News Column

KINDER MORGAN, INC. - 10-K - Management's Discussion and Analysis of Financial Condition and Results of Operations.

February 24, 2014

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the notes thereto. Additional sections in this report which should be helpful to the reading of our discussion and analysis include the following: (i) a description of our business strategy found in Items 1 and 2 "Business and Properties-(c) Narrative Description of Business-Business Strategy;" (ii) a description of developments during 2013, found in Items 1 and 2 "Business and Properties-(a) General Development of Business-Recent Developments;" and (iii) a description of risk factors affecting us and our business, found in Item 1A "Risk Factors." We prepared our consolidated financial statements in accordance with GAAP. Accordingly, as discussed in Notes 1 "General", 2 "Summary of Significant Accounting Policies", and 3 "Acquisitions and Divestitures" to our consolidated financial statements, our financial statements reflect the reclassifications necessary to reflect the results of KMP's FTC Natural Gas Pipelines disposal group as discontinued operations. We sold KMP's FTC Natural Gas Pipelines disposal group to Tallgrass effective November 1, 2012 for approximately $1.8 billion in cash (before selling costs), or $3.3 billion including KMP's share of joint venture debt. In 2013, KMP and Tallgrass trued up the final consideration for the sale of KMP's FTC Natural Gas Pipelines disposal group and based both on this true up and certain incremental selling expenses KMP paid in 2013, we recognized an additional $4 million loss related to our sale of the disposal group. Except for this loss amount, we recorded no other financial results from the operations of the disposal group during 2013. Furthermore, we have excluded the disposal group's financial results from the Natural Gas Pipelines business segment disclosures for each of the years ended December 31, 2012 and 2011. Inasmuch as the discussion below and the other sections to which we have referred you pertain to management's comments on financial resources, capital spending, our business strategy and the outlook for our business, such discussions contain forward-looking statements. These forward-looking statements reflect the expectations, beliefs, plans and objectives of management about future financial performance and assumptions underlying management's judgment concerning the matters discussed, and accordingly, involve estimates, assumptions, judgments and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed below and elsewhere in this report, particularly in Item 1A "Risk Factors" and at the beginning of this report in "Information Regarding Forward-Looking Statements." General



Our business model, through our ownership and operation of energy related assets, is built to support two principal components:

helping customers by providing safe and reliable energy, bulk commodity

and liquids products transportation, storage and distribution; and

creating long-term value for our shareholders.

To achieve these objectives, we focus on providing fee-based services to customers from a business portfolio consisting of energy-related pipelines, natural gas storage, processing and treating facilities, and bulk and liquids terminal facilities. We also produce and sell crude oil. Our reportable business segments are based on the way our management organizes our enterprise, and each of our business segments represents a component of our enterprise that engages in a separate business activity and for which discrete financial information is available.



Our reportable business segments are:

Natural Gas Pipelines-(i) the ownership and operation of major interstate

and intrastate natural gas pipeline and storage systems; (ii) the

ownership and/or operation of associated natural gas gathering systems and

natural gas 57

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processing and treating facilities; and (iii) the ownership and/or operation of NGL fractionation facilities and transportation systems;

CO2-KMP-(i) the production, transportation and marketing of CO2, to oil

fields that use CO2 to increase production of oil; (ii) ownership

interests in and/or operation of oil fields and gas processing plants in

West Texas; and (iii) the ownership and operation of a crude oil pipeline

system in West Texas;



Products Pipelines-KMP- the ownership and operation of refined petroleum

products and crude oil and condensate pipelines that deliver refined

petroleum products (gasoline, diesel fuel and jet fuel), NGL, crude oil,

condensate and bio-fuels to various markets, plus the ownership and/or

operation of associated product terminals and petroleum pipeline transmix

facilities;



Terminals-KMP-the ownership and/or operation of liquids and bulk terminal

facilities and rail transloading and materials handling facilities located

throughout the U.S. and portions of Canada;



Kinder Morgan Canada-KMP-the ownership and operation of the Trans Mountain

pipeline system that transports crude oil and refined petroleum products

from Edmonton, Alberta, Canada to marketing terminals and refineries in British Columbia, Canada and the state of Washington, plus the Jet Fuel aviation turbine fuel pipeline that serves the Vancouver (Canada) International Airport; and



Other-primarily includes several physical natural gas contracts with power

plants associated with EP's legacy trading activities. These contracts

obligate EP to sell natural gas to these plants and have various expiration dates ranging from 2012 to 2028. As an energy infrastructure owner and operator in multiple facets of the U.S.' and Canada's various energy businesses and markets, we examine a number of variables and factors on a routine basis to evaluate our current performance and our prospects for the future. With respect to our interstate natural gas pipelines and related storage facilities, the revenues from these assets are primarily received under contracts with terms that are fixed for various and extended periods of time. To the extent practicable and economically feasible in light of our strategic plans and other factors, we generally attempt to mitigate risk of reduced volumes and prices by negotiating contracts with longer terms, with higher per-unit pricing and for a greater percentage of our available capacity. These long-term contracts are typically structured with a fixed-fee reserving the right to transport natural gas and specify that we receive the majority of our fee for making the capacity available, whether or not the customer actually chooses to utilize the capacity. Similarly, in KMP's Texas Intrastate Natural Gas Group, it currently derives approximately 75% of its sales and transport margins from long-term transport and sales contracts that include requirements with minimum volume payment obligations. As contracts expire, we have additional exposure to the longer term trends in supply and demand for natural gas. As of December 31, 2013, the remaining average contract life of our natural gas transportation contracts (including intrastate pipelines' purchase and sales contracts) was approximately five and a half years. During 2012 and 2013, we further expanded our midstream services through our (i) EP midstream asset operations, which we acquired 50% from KKR effective June 1, 2012, and 50% from the May 25, 2012 EP acquisition; and (ii) our Copano operations, which included the remaining 50% ownership interest in Eagle Ford Gathering LLC that we did not already own and which was acquired effective May 1, 2013. These fee-based gathering, processing and fractionation assets, along with our financial strength and extensive pipeline transportation and storage assets, should provide an excellent platform to further grow our midstream services footprint. The revenues and earnings we realize from gathering natural gas, processing natural gas in order to remove NGL from the natural gas stream, and fractionating NGL into their base components, are also affected by the volumes of natural gas made available to our systems, which are primarily driven by levels of natural gas drilling activity. Our midstream services are provided pursuant to a variety of arrangements, generally categorized (by the nature of the commodity price risk) as fee-based, percent-of-proceeds, percent-of-index and keep-whole. Contracts may rely solely on a single type of arrangement, but more often they combine elements of two or more of the above, which helps us and our counterparties manage the extent to which each shares in the potential risks and benefits of changing commodity prices. The CO2 sales and transportation business primarily has third-party contracts with minimum volume requirements, which as of December 31, 2013, had a remaining average contract life of approximately ten years. CO2 sales contracts vary from customer to customer and have evolved over time as supply and demand conditions have changed. Our recent contracts have generally provided for a delivered price tied to the price of crude oil, but with a floor price. On a volume-weighted basis, for third-party contracts making deliveries in 2014, and utilizing the average oil price per barrel contained in our 2014 budget, approximately 69% of our contractual volumes are based on a fixed fee or floor price, and 31% fluctuate with the price of 58 -------------------------------------------------------------------------------- oil. In the long-term, our success in this portion of the CO2-KMP business segment is driven by the demand for CO2. However, short-term changes in the demand for CO2 typically do not have a significant impact on us due to the required minimum sales volumes under many of our contracts. In the CO2-KMP business segment's oil and gas producing activities, we monitor the amount of capital we expend in relation to the amount of production that we expect to add. In that regard, our production during any period is an important measure. In addition, the revenues we receive from our crude oil, NGL and CO2 sales are affected by the prices we realize from the sale of these products. Over the long-term, we will tend to receive prices that are dictated by the demand and overall market price for these products. In the shorter term, however, market prices are likely not indicative of the revenues we will receive due to our risk management, or hedging, program, in which the prices to be realized for certain of our future sales quantities are fixed, capped or bracketed through the use of financial derivative contracts, particularly for crude oil. The realized weighted average crude oil price per barrel, with all hedges allocated to oil, was $92.70 per barrel in 2013, $87.72 per barrel in 2012 and $69.73 per barrel in 2011. Had we not used energy derivative contracts to transfer commodity price risk, our crude oil sales prices would have averaged $94.94 per barrel in 2013, $89.91 per barrel in 2012 and $92.61 per barrel in 2011. The profitability of our refined petroleum products pipeline transportation business is generally driven by the volume of refined petroleum products that we transport and the prices we receive for our services. Transportation volume levels are primarily driven by the demand for the refined petroleum products being shipped or stored. Demand for refined petroleum products tends to track in large measure demographic and economic growth, and with the exception of periods of time with very high product prices or recessionary conditions, demand tends to be relatively stable. Because of that, we seek to own refined petroleum products pipelines located in, or that transport to, stable or growing markets and population centers. The prices for shipping are generally based on regulated tariffs that are adjusted annually based on changes in the U.S. Producer Price Index. The factors impacting the Terminals-KMP business segment generally differ depending on whether the terminal is a liquids or bulk terminal, and in the case of a bulk terminal, the type of product being handled or stored. As with our refined petroleum products pipeline transportation business, the revenues from our bulk terminals business are generally driven by the volumes we handle and/or store, as well as the prices we receive for our services, which in turn are driven by the demand for the products being shipped or stored. While we handle and store a large variety of products in our bulk terminals, the primary products are coal, petroleum coke, and steel. For the most part, we have contracts for this business that have minimum volume guarantees and are volume based above the minimums. Because these contracts are volume based above the minimums, our profitability from the bulk business can be sensitive to economic conditions. Our liquids terminals business generally has longer-term contracts that require the customer to pay regardless of whether they use the capacity. Thus, similar to our natural gas pipeline business, our liquids terminals business is less sensitive to short-term changes in supply and demand. Therefore, the extent to which changes in these variables affect our terminals business in the near term is a function of the length of the underlying service contracts (which on average is approximately four years), the extent to which revenues under the contracts are a function of the amount of product stored or transported, and the extent to which such contracts expire during any given period of time. To the extent practicable and economically feasible in light of our strategic plans and other factors, we generally attempt to mitigate the risk of reduced volumes and pricing by negotiating contracts with longer terms, with higher per-unit pricing and for a greater percentage of our available capacity. In addition, weather-related factors such as hurricanes, floods and droughts may impact our facilities and access to them and, thus, the profitability of certain terminals for limited periods of time or, in relatively rare cases of severe damage to facilities, for longer periods. In 2013, KMI completed the drop-down of its remaining 50% interest in EPNG and its 50% interest in the EP midstream assets to KMP. KMI used proceeds from the drop-down transaction to (i) pay down $947 million of KMI's senior secured term loan facility; and (ii) reduce borrowings under KMI's credit facility. In 2014, KMI expects to drop-down its 50% interest in Ruby Pipeline Holding Company, L.L.C., its 50% interest in Gulf LNG Holdings Group, LLC and its 47.5% interest in Young Gas Storage Company, LTD to EPB. KMP and EPB have a successful history of making accretive acquisitions and economically advantageous expansions of existing businesses. Thus, the amount that we are able to increase dividends to our shareholders will, to some extent, be a function of our and our subsidiaries' ability to complete successful acquisitions and expansions (including drop-down transactions). We believe we will continue to have opportunities for expansion of our facilities in many markets, and we have budgeted approximately $3.9 billion for our 2014 capital expansion program (including small acquisitions and investment contributions). We and our subsidiaries, KMP and EPB, regularly consider and enter into discussions regarding potential acquisitions, including those from us or our affiliates, and are currently contemplating potential acquisitions.



Based on our historical record and because there is continued demand for energy infrastructure in the areas we serve, we expect to continue to have such opportunities in the future, although the level of such opportunities is difficult to predict. While there are currently no unannounced purchase agreements for the acquisition of any material business or assets, such

59 -------------------------------------------------------------------------------- transactions can be effected quickly, may occur at any time and may be significant in size relative to our existing assets or operations. Furthermore, our ability to make accretive acquisitions is a function of the availability of suitable acquisition candidates at the right cost, and includes factors over which we have limited or no control. Thus, we have no way to determine the number or size of accretive acquisition candidates in the future, or whether we will complete the acquisition of any such candidates. Our, or our subsidiaries' (including EPB and KMP), ability to make accretive acquisitions or expand our assets is impacted by our ability to maintain adequate liquidity and to raise the necessary capital needed to fund such acquisitions. As MLPs, KMP and EPB distribute all of their available cash, and they access capital markets to fund acquisitions and asset expansions. Historically, KMP and EPB have succeeded in raising necessary capital in order to fund their acquisitions and expansions, and although we cannot predict future changes in the overall equity and debt capital markets (in terms of tightening or loosening of credit), we believe that KMP's and EPB's stable cash flows, credit ratings, and historical records of successfully accessing both equity and debt funding sources should allow us to continue to execute our current investment, distribution and acquisition strategies, as well as refinance maturing debt when required. For a further discussion of our liquidity, including KMP's and EPB's public debt and equity offerings in 2013, please see "-Liquidity and Capital Resources" below. In our discussions of the operating results of individual businesses that follow (see "-Results of Operations" below), we generally identify the important fluctuations between periods that are attributable to acquisitions and dispositions separately from those that are attributable to businesses owned in both periods. In addition, a portion of KMP's business portfolio (including the Kinder Morgan Canada-KMP business segment, the Canadian portion of KMP's Cochin Pipeline, and the bulk and liquids terminal facilities located in Canada) uses the local Canadian dollar as the functional currency for its Canadian operations and enters into foreign currency-based transactions, both of which affect segment results due to the inherent variability in U.S. - Canadian dollar exchange rates. To help understand our reported operating results, all of the following references to "foreign currency effects" or similar terms in this section represent our estimates of the changes in financial results, in U.S. dollars, resulting from fluctuations in the relative value of the Canadian dollar to the U.S. dollar. The references are made to facilitate period-to-period comparisons of business performance and may not be comparable to similarly titled measures used by other registrants.



Critical Accounting Policies and Estimates

Accounting standards require information in financial statements about the risks and uncertainties inherent in significant estimates, and the application of GAAP involves the exercise of varying degrees of judgment. Certain amounts included in or affecting our consolidated financial statements and related disclosures must be estimated, requiring us to make certain assumptions with respect to values or conditions that cannot be known with certainty at the time our financial statements are prepared. These estimates and assumptions affect the amounts we report for our assets and liabilities, our revenues and expenses during the reporting period, and our disclosure of contingent assets and liabilities at the date of our financial statements. We routinely evaluate these estimates, utilizing historical experience, consultation with experts and other methods we consider reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates, and any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. In preparing our consolidated financial statements and related disclosures, examples of certain areas that require more judgment relative to others include our use of estimates in determining: (i) the economic useful lives of our assets and related depletion rates; (ii) the fair values used to assign purchase price from business combinations, determine possible asset impairment charges, and calculate the annual goodwill impairment test; (iii) reserves for environmental claims, legal fees, transportation rate cases and other litigation liabilities; (iv) provisions for uncollectible accounts receivables; (v) exposures under contractual indemnifications; and (vi) unbilled revenues. For a summary of our significant accounting policies, see Note 2 "Summary of Significant Accounting Policies" to our consolidated financial statements. We believe that certain accounting policies are of more significance in our consolidated financial statement preparation process than others, which policies are discussed as follows.



Acquisition Method of Accounting

For acquired businesses, we recognize the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their estimated fair values (with limited exceptions) on the date of acquisition. Determining the fair value of these items requires management's judgment, the utilization of independent valuation experts and involves the use of significant estimates and assumptions with respect to the timing and amounts of future cash inflows and outflows, discount 60 -------------------------------------------------------------------------------- rates, market prices and asset lives, among other items. The judgments made in the determination of the estimated fair value assigned to the assets acquired, the liabilities assumed and any noncontrolling interest in the investee, as well as the estimated useful life of each asset and the duration of each liability, can materially impact the financial statements in periods after acquisition, such as through depreciation and amortization expense. For more information on our acquisitions and application of the acquisition method, see Note 3 "Acquisitions and Divestitures" to our consolidated financial statements.



Environmental Matters

With respect to our environmental exposure, we utilize both internal staff and external experts to assist us in identifying environmental issues and in estimating the costs and timing of remediation efforts. We expense or capitalize, as appropriate, environmental expenditures that relate to current operations, and we record environmental liabilities when environmental assessments and/or remedial efforts are probable and we can reasonably estimate the costs. Generally, we do not discount environmental liabilities to a net present value, and we recognize receivables for anticipated associated insurance recoveries when such recoveries are deemed to be probable. We record at fair value, where appropriate, environmental liabilities assumed in a business combination. Our recording of our environmental accruals often coincides with our completion of a feasibility study or our commitment to a formal plan of action, but generally, we recognize and/or adjust our environmental liabilities following routine reviews of potential environmental issues and claims that could impact our assets or operations. These adjustments may result in increases in environmental expenses and are primarily related to quarterly reviews of potential environmental issues and resulting environmental liability estimates. In making these liability estimations, we consider the effect of environmental compliance, pending legal actions against us, and potential third party liability claims. For more information on environmental matters, see Item 1(c). For more information on our environmental disclosures, see Note 16 "Litigation, Environmental and Other Contingencies" to our consolidated financial statements.



Legal Matters

Many of our operations are regulated by various U.S. and Canadian regulatory bodies and we are subject to legal and regulatory matters as a result of our business operations and transactions. We utilize both internal and external counsel in evaluating our potential exposure to adverse outcomes from orders, judgments or settlements. In general, we expense legal costs as incurred. When we identify contingent liabilities, we identify a range of possible costs expected to be required to resolve the matter. Generally, if no amount within this range is a better estimate than any other amount, we record a liability equal to the low end of the range. Any such liability recorded is revised as better information becomes available. Accordingly, to the extent that actual outcomes differ from our estimates, or additional facts and circumstances cause us to revise our estimates, our earnings will be affected. As of December 31, 2013, our most significant ongoing legal matters involved KMP's West Coast Products Pipelines and its Western Interstate Natural Gas Pipelines. Transportation rates charged by certain of these pipeline systems are subject to proceedings at the FERC and the CPUC involving shipper challenges to the pipelines' interstate and intrastate (California) rates, respectively. For more information on regulatory proceedings, see Note 16 "Litigation, Environmental and Other Contingencies" to our consolidated financial statements.



Intangible Assets

Intangible assets are those assets which provide future economic benefit but have no physical substance. Identifiable intangible assets having indefinite useful economic lives, including goodwill, are not subject to regular periodic amortization, and such assets are not to be amortized until their lives are determined to be finite. Instead, the carrying amount of a recognized intangible asset with an indefinite useful life must be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of the asset has decreased below its carrying value. We evaluate our goodwill for impairment on May 31 of each year. There were no impairment charges resulting from our May 31, 2013 impairment testing, and no event indicating an impairment has occurred subsequent to that date. Furthermore, our analysis as of that date did not reflect any reporting units at risk, and subsequent to that date, no event has occurred indicating that the implied fair value of each of our reporting units is less than the carrying value of its net assets. For more information on our goodwill, see Notes 2 "Summary of Significant Accounting Policies" and 7 "Goodwill and Other Intangibles" to our consolidated financial statements. 61

-------------------------------------------------------------------------------- Excluding goodwill, our other intangible assets include customer contracts, relationships and agreements, lease value, and technology-based assets. These intangible assets have definite lives, are being amortized in a systematic and rational manner over their estimated useful lives, and are reported separately as "Other intangibles, net" in our accompanying consolidated balance sheets. For more information on our amortizable intangibles, see Note 7 "Goodwill and Other Intangibles" to our consolidated financial statements.



Estimated Net Recoverable Quantities of Oil and Gas

We use the successful efforts method of accounting for our oil and gas producing activities. The successful efforts method inherently relies on the estimation of proved reserves, both developed and undeveloped. The existence and the estimated amount of proved reserves affect, among other things, whether certain costs are capitalized or expensed, the amount and timing of costs depleted or amortized into income, and the presentation of supplemental information on oil and gas producing activities. The expected future cash flows to be generated by oil and gas producing properties used in testing for impairment of such properties also rely in part on estimates of net recoverable quantities of oil and gas. Proved reserves are the estimated quantities of oil and gas that geologic and engineering data demonstrates with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Estimates of proved reserves may change, either positively or negatively, as additional information becomes available and as contractual, economic and political conditions change. For more information on our ownership interests in the net quantities of proved oil and gas reserves and our measures of discounted future net cash flows from oil and gas reserves, please see "Supplemental Information on Oil and Gas Producing Activities (Unaudited)".



Hedging Activities

We engage in a hedging program that utilizes derivative contracts to mitigate (offset) our exposure to fluctuations in energy commodity prices and to balance our exposure to fixed and variable interest rates, and we believe that these hedges are generally effective in realizing these objectives. According to the provisions of GAAP, to be considered effective, changes in the value of a derivative contract or its resulting cash flows must substantially offset changes in the value or cash flows of the item being hedged, and any ineffective portion of the hedge gain or loss and any component excluded from the computation of the effectiveness of the derivative contract must be reported in earnings immediately. We may or may not apply hedge accounting to our derivative contracts depending on the circumstances. All of our derivative contracts are recorded at estimated fair value. Since it is not always possible for us to engage in a hedging transaction that completely mitigates our exposure to unfavorable changes in commodity prices-a perfectly effective hedge-we often enter into hedges that are not completely effective in those instances where we believe to do so would be better than not hedging at all. But because the part of such hedging transactions that is not effective in offsetting undesired changes in commodity prices (the ineffective portion) is required to be recognized currently in earnings, our financial statements may reflect a gain or loss arising from an exposure to commodity prices for which we are unable to enter into a completely effective hedge. For example, when we purchase a commodity at one location and sell it at another, we may be unable to hedge completely our exposure to a differential in the price of the product between these two locations; accordingly, our financial statements may reflect some volatility due to these hedges. For more information on our hedging activities, see Note 13 "Risk Management" to our consolidated financial statements. Employee Benefit Plans We reflect an asset or liability for our pension and other postretirement benefit plans based on their overfunded or underfunded status. As of December 31, 2013, our pension plans were underfunded by $230 million and our other postretirement benefits plans were underfunded by $251 million. Our pension and other postretirement benefit obligations and net benefit costs are primarily based on actuarial calculations. We use various assumptions in performing these calculations, including those related to the return that we expect to earn on our plan assets, the rate at which we expect the compensation of our employees to increase over the plan term, the estimated cost of health care when benefits are provided under our plan and other factors. A significant assumption we utilize is the discount rate used in calculating our benefit obligations. We select our discount rates by matching the timing and amount of our expected future benefit payments for our pension and other postretirement benefit obligations to the average yields of various high-quality bonds with corresponding maturities. The selection of these assumptions is further discussed in Note 9 "Share-based Compensation and Employee Benefits" to our consolidated financial statements. 62 -------------------------------------------------------------------------------- Actual results may differ from the assumptions included in these calculations, and as a result, our estimates associated with our pension and other postretirement benefits can be, and often are, revised in the future. The income statement impact of the changes in the assumptions on our related benefit obligations are deferred and amortized into income over either the period of expected future service of active participants, or over the expected future lives of inactive plan participants. We record these deferred amounts as either accumulated other comprehensive income (loss) or as a regulatory asset or liability for certain of our regulated operations. As of December 31, 2013, we had deferred net losses of approximately $27 million in pretax accumulated other comprehensive loss and noncontrolling interests related to our pension and other postretirement benefits. The following table shows the impact of a 1% change in the primary assumptions used in our actuarial calculations associated with our pension and other postretirement benefits for the year ended December 31, 2013: Pension Benefits Other Postretirement Benefits Change in funded status and Change in funded pretax status and pretax accumulated accumulated other other comprehensive Net benefit cost comprehensive Net benefit cost (income) income (loss) (income) income (loss) (In millions) One percent increase in: Discount rates $ 13 $ 226 $ 1 $ 54 Expected return on plan assets (22 ) - (3 ) - Rate of compensation increase 2 (9 ) - - Health care cost trends - - 3 (45 ) One percent decrease in: Discount rates 4 (269 ) (1 ) (63 ) Expected return on plan assets 22 - 3 - Rate of compensation increase (2 ) 8 - - Health care cost trends - - (3 ) 39 Income Taxes We record a valuation allowance to reduce our deferred tax assets to an amount that is more likely than not to be realized. While we have considered estimated future taxable income and prudent and feasible tax planning strategies in determining the amount of our valuation allowance, any change in the amount that we expect to ultimately realize will be included in income in the period in which such a determination is reached. In addition, we do business in a number of states with differing laws concerning how income subject to each state's tax structure is measured and at what effective rate such income is taxed. Therefore, we must make estimates of how our income will be apportioned among the various states in order to arrive at an overall effective tax rate. Changes in our effective rate, including any effect on previously recorded deferred taxes, are recorded in the period in which the need for such change is identified. In determining the deferred income tax asset and liability balances attributable to our investments, we have applied an accounting policy that looks through our investments including our investment in KMP and EPB. The application of this policy resulted in no deferred income taxes being provided on the difference between the book and tax basis on the non-tax-deductible goodwill portion of our investment in KMP and EPB. Going Private Transaction



A Going Private Transaction completed in May 2007 was accounted for as a purchase business combination. Accordingly, our assets and liabilities were recorded at their estimated fair values as of the date of the completion of the Going Private Transaction, with the excess of the purchase price over these combined fair values recorded as goodwill.

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Results of Operations

Non-GAAP Measures

The non-GAAP, financial measures of (i) cash available to pay dividends, both in the aggregate and per share, and (ii) segment EBDA and certain items are presented below under "-Cash Available to Pay Dividends" and "-Consolidated Earnings Results." Certain items are items that are required by GAAP to be reflected in net income, but typically either do not have a cash impact, or by their nature are separately identifiable from our normal business operations and, in our view, are likely to occur only sporadically. We believe the GAAP measure most directly comparable to cash available to pay dividends is income from continuing operations. A reconciliation of cash available to pay dividends to income from continuing operations is provided below under "-Reconciliation of Cash Available to Pay Dividends to Income from Continuing Operation." Our non-GAAP measures below should not be considered as an alternative to GAAP net income or any other GAAP measure. Cash available to pay dividends and segment EBDA and certain items are not financial measures in accordance with GAAP and have important limitations as analytical tools. You should not consider these non-GAAP measures in isolation or as a substitute for an analysis of our results as reported under GAAP. Our computation of cash available to pay dividends and segment EBDA and certain items may differ from similarly titled measures used by others. Management compensates for the limitations of these non-GAAP measures by reviewing our comparable GAAP measures, understanding the differences between the measures and taking this information into account in its analysis and its decision making processes.



Cash Available to Pay Dividends

Our board of directors has adopted the dividend policy set forth in our shareholders' agreement, which provides that, subject to applicable law, we will pay quarterly cash dividends on all classes of our capital stock equal to the cash we receive from our subsidiaries and other sources less any cash disbursements and reserves established by a majority vote of our board of directors, including for general and administrative expenses, interest and cash taxes. See a further discussion on KMI dividends below under "- Financial Condition- KMI Dividends." The calculation of our cash available to pay dividends, and a reconciliation of this non-GAAP measure to income from continuing operations, for each of the years ended December 31, 2013, 2012 and 2011 is as follows: 64

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Cash Available to Pay Dividends (In millions, except per share amounts) Year Ended December 31, 2013 2012 2011 KMP distributions to us From ownership of general partner interest (a) $ 1,756$ 1,454$ 1,217 On KMP units owned by us (b) 147 120 100 On KMR shares owned by us (c) 83 73 63 Total KMP distributions to us 1,986 1,647 1,380 EPB distributions to us From ownership of general partner interest (d) 211 118 - On EPB units owned by us (e) 230 157 - Total EPB distributions to us 441 275 - Cash generated from KMP and EPB 2,427 1,922 1,380 General and administrative expenses and other (f) (50 ) (35 ) (9 ) Interest expense (132 ) (181 ) (167 ) Cash taxes (g) (516 )



(419 ) (368 ) Cash available for distribution to us from KMP and EPB 1,729 1,287 836

Cash available from other assets Cash generated from other assets (h) 375 439 30 EP debt assumed interest expense (i) (316 ) (235 ) - EP acquisition debt interest expense (j) (75 )



(80 ) - Cash available for distribution to us from other assets (16 ) 124 30

Cash available to pay dividends (k) $ 1,713 $



1,411 $ 866

Weighted-Average Shares Outstanding for Dividends (l) 1,040 908 708

Cash Available Per Average Share Outstanding $ 1.65$ 1.55$ 1.22 Declared Dividend $ 1.60$ 1.40$ 1.05 _______



(a) Based on (i) KMP distributions of $5.33, $4.98 and $4.61 per common unit

declared for the years ended December 31, 2013, 2012 and 2011, respectively;

(ii) 381 million, 340 million and 319 million aggregate common units, Class B

units and i-units (collectively KMP units) outstanding as of April 29, 2013,

April 30, 2012 and April 29, 2011, respectively; (iii) 433 million,

347 million and 330 million KMP units outstanding as of July 31, 2013, July

31, 2012 and July 29, 2011, respectively; (iv) 438 million, 365 million and

333 million KMP units outstanding as of October 31, 2013, 2012 and 2011,

respectively; (v) 444 million, 373 million and 336 million KMP units

outstanding as of January 31, 2014, 2013 and 2012, respectively, and (vi)

waived incentive distributions of $4 million, $26 million and $29 million for

the years ended December 31, 2013, 2012 and 2011, respectively related to

KMP's acquisition of its initial 50% interest in May 2010, and subsequently,

the remaining 50% interest in May 2011 of KinderHawk; and (vii) waived

incentive distribution of $75 million for the year ended December 31, 2013,

as a result of KMP's acquisition of Copano. In addition, we as general

partner of KMP, agreed to waive a portion of our future incentive

distributions amounts equal to (i) $120 million for 2014, $120 million for

2015, $110 million for 2016, and annual amounts thereafter decreasing by $5

million per year from the 2016 level related to the Copano acquisition and

(ii) $13 million for 2014, $19 million for 2015 and $6 million for 2016

related to KMP's APT and SCT acquisitions.

(b) Based on 28 million in 2013, 26 million as of September 30 and December 31,

2012 and 22 million in the prior periods, KMP units owned by us, multiplied

by the KMP per unit distribution declared, as outlined in footnote (a) above.

(c) Assumes that we sold the KMR shares that we received as distributions for the

years ended December 31, 2013, 2012 and 2011. We did not sell any KMR shares

in 2013, 2012 or 2011. We intend periodically to sell the KMR shares we

receive as distributions to generate cash.

(d) Based on (i) EPB distributions of $2.55 and $1.74 per common unit declared

for the year ended December 31, 2013 and the nine months ended December 31,

2012; (ii) 216 million common units outstanding as of April 29, 2013; (iii)

218 million and 208 million common 65

-------------------------------------------------------------------------------- units outstanding as of July 31, 2013 and 2012, respectively; (iv) 218 million and 216 million outstanding as of October 31, 2013 and 2012, respectively; and (v) 218 million and 216 million common units outstanding as of January 31, 2014 and 2013, respectively. (e) Based on 90 million EPB units owned by us as of December 31, 2013 and 2012,



multiplied by the EPB per unit distribution declared, as outlined in footnote

(d) above.

(f) Represents corporate general and administrative expenses, corporate

sustaining capital expenditures, and other income and expense.

(g) 2013 and 2012 Cash taxes were calculated based on the income and expenses

included in the table, deductions related to the income included, and use of

net operating loss carryforwards of $300 million and $200 million,

respectively.

(h) Represents cash available from former EP assets that remain at KMI, including

TGP, EPNG and El Paso midstream assets for the periods presented prior to

their drop-down to KMP, and our 20% interest in NGPL, net of general and

administrative expenses related to KMI's EP assets. Cash available includes

our share (if applicable) of pre-tax earnings, plus DD&A, and less cash taxes

and sustaining capital expenditures.

(i) Represents interest expense on debt assumed from the May 25, 2012 EP

acquisition.

(j) Represents interest associated with Kinder Morgan, Inc.'s (KMI) remaining

debt issued to finance the cash portion of EP acquisition purchase price.

(k) Excludes $310 million in after-tax expenses associated with the EP

acquisition and EP Energy sale for the year ended December 31, 2012. This

included (i) $101 million in employee severance, retention and bonus costs;

(ii) $55 million of accelerated EP stock based compensation allocated to the

post-combination period under applicable GAAP rules; (iii) $37 million in

advisory fees; (iv) $68 million write-off associated with the EP acquisition

(primarily due to debt repayments) or amortization of capitalized financing

fees; (v) $51 million for legal fees and reserves, net of recoveries; and

(vi) $19 million benefit associated with pension income.

(l) Includes weighted average common stock outstanding and (i) for 2013,

approximately 6 million of unvested restricted stock awards issued to

management employees that contain rights to dividends and (ii) for 2012,

Class B shares, Class C shares and unvested restricted stock awards. Reconciliation of Cash Available to Pay Dividends from Income from Continuing Operations (In millions) Year Ended December 31, 2013 2012 2011 Income from continuing operations (a) $ 2,696 $



1,204 $ 449 Income from discontinued operations, net of tax (a) (b)

- 160 211 Income attributable to EPB (c) - (37 ) -



Distributions declared by EPB for the second quarter and payable in the third quarter of 2012 to KMI (c)

- 82 - DD&A (a) (d) 1,806



1,426 1,092 Amortization of excess cost of equity investments (a) 39 23

7 Earnings from equity investments (e) (392 ) (423 ) (313 ) Distributions from equity investments 398 381 287



Distributions from equity investments in excess of cumulative earnings

185 200 236 Difference between equity investment DCF and distributions received (f) 157 160 4 KMP certain items (g) (559 ) 92 493 KMI certain items (h) 55 682 (2 ) KMI deferred income tax adjustments (i) - (57 ) - Difference between cash and book taxes 105



(264 ) (32 ) Difference between cash and book interest expense for KMI

14 23 (1 ) Sustaining capital expenditures (j) (405 ) (393 ) (213 ) KMP declared distribution on its limited partner units owned by the public (k) (2,031 ) (1,583 ) (1,357 ) EPB declared distribution on its limited partner units owned by the public (l) (324 ) (214 ) - Other (m) (31 ) (51 ) 5 Cash available to pay dividends $ 1,713 $



1,411 $ 866

_______

(a) Consists of the corresponding line items in our consolidated statements of

income.

(b) 2012 and 2011 amounts primarily represent income from KMP's FTC Natural Gas

Pipelines disposal group, net of tax.

(c) On May 25, 2012, we began recognizing income from our investment in EPB, and

we received in the third quarter the full distribution for the second quarter

as we were the holder of record as of July 31, 2012. 66

--------------------------------------------------------------------------------



(d) 2012 and 2011 amounts include $7 million and $24 million, respectively,

associated with KMP's FTC Natural Gas Pipelines disposal group.

(e) 2013 and 2012 amounts exclude $65 million and $200 million, respectively,

non-cash impairment charges on our investment in NGPL Holdco LLC. 2012 and

2011 amounts include $70 million and $87 million, respectively, associated

with KMP's FTC Natural Gas Pipelines disposal group.

(f) Consists of the difference between cash available for distributions and the

distributions received from our equity investments.

(g) Consists of items such as hedge ineffectiveness, legal and environmental

reserves, gain/loss on sale, insurance proceeds from casualty losses, and

asset acquisition and/or disposition expenses. 2013 amount includes (i) $558

million gain on remeasurement of previously held equity interest in Eagle

Ford Gathering to fair value; (ii) $177 million for legal reserves related to

the rate case and other litigation and environmental matters on KMP's west

coast Products Pipelines; and (iii) $140 million, net of tax, gain on the

sale of Express. 2011 amount includes (i) $167 million non-cash loss on

remeasurement of KMP's previously held equity interest in KinderHawk to fair

value; (ii) $234 million increase to KMP's legal reserve attributable to rate

case and other litigation involving KMP's products pipelines on the West

Coast and (iii) KMP's portion ($87 million) of a $100 million special bonus

expense for non-senior employees, which KMP is required to recognize in

accordance with GAAP. However, KMP had no obligation, nor did it pay any

amounts in respect to such bonuses. The cost of the $100 million special

bonus to non-senior employees was not borne by our Class P shareholders. In

May of 2011 we paid for the $100 million of special bonuses, which included

the amounts allocated to KMP, using $64 million (after-tax) in available

earnings and profits reserved for this purpose and not paid in dividends to

our Class A shareholders.

(h) 2013 and 2012 amounts include NGPL Holdco LLC non-cash impairment charges

discussed above in footnote (e). 2012 amount also represents pre-tax (income)

expense associated with the EP acquisition and EP Energy sale including (i)

$160 million in employee severance, retention and bonus costs; (ii) $87

million of accelerated EP stock based compensation allocated to the

post-combination period under applicable GAAP rules; (iii) $37 million in

advisory fees; (iv) $108 million write-off (primarily due to repayments) or

amortization of capitalized financing fees; (v) $68 million for legal fees

and reserves, net of recoveries; and (vi) $29 million benefit associated with

pension income.

(i) 2012 amounts represent an increase in our state effective tax rate as a

result of the EP acquisition.

(j) We define sustaining capital expenditures as capital expenditures which

maintain the capacity or throughput of an asset.

(k) Declared distribution multiplied by limited partner units outstanding on the

applicable record date less units owned by us. Includes distributions on KMR

shares. KMP must generate the cash to cover the distributions on the KMR

shares, but those distributions are paid in additional shares and KMP retains

the cash. We do not have access to that cash.

(l) Declared distribution multiplied by EPB limited partner units outstanding on

the applicable record date less units owned by us.

(m) Consists of items such as timing and other differences between earnings and

cash, KMP's and EPB's cash flow in excess of their distributions, non-cash

purchase accounting adjustments related to the EP acquisition and going

private transaction primarily associated with non-cash amortization of debt

fair value adjustments, and in the year ended 2011 KMP's crude hedges.

Consolidated Earnings Results

With regard to our reportable business segments, we consider segment earnings before all DD&A expenses, and amortization of excess cost of equity investments (defined in the "-Results of Operations" tables below and sometimes referred to in this report as EBDA) to be an important measure of our success in maximizing returns to our shareholders. We also use segment EBDA internally as a measure of profit and loss used for evaluating segment performance and for deciding how to allocate resources to our six reportable business segments. EBDA may not be comparable to measures used by other companies. Additionally, EBDA should be considered in conjunction with net income and other performance measures such as operating income, income from continuing operations or operating cash flows. 67

--------------------------------------------------------------------------------

Year Ended December 31, 2013 2012 2011 (In millions) Segment EBDA(a) Natural Gas Pipelines $ 4,207$ 2,174$ 563 CO2-KMP 1,435 1,322 1,117 Products Pipelines-KMP 602 668 461 Terminals-KMP 836 708 702 Kinder Morgan Canada-KMP 340 229 202 Other (5 ) 7 - Segment EBDA(b) 7,415 5,108 3,045 DD&A expense (1,806 ) (1,419 ) (1,068 ) Amortization of excess cost of equity investments (39 ) (23 ) (7 ) Other revenues 36 35 36 General and administrative expenses(c) (613 ) (929 ) (515 ) Unallocable interest and other, net(d) (1,688 ) (1,441 ) (701 ) Income from continuing operations before unallocable income taxes 3,305 1,331 790 Unallocable income tax expense (609 ) (127 ) (341 ) Income from continuing operations 2,696 1,204 449 (Loss) income from discontinued operations, net of tax(e) (4 ) (777 ) 211 Net income 2,692 427 660 Net income attributable to noncontrolling interests (1,499 ) (112 ) (66 )



Net income attributable to Kinder Morgan, Inc.$ 1,193$ 315

$ 594

_______

(a) Includes revenues, earnings from equity investments, allocable interest

income and other, net, less operating expenses, allocable income taxes, and

other expense (income). Operating expenses include natural gas purchases and

other costs of sales, operations and maintenance expenses, and taxes, other

than income taxes. Allocable income tax expenses included in segment earnings

for the years ended December 31, 2013, 2012 and 2011 were $133 million, $12

million and $20 million, respectively.

(b) 2013 amount includes an increase in earnings of $489 million, and 2012 and

2011 amounts include decreases in earnings of $285 million and $374 million,

respectively, related to the combined effect from all of the 2013, 2012 and

2011 certain items impacting continuing operations and disclosed below in our

management discussion and analysis of segment results.

(c) 2013 amount includes a decrease to expense of $4 million, and 2012 and 2011

amounts include increases in expense of $401 million and $127 million,

respectively, related to the combined effect from all of the 2013, 2012 and

2011 certain items related to general and administrative expenses disclosed

below in "-General and Administrative, Interest, and Noncontrolling

Interests."

(d) 2013 and 2012 amounts include increases in expense of $30 million and $107

million, respectively, related to the combined effect from all of the 2013

and 2012 certain items related to interest expense disclosed below in

"-General and Administrative, Interest, and Noncontrolling Interests."

(e) Represents amounts attributable to KMP's FTC Natural Gas Pipelines disposal

group. 2013 amount represents an incremental loss related to the sale of

KMP's disposal group effective November 1, 2012. 2012 amount includes a

combined $937 million loss from the remeasurement of net assets to fair value

and the sale of KMP's disposal group. 2011 amount includes a $10 million

increase in expense from the write-off of a receivable for fuel under-collected prior to 2011. 2012 and 2011 amounts also include depreciation and amortization expenses of $7 million and $27 million, respectively.



Year Ended December 31, 2013 vs. 2012

Our total revenues for 2013 and 2012 were $14.1 billion and $10.0 billion, respectively. Income from continuing operations before income taxes totaled $3,438 million for 2013 as compared to $1,343 million in 2012.

Our income from continuing operations before income taxes (excluding income taxes allocated to segment earnings, see footnote (a)) increased by $2,095 million (156%) from $1,343 million in 2012 to $3,438 million in 2013. However, this increase included a $1,256 million increase in income from continuing operations before income taxes from the combined effect of the certain items referenced in footnotes (b), (c) and (d) in the above table. 68 -------------------------------------------------------------------------------- The remaining $839 million (39%) increase in income from continuing operations before income taxes was primarily due to better overall performance from our segments in 2013 driven by the Natural Gas Pipelines segment (primarily due to a full year of contributions from the EP operations, including EPB).



Year Ended December 31, 2012 vs. 2011

Our total revenues for 2012 and 2011 were $10.0 billion and $7.9 billion, respectively. Income from continuing operations before income taxes totaled $1,343 million for 2012 as compared to $810 million in 2011.

Our income from continuing operations before income taxes (excluding income taxes allocated to segment earnings, see footnote (a)) increased by $533 million (66%) from $810 million in 2011 to $1,343 million in 2012. However, this increase included a $292 million (pre-tax) decrease in income from continuing operations before income taxes from the combined effect of the certain items referenced in footnotes (b), (c) and (d) in the above table. After adjusting for these items, the remaining $825 million (63%) increase in income from continuing operations before income taxes was primarily due to better performance in 2012 from all reportable business segments, driven mainly by increases attributable to the Natural Gas Pipelines, due to contributions from the EP operations, including EPB, the CO2-KMP and the Terminals-KMP business segments.



Impact of the Purchase Method of Accounting on Segment Earnings (Loss)

The impacts of the purchase method of accounting on segment earnings (loss) before DD&A relate primarily to the revaluation of the accumulated other comprehensive income related to derivatives accounted for as hedges in the CO2-KMP and Natural Gas Pipelines segments. Where there is an impact to segment earnings (loss) before DD&A from the Going Private Transaction, the impact is described in the individual business segment discussions, which follow. The effects on DD&A expense result from changes in the carrying values of certain tangible and intangible assets to their estimated fair values as of May 30, 2007. This revaluation results in changes to DD&A expense in periods subsequent to May 30, 2007. The purchase accounting effects on "Unallocable interest and other, net" result principally from the revaluation of certain debt instruments to their estimated fair values as of May 30, 2007, resulting in changes to interest expense in subsequent periods.



Segment earnings before depreciation, depletion and amortization expenses

Certain items included in earnings from continuing operations are either not allocated to business segments or are not considered by management in its evaluation of business segment performance. In general, the items not included in segment results are interest expense, general and administrative expenses, DD&A and unallocable income taxes. These items are not controllable by our business segment operating managers and therefore are not included when we measure business segment operating performance. Our general and administrative expenses include such items as employee benefits insurance, rentals, unallocated litigation and environmental expenses, and shared corporate services-including accounting, information technology, human resources and legal services. We currently evaluate business segment performance primarily based on segment earnings before DD&A in relation to the level of capital employed. Because KMP's and EPB's partnership agreements require them to distribute 100% of their available cash to their partners on a quarterly basis (KMP's and EPB's available cash consists primarily of all of its cash receipts, less cash disbursements and changes in reserves), we consider each period's earnings before all non-cash DD&A expenses to be an important measure of business segment performance for our segments that are also segments of KMP. We account for intersegment sales at market prices. We account for the transfer of net assets between entities under common control by carrying forward the net assets recognized in the balance sheets of each combining entity to the balance sheet of the combined entity, and no other assets or liabilities are recognized as a result of the combination. Transfers of net assets between entities under common control do not affect the income statement of the combined entity. 69 --------------------------------------------------------------------------------

Natural Gas Pipelines Year Ended December 31, 2013 2012 2011 (In millions, except operating statistics) Revenues(a) $ 8,617$ 5,230$ 3,943 Operating expenses (5,235 ) (3,111 ) (3,370 ) Other income (expense) 24 (14 ) (1 ) Earnings from equity investments 232 52 158 Interest income and Other, net 578 22 (164 ) Income tax expense (9 ) (5 ) (3 ) EBDA from continuing operations(b) 4,207 2,174 563 Discontinued operations(c) (4 ) (770 ) 228



EBDA including discontinued operations $ 4,203$ 1,404 $ 791 Natural gas transport volumes (TBtu)(d)

9,634.0 10,071.9 8,961.4 Natural gas sales volumes (TBtu)(e) 897.3 879.1 804.7 Natural gas gathering volumes (BBtu/d)(f) 2,959.3 2,996.2 2,475.9



_______

(a) 2013 amount includes a $16 million decrease related to derivative contracts

used to hedge forecasted natural gas, NGL and crude oil sales.

(b) 2013, 2012 and 2011 amounts include a $490 million increase in earnings, a

$202 million decrease in earnings and $168 million decrease in earnings,

respectively, related to the combined effect from certain items. 2013 amount

consists of (i) a $558 million gain from the remeasurement of KMP's

previously held 50% equity interest in Eagle Ford to fair value; (ii) a $36

million gain from the sale of certain Gulf Coast offshore and onshore TGP

supply facilities; (iii) a $16 million decrease in earnings related to

derivative contracts, as described in footnote (a); (iv) a $4 million

decrease in EBDA related to SNG's certain items; and (v) a combined $1

million increase from other certain items. 2013 and 2012 amounts include $65

million and $200 million, respectively, non-cash equity investment impairment

charges related to our 20% ownership interest in NGPL Holdco LLC. 2012 amount

consists of a combined $11 million increase from other certain items. 2011

amount consists of a $167 million loss from the remeasurement of KMP's

previously held 50% equity interest in KinderHawk to fair value. Also, 2013,

2012 and 2011 amounts include decreases in earnings of $20 million, $13

million, and $1 million, respectively, related to assets sold, or adjusted,

that had been revalued as part of the Going Private Transaction and recorded

in the application of the purchase method of accounting.

(c) Represents EBDA attributable to KMP's FTC Natural Gas Pipelines disposal

group. 2013 amount represents a loss from the sale of net assets. 2012 amount

includes a combined loss of $937 million from the remeasurement of net assets

to fair value and the sale of net assets. 2011 amount includes a $10 million

increase in expense from the write-off of a receivable for fuel

under-collected prior to 2011. 2012 and 2011 amounts also include revenues of

$227 million and $322 million, respectively.

(d) Includes pipeline volumes for TransColorado Gas Transmission Company LLC,

Midcontinent Express Pipeline LLC, Kinder Morgan Louisiana Pipeline LLC,

Fayetteville Express Pipeline LLC, TGP, EPNG, Copano South Texas, the Texas

intrastate natural gas pipeline group, EPB, Florida Gas Transmission Company,

and Ruby Pipeline, L.L.C. Volumes for acquired pipelines are included for all

periods. However these contributions to EBDA are included only for the

periods subsequent to their acquisition.

(e) Represents volumes for the Texas intrastate natural gas pipeline group .

(f) Includes Copano operations, EP midstream assets operations, KinderHawk,

Endeavor, Bighorn Gas Gathering L.L.C., Webb Duval Gatherers, Fort Union Gas

Gathering L.L.C., EagleHawk, and Red Cedar Gathering Company throughput

volumes. Joint venture throughput is reported at KMP's ownership share.

Volumes for acquired pipelines are included for all periods. However these

contributions to EBDA are included only for the periods subsequent to their

acquisition. The certain items described in the footnotes to the table above accounted for a $1,625 million increase in our Natural Gas Pipelines business segment's EBDA (including discontinued operations) in 2013, and a $961 million decrease in segment EBDA in 2012, when compared to the respective prior year. The certain items also accounted for a $16 million decrease in segment revenues (including discontinued operations) in 2013 when compared to 2012. Following is information, including discontinued operations, related to the segment's remaining (i) $1,174 million (46%) and $1,574 million (162%) increases in EBDA and (ii) $3,176 million (58%) increase and $1,192 million (28%) increase in revenues in 2013 and 2012, when compared with the respective prior year: 70 -------------------------------------------------------------------------------- Year Ended December 31, 2013 versus Year Ended December 31, 2012 EBDA Revenues increase/(decrease) increase/(decrease) (In millions, except percentages) EPB $ 456 62 % $ 598 66 % TGP 358 81 % 440 73 % EPNG 151 68 % 217 72 % Copano operations (excluding Eagle Ford) 233 n/a 1,119 n/a EP midstream asset operations 46 118 % 81 89 % Eagle Ford(a) 56 166 % 419 n/a Texas Intrastate Natural Gas Pipeline Group 16 5 % 874 31 % KinderHawk Field Services 13 8 % 9 5 % Kinder Morgan Treating operations (26 ) (32 )% (47 ) (30 )% Citrus 32 62 % n/a n/a Gulf LNG Holdings Group, LLC 21 81 % n/a n/a Other KMI owned assets(b) (11 ) (275 )% n/a n/a All others (including eliminations) (4 ) (2 )% (307 ) (263 )% Total Natural Gas Pipelines - continuing operations 1,341 56 % 3,403 65 % Discontinued operations(c) (167 ) (100 )% (227 ) (100 )% Total Natural Gas Pipelines - including discontinued operations $ 1,174 46 % $ 3,176 58 % _______



n/a - not applicable (a) Equity investment until May 1, 2013. On that date, as part of KMP's Copano

acquisition, it acquired the remaining 50% ownership interest that it did not

already own. Prior to that date, KMP recorded earnings under the equity

method of accounting, but it received distributions in amounts essentially

equal to equity earnings plus our share of depreciation and amortization

expenses less our share of sustaining capital expenditures (those capital

expenditures which do not increase the capacity or throughput).

(b) Primarily represents EBDA from NGPL HoldCo and the following EP assets and

investments: Ruby Pipeline Holding Company, L.L.C. and Young Gas Storage

Company, LTD.

(c) Represents amounts attributable to KMP's FTC Natural Gas Pipelines disposal

group. The significant increases and decreases in the Natural Gas Pipelines business segment's EBDA in the comparable years of 2013 and 2012 included the following: incremental earnings of $1,064 million associated with full-year



contributions from assets acquired from EP, including earnings from EPB,

TGP, EPNG, EP midstream asset operations, Citrus and Gulf LNG Holdings

Group, LLC;

incremental earnings of $233 million from the Copano operations, which KMP

acquired effective May 1, 2013 (but excluding Copano's 50% ownership

interest in Eagle Ford, which is included below with the 50% ownership

interest it previously owned);

incremental earnings of $56 million (166%) from KMP's now wholly-owned

Eagle Ford natural gas gathering operations, due primarily to the

incremental 50% ownership interest it acquired as part of our acquisition

of Copano effective May 1, 2013, and partly to higher natural gas gathering volumes from the Eagle Ford shale formation; 71

--------------------------------------------------------------------------------



a $16 million (5%) increase from our Texas intrastate natural gas pipeline

group, due largely to higher transport margins (primarily related to higher transportation volumes from the Eagle Ford shale formation in south Texas) and lower pipeline maintenance expenses (due to both higher pipeline integrity maintenance and unexpected well repair expenses incurred in the last half of 2012), but partially offset by both lower



storage margins (due mainly to timing differences on storage settlements)

and lower natural gas processing margins (due mainly to lower NGL prices).

The growth in revenues across both comparable years reflect higher natural

gas sales revenues, driven by higher natural gas sales volumes in 2013 versus 2012. However, because the intrastate group both purchases and



sells significant volumes of natural gas, and because the group generally

sells natural gas in the same price environment in which it is purchased,

the increases in its natural gas sales revenues were largely offset by corresponding increases in its natural gas purchase costs; incremental earnings of $13 million (8%) increase from KinderHawk Field Services, driven by increased CO2 treating fees, increased gathering rates and increased minimum volume commitments, partly offset by lower throughput volumes; and



a $26 million (32%) decrease from KMP's natural gas treating operations,

primarily due to lower sales volumes and margins from treating equipment

manufacturing. The period-to-period decreases in EBDA from discontinued operations was due to the sale of our FTC Natural Gas Pipelines disposal group effective November 1, 2012. For further information about this sale, see Note 3 "Acquisitions and Divestitures-Divestitures-KMP's FTC Natural Gas Pipelines Disposal Group-Discontinued Operations" to our consolidated financial statements. Year Ended December 31, 2012 versus Year Ended December 31, 2011 EBDA Revenues increase/(decrease) increase/(decrease) (In millions, except percentages) EP assets(a) $ 96 n/a $ 18 n/a EPB 731 n/a 907 n/a EPNG 222 n/a 301 n/a EP midstream asset operations 39 n/a 91 n/a TGP 436 n/a 602 n/a KinderHawk Field Services(b) 58 52 % 95 96 % Kinder Morgan Treating operations 33 70 % 69 79 % Fayetteville Express Pipeline LLC(b) 31 131 % - n/a Eagle Ford(b) 23 203 % - n/a Texas Intrastate Natural Gas Pipeline Group (6 ) (2 )% (776 ) (22 )% NGPL Holdco LLC(b) (17 ) (89 )% n/a n/a All others (including eliminations) (1 ) (1 )% (20 ) (13 )% Total Natural Gas Pipelines - continuing operations 1,645 225 % 1,287 33 % Discontinued operations(c) (71 ) (30 )% (95 ) (29 )% Total Natural Gas Pipelines - including discontinued operations $ 1,574 162 % $ 1,192 28 % __________ n/a - not applicable (a) Primarily represents EBDA and revenues from the following EP assets and



investments: Citrus, Gulf LNG Holdings Group, LLC, Ruby Pipeline Holding

Company, L.L.C., Bear Creek Storage and Young Gas Storage Company, LTD.

(b) For these equity investment we record earnings under the equity method of

accounting, but we receive distributions in amounts essentially equal to

equity earnings plus our share of depreciation and amortization expenses less

our share of sustaining capital expenditures.

(c) Represents amounts attributable to KMP's FTC Natural Gas Pipelines disposal

group. 72

-------------------------------------------------------------------------------- The significant increases and decreases in the Natural Gas Pipelines business segment's EBDA in the comparable years of 2012 and 2011 included the following: incremental earnings of $1,524 million from assets acquired on May 25, 2012 from EP, including earnings from EPB, EPNG and TGP;



incremental earnings of $58 million from KMP's wholly-owned KinderHawk

Field Services, LLC, due principally to the inclusion of a full year of

operations in 2012 (KMP acquired the remaining 50% ownership interest in

KinderHawk that it did not already own and began accounting for the

investment under the full consolidation method effective July 1, 2011);

incremental earnings of $33 million due principally to the inclusion of a

full year of operations in 2012 from SouthTex Treaters, Inc., which was acquired by Kinder Morgan Treating operations effective November 30, 2011; a $31 million (131%) increase in equity earnings from KMP's 50% owned



Fayetteville Express Pipeline LLC-driven by a ramp-up in firm contract

transportation volumes, and to lower interest expense. Higher

year-over-year transportation revenues reflected a 15% increase in natural

gas transmission volumes, and the decrease in interest expense related to

Fayetteville Express Pipeline LLC's refinancing of its prior bank credit

facility in July 2011;

incremental equity earnings of $23 million from KMP's 50%-owned Eagle

Ford, which initiated flow on its natural gas gathering system on August

1, 2011; and

a $6 million (2%) decrease from the Texas intrastate natural gas pipeline

group-driven by higher operating and maintenance expenses, lower margins

on natural gas processing activities, and lower margins on natural gas sales. The increase in expenses was driven by both higher pipeline integrity maintenance and unexpected repairs at the Markham storage facility. The decrease in processing margin was mostly due to lower NGL prices, and the year-over-year decrease in sales margin was due to lower average natural gas sales prices in 2012 compared to 2011. The overall year-to-year decrease in EBDA from discontinued operations was largely due to the loss of income due to the sale of our discontinued operations effective November 1, 2012. EBDA from the Kinder Morgan Interstate Gas Transmission pipeline system, the Trailblazer pipeline system and KMP's investment in the Rockies Express pipeline system decreased $29 million (33%), $20 million (59%) and $17 million (19%) respectively, in 2012 versus 2011. In addition to the loss of income due to our divestiture, earnings from both pipeline systems decreased during the ten months we owned the assets in 2012 compared to the same period in 2011. The decrease was driven by lower revenues in 2012, generally related to lower net fuel recoveries, lower margins on operational natural gas sales, and excess natural gas transportation capacity existing out of the Rocky Mountain region, relative to 2011. 73 --------------------------------------------------------------------------------

CO2-KMP Year Ended December 31, 2013 2012 2011 (In millions, except operating statistics) Revenues(a) $ 1,857$ 1,677$ 1,434 Operating expenses (439 ) (381 ) (342 ) Other income - 7 - Earnings from equity investments 24 25 24 Interest income and Other, net - (1 ) 5 Income tax expense (7 ) (5 ) (4 ) EBDA(b) $ 1,435$ 1,322$ 1,117 Southwest Colorado CO2 production (gross) (Bcf/d)(c) 1.2 1.2 1.3 Southwest Colorado CO2 production (net) (Bcf/d)(c) 0.5 0.5 0.5 SACROC oil production (gross)(MBbl/d)(d) 30.7 29.0 28.6 SACROC oil production (net)(MBbl/d)(e) 25.5 24.1 23.8 Yates oil production (gross)(MBbl/d)(d) 20.4 20.8 21.7 Yates oil production (net)(MBbl/d)(e) 9.0 9.3 9.6 Katz oil production (gross)(MBbl/d)(d) 2.7 1.7 0.5 Katz oil production (net)(MBbl/d)(e) 2.2 1.4 0.4 Goldsmith Landreth oil production (gross)(MBbl/d)(d) 0.7 - - Goldsmith Landreth oil production (net)(MBbl/d)(e) 0.6 - - NGL sales volumes (net)(MBbl/d)(e) 9.9 9.5 8.5



Realized weighted-average oil price per Bbl(f) $ 92.70 $

87.72 $ 69.73 Realized weighted-average NGL price per Bbl(g) $ 46.43 $



50.95 $ 65.61

_______

(a) 2013, 2012 and 2011 amounts include unrealized gains of $3 million,

unrealized losses of $11 million and unrealized gains of $5 million,

respectively, all relating to derivative contracts used to hedge forecasted

crude oil sales. Also, 2011 amount includes an increase in segment earnings

resulting from a valuation adjustment of $18 million related to derivative

contracts in place at the time of the Going Private Transaction and recorded

in the application of the purchase method of accounting.

(b) 2013, 2012 and 2011 amounts include certain items of a $3 million increase in

earnings discussed in footnote (a) above, a $4 million decrease in earnings,

(net of $11 million of loss discussed in footnote (a) above and $7 million

gain from the sale of KMP's ownership interest in the Claytonville oil field

unit) and $23 million increase in earnings discussed in footnote (a) above,

respectively.

(c) Includes McElmo Dome and Doe Canyon sales volumes.

(d) Represents 100% of the production from the field. KMP owns an approximately

97% working interest in the SACROC unit, an approximately 50% working

interest in the Yates unit, an approximately 99% working interest in the Katz

Strawn unit and a 100% working interest in the Goldsmith Landreth unit.

(e) Net to KMP, after royalties and outside working interests.

(f) Includes all of KMP's crude oil production properties.

(g) Includes production attributable to leasehold ownership and production

attributable to KMP's ownership in processing plants and third party processing agreements. The CO2-KMP segment's primary businesses involve the production, marketing and transportation of both CO2 and crude oil, and the production and marketing of natural gas and NGL. We refer to the segment's two primary businesses as its Oil and Gas Producing Activities and Sales and Transportation Activities. Combined, the certain items described in footnotes (a) and (b) to the table above accounted for a $7 million increase in segment EBDA in 2013, and a $27 million decrease in segment EBDA in 2012, when compared to the respective prior year. The certain items also accounted for a $14 million increase in segment revenues in 2013, and a $34 million decrease in segment revenues in 2012, when compared to the respective prior year. For each of the segment's two primary businesses, following is information related to the remaining (i) $106 million (8%) and $232 million (21%) increases in EBDA; and (ii) $166 million (10%) and $277 million (20%) increases in revenues in both 2013 and 2012, when compared with the respective prior year: 74 --------------------------------------------------------------------------------

Year Ended December 31, 2013 versus Year Ended December 31, 2012 EBDA Revenues increase/(decrease) increase/(decrease) (In millions, except percentages) Oil and Gas Producing Activities $ 74 8 % $ 144 11 % Sales and Transportation Activities 32 9 % 40 10 % Intrasegment Eliminations - - (18 ) (23 )% Total CO2-KMP $ 106 8 % $ 166 10 % The segment's oil and gas producing activities include the operations associated with its ownership interests in oil-producing fields and natural gas processing plants. When compared to 2012, the increase in earnings from the segment's oil and gas producing activities in 2013 was mainly due to the following:



a $148 million (13%) increase in crude oil sales revenues-due primarily to

higher average realized sales prices for U.S. crude oil and partly due to

higher oil sales volumes. KMP's realized weighted average price per barrel

of crude oil increased 6% in 2013 versus 2012. The overall increase in oil

sales revenues were also favorably impacted by a 7% increase in crude oil

sales volumes, due primarily to both higher production from the Katz and

SACROC field units, and to incremental production from the Goldsmith Landreth unit, which KMP acquired effective June 1, 2013 (volumes presented in the results of operations table above);



a $9 million (5%) decrease in natural gas plant products sales-due to a 9%

decrease in KMP's realized weighted average price per barrel of NGL, but partially offset by a 4% increase in sales volumes; and



a $65 million (20%) increase in operating expenses-driven primarily by

higher fuel and power expenses, and higher maintenance and well workover

expenses, all related to both increased drilling activity in 2013 and incremental expenses associated with the Goldsmith Landreth field unit. EBDA from the segment's sales and transportation activities increased by $32 million (9%) in 2013 versus 2012. The year-to-year increase in earnings was driven by (i) higher CO2 sales revenues, due to an almost 10% increase in average sales prices; (ii) higher reimbursable project revenues, largely related to the completion of prior expansion projects on the Central Basin pipeline system; and (iii) higher third party storage revenues at the Yates field unit. Year Ended December 31, 2012 versus Year Ended December 31, 2011 EBDA Revenues increase/(decrease) increase/(decrease) (In millions, except percentages) Oil and Gas Producing Activities $ 180 23 % $ 228 20 % Sales and Transportation Activities 52 17 % 46 13 % Intrasegment Eliminations - - % 3 5 % Total CO2-KMP $ 232 21 % $ 277 20 %



When compared to 2011, the increase in earnings from the segment's oil and gas producing activities in 2012 was mainly due to the following:

a $256 million (29%) increase due to higher crude oil sales revenues-driven by higher average realizations for U.S. crude oil, and increased oil production at both the Katz and SACROC field units. When compared to 2011, KMP's realized weighted average price per barrel of



crude oil increased 26% in 2012 (from $69.73 per barrel in 2011 to $87.72

per barrel in 2012); a $46 million (14%) decrease due to higher combined operating expenses-driven primarily by higher well workover expenses (due to increased drilling activity) and higher severance and property tax expenses; and 75

--------------------------------------------------------------------------------



a $26 million (13%) decrease due to lower plant product sales revenues-due

to a 22% year-over-year decrease in the realized weighted average price

per barrel of NGL (from $65.61 per barrel in 2011 to $50.95 per barrel in

2012). The decrease in revenues from lower prices more than offset an

increase in revenues related to an overall 12% increase in plant products

sales volumes.



The increase in EBDA from the segment's sales and transportation activities in 2012 compared to 2011 was primarily revenue related, attributable to the following:

a $24 million (10%) increase due to higher CO2 sales revenues-driven by a

17% increase in average sales prices, due primarily to two factors: (i) a change in the mix of contracts resulting in more CO2 being delivered under



higher price contracts and (ii) heavier weighting of new CO2 contract

prices to the price of crude oil; and a $22 million (22%) increase in all other revenues-due largely to both



higher non-consent revenues and higher reimbursable project revenues. The

increase in non-consent revenues related to sharing arrangements

pertaining to certain expansion projects completed at the McElmo Dome unit

in Colorado since the end of 2011. The increase in reimbursable revenues

related to the completion of prior expansion projects on the Central Basin pipeline system. Products Pipelines-KMP Year Ended December 31, 2013 2012 2011 (In millions, except operating statistics) Revenues $ 1,853 $ 1,370 $ 914 Operating expenses (1,295 ) (759 ) (500 ) Other income (expense) (6 ) 5 8 Earnings from equity investments 45 39 34 Interest income and Other, net 3 11 8 Income tax benefit (expense) 2 2 (3 ) EBDA(a) $ 602 $ 668 $ 461 Gasoline (MMBbl) (b) 423.4 395.3 398.0 Diesel fuel (MMBbl) 142.4 141.5 148.9 Jet fuel (MMBbl) 110.6 110.6 110.5 Total refined product volumes (MMBbl)(c) 676.4 647.4 657.4 NGL (MMBbl)(d) 37.3 31.7 26.1 Condensate (MMBbl)(e) 12.6 1.4 n/a Total delivery volumes (MMBbl) 726.3 680.5 683.5 Ethanol (MMBbl)(f) 38.7 33.1 30.4 _______



(a) 2013, 2012 and 2011 amounts include decreases in earnings of $182 million,

$35 million and $233 million, respectively, related to the combined effect

from certain items. 2013 amount consists of a $162 million increase in

expense associated with rate case liability adjustments, a $15 million

increase in expense associated with a legal liability adjustment related to a

certain West Coast terminal environmental matter and a $5 million loss from

the write-off of assets at KMP's Los Angeles Harbor West Coast terminal. 2012

amount consists of a $32 million increase in expense associated with

environmental liability and environmental recoverable receivable adjustments,

and a combined $1 million decrease in earnings from other certain items. 2011

amount consists of a $168 million increase in expense associated with rate

case liability adjustments, a $60 million increase in expense associated with

rights-of-way lease payment liability adjustments, and a combined $3 million

decrease in earnings from other certain items. Also, 2012 and 2011 amounts

include decreases in earnings of $2 million and $2 million, respectively,

related to property disposal losses, which had been revalued as part of the

Going Private Transaction and recorded in the application of the purchase

method of accounting.

(b) Volumes include ethanol pipeline volumes.

(c) Includes Pacific, Plantation Pipe Line Company, Calnev, Central Florida and

Parkway pipeline volumes.

(d) Includes Cochin and Cypress pipeline volumes.

(e) Includes Kinder Morgan Crude & Condensate and Double Eagle Pipeline LLC

pipeline volumes.

(f) Represents total ethanol volumes, including ethanol pipeline volumes included

in gasoline volumes above. 76

-------------------------------------------------------------------------------- Combined, the certain items described in footnote (a) to the table above accounted for a $147 million decrease in segment EBDA in 2013, and a $198 million increase in segment EBDA in 2012, when compared with the respective prior year. Following is information related to the segment's (i) remaining $81 million (12%) and $9 million (1%) increases in EBDA and (ii) $483 million (35%) and $456 million (50%) increases in revenues in both 2013 and 2012, when compared with the respective prior year: Year Ended December 31, 2013 versus Year Ended December 31, 2012 EBDA Revenues increase/(decrease) increase/(decrease) (In millions, except percentages) Transmix operations $ 27 174 % $ 406 82 % Cochin Pipeline 25 34 % 33 42 % Kinder Morgan Crude & Condensate Pipeline 14 n/a 19 n/a Southeast terminal operations 6 9 % 12 12 % Plantation Pipe Line Company 4 6 % - n/a Double Eagle Pipeline LLC 3 n/a 3 n/a Pacific operations (7 ) (3 )% 3 1 % All others (including eliminations) 9 5 % 7 3 % Total Products Pipelines-KMP $ 81 12 % $ 483 35 % _______ n/a - not applicable



The primary increases and decreases in the Products Pipelines-KMP business segment's EBDA in 2013 compared to 2012 were attributable to the following:

a $27 million (174%) increase from KMP 's transmix processing

operations-due to higher margins on processing volumes, incremental

earnings from third-party sales of excess renewable identification numbers

(RINS) (generated through its ethanol blending operations), and to the

recognition of unfavorable net carrying value adjustments to product

inventory recognized in 2012. The period-to-period increases in revenues

were mainly due to the expiration of certain transmix fee-based processing

agreements since the end of the third quarter of 2012. Due to the

expiration of these contracts, KMP now directly purchases incremental

transmix volumes and sells incremental volumes of refined products,

resulting in both higher revenues and higher costs of sales expenses;

a $25 million (34%) increase from KMP's Cochin Pipeline-primarily due to

higher transportation revenues, driven by an overall 33% increase in pipeline throughput volumes, partly attributable to incremental ethane/propane volumes as a result of pipeline modification projects completed in June 2012; incremental earnings of $14 million from KMP's Kinder Morgan Crude &



Condensate Pipeline, which began transporting crude oil and condensate

volumes from the Eagle Ford shale gas formation to multiple terminaling

facilities along the Texas Gulf Coast in October 2012;



a $6 million (9%) increase from KMP's Southeast terminal operations,

driven by higher margins from ethanol blending operations, and higher

revenues from refined products and bio-fuels throughput volumes; a $4 million (6%) increase from KMP's approximate 51% interest in



Plantation Pipe Line Company-due largely to higher transportation revenues

driven by an 11% increase in system delivery volumes, and by higher average tariff rates since the end of 2012;



incremental earnings of $3 million from KMP's 50% interest in Double Eagle

Pipeline LLC-which gathers condensate and crude oil for Eagle Ford shale

producers and which KMP acquired as part of its Copano acquisition effective May 1, 2013; 77

--------------------------------------------------------------------------------



a $7 million (3%) decrease from KMP's Pacific operations, primarily

attributable to a reduction in mainline transportation revenues with a nearly 2% increase in system-wide delivery volumes. The change to transport revenues related to reductions associated with various interstate and California intrastate rate case decisions; and a $9 million (5%) increase from all other represents a number of small increases at various locations. Year Ended December 31, 2012 versus Year Ended December

31, 2011 EBDA Revenues increase/(decrease) increase/(decrease) (In millions, except percentages) Cochin Pipeline $ 22 43 % $ 4 5 % Kinder Morgan Crude & Condensate Pipeline 5 230 % 4 n/a Plantation Pipe Line Company 4 7 % 1 3 % Southeast terminal operations 4 5 % 3 3 % Transmix operations (18 ) (54 )% 447 928 % Pacific operations (9 ) (3 )% (10 ) (2 )% Calnev (8 ) (16 )% (6 ) (8 )% All others (including eliminations) 9 7 % 13 7 % Total Products Pipelines-KMP $ 9 1 % $ 456 50 % _______ n/a - not applicable



The primary increases and decreases in the Products Pipelines-KMP business segment's EBDA in 2012 compared to 2011 were attributable to the following:

a $22 million (43%) increase from the Cochin NGL pipeline system-due

mainly to a $10 million increase in gross margin, and due partly to both

the favorable settlement of a pipeline access dispute and a favorable 2012

income tax adjustment. The increase in gross margin was mainly due to an overall 40% increase in pipeline throughput volumes, which included incremental ethane/propane volumes related primarily to completed expansion projects since the end of 2011; incremental earnings of $5 million from the Kinder Morgan Crude &



Condensate Pipeline, which began transporting crude oil and condensate

volumes in October 2012;



a $4 million (7%) increase from KMP's approximate 51% equity interest in

Plantation Pipe Line Company-due largely to higher transportation revenues

driven by higher average tariff rates since the end of 2011;



a $4 million (5%) increase from the Southeast terminal operations-due

mainly to higher butane blending revenues and increased throughput volumes

of refined products and biofuels;



an $18 million (54%) decrease from the transmix processing operations-due

primarily to a decrease in processing volumes and unfavorable net carrying

value adjustments to product inventory. The year-to-year increases in

revenues was due mainly to the expiration of certain transmix fee-based

processing agreements in March 2012. Due to the expiration of these

contracts, KMP now directly purchases incremental volumes of transmix and

sells incremental volumes of refined products, resulting in both higher

revenues and higher costs of sales expenses; a $9 million (3%) decrease from the Pacific operations-primarily



attributable to a corresponding $9 million drop in mainline transportation

revenues, due primarily to lower average FERC tariffs as a result of rate case rulings settlements made since the end of 2011, and due partly to a 2% decrease in mainline delivery volumes; and



an $8 million (16%) decrease from Calnev-chiefly due to an approximate 9%

decrease in pipeline delivery volumes that were due in part to incremental

services offered by a competing pipeline. 78

--------------------------------------------------------------------------------

Terminals-KMP Year Ended December 31, 2013 2012 2011 (In millions, except operating statistics) Revenues $ 1,410$ 1,359$ 1,315 Operating expenses (657 ) (685 ) (634 ) Other income (expense) 74 14 (1 ) Earnings from equity investments 22 21



11

Interest income and Other, net 1 2 6 Income tax (expense) benefit (14 ) (3 ) 5 EBDA(a) $ 836 $ 708 $ 702 Bulk transload tonnage (MMtons)(b) 89.9 96.9



99.8

Ethanol (MMBbl) 65.0 65.3



61.0

Liquids leaseable capacity (MMBbl) 68.1 60.4 60.2 Liquids utilization %(c) 94.5 % 92.8 % 94.5 % _______



(a) 2013, 2012 and 2011 amounts include an increase of $38 million, a decrease of

$44 million, and an increase of $1 million, respectively, related to the

combined effect from certain items. 2013 amount consists of (i) a $109

million increase in earnings from casualty indemnification gains; (ii) an $8

million increase in revenues related to hurricane reimbursements; (iii) a $59

million increase in clean-up and repair expense, all related to 2012

hurricane activity at the New York Harbor and Mid-Atlantic terminals; and

(iv) a $3 million increase in expense associated with the removal of certain

physical assets at the Tampaplex bulk terminal located in Tampa, Florida.

2012 amount consists of a $51 million increase in expense related to

hurricanes Sandy and Isaac clean-up and repair activities and the associated

write-off of damaged assets, a $4 million increase in expense associated with

environmental liability adjustments, and a $12 million casualty

indemnification gain related to a 2010 casualty at the Myrtle Grove,

Louisiana, International Marine Terminal facility. 2011 amount consists of a

$5 million decrease in expense (reflecting tax savings) related to non-cash

compensation expense allocated to KMP from us (however, KMP does not have any

obligation, nor did it pay any amounts or realize any direct benefits related

to this compensation expense) and a combined $2 million decrease from other

certain items. Also, 2013, 2012 and 2011 amounts include decreases of

earnings of $17 million, $1 million, and $2 million, respectively, related to

assets sold, which had been revalued as part of the Going Private Transaction

and recorded in the application of the purchase method of accounting.

(b) Volumes for acquired terminals are included for all periods and include KMP's

proportionate share of joint venture tonnage.

(c) The ratio of KMP's actual leased capacity to its estimated potential

capacity.

The Terminals-KMP business segment includes the operations of petroleum, chemical and other liquids terminal facilities (other than those included in the Products Pipelines-KMP segment), and all of coal, petroleum coke, fertilizer, steel, ores and other dry-bulk material services facilities. KMP groups its bulk and liquids terminal operations into regions based on geographic location and/or primary operating function. This structure allows the management to organize and evaluate segment performance and to help make operating decisions and allocate resources. Combined, the certain items described in footnote (a) to the table above accounted for a $82 million increase in segment EBDA in 2013, a $45 million decrease in segment EBDA in 2012, and an $8 million increase in segment revenues in 2013, when compared with the respective prior year. Following is information related to the segment's (i) remaining $46 million (6%) and $51 million (7%) increases in EBDA and (ii) $43 million (3%) and $44 million (3%) increases in revenues in both 2013 and 2012, when compared with the respective prior year: 79

-------------------------------------------------------------------------------- Year Ended December 31, 2013 versus Year Ended December 31, 2012 EBDA Revenues increase/(decrease) increase/(decrease) (In millions, except percentages) Gulf Liquids $ 21 11 % $ 34 14 % Rivers 15 24 % 7 5 % Midwest 9 18 % 14 11 % Northeast 5 4 % 1 - % Acquired assets and businesses 4 n/a 5 n/a Southeast 3 7 % - - % Mid-Atlantic - - % (5 ) (3 )% All others (including intrasegment eliminations and unallocated income tax expenses) (11 ) (5 )% (13 ) (3 )% Total Terminals-KMP $ 46 6 % $ 43 3 % The overall increase in the Terminals-KMP's EBDA in 2013 versus 2012 was driven by incremental contributions from its Gulf Liquids terminals, due primarily to higher liquids revenues from its Pasadena and Galena Park liquids facilities located along the Houston Ship Channel. The facilities benefited from high gasoline export demand, increased rail services, and new and incremental customer agreements at higher rates. For all terminals included in the Terminals-KMP business segment, total liquids leaseable capacity increased to 68.1 MMBbl at year-end 2013, up 12.7% from a capacity of 60.4 MMBbl at the end of 2012. The increase in capacity was mainly due to the acquisition of KMP's Norfolk and Chesapeake, Virginia facilities from Allied Terminals in June 2013 (incremental contributions from these two terminals are included within the "Acquired assets and businesses" line in the two tables above), and the partial in-service of BOSTCO and Edmonton Tank expansion projects. At the same time, KMP's overall liquids utilization rate increased 1.8% since the end of 2012. The Rivers region earnings and revenues increased due to the in-service of the IMT Phase I and II expansion projects at KMP's International Marine Terminal (located at Myrtle Grove, Louisiana, near the mouth of the Mississippi River). The region also benefited from lower operating and maintenance costs. Much of the Midwest's improvement comes from the opening in August 2013 of the BP Whiting terminal (Whiting, Indiana). Salt and ethanol increases account for the rest of the improvement. The period-to-period increases in earnings from KMP's Northeast terminal operations were driven by incremental contributions from KMP's Carteret New Jersey liquids facility and KMP's Perth Amboy, New Jersey liquids terminal. Carteret benefited from both higher non-operating income (due to insurance indemnifications received for 2012 business interruptions caused by Hurricane Sandy) and higher revenues (due in part to new and restructured customer agreements at higher rates). KMP's Perth Amboy terminal benefited from higher year-over-year revenues, due mainly to additional and restructured customer contracts at higher rates. Earnings from KMP's Mid-Atlantic terminals were flat across both 2013 and 2012, as higher earnings from its Fairless Hills, Pennsylvania bulk terminal were offset by lower earnings and revenues from its Pier IX terminal, located in Newport News, Virginia. The earnings increase from Fairless Hills was primarily due to higher margins and volumes from steel and fertilizer transfers, driven by rebounding manufacturing and agricultural demand in the last half of 2013, as well as fertilizer expansion projects coming on-line. The decreases in revenues and earnings from Pier IX were due primarily to an 8% drop in coal transfer volumes, due largely to some weakening in the coal export market relative to 2012, and due partly to scheduled maintenance at the facility in the second quarter of 2013. The remaining increases and decreases in the Terminals-KMP segment's earnings and revenues reported in the "All others" line in the table above represent increases and decreases in terminal results at various locations; however the overall decreases across the comparable years were due in large part to (i) the loss of business effective March 31, 2013 when TRANSFLO, a wholly owned subsidiary of CSX, elected to terminate their contract with KMP's materials handling, wholly-owned subsidiary, Kinder Morgan Materials Services (KMMS), and (ii) higher income tax expense. 80 -------------------------------------------------------------------------------- Year Ended December 31, 2012 versus Year Ended December 31, 2011 EBDA Revenues increase/(decrease) increase/(decrease) (In millions, except percentages) Gulf Liquids $ 19 11 % $ 17 7 % Mid-Atlantic 15 25 % 19 16 % Northeast 15 19 % 18 13 % Acquired assets and businesses 10 n/a 4 n/a All others (including intrasegment eliminations and unallocated income tax expenses) (8 ) (2 )% (14 ) (2 )% Total Terminals-KMP $ 51 7 % $ 44 3 % The overall increase in EBDA from the Terminals-KMP business segment in 2012 compared to 2011was driven by higher contributions from the terminal facilities included in the Gulf Liquids, Mid-Atlantic and Northeast regions. The increase from the Gulf Liquids facilities was driven by higher warehousing revenues (as a result of new and renewed customer agreements at higher rates) at the Galena Park and Pasadena, Texas facilities, higher ethanol volumes through the Deer Park, Texas rail terminal, and higher overall gasoline throughput volumes. KMP also benefited from both higher capitalized overhead associated with the ongoing construction of KMP's majority-owned Battleground Oil Specialty Terminal Company LLC terminal located on the Houston Ship Channel, and higher earnings from its crude oil storage operations located in Cushing, Oklahoma. The year-to-year earnings increase from the Mid-Atlantic region resulted primarily from higher export coal shipments from the Pier IX terminal, and higher import steel and iron ore imports from the Fairless Hills, Pennsylvania bulk terminal. Economic expansion in developing countries generated a growth cycle in the coal export market during 2012, and due both to this growth in demand and to completed infrastructure expansions since the end of 2011, KMP's total export coal volumes (for all terminals combined) increased by 5.7 million tons (38%) in 2012, when compared to the prior year. The increase in earnings from the Northeast terminal operations was driven by higher contributions from the Staten Island terminal due mainly to new and favorable contract changes. Despite being affected heavily by Hurricane Sandy in 2012, the liquids terminal in Carteret, New Jersey increased earnings primarily due to higher transfer and storage rates, and to new and renegotiated contracts. KMP also benefited from incremental earnings from the Philadelphia liquids terminal, due largely to new and restructured customer contracts at higher rates, and from the Perth Amboy, New Jersey liquids terminal, due primarily to higher gasoline throughput volumes and favorable contract changes. The incremental earnings and revenues from acquired assets and businesses primarily represent contributions from KMP's additional equity investment in the short-line railroad operations of Watco Companies, LLC (acquired in December 2011) and its bulk terminal (acquired in June 2011) that handles petroleum coke for the Total refinery located in Port Arthur, Texas. The incremental amounts represent earnings and revenues from acquired terminals' operations during the additional months of ownership in 2012, and do not include increases or decreases during the same months KMP owned the assets in 2011. The remaining increases and decreases in the Terminals-KMP segment's earnings and revenues-reported in the "All others" line in the table above-represent increases and decreases in terminal results at various locations; however the overall decreases were driven by lower results from the combined terminal operations included in the Rivers region. The decreases were mainly due to lower domestic coal transload volumes, largely the result of a drop in domestic demand relative to 2011. 81

--------------------------------------------------------------------------------

Kinder Morgan Canada-KMP Year Ended December 31, 2013 2012 2011 (In millions, except operating statistics) Revenues $ 302 $ 311$ 302 Operating expenses (110 ) (103 ) (97 ) Earnings from equity investments 4 5 (2 ) Interest income and Other, net 249 17 14 Income tax expense (105 ) (1 ) (15 ) EBDA(a) $ 340 $ 229$ 202 Transport volumes (MMBbl)(b) 101.1 106.1



99.9

______

(a) 2013 amount includes both a $224 million gain from the sale of KMP's equity

and debt investments in the Express pipeline system, and an associated $84

million increase in income tax expense related to the pre-tax gain amount.

2011 amount includes a $3 million increase in earnings associated with an

income tax benefit (reflecting tax savings) related to non-cash compensation

expense allocated to KMP from us (however, KMP does not have any obligation,

nor did it pay any amounts related to this compensation expense).

(b) Represents Trans Mountain pipeline system volumes.

The Kinder Morgan Canada-KMP business segment includes the operations of the Trans Mountain and Jet Fuel pipeline systems and until March 14, 2013, the effective date of sale, KMP's one-third ownership interest in the Express crude oil pipeline system. Combined, the certain items described in footnote (a) to the table above accounted for a $140 million increase in segment EBDA in 2013, and a $3 million decrease in segment EBDA in 2012, when compared with the respective prior year. Following is information related to the segment's (i) remaining $29 million (13%) decrease and $30 million (15%) increase in EBDA in 2013 and 2012 and (ii) $9 million (3%) decrease and $9 million (3%) increase in revenues in 2013 and 2012, when compared with the respective prior year: Year Ended December 31, 2013 versus Year Ended December 31, 2012 EBDA Revenues increase/(decrease) increase/(decrease) (In millions, except percentages) Trans Mountain Pipeline $ (24 ) (11 )% $ (9 ) (3 )% Express Pipeline(a) (5 ) (28 )% n/a n/a Total Kinder Morgan Canada-KMP $ (29 ) (13 )% $ (9 ) (3 )%



______

(a) Equity investment; accordingly, KMP recorded earnings under the equity method

of accounting. However, KMP sold its debt and equity investments in Express

effective March 14, 2013.

The period-to-period decreases in EBDA from Express were primarily due to both lower equity earnings and lower interest income resulting from the sale of KMP's equity and debt investments in Express effective March 14, 2013. The decreases in Trans Mountain's earnings were driven by (i) higher income tax expenses (due largely to general increases in British Columbia's income tax rates since the end of the third quarter of 2012); (ii) unfavorable impacts from foreign currency translation (due to the weakening of the Canadian dollar since the end of 2012, KMP translated Canadian denominated income and expense amounts into less U.S. dollars in 2013); and (iii) lower management incentive fees earned from the operation of the Express pipeline system (due to its sale in March 2013). The period-to-period decreases in Trans Mountain's earnings were partially offset by incremental non-operating income from allowances for funds used during construction (representing an estimate of the cost of capital funded by equity contributions). 82

-------------------------------------------------------------------------------- Year Ended December 31, 2012 versus Year Ended December 31, 2011 EBDA Revenues increase/(decrease) increase/(decrease) (In millions, except percentages) Trans Mountain Pipeline $ 23 12 % $ 9 3 % Express Pipeline 7 61 % - - % Total Kinder Morgan Canada-KMP $ 30 15 % $ 9 3 % The year-to-year increase in Trans Mountain's EBDA was driven by a $17 million decrease in income tax expenses, associated primarily with favorable tax adjustments, recorded in 2012, related to lower taxable income relative to 2011. Trans Mountain also benefited from higher non-operating income, related primarily to incremental management incentive fees earned from its operation of the Express pipeline system. The year-over-year increase in earnings from the equity investment in the Express pipeline system was mainly due to volumes moving at higher transportation rates on the Express (Canadian) portion of the system, and to higher domestic volumes on the Platte (domestic) portion of the segment. Other Our other segment activities include those operations that were acquired from EP on May 25, 2012 and are primarily related to several physical natural gas contracts with power plants associated with EP's legacy trading activities. These contracts obligate EP to sell natural gas to these plants and have various expiration dates ranging from 2012 to 2028. This segment also included an interest in the Bolivia to Brazil Pipeline, which we sold for $88 million on January 18, 2013. This segment contributed a loss of $5 million and earnings of $7 million for the years ended 2013 and 2012.



General and Administrative, Interest, and Noncontrolling Interests

Year Ended December 31, 2013 2012 2011 (In millions) KMI general and administrative expense(a)(b) $ (30 ) $ 297 $ 42 KMP general and administrative expense(c) 560 547 473 EPB general and administrative expense(d) 83 85 - Consolidated general and administrative expense $ 613 $ 929$ 515 KMI interest expense, net of unallocable interest income(e) $ 528 $ 559$ 170 KMP interest expense, net of unallocable interest income(f) 860 700 531 EPB interest expense, net of unallocable interest income(g) 300 182 -



Unallocable interest expense net of interest income and other, net $

1,688 $ 1,441$ 701 KMR noncontrolling interests $ 230 $ (15 ) $ 14 KMP noncontrolling interests(h) 1,018 (51 ) 52 EPB noncontrolling interests 251 178 - Net income attributable to noncontrolling interests $



1,499 $ 112 $ 66

_______

(a) 2013 includes a decrease in expense of $80 million, 2012 includes an increase

in expense of $251 million, and 2011 includes a decrease in expense of $2

million, related to the combined effect from certain items. 2013 amount

includes a decrease in expense of (i) $59 million related to EP post-merger

pension credits; (ii) $32 million elimination of intercompany rent expense

included in KMP and EPB general and administrative expenses; (iii) $5 million

for an overaccrual related to The Oil Insurance Limited exit premium; (iv) $3

million related to grantor trust credit; and (v) $2 million payroll tax

overaccrual; partially offset by increases in expense of (i) $14 million

related to rent expense and lease exit cost on unoccupied space and (ii) $7

million related to the EP acquisition. 2012 amount includes $251 million

increase of pre-tax expense associated with the EP acquisition and EP Energy

sale, which includes (i) $59 million (also see footnotes (c) and (d) below

for KMP and EPB portion, respectively) in employee severance, retention and

bonus costs; (ii) $87 million of accelerated EP stock based compensation

allocated to the post-combination period under applicable GAAP rules; (iii)

$37 million in advisory fees; (iv) $68 million for legal fees and reserves,

net of recoveries; and (v) $29 million of other EP acquisitions expenses;

partially offset by (i) $29 million benefit associated with pension income.

2011 amount includes a net $2 million decrease in expense, which includes (i)

$46 million reduction to expense for a Going Private transaction litigation

insurance reimbursement; net of 83

-------------------------------------------------------------------------------- increases in expense for (ii) KMI's portion ($13 million) of a $100 million special bonus to non-senior management employees; (iii) $11 million of expense associated with our initial public offering; (iv) a $9 million increase in expense related to the EP acquisition; and (v) $10 million increase in Going Private transaction litigation expense; and (vi) a combined $1 million increase in other expense related primarily to non-cash compensation expense. The cost of the $100 million special bonus was not borne by our Class P shareholders. In May of 2011, we paid for the $100 million of special bonuses, which included the amounts allocated to KMP, using $64 million (after-tax) in available earnings and profits reserved for this purpose and not paid in dividends to our Class A shareholders. See also footnote (c) below. (b) 2013, 2012 and 2011 amounts include NGPL Holdco LLC general and



administrative reimbursements of $36 million, $35 million, and $35 million,

respectively. These amounts were recorded to the "Product sales and other"

caption in our accompanying consolidated statements of income with the

offsetting expenses primarily included in the "General and administrative"

expense caption in our accompanying consolidated statements of income.

(c) 2013, 2012 and 2011 amounts include increases in expense of $40 million, $81

million and $94 million, respectively, related to the combined effect from

certain items. 2013 amount consists of (i) a $34 million increase in expense

associated with certain asset and business acquisition costs and unallocated

legal expenses; (ii) a $10 million increase in unallocated severance expense

associated with the asset drop-down groups and allocated to KMP from us

(however, KMP does not have any obligation, nor did it pay any amounts

related to this expense); and (iii) a combined $4 million decrease in expense

from other certain items. 2012 amount consists of $67 million in severance,

retention and bonus costs and a combined $14 million increase in expense from

other certain items. 2011 amount consists of a combined $90 million increase

in non-cash compensation expense (including $87 million related to a special

non-cash bonus expense to non-senior management employees) allocated to KMP

from us; however, it does not have any obligation, nor did it pay any amounts

related to this expense, and a combined $4 million increase in expense from

other certain items.

(d) 2012 amount includes $34 million for severance cost. This expense is

attributable to non-cash severance costs allocated to EPB from us as a result

of KMI's and EP's merger; however, EPB does not have any obligation, nor did

EPB pay any amounts related to this expense.

(e) 2013 and 2012 amounts include $21 million and $108 million, respectively,

write off of capitalized financing fees, almost all of which was associated

with the EP acquisition financing that was written-off (primarily due to debt

repayment) or amortized. 2013 amount also includes $14 million of interest on

margin for marketing contracts.

(f) 2013 includes a decrease in expense of $5 million associated with debt fair

value adjustments recorded in purchase accounting for KMP's Copano

acquisition. 2012 amount includes a decrease in expense of $1 million related

to the combined effect from other certain items.

(g) Includes expenses and transactions for the periods after the May 25, 2012 EP

acquisition date.

(h) 2013, 2012 and 2011 amounts include an increase of $5 million, a decrease

of $4 million and a decrease of $7 million, respectively, in net income

attributable to KMP's noncontrolling interests, related to the combined

effect from all of the 2013, 2012 and 2011 items previously disclosed in the

footnotes to the tables included in "-Results of Operations."

Combined, the certain items described in footnotes (a) and (b) to the table above affected KMI's general and administrative expenses by a $330 million decrease in 2013 and $253 million increase in 2012, when compared with the respective year. The remaining changes in KMI's general and administrative expense was essentially flat in both 2013 and 2012, when compared with the respective year.

2013 and 2012 amounts also include $9 million and $43 million, respectively, of KMP expense attributable to KMP's drop-down asset groups for the periods prior to the acquisition dates. Combined, the certain items described in footnote (c) to the table above, and the combined $34 million decrease in expense from the drop-down asset groups expense prior to the acquisition dates, decreased KMP's general and administrative expenses by $75 million in 2013, and increased its general and administrative expenses by $30 million in 2012, when compared with the respective prior year. The remaining $88 million (21%) and $44 million (12%) increases in general and administrative expenses in 2013 and 2012, respectively, were driven by the acquisition of additional businesses, primarily associated with KMP's acquisition of the drop-down asset groups from us (effective August 1, 2012 and March 1, 2013), and for 2013 versus 2012, its acquisition of Copano (effective May 1, 2013). KMP also realized higher year-over-year employee benefits and payroll tax expenses, due mainly to both cost inflation increases on work-based health and insurance benefits and higher wage rates. In the table above, we report our interest expense as "net," meaning that we have subtracted unallocated interest income and capitalized interest from our total interest expense to arrive at one interest amount. Combined, the certain items described in footnotes (e) and (f) to the table above affected our consolidated interest expense by a $77 million decrease in 2013 and a $107 million increase in 2012, when compared with the respective prior year. Our remaining consolidated interest expense, net of interest income, increased $324 million (24%) and $633 million (90%), respectively, in 2013 and 2012 when compared with the respective prior year. The increase in KMI's interest expense in 2013 and 2012 compared to respective prior years was primarily due to interest expense incurred from (i) EP acquisition debt and (ii) debt assumed in the EP acquisition, see Notes 3 "Acquisition and Divestitures-KMI Acquisition of El Paso Corporation" and Note 8 "Debt" to our consolidated financial statements. For KMP, the 2013 and 2012 amounts also include $15 million and $69 million, respectively, of KMP expense attributable to KMP's drop-down asset groups for the periods prior to the acquisition dates. After taking into effect the certain items 84 -------------------------------------------------------------------------------- described in footnote (f) to the table above, and the combined $54 million decrease in expense from the drop-down asset groups expense prior to the acquisition dates, KMP's unallocable interest expense increased $218 million (34%) in 2013 compared to 2012, and increased $101 million (19%) in 2012 compared to 2011. For both pairs of comparable years, the increase in interest expense was attributable to higher average borrowings, and for 2013 compared to 2012, to higher effective interest rates. KMP's average debt balances increased 24% in 2013 and 23% in 2012, when compared to the respective prior year. The increases in average borrowings were largely due to the capital expenditures, business acquisitions (including debt assumed from the drop-down transactions), and joint venture contributions KMP has made since the beginning of 2011. For more information on the capital expenditures, capital contributions, and acquisition expenditures, see "-Liquidity and Capital Resources." The weighted average interest rate on all of KMP's borrowings-including both short-term and long-term amounts-increased by 9% in 2013 versus 2012, but was essentially flat across both 2012 and 2011 (the weighted average interest rate on all of KMP's borrowings was 4.62% during 2013, 4.24% during 2012 and 4.26% during 2011). The higher average rate in 2013 was driven primarily by higher interest rates on the debt obligations KMP assumed as part of the drop-down transactions. We, and our subsidiary KMP, use interest rate swap agreements to transform a portion of the underlying cash flows related to our long-term fixed rate debt securities (senior notes) into variable rate debt in order to achieve our desired mix of fixed and variable rate debt. As of December 31, 2013, approximately 27% of KMI's and 29% of KMP's debt balances (excluding debt fair value adjustments) were subject to variable interest rates-either as short-term or long-term variable rate debt obligations or as fixed-rate debt converted to variable rates through the use of interest rate swaps. EPB did not have variable rate debt obligations as of December 31, 2013. As of December 31, 2012, approximately 47% of KMI's and 37% of KMP's debt balances (excluding debt fair value adjustments) were subject to variable interest rates. For more information on our interest rate swaps, see Note 13 "Risk Management-Interest Rate Risk Management" to our consolidated financial statements. Net income attributable to noncontrolling interests, which represents the allocation of our consolidated net income (or loss) attributable to all outstanding ownership interests in our consolidated subsidiaries (primarily KMP and EPB) that are not held by us. The $1,387 million (1,238%) increase for 2013 as compared to 2012 was primarily due to our noncontrolling interest's portion of (i) KMP's $558 million gain from the remeasurement of its previously held 50% equity interest in Eagle Ford to fair value; (ii) KMP's $140 million after-tax gain on the sale of its investments in the Express pipeline system; (iii) KMP's additional income from EP assets acquired by KMP from us; (iv) KMP's additional income from its acquisition of Copano; and (v) the 2012 non-cash loss of $937 million net of tax loss from both costs to sell and the remeasurement of KMP's FTC Natural Gas Pipeline disposal group net assets to fair value. The $46 million (70%) increase in 2012 as compared to 2011 was primarily due to our noncontrolling interests portion of the additional income from acquisitions and partially offset by non-cash loss of $937 million from both the costs to sell and a remeasurement of the FTC Natural Gas Pipeline disposal group net assets to fair value.



Income Taxes-Continuing Operations

Year Ended December 31, 2013 versus Year Ended December 31, 2012

Our tax expense for income from continuing operations for the year ended December 31, 2013 was $742 million, as compared with 2012 income tax expense of $139 million. The $603 million increase in tax expense is due primarily to (i) higher income in 2013 attributable to KMI's investments in KMP and EPB as compared to 2012 and (ii) tax expense as a result of KMP's 2013 sale of its one-third interest in the Express pipeline system. These increases are partially offset by a decrease in the deferred state tax rate as a result of the March 2013 drop-down transaction and KMP's Copano acquisition.



Year Ended December 31, 2012 versus Year Ended December 31, 2011

Our income tax expense for income from continuing operations for the year ended December 31, 2012 was $139 million, as compared with 2011 income tax expense of $361 million. The $222 million decrease in tax expense is due primarily to (i) lower income attributable to KMI as a result of costs incurred in 2012 to facilitate the EP acquisition and a $200 million impairment of our NGPL investment and (ii) a 2012 adjustment to decrease our income tax reserve for uncertain tax positions. These decreases are partially offset by (i) a 2012 adjustment to increase the deferred tax liability for a change in non tax-deductible goodwill related to our investment in KMP and (ii) the tax impact of an increase in the deferred state tax rate in 2012 as a result of the EP acquisition. 85 --------------------------------------------------------------------------------



Liquidity and Capital Resources

General

As of December 31, 2013, we had a combined $598 million of "Cash and cash equivalents," a decrease of $116 million (16%) from December 31, 2012. We believe that our cash position and remaining borrowing capacity (discussed below in "-Short-term Liquidity"), and our access to financial resources are adequate to allow us to manage our day-to-day cash requirements and anticipated obligations. We have relied primarily on cash provided from operations to fund our operations as well as our debt interest payments, sustaining capital expenditures (those capital expenditures which do not increase the capacity or throughput), quarterly dividend payments and our subsidiaries' quarterly distributions. Expansion capital expenditures, acquisitions and debt principal payments, as such debt principal payments become due, have historically been funded by us and our subsidiaries through (i) additional borrowings (including commercial paper issuances by KMP); (ii) the issuance of additional common stock by us; (iii) issuance of shares by KMR with proceeds used for its purchase of additional KMP i-units; (iv) issuance of common units by KMP or EPB; and (v) and in some instances, proceeds from divestitures. In addition, KMP has funded a portion of its historical expansion capital expenditures with retained cash, from including i-units owned by KMR in the determination of KMP's cash distributions per unit, but paying quarterly distributions on i-units in additional i-units rather than cash and from waived incentive distributions to KMGP, KMP's general partner. Additional information regarding KMP's distributions and waived incentive distributions is discussed in Note 10 "Stockholders' Equity-Noncontrolling Interests-Distributions-KMP Distributions."



In addition to results of operations, our, KMP and EPB's debt and capital balances are affected by financing activities, as discussed below in "-Financing Activities."

Credit Ratings and Capital Market Liquidity

Our and our subsidiaries' credit ratings affect our ability to access the public and private debt markets (including the commercial paper market by KMP), as well as the terms and pricing of our debt (see Part I, Item 1A "Risk Factors"). Based on our and our subsidiaries' credit ratings as discussed below, we and our subsidiaries expect that our respective short-term liquidity needs will be met primarily through short-term borrowings. Nevertheless, our and our subsidiaries' ability to satisfy financing requirements or fund planned capital expenditures (including our share of planned expenditures of our joint ventures) will depend upon future operating performance, which will be affected by prevailing economic conditions in the energy pipeline and terminals industries and other financial and business factors, some of which are beyond our control. KMP's short-term corporate debt rating is A-2, Prime-2 and F2 at Standard and Poor's, Moody's Investor Services and Fitch Ratings, Inc., respectively. The following table represents KMI, KMP and EPB's debt ratings as of December 31, 2013. Rating agency Senior debt rating Date of last change Outlook KMI(a) Standard and Poor's BB February 20, 2008 Positive Moody's Investor Services Ba2 February 27, 2013 Stable Fitch Ratings, Inc. BB+ August 9, 2012 Stable KMP(b) Standard and Poor's BBB January 8, 2007 Stable Moody's Investor Services Baa2 May 30, 2007 Stable Fitch Ratings, Inc. BBB April 11, 2007 Stable EPB(b) Standard and Poor's BBB- May 24, 2012 Positive Moody's Investor Services Ba1 March 25, 2010 Positive Fitch Ratings, Inc. BBB- March 25, 2010 Stable _______ 86 -------------------------------------------------------------------------------- (a) Represents senior secured credit rating (b) Represents senior unsecured credit rating



Short-term Liquidity

As of December 31, 2013, our principal sources of short-term liquidity are (i) KMI, KMP and EPB's respective credit facilities (discussed following); (ii) KMP's $2.7 billion short-term commercial paper program; and (iii) cash from operations. The loan commitments under the facilities can be used to fund borrowings for the respective entity's general corporate or partnership purposes, and KMP's facility can be used as a backup for its commercial paper program. We provide for liquidity by maintaining a sizable amount of excess borrowing capacity related to our credit facilities and have consistently generated strong cash flow from operations, providing a source of funds of $4,064 million and $2,795 million in 2013 and 2012, respectively (the year-to-year increase is discussed below in "Cash Flows-Operating Activities"). The following represents our primary revolving credit facilities that were available to KMI and its subsidiaries, KMP and EPB, debt outstanding under the credit facilities, including commercial paper borrowings, and available borrowing capacity under the facilities after deducting (i) outstanding letters of credit and (ii) outstanding borrowings under KMI and EPB's credit facilities, and KMP's commercial paper program (supported by its credit facility). At December 31, 2013 Available Debt borrowing outstanding capacity (In millions) Credit Facilities KMI $1.75 billion, six-year secured revolver, due December 2014 $ 175 $ 1,495 KMP $2.7 billion, five-year unsecured revolver, due May 2018 $ 979 $ 1,518 EPB $1.0 billion, five-year secured revolver, due May 2016 $ -



$ 1,000

Our combined balance of short-term debt as of December 31, 2013 was $2,306 million, primarily consisting of (i) $1,154 million combined outstanding borrowings under KMI's $1.75 billion credit facility and KMP's $2.7 billion commercial paper program; (ii) $500 million in principal amount of KMP's 5.125% senior notes that mature November 15, 2014; (iii) a combined $193 million of borrowings outstanding under EP credit facilities; and (iv) $207 million in principal amount of EP's 6.875% senior notes that mature on June 15, 2014. KMP intends to refinance its current short-term debt through a combination of long-term debt, equity, and/or the issuance of additional commercial paper or credit facility borrowings to replace maturing commercial paper and current maturities of long-term debt. KMI intends to refinance its short-term debt through additional credit facility borrowings to replace maturing credit facility borrowings, issuing new long-term debt, or with proceeds from asset sales. Our combined balance of short-term debt as of December 31, 2012 was $2,401 million. We had working capital deficits of $2,207 million and $1,554 million as of December 31, 2013 and 2012, respectively. The overall $653 million (42%) unfavorable change from year-end 2012 was primarily due to (i) an increase in "Accrued contingencies," due largely to certain KMP transportation rate case liabilities being reclassified from long-term liabilities to short-term liabilities; (ii) a net increase in KMP's commercial paper borrowings; (iii) a net increase in KMI and its subsidiaries (excluding KMP and EPB and its subsidiaries') current maturities; and (iv) the sale in 2013 of our investment in BBPP Holdings Ltda and KMP's investment in the Express pipeline system, which were included at December 31, 2012 within "Assets held for sale." The overall increase in our working capital deficit was partially offset by a net decrease in KMI's credit facility borrowings. Generally, our working capital balance varies due to factors such as the timing of scheduled debt payments, timing differences in the collection and payment of receivables and payables, the change in fair value of our derivative contracts, and changes in our combined cash and cash equivalent balances as a result of our or our subsidiaries' debt or equity issuances (discussed below in "-Long-term Financing"). KMP and EPB each employ centralized cash management programs for their U.S.-based bank accounts that essentially concentrates the cash assets of their operating partnerships and their subsidiaries in joint accounts for the purpose of providing financial flexibility and lowering the cost of borrowing. These programs provide that funds in excess of the daily needs of their operating partnerships and their subsidiaries are concentrated, consolidated or otherwise made available for use by other 87 -------------------------------------------------------------------------------- entities within their consolidated group. KMP and EPB place no material restrictions on the ability to move cash between entities, payment of intercompany balances or the ability to upstream dividends to parent companies other than restrictions that may be contained in agreements governing the indebtedness of those entities. However, KMP and EPB's cash and the cash of their subsidiaries are not concentrated into accounts of KMI or any company not in our consolidated group of companies, and KMI has no rights with respect to KMP and EPB's cash except as permitted pursuant to their respective partnership agreements. Furthermore, certain of KMP and EPB's operating subsidiaries are subject to FERC-enacted reporting requirements for oil and natural gas pipeline companies that participate in cash management programs. FERC-regulated entities subject to these rules must, among other things, place their cash management agreements in writing, maintain current copies of the documents authorizing and supporting their cash management agreements, and file documentation establishing the cash management program with the FERC.



Long-term Financing

From time to time, KMI, KMP or EPB issue long-term debt securities, often referred to as senior notes. All of the senior notes of KMI, KMP or EPB issued to date, other than those issued by KMP and EPB's subsidiaries and its operating partnerships, generally have very similar terms, except for interest rates, maturity dates and prepayment premiums. KMI and its subsidiaries' (other than KMP and its subsidiaries and EPB and its subsidiaries') senior notes are secured equally and ratably with KMI's $1.75 billion senior secured revolving credit facility. All of KMP and EPB's outstanding senior notes are unsecured obligations that rank equally with all of its other senior debt obligations. Secured debt has also been incurred by some of KMP's operating partnerships and subsidiaries. All of the fixed rate senior notes of KMI, KMP or EPB provide that the notes may be redeemed at any time at a price equal to 100% of the principal amount of the notes plus accrued interest to the redemption date, and, in most cases, plus a make-whole premium. As of December 31, 2013 and 2012, the consolidated balances of long-term debt, including the current portion and the preferred interest in the general partner of KMP, but excluding debt fair value adjustments was $33,062 million and $30,154 million, respectively. To date, our and our subsidiaries' debt balances have not adversely affected our operations, our ability to grow or our ability to repay or refinance our indebtedness. During 2013, we paid down the EP acquisition debt using $947 million of proceeds from the March 2013 drop-down transaction and $239 million of proceeds from the sale of the remainder of the EPC building note to third parties in the second quarter of 2013. We anticipate that we will continue to reduce our debt balance with proceeds from future drop-down transactions. Based on our historical record, we believe that our capital structure will continue to allow us to achieve our business objectives. We and our subsidiaries, including KMP and EPB, are subject, however, to conditions in the equity and debt markets and there can be no assurance we will be able or willing to access the public or private markets for equity and/or long-term senior notes in the future. If we were unable or unwilling to access the equity markets, we would be required to either restrict expansion capital expenditures and/or potential future acquisitions or pursue debt financing alternatives, some of which could involve higher costs or negatively affect our or our subsidiaries' credit ratings. Furthermore, our subsidiaries' ability to access the public and private debt markets is affected by their respective credit ratings. See "-Credit Ratings and Capital Market Liquidity" above for a discussion of our and our subsidiaries' credit ratings. KMI and some of its direct and indirect subsidiaries (referred to as the Combined Other Guarantor Subsidiaries), guarantee the payment of certain of El Paso's (formerly known as El Paso Corporation) outstanding debt. As of the successor date of August 13, 2012, each series of El Paso outstanding notes in aggregate principal amount became guaranteed on a senior unsecured basis by KMI and the Combined Other Guarantor Subsidiaries. As of December 31, 2013 and 2012, approximately $3.8 billion and $3.9 billion, respectively, in aggregate principal amount of these series of El Paso senior notes is outstanding. See Note 19 "Guarantee of Securities of Subsidiaries" to our consolidated financial statements. For additional information about our debt-related transactions in 2013, see Note 8 "Debt" to our consolidated financial statements. For information about our interest rate risk, see Item 7A "Quantitative and Qualitative Disclosures About Market Risk-Interest Rate Risk."



Capital Expenditures

We account for our capital expenditures in accordance with GAAP. Capital expenditures include those that are maintenance/sustaining capital expenditures and those that are capital additions and improvements (which we refer to as

88 -------------------------------------------------------------------------------- expansion, or discretionary capital expenditures). These distinctions are used when determining cash from operations pursuant to the MLP partnership agreements (which is distinct from GAAP cash flows from operating activities). Capital additions and improvements are those expenditures which increase throughput or capacity from that which existed immediately prior to the addition or improvement, and are not deducted in calculating cash from operations. Maintenance capital expenditures are those which maintain throughput or capacity. Thus under the MLP partnership agreements, the distinction between maintenance capital expenditures and capital additions and improvements is a physical determination rather than an economic one. Generally, the determination of whether a capital expenditure is classified as maintenance or as capital additions and improvements is made on a project level. The classification of the MLP's capital expenditures as capital additions and improvements or as maintenance capital expenditures under the partnership agreements is left to the good faith determination of KMGP as KMP's general partner and El Paso Pipeline GP Company, L.L.C. as EPB's general partner, which is deemed conclusive. Generally we fund our sustaining capital expenditures with existing cash or from cash flows from operations, and we initially fund our discretionary capital expenditures through borrowings under our credit facilities (or commercial paper program for KMP) until the amount borrowed is of a sufficient size to cost effectively replace the initial funding with long-term debt, or equity, or both. Our capital expenditures for the year ended December 31, 2013, and the amount we expect to spend for 2014 to sustain and grow our business are as follows (in millions): 2013 Expected 2014



Sustaining capital expenditures

KMP $ 327 $ 438 EPB 39 47 KMI 47 68 Total sustaining capital expenditures(a) $ 413 $ 553



Discretionary capital expenditures(b)(c) $ 3,602 $ 3,874

_______

(a) 2013 and Expected 2014 amounts include $47 million and $70 million,

respectively, for our proportionate share of sustaining capital expenditures

of certain unconsolidated joint ventures.

(b) 2013 amount (i) includes $543 million of discretionary capital expenditures

of unconsolidated joint ventures and acquisitions; (ii) includes a combined

$275 million net increase from accrued capital expenditures and contractor

retainage; (iii) is reduced by $126 million related to contributions from

KMP's noncontrolling interests to fund a portion of certain capital projects;

and (iv) is reduced by $93 million related primarily to both casualty losses

and other non-recurring items. 2013 amount also excludes the May 1, 2013

acquisition of Copano, but includes the discretionary capital expenditures of

Copano, its subsidiaries and its unconsolidated joint ventures after KMP's

May 1, 2013 acquisition date.

(c) Expected 2014 includes our contributions to certain unconsolidated joint

ventures and small acquisitions, net of contributions estimated from unaffiliated joint venture partners for consolidated investments.



Off Balance Sheet Arrangements

We have invested in entities that are not consolidated in our financial statements. For information on KMP's and EPB's obligations with respect to these investments, as well as KMP's and EPB's obligations with respect to related letters of credit, see Note 12 "Commitments and Contingent Liabilities" to our consolidated financial statements. Additional information regarding the nature and business purpose of our investments is included in Note 6 "Investments" to our consolidated financial statements. 89 --------------------------------------------------------------------------------



Contractual Obligations and Commercial Commitments

Payments due by period Less than 1 More than 5 Total year 2-3 years 4-5 years years (In millions) Contractual obligations: Debt borrowings-principal payments $ 34,216$ 2,306$ 4,591$ 4,885$ 22,434 Interest payments(a) 23,464 1,848 3,486 2,935 15,195 Lease obligations(b) 432 70 109 76 177 Pension and postretirement welfare plans(c) 762 92 62 62 546 Transportation, volume and storage agreements(d) 938 115 217 191 415 Rights of way(e) 274 23 46 46 159 Other obligations(f) 493 149 180 34 130 Total $ 60,579$ 4,603$ 8,691$ 8,229$ 39,056 Other commercial commitments: Standby letters of credit(g) $ 535 $ 530 $ 5 $ - $ - Capital expenditures(h) $ 900 $ 900 $ - $ - $ - _______



(a) Interest payment obligations exclude adjustments for interest rate swap

agreements and assume no change in variable interest rates from those in

effect at December 31, 2013.

(b) Represents commitments pursuant to the terms of operating lease agreements.

(c) Represents the amount by which the benefit obligations exceeded the fair

value of fund assets for pension and other postretirement benefit plans at

year-end. The payments by period include expected contributions to funded

plans in 2014 and estimated benefit payments for unfunded plans in all

years.

(d) Primarily represents KMP and EPB transportation agreements of $396 million,

volume agreements of $256 million and storage agreements for capacity on

third party and an affiliate pipeline systems of $145 million.

(e) Represents liabilities for rights-of-way.

(f) Primarily includes environmental liabilities related to sites that we own or

have a contractual or legal obligation with a regulatory agency or property

owner upon which we will perform remediation activities. These liabilities

are included within "Other long-term liabilities and deferred credits" in our

consolidated balance sheets.

(g) The $535 million in letters of credit outstanding as of December 31, 2013

consisted of the following (i) $170 million under six letters of credit

related to power and marketing purposes; (ii) $87 million under fourteen

letters of credit for insurance purposes; (iii) a $100 million letter of

credit that supports certain proceedings with the CPUC involving refined

products tariff charges on the intrastate common carrier operations of KMP's

Pacific operations' pipelines in the state of California; (iv) KMP's $30

million guarantee under letters of credit totaling $46 million supporting

KMP's International Marine Terminals Partnership Plaquemines, Louisiana Port,

Harbor, and Terminal Revenue Bonds; (v) a $38 million letter of credit

supporting KMP's pipeline and terminal operations in Canada; (vi) a $25

million letter of credit supporting KMP's Kinder Morgan Liquids Terminals LLC

New Jersey Economic Development Revenue Bonds; (vii) a $24 million letter of

credit supporting KMP's Kinder Morgan Operating L.P. "B" tax-exempt bonds;

(viii) a $14 million letter of credit supporting Nassau County, Florida Ocean

Highway and Port Authority tax-exempt bonds; and (ix) a combined $32 million

in twenty-one letters of credit supporting environmental and other

obligations of us and our subsidiaries.

(h) Represents commitments for the purchase of plant, property and equipment as of December 31, 2013. 90

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Cash Flows

The following table summarizes our net cash flows from operating, investing and financing activities for each period presented.

Year Ended



December 31,

2013



2012 Increase/Decrease

(In millions) Net Cash Provided by (Used in) Operating activities $ 4,064$ 2,795 $ 1,269 Investing activities (3,064 ) (5,084 ) 2,020 Financing activities (1,095 ) 2,584 (3,679 ) Effect of Exchange Rate Changes on Cash (21 ) 8 (29 )



Net (Decrease) Increase in Cash and Cash Equivalents $ (116 ) $

303 $ (419 )



Operating Activities The net increase of $1,269 (45%) million in cash provided by operating activities in 2013 compared to 2012 was primarily attributable to: a $1 billion increase in cash from overall higher net income after

adjusting our period-to-period $2 billion increase in net income for

non-cash items primarily consisting of higher net gains from both the sale

and the remeasurement of net assets to fair value; the 2013 gain on the

sale of KMP's investments in the Express pipeline system; DD&A; deferred

income taxes; earnings from equity investments; higher gains in 2013 from

the sale and/or write-off of property, plant and equipment; and an

increase in transportation rate case liabilities and legal liabilities.

Investing Activities The $2,020 million net decrease in cash used in investing activities in 2013 compared to 2012 was primarily attributable to: a $4,761 million decrease due to less cash used in the acquisitions of assets and investments from unrelated parties primarily driven by the $4,970 million net outlay of cash in 2012 for the EP acquisition; a combined $490 million of proceeds we received in 2013 from both KMP's sale of the investments in the Express pipeline system and our sale of BBPP Holding Ltds (both discussed in Note 3 "Acquisitions and Divestitures" to our consolidated financial statements;)



a $1,791 million of net proceeds received in 2012 (after paying selling

costs) from the disposal of KMP's FTC Natural Gas Pipelines disposal group; and



a $1,347 million increase in cash used in investing activities in 2013 due

to higher capital expenditures, as described above in "-Capital

Expenditures."

Financing Activities The net decrease of $3,679 million in cash from financing activities in 2013 compared to 2012 was primarily attributable to: a $2,132 million net decrease in cash from overall debt financing activities primarily due to (i) $5,288 billion of proceeds from the EP acquisition debt issued in the second quarter of 2012; (ii) lower debt repayments of $1,475 million resulting from the $1,186 million of



repayments made on the acquisition debt in 2013, compared to the $2,661

million of repayments made on the EP acquisition debt in 2012. Further

information regarding the March 2013 drop-down transaction and acquisition

debt is discussed in Note 3 "Acquisitions and Divestitures--Drop-down of

EP 91

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Assets to KMP" and Note 8 "Debt-KMI," respectively, to our consolidated financial statements; and (iii) a $1,695 million net decrease in our and our subsidiaries other debt repayments and debt issuances. a $480 million decrease in cash due to higher combined repurchases of

shares and warrants; a $473 million decrease in cash associated with distributions to



noncontrolling interests, primarily reflecting the increased distributions

to common unit owners by KMP and EPB;

a $438 million decrease in cash due to higher dividend payments; and

a $233 million decrease in contributions provided by noncontrolling

interests, primarily reflecting the following (i) $141 million less

proceeds from the sales of additional KMP common units in 2013 versus

2012; and (ii) $187 million less proceeds EPB received from its issuance

of common units in 2013 versus 2012 excluding the common units issued to

its general partner. These decreases were partially offset by the $86 million increase in cash, due to an increase in other noncontrolling interests contributions, mainly due to the incremental contributions KMP received from its BOSTCO partners in 2013. KMI Dividends Our board of directors has adopted the dividend policy set forth in our shareholders' agreement, which provides that, subject to applicable law, we will pay quarterly cash dividends on all classes of our capital stock equal to the cash we receive from our subsidiaries and other sources less any cash disbursements and reserves established by a majority vote of our board of directors, including for general and administrative expenses, interest and cash taxes. The division of our dividends among our various classes of capital stock that were outstanding prior to December 26, 2012 (discussed further following) was in accordance with our charter. Our board of directors may declare dividends by a majority vote in accordance with our dividend policy pursuant to our bylaws. This policy reflects our judgment that our stockholders would be better served if we distributed to them a substantial portion of our cash. As a result, we may not retain a sufficient amount of cash to fund our operations or to finance unanticipated capital expenditures or growth opportunities, including acquisitions. Total quarterly dividend per share for the Three months ended period Date of declaration Date of record Date of dividend December 31, 2012 $ 0.37 January 16, 2013 January 31, 2013 February 15, 2013 March 31, 2013 $ 0.38 April 17, 2013 April 29, 2013 May 16, 2013 June 30, 2013 $ 0.40 July 17, 2013 July 31, 2013 August 15, 2013 September 30, 2013 $ 0.41 October 16, 2013 October 31, 2013 November 15, 2013 December 31, 2013 $ 0.41 January 15, 2014 January 31, 2014 February 18, 2014



As shown in the table above, we declared dividends of $1.60 per share for 2013, a 14% increase over our 2012 declared dividends of $1.40 per share.

On December 26, 2012, the remaining outstanding shares of our Class A, Class B, and Class C common stock were fully converted into Class P shares and as of December 31, 2012 only our Class P common stock was outstanding. Prior to the above common stock conversions, dividends on our Class A, Class B and Class C common stock (investor retained stock) generally were paid at the same time as dividends on our common stock and were based on the aggregate number of shares of common stock into which our investor retained stock was convertible on the record date for the applicable dividend. The portion of our dividends payable on the three classes of our investor retained stock varied among those classes, but the variations did not affect the dividends we paid on our common stock since the total number of shares of common stock into which our investor retained stock could convert in the aggregate was fixed on the closing of our initial public offering. Our board of directors may amend, revoke or suspend our dividend policy at any time and for any reason. There is nothing in our dividend policy or our governing documents that prohibits us from borrowing to pay dividends. The actual amount of dividends to be paid on our capital stock will depend on many factors, including our financial condition and results of operations, liquidity requirements, market opportunities, our capital requirements, legal, regulatory and contractual constraints, tax laws and other factors. In particular, distributions received from KMP continue to be the most significant source of our cash available to pay dividends. Our ability to pay and increase dividends to our stockholders is primarily dependent on distributions received from KMP and EPB. 92 -------------------------------------------------------------------------------- Our dividends are not cumulative. Consequently, if dividends on our common stock are not paid at the intended levels, our common stockholders are not entitled to receive those payments in the future. We pay our dividends after we receive quarterly distributions from KMP and EPB, which are paid within 45 days after the end of each quarter, generally on or about the 15th day of each February, May, August and November. Therefore, our dividend generally will be paid on or about the 16th day of each February, May, August and November. If the day after we receive KMP's and EPB's distributions is not a business day, we expect to pay our dividend on the business day immediately following.



Recent Accounting Pronouncements

Please refer to Note 17 "Recent Accounting Pronouncements" to our consolidated financial statements for information concerning recent accounting pronouncements.


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Source: Edgar Glimpses


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