say in the press release, we'll be publishing our budget materials on February 5th, and that will provide more detail behind the summary budget that we provided in December. Our budget does not include the recently announced Outrigger acquisition, which we expect to close in the first quarter, and we expect that acquisition to be immediately accretive.

And we expect to -- our year-end leverage will remain at 3.8 times even after taking into account that transaction. With that, I'll turn it back to Kim.

Okay. Michelle, if you'll come on and we'll take questions. And if everyone can ask one question and one follow-up, and then if you have further questions, please get back in line.

Thank you. [Operator Instructions] Our first caller is Theresa Chen with Barclays. You may go ahead.

Good afternoon, and thank you for taking my questions. When we look at the last update, at the backlog, including CO2 and GMP comparing the backlog today, the implied multiple of 6.4 times, it's pretty compelling. So, for projects like Mississippi Crossing and Trident and future natural gas infrastructure projects, can you talk about the economic moat that you have, competitive moat that you have, the financial considerations, and how you can maintain these types of multiples and returns for growth projects under development?

Sure. Let me just say, there's been no change in our return criteria and the way we think about and the way we look at these projects. As you know, required returns, our required return moves around a little bit depending on the risk inherent in the cash flows. And so we do have different returns for different risk projects that make up the overall multiple of the backlog that is less than 6 times.

I think that these projects are competitive. And as you know, we -- on MSX, we were competing for that project. We also competed on the Trident project with other people that were attempting to build. I do think that having the infrastructure that we have, having the reputation that we have as an operator, and our ability to bring these projects in, in a timely manner, does help us to be successful as we go out and try to get new projects and new business.

But this return is consistent with the returns that we have achieved over time on these projects.

Understood. And related to the Outrigger acquisition, can you expand a bit on the strategic rationale behind this and outlook for downstream synergies? And if Y-Grade eventually flows onto Double H once converted to NGL service, for example?

Yes. Let me make a couple of comments on that. So, there are -- these assets fit in well with our existing system. So, there are potential capital synergies and commercial synergies with our existing assets in this acquisition.

At this point in time, we're not quantifying exactly what those are just because those can move around based on a number of different factors, including the producer's drilling schedule. But I think that we're in a good position to deliver at least some of those synergies and hopefully, we will get significant synergies from this. In terms of downstream synergies, I think that there are some existing contracts in place and we may have a potential for downstream synergies, but I think that will come later in time. There is nothing immediate with respect to downstream synergies.

Got it. Thank you.

Thank you. Our next caller is Manav Gupta with UBS. You may go ahead, sir.

Good morning. A quick observation. I think on December 9th, when you announced your CapEx, you were looking for an adjusted EPS growth of 8% and today it's already 10%. And I'm hoping, as the year progresses, this number just moves up. And can you help us understand some of the macro trends or favorable factors which could help you push even higher than 10% EPS growth in 2025?

Sure. So, I think, one, that we have some sensitivity to commodity prices, and currently, commodity prices are a little bit higher than what we budgeted. Now there's crude, there's natural gas, and then we have some rent sensitivity. And so we've got upside on the first two.

We've got a little bit of downside on the last one. But when you net all those together, today there's some upside on the overall commodity picture. Now, it's early in the year and commodity prices can move. And so I don't think you can take that to the bank at this point.

The Outrigger acquisition, as David said in his comments, is not in the budget. And so there's -- that's going to be accretive and will be a positive versus our budget. There's the potential I think for some upside on the Jones Act tankers that we've got. Right now, I think interest expense, the rates that we budgeted are largely in line with where the current market is.

So, I think there if the prices stay high, I mean you could see some upside on G&P volumes over time. And if we continue to deplete the inventory that's in storage as a result of winter weather, I think the winter weather, we probably did a little bit better than what we budgeted with respect to winter weather. But again, it's early in the year. There's a lot of different moving parts in our budget.

And so, I'd just say at this point in time, we are not changing our guidance. We're sticking to our budget. But it is a nice start to the year.

Perfect. My quick follow-up is, it looks like we have a new administration, which is really pushing the AI goals here, $500 billion investment announced yesterday. And I'm trying to understand, in terms of this execution, are we still in very early stages of this positive macro trend where this trend could continue for like five, seven, eight, or nine years as these data centers come on and the demand for power just keeps rising and how Kinder fits into that. Thank you.

Yes. I think we are early in the data center trend and the power that's going to be needed there. And so I think that the encouragement that this administration has given on the data center development, the -- their desire to see American energy do well, I think all plays into a nice long-term trend for natural gas demand. As I said in my opening comments, we think the natural gas demand is going to grow by 28 Bcf a day between now and 2030. And part of that is power demand.

In those numbers though, we only have power demand up about 3 Bcf a day. And I think there are a lot of numbers that are much higher than that 3 Bcf a day in terms of power demand. I've seen numbers at 10 Bcf a day. And so I think there is the potential for upside above the 28 Bcf of growth that we are projecting.

Thank you.

Thank you. Our next caller is Michael Blum with Wells Fargo. You may go ahead, sir.

Thanks. Good afternoon, everyone. So, maybe staying on President Trump's recent infrastructure announcement, it does -- one of the projects involved there seems like it's going to be a large data center campus in Abilene, Texas, which, if I'm not mistaken…

I can't hear you. Well, hang on.

Can you hear me?

Yes. Now I can.

Can you guys hear me? Okay, great. So, sorry about that. So, you hear me okay?

Yes, something in Texas.

Okay. President Trump's AI data center announcement includes a large data center in Abilene, Texas, so, which I think is pretty close to some of your pipelines. I'm wondering if there's an opportunity there for you, and do you have availability to address it?

So, Michael, this is Sital. One, it's a good announcement. Our Intrastate footprint, our NGPL footprint, it's all in and around the area. I think it's an opportunity. But once again, there's a lot of folks that are going to be chasing the opportunity. So, I think we're well-positioned to partake in some of that growth.

Okay, great. And then I also wanted to ask about the Open Season on Kinder Morgan Louisiana, like a Texas Header Project. Can you just tell us how that's progressing and the potential scope of that project? Thanks.

Absolutely. So, part of -- one, I think the Open Season closed and we do have binding commitments to build that segment. Part of the overall strategy here is there is a lot of interconnectivity needed with all the gas coming from multiple directions. And so, I think this is a good platform for us to establish that kind of initial leg with the prospective possibility of extending that into the Louisiana corridor.

And so, I think that when you think about it, this first phase here is contracted and ready to go and it's a position as well for future growth.

And let me just further on that. The existing Header is in the Trident project in terms of the economics that we get from that. And then future, it's there -- we have future expansion potential, but that would be another project that we would get approved at that time.

Yes, so just to clarify, the KMLP expansion is -- one of the pipes that it will connect to is Trident. It's separate and apart from Trident itself. And it can potentially be a leg into the Louisiana corridor down the line.

Right, but in the future.

In the future, that's right. Michael, does that make sense?

Yes. Thank you.

Thank you. Our next caller is Neal Dingmann with Truist Securities. You may go ahead, sir.

Hey, good afternoon. This is Jack Wilson on for Neal. Can you maybe speak to your positioning in regards to LNG exports specifically?

Yes, sure. We serve about 50% of that market, but it's just under that, it's 45%. I think our total contracts that we've got in place for LNG exports is about 10.7 Bcf a day. Not all of that is online today, but that's the position that we will grow into overtime.

I think it's a little less than 10 Bcf/d today. And then the opportunity set is in the range of 15 Bcf a day is the future capacity that is included in the 28 Bcf a day of growth that we see between now and 2030. And that's -- so we'll be focused on trying to capture some of those opportunities. And then a lot of times, as we said before, there's the initial opportunities to connect to the Header systems or directly to those facilities. And then a lot of times LNG export facilities and customers are looking for to go back further, back upstream to get more competitively priced supply.

And in addition, sometimes some of them are looking for some insurance capacity and therefore they contract for more than just the capacity of the facility to make sure that they can get molecules there. So, a lot of times those initial projects lead to future projects. So, there's a lot of opportunity on the export LNG side.

Thank you very much.

Thank you. Our next caller is Keith Stanley with Wolfe Research.

Hi, good afternoon. First question, just curious, you just did an acquisition a couple of weeks ago, how you're thinking about incremental acquisitions at this point? So, on the one hand, you have greatly increased organic investment opportunities. So, you probably want some excess financial capacity, but you also have a much-improved currency and it's probably pretty easy to make deals accretive at this point.

So, just how are you balancing those factors and thinking about M&A?

Yes. So, we think about M&A on a very opportunistic basis. And so we can't predict that. And therefore, it's hard to budget or schedule for it.

Our criteria in terms of acquisitions hasn't changed. So, it's still the same. So, we're not modifying the criteria. And then we just evaluate each one as it comes to fruition.

So, right now, we are able to fully fund all of our CapEx with internally generated cash. We have no need to issue equity. If we saw some big, huge acquisition, not opposed to issuing equity, but it would have to make economic sense. And so we would just have to view it in the context of the overall deal when that opportunity came before us.

Thanks for that. Second one, just wanted to follow up on the quarter. So, Q4 EBITDA was about $100 million below the initial quarterly budget and you talked about commodities volumes and some of the RNG headwinds. Is there anything else you'd flag for the quarter in particular or are those the main factors?

So, the commodity headwind was part of it. We had some -- the RNG sales were down relative to what we had expected. And then we had -- some of the RINs that we produced in the quarter were pushed out of the year into the next year because there was a lack of liquidity in the market. So, that also contributed to it. But you hit the main ones.

Thank you.

Thank you. Our next caller is Jean Ann Salisbury with Bank of America.

Hi, most of what Kinder Morgan has announced over the past year has been typical large diameter, big CapEx projects, so SNG, GCX, MSX, Trident. From here forward, do you see any shift in the type of the future projects to being mostly more like end-user projects, like laterals to power plants or data centers, which might be lower absolute CapEx, but better multiples, or you're not really ready to call that shift yet?

That's -- it's hard to call. I think we're going to have opportunities on both fronts. I think more of the opportunities probably come in what I call the singles and doubles, connecting to power plants, that types of things. And that's largely just because the larger projects, to do those, you've got to put together a lot of customers.

There -- it's just a lot more complicated and a lot harder to do. But, that being said, we do have some large-scale opportunities that we're evaluating and looking at that have the potential to come to fruition. It's just harder to call your shots on those, again, because you face competition and you've got to bring -- a lot of different factors have to come together to make those possible. So, it could -- it's going to continue just to be a combination of things, Jean Ann, but I do think that the larger ones will -- are going to be more infrequent than we'll just have a lot of smaller opportunities, singles and doubles.

It's harder to hit the home run. We just -- we were very fortunate this year that we got a number of them in one year.

Yes. That makes sense. Great. And then as a follow-up, can you kind of talk about how you're forecasting the cadence of Haynesville volumes coming back? I think rig count in that basin is falling more than most would have thought, and you've seen some producers saying that you need far higher prices than today's strip for them to come back.

Jean, this is Sital. Yes. So, I think last year, we did see a little pullback in the Haynesville as a result of kind of the price environment. In light of what we're seeing currently and the expectation of the LNG demand coming on, we are seeing activity pick back up in the Haynesville, and if any of this price is sustained as kind of we hope it is, I think you'll see a lot more activity in the Haynesville.

Okay. That's helpful. Thank you. That's all from me.

Thank you. Our next caller is Spiro Dounis from Citi. You may go ahead, sir.

Thanks, operator. Afternoon, team. I just want to go back to the project backlog again. Now at $8.1 billion, largest we've seen in a while here.

And Kim, you mentioned the $2.5 billion a year annually. And I guess if we sort of track that through 2028, gets you to about $10 billion all-in. So, just curious, is that the right way to think about maybe your visibility on the sort of unsanctioned backlog from here, at least through '28? And in that context, kind of what Jean Ann was getting at, you added over $5 billion of projects in this last year.

It sounds hard to repeat, but at the same time, you also did mention being in the early stages of data center demand and potentially some new LNG FIDs coming this year. So, when do you think we do see a year like that again? I know it's hard to predict, but just thinking about, as you seem to…

Well, I hope next year. But this has been a pretty spectacular year is what I would say in terms of backlog additions and then four really big projects. So -- but again, we have outlined, there's going to be a lot of growth in natural gas, 28 Bcf a day again between now and 2030, that's a large amount of demand growth and it's all happening across the Southern United States where we've just got a really good position of assets, whether that's in Texas or that's going across the Southeast or that's going out to the desert Southwest. And so, I think we've tried to give you $2.5 billion a year, yes, that we filled in a few things there, but -- in terms of our expectations on what's going to happen.

And -- but I think there is the opportunity for that to grow over time, I believe. And so, I think the -- that's what we would expect to happen, is that we continue to add to this backlog. But we're also going to be placing projects in service. And so, not sure how to tell you exactly how much we can add over time.

Okay. Yes. Understood. That's helpful.

Second question, quickly, just thinking about some weather events that have kind of occurred so far here in the first quarter. Obviously, we've got the LA fires, I know you guys have assets out in that region, but we've also had some cold weather just along the US Gulf Coast. So, just curious how much either of those events has kind of impacted operations so far in the first quarter.

Yes. In terms of California, no impact on our assets. I mean, we were down for two days on some pipes, but I think those volumes, we'll largely be able to make up. And then, on the cold weather, I mean, our operations guys have done a fantastic job.

We went out and manned stations, and yes, we had something go off, but they would get it right back on. So, really, no impact in terms of being able to operate, from the fires or from the cold weather.

Great. I'll leave it there. Thanks for the time.

Thank you. Our next caller is Zack Van Everen with TPH. You may go ahead, sir.

Hey, thanks for taking my question. Maybe first one on the Bakken acquisition. Can you maybe touch on a high level, what type of contracting that plant and the pipeline have? Is it MBCs, is it mostly contracted, or just any more color there would be great.

Yes, sure. So, this is Sital. One, I think the asset folks will kind of overall integrate the strategy. Most of the contracts are kind of MBC-backed with some firm obligations there.

As we think about the footprint, one of the things that this asset does for us is it gives us processing north of the river. We've always been kind of south of the river, if you're familiar with that area. And so, I think it opens up some potential flexibility that we can leverage as we move forward.

Got you. That makes sense. And then maybe just one on Trident. I know that shortly after announcing it, Golden Pass came out talking about them being one of the anchor shippers.

I know in the press release today, you kind of note LNG and industrial demand. Could you touch on maybe just the high-level makeup of the demand contracts? Is it mostly LNG or is there also some power and industrial demand you're seeing as well?

So, I will tell you this. Since the last time we've spoken, I can't -- I won't say any names, but we've got some power behind -- power demand behind the contracts and we continue to work with industrials and the large -- some of the large end-use customers on the ability to potentially even expand the pipe from the 1.5 Bcf that we've guided at now all the way up to the 2.8 Bcf that we think we could get through some capital-efficient expansion.

Got you. Super helpful. I appreciate the time today. Thanks.

Thank you. Our next caller is John Mackay with Goldman Sachs.

Hey, thanks for the time. I think the first one, I want to go back to -- I think it was Spiro's question just on touching on the $2.5 billion a year. Can you kind of frame up, is that a ceiling on how much you think you can spend a year? Can that number move higher?

And I guess, generally speaking, how do you think about setting that? Is that a leverage question? Is that a free cash? Is that a dividend?

Just firming that up for us would be helpful.

So, the $2.5 billion is generally what we think based -- looking at all the projects that we have in the backlog and other things that we think are probably very highly likely what we think we can spend, and I mean, it's over the next several years, three to four years. So, that $2.5 billion is on average per year. I mean, are you going to have years where it could be $3 billion and others where it could be $2 billion? Yes.

I mean it's not going to be perfectly allocated $2.5 billion each year. So, it can be loppy and that depends on the project timing. But we're trying to give you a sense of what we see in terms of our opportunities to invest capital over time. We can fund $2.5 billion per year out of internally generated cash.

So, no concerns that we need external capital for that. We can fund in some years a little bit more than that. If it's lumpy during that time frame, we've got -- our balance sheet is in good shape. And in this year at 4 times and expect it at the end of '25 at 3.8 times.

And so we can absorb that lumpiness on the balance sheet and once those projects come on, we'll grow out of that. So, I think we will continue to look at that number and update it. And if we add significant new projects to the backlog, then I think we have the potential that, that number increases over time. But we have made [Technical Difficulty] pointed out earlier, some estimate of some additional growth beyond what's in the backlog because as someone noted, the backlog adds up to $8.1 billion and if you take four years of $2.5 billion, you get $10 billion.

So, there is a little bit of capital that we're assuming based on our opportunity set, we'll be able to fill in.

I appreciate that. Thank you. Maybe just second one from me. We've talked a lot about these big kind of marquee projects you've added.

Is there anything you can share on kind of knock-on effects across the rest of the Kinder system now that you're going to be moving a lot more gas, is there some kind of operating leverage on the rest of the footprint that you could think about adding to these returns?

Sure. This is Sital again. So, as we think about -- as you put these arteries in across with the developments that are coming in and around data centers and just power in general, there's opportunities for us to kind of leverage our footprint to kind of establish capillaries to these facilities. One of the things that Jean Ann talked about was kind of the small capital-efficient projects, there's opportunities on top of these large expansions for those type of projects and in strategic areas that we can further expand.

And that really applies across the footprint. We're also looking at some opportunities moving out west to the desert Southwest. Those might be -- that might be an area where we can see some primary and secondary expansion opportunities.

And the other thing I'd point out is, like MSX, it'll connect our three legs of the Tennessee gas pipeline. So, over time, that could -- that's going to give us some operating flexibility and potentially upside to help our customers. And then on Trident, it will come into the Intrastate market and it will integrate well with our Texas Intrastate and hopefully over time, that will give us the ability to deliver more value to our customers in sharing some of that.

I think the message here that all of the team is trying to deliver is, we have an unparalleled system that bridges the part of the country that needs the most new natural gas delivery system. We have that and all of what we're saying, I think lends itself to lots of expansion opportunities coming off of this great footprint that we have. And that's really our whole strategy over the next several years, is to move forward with the system we have, expand it, extend it, and drive home real nice earnings growth and growth in EBITDA.

That's great. Thank you, Rich. Thank you, team. Appreciate the time.

Thank you. Our next caller is Gabe Moreen with Mizuho. You may go ahead, sir.

Hey, good afternoon, everyone. I just want to start off by saying that I think Pete's -- based on how the share price has performed, Pete's making a good case for saving himself work and not holding Analyst Days in future years. Peter? But with that said, I wanted to ask a question on the MSX project timeline being four years plus or minus and being almost two years longer than a similarly-sized Intrastate project.

Is that a question of permitting, right-of-way, conservatives? Is there any conservatism built into that? And fitting into the regime change in DC with the new administration, is there anything on the permitting Wishlist or discussions you've had that you maybe think can expedite something, which I think is your first kind of greenfield'ish Interstate in some time?

Yes. So, I mean, the difference, just horseshoes and hand grenades, we generally think about Interstate pipes take us four years, two years of permitting and two years to build. And Intrastate pipes where we don't have to go get a FERC certificate is usually two-ish years. And that's sort of the timeline that you see -- the difference in the timeline that you see between Trident and MSX or a South System 4. We came up with these schedules when we sanctioned these projects, so late last year.

I would say that they were done in line with what we thought we would get under the prior administration. And so, to the extent that FERC speeds up -- and it's really the FERC permit that is going to be the primary item. To the extent that FERC speeds up their timeline, we could get it potentially in service earlier. But I think the flip side of that is we want to make sure that we get a good FERC permit that we can defend in court.

And so, we don't want them to skip or shortcut any of their processes. So, we want to make sure that we get a good, defendable FERC permit out, but hopefully, they can do that faster under this administration.

Thanks, Kim. And I know there'll be some more details on '25 guidance in the not-too-distant future, but could I ask maybe just one on your nat gas sensitivity that you've got to the $0.10 change in gas prices? It's a bit higher this year than last, kind of want to know what's behind that.

Yes, sure.

I know it's not a big piece of things, but…

That's a sensitivity that we've had in the past. So, it's not anything new, Gabe. It's been hard to quantify because some of our producers on the gathering side, the contract can move, the price they pay, the tariffs that they pay can move up and down with some gas prices. And so that's what's -- this year, we are right in the middle of the range and we've been trying to find a way to quantify it for investors.

And this year we were able to do it. So, again, no difference from prior years.

Thanks, Kim.

Thank you. Jeremy Tonet with J.P. Morgan. You may go ahead, sir.

Hi, good afternoon.

Good afternoon, Jeremy.

I just wanted to circle back, I guess, new administration, new lookout there. Just wondering, Kinder has looked at expansions in the Northeast before, but state-level permitting issues has impacted the calculus of moving forward with those types of projects. Just wondering if you're tracking anything on the federal side that maybe would change, I guess, the permitting process or laws otherwise that would kind of, I guess, change your outlook. I mean, clearly, the need for more gas logistics in the Northeast is there, but just do you see anything on the permitting side that might make you kind of look at things differently?

Yes. No, the -- it's not the federal permits that are the real problem in the Northeast. I mean, we can get the federal permits, get the state permits and I don't see anything changing there. The other thing I'd say about the Northeast is the commercial structure.

It's the commercial structure with the operator, RTO operator, does not allow for pass-through of the fixed demand charges if you're an IPP. And so it makes it harder for the IPPs to contract on a firm basis for that capacity. And so those are the two largest hurdles and we have not seen any change.

Got it. Understood. And might be dating myself a little bit here, but if I go back, I think, to around the 2009 timeframe with Rockies Express, I think it was described as the Pig and the Boa Constrictor at that point. And there was a big move in the industry as far as unconventional production, supply push out of basins and everyone was running on the same steel and construction at the same time, and led to some cost inflation issues.

At that point in time, we see inflationary environment in the background now. Just wondering how you think about, I guess, those risks going forward and with ENCs you see out there that you think can best protect you? Just wondering, I'm sure you guys are very thoughtful in all this, but wanted to see your latest thoughts.

Yes. We are already engaged in procurement on all three big pipes. I'm not going to go pipe by pipe, but on some of the pipes, we have already -- we already have an agreement to purchase steel, purchase the compression. And on others, I think we will do so in the not-too-distant future. So, we are -- I think we're working hard to try to mitigate that risk.

Got it. Okay. Thank you.

Thank you. At this time, I am showing no further questions.

Okay. Thank you all very much. Have a pleasant evening.

Thank you. This concludes today's conference call. You may go ahead and disconnect at this time.