425

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  August 29, 2014

KINDER MORGAN ENERGY PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation) 1-11234 (Commission File Number) 76-0380342 (I.R.S. Employer Identification No.)

1001 Louisiana Street, Suite 1000

Houston, Texas 77002

(Address of principal executive offices, including zip code)

713-369-9000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

þ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01     Other Events.

As previously reported in Kinder Morgan Partners, L.P’s. Current Report on Form 8-K filed August 12, 2014, Kinder Morgan, Inc. (KMI) has entered into a separate Agreement and Plan of Merger with each of Kinder Morgan Energy Partners, L.P. (KMP), Kinder Morgan Management, LLC (KMR) and El Paso Pipeline Partners, L.P. (EPB), pursuant to which KMI will acquire directly or indirectly all of the outstanding common units of KMP and EPB and all of the outstanding shares of KMR that KMI and its subsidiaries do not already own. The mergers and the other transactions contemplated by each of these merger agreements are collectively referred to as the “Transactions.” At the effective time of the mergers, (i) each publicly held KMR share will be converted into the right to receive 2.4849 shares of KMI common stock, (ii) through the election and proration mechanisms in the KMP merger agreement, on average, each common unit held by a public KMP unitholder will be converted into the right to receive 2.1931 shares of KMI common stock and $10.77 in cash, and (iii) through the election and proration mechanisms in the EPB merger agreement, on average, each common unit held by a public EPB unitholder will be converted into the right to receive 0.9451 shares of KMI common stock and $4.65 in cash. The consummation of each merger is contingent on the consummation of the other two mergers.  KMI included each of KMP, KMR and EPB in its historical consolidated financial statements and will continue to include such entities in its consolidated financial statements after the completion of the Transactions.  As described in Item 9.01(b) below, this Form 8-K includes, in Exhibit 99.1, KMI’s pro forma financial information to give effect to the impacts related to the above Transactions, which Exhibit 99.1 is incorporated into this Item 8.01 by reference.

Set forth below are certain risk factors relating to the KMP merger. Realization of any of the risks described below could have a material adverse effect on KMI’s, KMP’s or the combined organization’s respective businesses, financial condition, cash flows and results of operations and could result in a decline in the trading prices of their respective securities.

The mergers that are part of the Transactions are contingent upon each other, and the KMP merger is subject to other substantial conditions and may not be consummated even if the required KMI stockholder and KMP unitholder approvals are obtained.

Completion of the KMP merger is contingent upon completion of the KMR merger and the EPB merger, and vice versa. No merger will occur unless all three mergers occur. The KMR merger and the EPB merger are subject to the satisfaction or waiver of their own conditions, including approval of KMP merger agreements by KMR’s shareholders and EPB’s unitholders, some of which are out of the control of KMI and all of which are out of the control of KMP. Further, KMI’s stockholders must approve an amendment to KMI’s certificate of incorporation to increase the number of authorized shares of KMI common stock and must approve the issuance of KMI common stock in the three mergers.

The KMP merger agreement contains other conditions that, if not satisfied or waived, would result in the merger not occurring, even though the KMI stockholders and the KMP unitholders may have voted in favor of the merger-related proposals presented to them. Satisfaction of some of these other conditions to the KMP merger, such as receipt of required regulatory approvals, is not entirely in the control of KMI or KMP. In addition, KMI and KMP can agree not to consummate the KMP merger even if all stockholder and unitholder approvals have been received. The closing conditions to the KMP merger may not be satisfied, and KMI or KMP may choose not to, or may be unable to, waive an unsatisfied condition, which may cause the KMP merger not to occur.

Because the exchange ratio is fixed and because the market price of KMI common stock will fluctuate prior to the consummation of the KMP merger, KMP unitholders who receive KMI common stock as part of the merger consideration cannot be sure of the market value of the KMI common stock they will receive in the KMP merger until the effective time of the KMP merger.

KMP unitholders who either make a stock election, mixed election or no election or who make a cash election that is subject to proration will receive KMI common stock as part of the merger consideration. The market value of the KMI common stock that such KMP common unitholders will receive in the KMP merger will depend on the trading price of the KMI common stock as of the 105 effective time of the KMP merger. The exchange ratio that determines the number of shares of KMI common stock that KMP unitholders will receive in the KMP merger is fixed. This means that there is no mechanism contained in the KMP merger agreement that would adjust the number of shares of KMI common stock that KMP unitholders will receive based on any decreases in the trading price of the KMI common stock. If the KMI common stock price as of the effective time of the KMP merger is less than the KMI common stock price as of the date that the KMP merger agreement was signed, then the market value of the consideration received by KMP unitholders will be less than contemplated at the time the KMP merger agreement was signed.

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KMI common stock price changes may result from a variety of factors, including general market and economic conditions, market expectations regarding the impact of the Transactions on KMI’s future financial performance, conditions affecting its industry generally or those of its customers, changes in KMI’s business, operations and prospects, and regulatory considerations. Many of these factors are beyond KMI’s and KMP’s control.

KMP unitholders may not receive the amount of cash consideration or stock consideration they elected to receive due to proration and adjustment, and therefore such unitholders may receive consideration having an aggregate value that is less than the aggregate value of consideration they elected to receive. KMP unitholders who make either a cash election or a stock election will be subject to proration if KMP unitholders, in the aggregate, elect to receive more or less cash consideration than the aggregate amount of cash consideration to be paid in the KMP merger. Accordingly, some of the consideration KMP unitholders receive in the KMP merger may differ from the type of consideration they elected to receive. The relative proportion of KMI common stock and cash that a KMP unitholder receives in the merger also may have an aggregate value that is higher or lower than the relative proportion of stock and cash that the KMP unitholder elected to receive.

The tax liability of a KMP unitholder as a result of the KMP merger could be more than expected.

As a result of the KMP merger, a KMP unitholder will recognize gain or loss for U.S. federal income tax purposes equal to the difference between the amount realized and its adjusted tax basis in its KMP common units. KMP unitholders who either make the stock election, mixed election or no election or who make a cash election that is subject to proration will receive KMI common stock as part of the merger consideration. Because the value of any KMI common stock received in the KMP merger will not be known until the effective time of the merger, a KMP unitholder who receives KMI common stock as full or partial consideration for its KMP common units will not be able to determine its amount realized, and therefore its taxable gain or loss, until such time. In addition, because prior distributions in excess of a KMP unitholder’s allocable share of KMP’s net taxable income decrease such KMP unitholder’s tax basis in its KMP common units, the amount, if any, of such prior excess distributions with respect to such KMP common units will, in effect, become taxable income to a KMP unitholder if the aggregate value of the consideration received in the KMP merger is greater than such KMP unitholder’s adjusted tax basis in its KMP common units, even if the aggregate value of the consideration received in the KMP merger is less than such KMP unitholder’s original cost basis in its KMP common units. Furthermore, a portion of this gain or loss, which portion will likely be substantial, will be separately computed and taxed as ordinary income or loss to the extent attributable to assets giving rise to depreciation recapture or other “unrealized receivables” or to “inventory items” owned by KMP and its subsidiaries.

The tax liability of a KMP unitholder as a result of the KMP merger may exceed the cash received by such unitholder in the KMP merger.

The receipt of KMI common stock, cash or a combination of KMI common stock and cash by KMP unitholders in exchange for KMP common units in the KMP merger will be treated as a taxable sale by such unitholders of such common units for U.S. federal income tax purposes. The amount of gain or loss recognized by each KMP unitholder in the KMP merger will vary depending on each KMP unitholder’s particular situation, including the amount of any cash and the fair market value of any KMI common stock received by such unitholder in the KMP merger, the adjusted tax basis of the KMP common units exchanged by such unitholder in the KMP merger and the amount of any suspended passive losses that may be available to a particular unitholder to offset a portion of the gain recognized by such unitholder. The amount of cash received by each KMP unitholder in the KMP merger will vary depending on whether such unitholder makes a stock, cash or mixed election, or no election, and whether such unitholder’s cash election or stock election is subject to proration and adjustment. Consequently, the gain recognized for U.S. federal income tax purposes by a KMP unitholder in the KMP merger may result in a tax liability in excess of the cash received by such unitholder in the KMP merger.

KMP is subject to provisions that limit its ability to pursue alternatives to the merger, could discourage a potential competing acquirer of KMP from making a favorable alternative transaction proposal and, in specified circumstances under the KMP merger agreement, could require KMP to pay a termination fee of $817 million to KMI.

Under the KMP merger agreement, KMP is restricted from entering into alternative transactions. Unless and until the KMP merger agreement is terminated, subject to specified exceptions, KMP is restricted from soliciting, initiating, knowingly facilitating, knowingly encouraging or knowingly inducing or negotiating, any inquiry, proposal or offer for a competing acquisition proposal with any person. Under the KMP merger agreement, in the event of a potential change by the KMGP conflicts committee, the KMR board or the KMGP board of its recommendation with respect to the KMP merger in light of a superior proposal or an intervening event, KMP must provide KMI with five days’ notice to allow KMI to propose an adjustment to the terms and conditions of the KMP merger agreement. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of KMP from considering or proposing that acquisition, even if such third party were prepared to pay consideration with a higher per unit market value than the market value of the consideration

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proposed to be received or realized in the KMP merger, or might result in a potential competing acquirer of KMP proposing to pay a lower price than it would otherwise have proposed to pay because of the added expense of the termination fee that may become payable in specified circumstances.

Under the KMP merger agreement, KMP may be required to pay to KMI a termination fee of $817 million if the KMP merger agreement is terminated under specified circumstances. If such a termination fee is payable, the payment of this fee could have material and adverse consequences to the financial condition and operations of KMP.

All directors and certain executive officers of KMP have certain interests that are different from those of KMP unitholders generally.

Some directors and executive officers of KMP have interests that may be different from, or be in addition to, the interests of unitholders of KMP generally.

The KMI common stock to be received by KMP unitholders as a result of the KMP merger has different rights from KMP common units.

Following completion of the KMP merger, KMP unitholders will no longer hold KMP common units, but will instead be stockholders of KMI. KMI is a corporation, and KMP is a limited partnership. There are important differences between the rights of KMP unitholders and the rights of KMI stockholders.

KMI and the other parties will incur substantial transaction-related costs in connection with the Transactions.

KMI and the other parties to the Transactions, including KMP, expect to incur a number of non-recurring transaction-related costs associated with completing the Transactions, which are currently estimated to total approximately $90 million, excluding expenses associated with expected financings, which expenses would be substantial. Non-recurring transaction costs include, but are not limited to, fees paid to legal, financial and accounting advisors, filing fees and printing costs. There can be no assurance that the elimination of certain costs due to the fact that KMP, KMR and EPB will no longer be public companies will offset the incremental transaction-related costs over time. Thus, any net cost savings may not be achieved in the near term, the long term or at all.

Failure to complete, or significant delays in completing, the KMP merger could negatively affect the trading prices of KMI common stock and KMP common units and the future business and financial results of KMI and KMP.

Completion of the KMP merger is not assured and is subject to risks, including the risks that approval of the merger by the KMP unitholders or by governmental agencies is not obtained or that other closing conditions are not satisfied. If the KMP merger is not completed, or if there are significant delays in completing the KMP merger, the trading prices of KMI common stock and KMP common units and the respective future business and financial results of KMI and KMP could be negatively affected, and each of them will be subject to several risks, including the following:

• the parties may be liable for damages to one another under the terms and conditions of the KMP merger agreement;

• negative reactions from the financial markets, including declines in the prices of KMI common stock or KMP common units due to the fact that current prices may reflect a market assumption that the KMP merger will be completed;

• having to pay certain significant costs relating to the KMP merger, including, in the case of KMP in certain circumstances, a termination fee of $817 million; and

• the attention of management of KMI and KMP will have been diverted to the KMP merger rather than each company’s own operations and pursuit of other opportunities that could have been beneficial to that company.

If the KMP merger is approved by KMP unitholders, the date that those unitholders will receive the merger consideration is uncertain.

Completing the proposed merger is subject to a number of conditions, not all of which are controllable or waiveable by KMI or KMP. Accordingly, if the KMP merger is approved by KMP unitholders, the date that those unitholders will receive the merger consideration depends on the completion date of the KMP merger, which is uncertain.

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IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT

This communication may be deemed to be solicitation material in respect of the proposed acquisition by Kinder Morgan, Inc. (“KMI”) of each of Kinder Morgan Energy Partners, L.P. (“KMP”), Kinder Morgan Management, LLC (“KMR”) and El Paso Pipeline Partners, L.P. (“EPB”) (collectively, the “Proposed Transactions”). KMI has filed with the Securities and Exchange Commission (“SEC”) a registration statement on Form S‑4, which contains a preliminary proxy statement for KMI and a preliminary proxy statement/prospectus for each of KMP, KMR and EPB The Registration Statement has not yet been declared effective by the SEC. Each of KMI, KMP, KMR and EPB plan to mail to their respective security holders, as applicable, a proxy statement or proxy statement/prospectus in connection with the Proposed Transactions following the Registration Statement being declared effective by the SEC. The registration statement, the preliminary KMI proxy statement and each preliminary proxy statement/prospectus contain important information about KMI, KMP, KMR, EPB, the Proposed Transactions and related matters. Investors and security holders are urged to read CAREFULLY the Registration Statement, THE APPLICABLE PROXY STATEMENT OR Proxy Statement/Prospectus AND ANY OTHER DOCUMENTS THAT HAVE BEEN FILED OR WILL BE FILED WITH THE SEC, INCLUDING THE DEFINITIVE KMI PROXY STATEMENT AND EACH DEFINITIVE PROXY STATEMENT/PROSPECTUS, IN CONNECTION WITH THE PROPOSED TRANSACTIONS OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT OR THE APPLICABLE PROXY STATEMENT/PROSPECTUS.

Investors and security holders will be able to obtain copies of the KMI proxy statement and each proxy statement/prospectus as well as other filings containing information about KMI, KMP, KMR and EPB, without charge, at the SEC’s website, http://www.sec.gov. Copies of documents filed with the SEC by KMI, KMP, KMR and EPB will be made available free of charge on Kinder Morgan, Inc.’s website at http://www.kindermorgan.com/investor/ or by written request by contacting the investor relations department of KMI, KMP, KMR or EPB at the following address: 1001 Louisiana Street, Suite 1000, Houston, Texas 77002, Attention: Investor Relations or by phone at (713)-369-9490 or by email at km_ir@kindermorgan.com.

NO OFFER OR SOLICITATION

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

PARTICIPANTS IN THE SOLICITATION

KMI, KMP, KMR and EPB, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies in respect of the Proposed Transactions. Information regarding the directors and executive officers of KMI is contained in KMI’s Form 10-K for the year ended December 31, 2013 and its proxy statement filed on April 9, 2014, each of which has been filed with the SEC. Information regarding the directors and executive officers of KMP’s general partner and KMR, the delegate of KMP’s general partner, is contained in KMP’s Form 10-K for the year ended December 31, 2013, which has been filed with the SEC. Information regarding the directors and executive officers of KMR is contained in KMR’s Form 10-K for the year ended December 31, 2013, which has been filed with the SEC. Information regarding the directors and executive officers of EPB’s general partner is contained in EPB’s Form 10-K for the year ended December 31, 2013, which has been filed with the SEC.

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Statements in this communication regarding the Proposed Transactions involving KMI, KMP, KMR and EPB, the expected timetable for completing the Proposed Transactions, the expected benefit of the Proposed Transactions, future financial and operating results, future opportunities for the combined company and any other statements about management’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the ability to consummate the Proposed Transactions; the ability to obtain requisite regulatory and shareholder or unitholder approval and the satisfaction of the other conditions to the consummation of the Proposed Transactions; the ability to realize anticipated synergies and cost savings; the potential impact of the announcement or consummation of the Proposed Transactions on relationships, including with employees, suppliers, customers and competitors; the ability to achieve revenue growth; the effects of environmental, legal, regulatory or other uncertainties; the effects of government regulations and policies and of the pace of deregulation of retail natural gas; national, international, regional and local economic

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or competitive conditions and developments; possible changes in credit ratings; capital and credit markets conditions; interest rates; the political and economic stability of oil producing nations; energy markets, including changes in the price of certain commodities; weather, alternative energy sources, conservation and technological advances that may affect price trends and demand; business and regulatory or legal decisions; the timing and success of business development efforts; acts of nature, accidents, sabotage, terrorism (including cyber attacks) or other similar acts causing damage greater than the insurance coverage limits of the combined company; and the other factors and financial, operational and legal risks or uncertainties described in KMI’s, KMP’s, KMR’s and EPB’s Annual Reports on Form 10-K for the year ended December 31, 2013 and other subsequent filings with the SEC. KMI, KMP, KMR and EPB disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication, other than as required by applicable law.

Item 9.01     Financial Statements and Exhibits.

(b) Pro Forma Financial Information.

The Unaudited Pro Forma Condensed Combined Balance Sheet of Kinder Morgan, Inc. as of June 30, 2014 and the Unaudited Pro Forma Condensed Combined Statements of Income for the six months ended June 30, 2014 and the year ended December 31, 2013 and Notes thereto are attached hereto as Exhibit 99.1 and incorporated herein by reference.

(d) Exhibits.

99.1 Unaudited Pro Forma Condensed Combined Balance Sheet of Kinder Morgan, Inc. as of June 30, 2014 and the Unaudited Pro Forma Condensed Combined Statements of Income for the six months ended June 30, 2014 and the year ended December 31, 2013 and Notes thereto.

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S I G N A T U R E

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KINDER MORGAN ENERGY PARTNERS, L.P.

By:	KINDER MORGAN G.P., INC.,
	its general partner

By:	KINDER MORGAN MANAGEMENT, LLC,
	its delegate

Dated: August 29, 2014	By:	/s/ Kimberly A. Dang
		Kimberly A. Dang Vice President

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EX-99.1

Exhibit 99.1

Kinder Morgan, Inc.

Unaudited Pro Forma Condensed Combined Financial Statements

In the Transactions, described as follows, KMI will acquire all of the outstanding common units of KMP and EPB and all the outstanding shares of KMR that KMI and its subsidiaries do not already own (referred to in these pro forma financial statements as “the publicly held units or shares”). At the effective time of the mergers, (i) each publicly held KMR share will be converted into the right to receive 2.4849 shares of KMI common stock, (ii) through the election and proration mechanisms in the KMP merger agreement, on average, each common unit held by a public KMP unitholder will be converted into the right to receive 2.1931 shares of KMI common stock and $10.77 in cash, and (iii) through the election and proration mechanisms in the EPB merger agreement, on average, each common unit held by a public EPB unitholder will be converted into the right to receive 0.9451 shares of KMI common stock and $4.65 in cash. The cash payments to the public unitholders of KMP and EPB, based on the respective publicly held units outstanding as of July 31, 2014, will total approximately $3.9 billion.

The unaudited pro forma condensed combined financial information has been developed by applying pro forma adjustments to the historical audited and unaudited consolidated financial statements of KMI. The historical consolidated financial statements of KMI consolidate KMP, EPB, and KMR, because KMI currently controls these entities. The unaudited pro forma condensed combined balance sheet as of June 30, 2014 of KMI has been prepared to give effect to the Transactions as if they had occurred on June 30, 2014. The unaudited pro forma condensed combined statements of income of KMI for the six months ended June 30, 2014 and year ended December 31, 2013, have been prepared to give effect to the Transactions as if they had occurred on January 1, 2013.

The Transactions will be accounted for in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) 810, Consolidation—Overall—Changes in a Parent's Ownership Interest in a Subsidiary (ASC 810). Because KMI controls KMP, EPB, and KMR both before and after the Transactions, the changes in KMI's ownership interest in KMP, EPB, and KMR will be accounted for as an equity transaction and no gain or loss will be recognized in KMI's consolidated statements of income resulting from the Transactions. In addition, the tax effects of the Transactions are presented in additional paid-in capital consistent with ASC 740, Income Taxes (ASC 740). Since the KMI historical financial information includes the accounts of KMP, EPB and KMR, the historical financial information of those entities has not been shown separately.

The unaudited pro forma condensed combined financial statements include pro forma adjustments that are factually supportable and directly attributable to the Transactions. In addition, with respect to the unaudited pro forma condensed combined statements of income, pro forma adjustments have been made only for items that are expected to have a continuing impact on the combined results.

The unaudited pro forma condensed combined financial statements should be read in conjunction with (i) the historical audited consolidated financial statements and related notes included in the respective Annual Reports on Form 10-K for the year ended December 31, 2013 for KMI, KMP, EPB and KMR; and (ii) the unaudited consolidated financial statements and related notes included in the respective Quarterly Reports on Form 10-Q for the six months ended June 30, 2014 for KMI, KMP, EPB and KMR.

The unaudited pro forma adjustments are based on available preliminary information and certain assumptions that KMI believes are reasonable under the circumstances. The unaudited pro forma condensed combined financial statements are presented for informational purposes only and are not necessarily indicative of the results that might have occurred had the Transactions taken place on June 30, 2014 for balance sheet purposes, and on January 1, 2013 for statements of income purposes, and are not intended to be a projection of future results. Actual results may vary significantly from the results reflected because of various factors. All pro forma adjustments and their underlying assumptions are described more fully in the notes to the unaudited pro forma condensed combined financial statements.

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Kinder Morgan, Inc. Unaudited Pro Forma Condensed Combined Balance Sheet As of June 30, 2014 (In Millions)
	KMI Historical			Pro Forma Adjustments				Combined Pro Forma
ASSETS
Current assets	$	3,367		$	90		(a)	$	3,495
				38			(b)
Property plant and equipment, net	37,607			—				37,607
Investments	5,862			—				5,862
Goodwill	24,653			—				24,653
Deferred charges and other assets	4,875			4,596			(c)	9,471
Total Assets	$	76,364		$	4,724			$	81,088
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities	$	6,487		$	90		(d)	$	11,256
				4,679			(e)
Long-term debt	34,521			(650		)	(e)	33,871
Deferred income taxes	4,554			(4,554		)	(c)	—
Other long-term liabilities and deferred credits	2,147			—				2,147
Total Liabilities	47,709			(435		)		47,274
Stockholders’ Equity
Class P shares	10			11			(f)	21
Additional paid-in capital	14,339			20,892			(f)	35,231
Retained deficit	(1,661		)	(2		)	(f)	(1,663		)
Accumulated other comprehensive loss	(68		)	(36		)	(f)	(104		)
Total Kinder Morgan, Inc.’s Stockholders’ Equity	12,620			20,865				33,485
Noncontrolling interests	16,035			(15,706		)	(f)	329
Total Stockholders’ Equity	28,655			5,159				33,814
Total Liabilities and Stockholders’ Equity	$	76,364		$	4,724			$	81,088

The accompanying notes are an integral part of this unaudited pro forma condensed combined financial statement.

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Kinder Morgan, Inc. Unaudited Pro Forma Condensed Combined Statement of Income For the Six Months Ended June 30, 2014 (In Millions, Except Per Share Amounts)
	KMI Historical			Pro Forma Adjustments				Combined Pro Forma
Revenues	$	7,984		$	—			$	7,984
Operating Costs and Expenses
Cost of sales	3,253			—				3,253
Other operating expenses	2,571			—				2,571
Total Operating Costs and Expenses	5,824			—				5,824
Operating income	2,160			—				2,160
Other Income (Expense)
Earnings from equity investments	199			—				199
Interest, net	(888		)	(45		)	(g)	(933		)
Other, net	5			—				5
Total Other (Expense) Income	(684		)	(45		)		(729		)
Income from Continuing Operations Before Income Taxes	1,476			(45		)		1,431
Income tax expense	(378		)	(139		)	(h)	(517		)
Net Income	1,098			(184		)		914
Net income attributable to noncontrolling interests	(527		)	524			(i)	(3		)
Net Income Attributable to Kinder Morgan, Inc.	$	571		$	340			$	911
Basic and Diluted Earnings Per Common Share	$	0.55						$	0.43		(j)(k)
Basic and Diluted Weighted-Average Number of Shares Outstanding	1,028			1,079			(j)	2,107			(j)(k)

The accompanying notes are an integral part of this unaudited pro forma condensed combined financial statement.

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Kinder Morgan, Inc. Unaudited Pro Forma Condensed Combined Statement of Income For the Year Ended December 31, 2013 (In Millions, Except Per Share Amounts)
	KMI Historical			Pro Forma Adjustments				Combined Pro Forma
Revenues	$	14,070		$	—			$	14,070
Operating Costs and Expenses
Costs of sales	5,253			—				5,253
Other operating expenses	4,827			—				4,827
Total Operating Costs and Expenses	10,080			—				10,080
Operating income	3,990			—				3,990
Other Income (Expense)
Equity in earnings of other equity investments	327			—				327
Interest, net	(1,675		)	(224		)	(g)	(1,899		)
Other, net	796			—				796
Total Other (Expense) Income	(552		)	(224		)		(776		)
Income from Continuing Operations Before Income Taxes	3,438			(224		)		3,214
Income tax expense	(742		)	(323		)	(h)	(1,065		)
Income from Continuing Operations	2,696			(547		)		2,149
Loss on Sale of Discontinued Operations, Net of Tax	(4		)	—				(4		)
Net Income	2,692			(547		)		2,145
Net income attributable to noncontrolling interests	(1,499		)	1,495			(i)	(4		)
Net Income Attributable to Kinder Morgan, Inc.	$	1,193		$	948			$	2,141
Basic and Diluted Earnings Per Common Share From Continuing Operations	$	1.15						$	1.01		(j)(k)
Basic and Diluted Weighted-Average Number of Shares Outstanding	1,036			1,079			(j)	2,115			(j)(k)

The accompanying notes are an integral part of this unaudited pro forma condensed combined financial statement.

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Kinder Morgan, Inc.

Notes to Unaudited Pro Forma

Condensed Combined Financial Statements

Note 1 - Basis of Pro Forma Presentation

The unaudited pro forma condensed combined financial statements (the “Unaudited Pro Forma Statements”) give effect to the Transactions as an equity transaction. The unaudited pro forma condensed combined balance sheet gives effect to the Transactions as if they had occurred on June 30, 2014. The unaudited pro forma condensed combined statements of income for the six months ended June 30, 2014 and the year ended December 31, 2013 give effect to the Transactions as if they had occurred on January 1, 2013. The unaudited pro forma condensed combined statement of income for the year ended December 31, 2013 does not include pro forma effects of the previously consummated acquisitions of American Petroleum Tankers and State Class Tankers acquired January 1, 2014, certain oil and gas properties from Goldsmith Landreth acquired June 1, 2013 and Copano Energy, L.L.C. acquired May 1, 2013, because the impact on pro forma net income attributable to KMI was deemed immaterial. The effects of these acquisitions are included in the historical financial statements of KMI since the respective dates of acquisition.

These Unaudited Pro Forma Statements are presented for illustrative purposes only. The pro forma adjustments are based upon available information and the assumptions described below. The Unaudited Pro Forma Statements are not necessarily indicative of what the actual results of operations or financial position of KMI would have been if the Transactions had in fact occurred on the dates or for the periods indicated, nor do they purport to project the results of operations or financial position of KMI for any future periods or as of any date. The Unaudited Pro Forma Statements do not give effect to any cost savings, operating synergies, or revenue enhancements expected to result from the Transactions or the costs to achieve these cost savings, operating synergies, and revenue enhancements.

The following is the estimated consideration for the Transactions calculated using actual share amounts (in millions, except per unit/share amounts):

Consideration
KMP public units exchanged (1)	303
Cash payment per KMP unit (2)	$	10.77
Cash portion of consideration	$	3,261
EPB public units exchanged (1)	138
Cash payment per EPB unit (2)	$	4.65
Cash portion of consideration	$	640
Total cash portion of consideration	$	3,901
Total KMP units exchanged (1)	303
KMP exchange ratio per unit (2)	2.1931
KMI common stock assumed to be issued	664
Total EPB units exchanged (1)	138
EPB exchange ratio per unit (2)	0.9451
KMI common stock assumed to be issued	130
Total KMR shares exchanged (1)	115
KMR exchange ratio per share	2.4849
KMI common stock assumed to be issued	285
Total KMI common stock assumed to be issued	1,079
KMI Class P common share closing price as of August 22, 2014	$	40.81
Fair value of equity portion of consideration (3)	$	44,052
Total consideration (excluding debt assumed) (3)	$	47,953

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____

(1) Reflects publicly held KMP and EPB units and KMR shares outstanding as of July 31, 2014.

(2) Reflects the average cash payment amount per unit and the average exchange ratio per unit to be received by the public KMP or EPB unitholders by reason of the election and proration provisions of the KMP and EPB merger agreements.

(3) A $1 change in the price of a share of KMI common stock would change the total consideration by $1.1 billion, and the deferred tax asset and additional paid-in capital by approximately $0.3 billion for purposes of these Unaudited Pro Forma Statements.

Note 2 - Pro Forma Adjustments and Assumptions

Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments

(a) Reflects the excess cash related to estimated borrowings of $4,679 million under a 364-day committed bridge loan, less (i) $3,901 million cash portion of the KMP and EPB consideration; (ii) $650 million for the extinguishment of a previously existing term loan facility; and (iii) $38 million of deferred financing costs. The $90 million of excess cash will be used to fund transaction costs which are reflected as a current liability. See footnote (d) below.

(b) Reflects a $38 million increase in deferred financing costs associated with the 364-day committed bridge loan incurred as a direct result of the Transactions.

(c) Reflects the estimated impact on deferred income taxes resulting from the Transactions using KMI’s statutory federal and state tax rate of 36.5%. The amount reflects a net adjustment of $9.6 billion to deferred income taxes, $8.7 billion of which relates to the effects of the change in ownership and the step-up in tax basis as a result of KMI’s acquisition of the publicly held interests in KMP and EPB, resulting in a deferred tax asset. The remainder of the adjustment relates to estimated changes to other temporary differences and estimated changes to KMI’s effective state tax rate. This adjustment also includes the elimination of $464 million in deferred charges associated with previously consummated transactions between entities under common control related to deferred taxes. The deferred income tax impact is an estimate based on preliminary information and assumptions used in preparing these Unaudited Pro Forma Statements and is subject to change.

(d) Reflects estimated transaction costs of $90 million directly attributable to the Transactions. The transaction costs include fees related to financialadvisory, legal services and other professional fees to be paid in 2014 using a portion of the 364-day committed bridge loan proceeds. As the Transactions involve the acquisition of noncontrolling interest accounted for as an equity transaction, these costs will be recognized as an adjustment to additional paid-in capital, net of the estimated tax benefit, during the periods in which services are rendered.

(e) Reflects the issuance of a 364-day committed bridge loan to fund the cash portion of the KMP and EPB consideration and to pay related transaction costs. The proceeds received from the 364-day bridge loan include an amount that will be used to extinguish a previously existing $650 million term loan facility which, pursuant to the existing credit agreement, is required to be repaid as a result of the Transactions. In addition, the Transactions result in the termination of the existing KMI, KMP and EPB revolving credit facilities which had a combined outstanding balance of $1,333 million as of June 30, 2014 and are reflected as current liabilities in the KMI historical balance sheet. Management expects to replace the existing revolving credit facilities with a replacement revolving credit facility with terms substantially consistent with the existing KMP revolving credit facility. This replacement revolving credit facility is not reflected in these Unaudited Pro Forma Statements.

(f) The Transactions, which involve a change in KMI’s ownership interests in its subsidiaries KMP, EPB and KMR, have been accounted for as equity transactions in accordance with ASC 810. As described in Note 2(c), the Transactions resulted in the recognition of a deferred tax asset totaling $9.6 billion. This tax impact is presented as an increase to additional paid-in capital consistent with the accounting for tax effects of transactions with noncontrolling shareholders pursuant to ASC 740. The following table reflects pro forma adjustments to components of Total Stockholders’ Equity (in millions):

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	Class P shares		Additional paid-in capital			Retained deficit			Accumulated other comprehensive loss			KMI’s Stockholders’ Equity			Non- controlling interests (1)			Total Stockholders’ Equity
Shares issued for the Transactions	$	11	$	(11	)	$	—		$	—		$	—		$	—		$	—
Cash consideration	—		(3,901		)	—			—			(3,901		)	—			(3,901		)
Transaction costs, net of tax (see Note 2(d))	—		(57		)	—			—			(57		)	—			(57		)
Deferred tax adjustments (see Note 2(c))	—		9,099			—			20			9,119			—			9,119
Eliminate noncontrolling interests to reflect historical cost	—		15,762			—			(56		)	15,706			(15,706		)	—
Write-off term loan unamortized debt costs	—		—			(2		)	—			(2		)	—			(2		)
Total pro forma adjustment	$	11	$	20,892		$	(2	)	$	(36	)	$	20,865		$	(15,706	)	$	5,159

____

(1)Reflects the June 30, 2014 book value of the publicly held interests in KMP, EPB and KMR.

Unaudited Pro Forma Condensed Combined Statements of Income Adjustments

(g) Reflects incremental interest expense, including amortization of deferred financing costs associated with the 364-day committed bridge loan and the required repayment of the $650 million term loan facility, directly attributable to the Transactions. This incremental debt is expected to aggregate to $4,679 million with a stated interest rate of LIBOR plus an accelerating margin (resulting in weighted-average interest rates of 2.53% for the six months ended June 30, 2014 and 2.16% for the year ended December 31, 2013 for purposes of these Unaudited Pro Forma Statements). A change of 0.125% in the effective interest rate on the incremental debt would cause a change in annual interest expense of $4 million, net of income tax.

The following are the pro forma adjustments to interest expense (in millions):

	Six Months Ended June 30, 2014			Year Ended December 31, 2013
Interest expense on debt incurred for the Transactions (1)	$	(59	)	$	(101	)
Amortization of debt issuance costs (2)	—			(38		)
Fee escalations (3)	—			(117		)
Remove interest on extinguished term loan (see Note 2(e))	13			28
Remove amortization of debt issuance costs of extinguished term loan (see Note 2(e))	1			4
Pro forma adjustments to interest expense	$	(45	)	$	(224	)

____

(1) Reflects incremental interest expense associated with the debt incurred for the Transactions as if that debt was outstanding for the six months ended June 30, 2014 and the year ended December 31, 2013.

(2) Reflects amortization of the incremental debt issuance costs on the debt incurred as a direct result of the Transactions using the effective interest method.   

(3) Reflects certain escalating fees, including duration and funding fees, that would be recognized as interest expense if the borrowings under the 364-day committed bridge loan were to remain outstanding for the maximum term.

(h) Reflects estimated income tax expense using KMI’s statutory federal and state income tax rate of 36.5%.

For the six months ended June 30, 2014, the amount reflects the combined effects of (i) $163 million of income tax expense on the income previously attributable to KMP’s and EPB’s noncontrolling interest holders that was not previously subject to corporate income taxes; (ii) $17 million of tax benefit related to the interest expense on the debt incurred as a direct result of the Transactions; and (iii) $7 million to reverse, as a result of the Transactions, the impacts of certain tax expense recorded during the six month period ended June 30, 2014.

For the year ended December 31, 2013, the amount reflects the combined effects of (i) $466 million of income tax expense on the income previously attributable to the KMP’s and EPB’s noncontrolling interest holders that was not previously subject to corporate income taxes; (ii) $83 million of tax benefit related to the interest expense on the debt incurred as a direct result of the Transactions; and (iii) $60 million to reverse, as a result of the Transactions, the impacts of certain tax expense recorded during 2013.

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(i) Reclassifies net income previously allocated to noncontrolling interests related to the publicly held KMP and EPB common units and publicly held KMR shares to net income attributable to KMI.

(j) Reflects the 1,079 million shares of KMI common stock assumed to be issued in the Transactions were outstanding as of January 1, 2013.

(k) For the six months ended June 30, 2014 and the year ended December 31, 2013, for both historical and these Unaudited Pro Forma Statements, the following potential common stock equivalents were antidilutive and, accordingly, are excluded from the determination of diluted earnings per share (in millions on a weighted-average basis):

	Six Months Ended June 30, 2014	Year Ended December 31, 2013
Unvested restricted stock awards	7	4
Outstanding warrants to purchase KMI common stock	325	401
Convertible trust preferred securities	10	10

IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT

This communication may be deemed to be solicitation material in respect of the proposed acquisition by Kinder Morgan, Inc. (“KMI”) of each of Kinder Morgan Energy Partners, L.P. (“KMP”), Kinder Morgan Management, LLC (“KMR”) and El Paso Pipeline Partners, L.P. (“EPB”) (collectively, the “Proposed Transactions”). KMI has filed with the Securities and Exchange Commission (“SEC”) a registration statement on Form S‑4, which contains a preliminary proxy statement for KMI and a preliminary proxy statement/prospectus for each of KMP, KMR and EPB The Registration Statement has not yet been declared effective by the SEC. Each of KMI, KMP, KMR and EPB plan to mail to their respective security holders, as applicable, a proxy statement or proxy statement/prospectus in connection with the Proposed Transactions following the Registration Statement being declared effective by the SEC. The registration statement, the preliminary KMI proxy statement and each preliminary proxy statement/prospectus contain important information about KMI, KMP, KMR, EPB, the Proposed Transactions and related matters. Investors and security holders are urged to read CAREFULLY the Registration Statement, THE APPLICABLE PROXY STATEMENT OR Proxy Statement/Prospectus AND ANY OTHER DOCUMENTS THAT HAVE BEEN FILED OR WILL BE FILED WITH THE SEC, INCLUDING THE DEFINITIVE KMI PROXY STATEMENT AND EACH DEFINITIVE PROXY STATEMENT/PROSPECTUS, IN CONNECTION WITH THE PROPOSED TRANSACTIONS OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT OR THE APPLICABLE PROXY STATEMENT/PROSPECTUS.

Investors and security holders will be able to obtain copies of the KMI proxy statement and each proxy statement/prospectus as well as other filings containing information about KMI, KMP, KMR and EPB, without charge, at the SEC’s website, http://www.sec.gov. Copies of documents filed with the SEC by KMI, KMP, KMR and EPB will be made available free of charge on Kinder Morgan, Inc.’s website at http://www.kindermorgan.com/investor/ or by written request by contacting the investor relations department of KMI, KMP, KMR or EPB at the following address: 1001 Louisiana Street, Suite 1000, Houston, Texas 77002, Attention: Investor Relations or by phone at (713)-369-9490 or by email at km_ir@kindermorgan.com.

NO OFFER OR SOLICITATION

This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

PARTICIPANTS IN THE SOLICITATION

KMI, KMP, KMR and EPB, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies in respect of the Proposed Transactions. Information regarding the directors and executive officers of KMI is contained in KMI’s Form 10-K for the year ended December 31, 2013 and its proxy statement filed on April 9, 2014, each of which has been filed with the SEC. Information regarding the directors and executive officers of KMP’s general partner and KMR, the delegate of KMP’s general partner, is contained in KMP’s Form 10-K for the year ended December 31, 2013, which has been filed with the SEC. Information regarding the directors and executive officers of KMR is contained in KMR’s Form 10-K for the year ended December 31, 2013, which has been filed with the SEC. Information regarding the directors and executive

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officers of EPB’s general partner is contained in EPB’s Form 10-K for the year ended December 31, 2013, which has been filed with the SEC.

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Statements in this communication regarding the Proposed Transactions involving KMI, KMP, KMR and EPB, the expected timetable for completing the Proposed Transactions, the expected benefit of the Proposed Transactions, future financial and operating results, future opportunities for the combined company and any other statements about management’s future expectations, beliefs, goals, plans or prospects constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: the ability to consummate the Proposed Transactions; the ability to obtain requisite regulatory and shareholder or unitholder approval and the satisfaction of the other conditions to the consummation of the Proposed Transactions; the ability to realize anticipated synergies and cost savings; the potential impact of the announcement or consummation of the Proposed Transactions on relationships, including with employees, suppliers, customers and competitors; the ability to achieve revenue growth; the effects of environmental, legal, regulatory or other uncertainties; the effects of government regulations and policies and of the pace of deregulation of retail natural gas; national, international, regional and local economic or competitive conditions and developments; possible changes in credit ratings; capital and credit markets conditions; interest rates; the political and economic stability of oil producing nations; energy markets, including changes in the price of certain commodities; weather, alternative energy sources, conservation and technological advances that may affect price trends and demand; business and regulatory or legal decisions; the timing and success of business development efforts; acts of nature, accidents, sabotage, terrorism (including cyber attacks) or other similar acts causing damage greater than the insurance coverage limits of the combined company; and the other factors and financial, operational and legal risks or uncertainties described in KMI’s, KMP’s, KMR’s and EPB’s Annual Reports on Form 10-K for the year ended December 31, 2013 and other subsequent filings with the SEC. KMI, KMP, KMR and EPB disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication, other than as required by applicable law.

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