ENEVA Corporate Presentation ? November 2014
Transcript of ENEVA Corporate Presentation ? November 2014
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November, 2014
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Company Overview
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One of the largest private sector power generators in Brazil
ENEVA currently operates 2.4GW in coal and gas-fired power plants (2.9 GW until
Integrated energy platform, with privileged access to natural resources
Only private power generator in Brazil with access to onshore gas
Ongoing restructuring initiatives
- Reorganization of the companys structure and continuous TPPs operation stabiliz
- Strengthening of the companys capital structure
Competitive greenfield portfolio
Licensed coal, gas and wind power generation projects
Company overview
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A Brazilian thermal generator with asset exposure to energy fossil fuels (natural gas
ENEVA at a glance
2.9GW inflation-protected, long-term PPAs
o 2.4GW in operation
o 518MW under construction
Long-term PPAs guarantee R$2.2 billion in annual inflation-adjusted
capacity payments
PPAs provide hedge against commodity price exposure
Integrated gas E&P assets supply up to 8.4MM m/day to ENEVAspower
plants
Competitive portfolio of licensed greenfield wind, coal and gas fired
capacity
Company Description
ENEVA ownership structure
Geographic Footp
Amapari EnergiaENEVA 51% / Eletronorte 49%
Diesel - 23MW
ItaqENEVCoal
Natural GasExploratory
blocksContracted production
of 8.4MM m3/day
Free Float (37.1%)
42.9%20.0%
Other
ENEVA ParticipaesENEVA/E.ON
Joint Venture
50%
50%
BNDES
8.6%
EikeBatista
Controlling Block
28.5%
Note: 1) Ownership structure assumes future ENEVA Participaes (JV ENEVA/E.ON) incorporation, as disclosed on the Material Fact Notice as of July 3, 2013
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Pecm I
Capacity: 720MW
Fix. Rev.: R$600.3MM /year
CVU: R$99/MWh
Auction: A-5/2007
COD: Dec, 2012
Capacity: 360MW
Fix. Rev.: R$317.3MM/year
CVU: R$103/MWh
Auction: A-5/2007
COD: Feb, 2013
Itaqui
Note: (1) Fixed revenues are indexed to inflation index IPCA (Database: Nov, 2013)
Capaci
Fix. Re
CVU: R
Auctio
COD: O
Coal generation portfolio overview1.4 GW of installed capacity in full operation
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Parnaba II2 GE GTs x 168,8MW+ 1 GE ST x 181MW
Parnaba I4 GE GTs x 168,8MW
Parnaba III1 GE GT x 168,8MW
+ 1 Wrtsil GM x 7,3MWParnaba IV
3 Wrtsil GMs x 18MW
Capacity: 56MW
46% efficiency
Fix. Rev:R$54MM/year
CVU: R$69/MWh
Free market
COD: Dec, 2013
Capacity: 178MW
38% efficiency
Fix. Rev: R$98MM/year
CVU: R$160/MWh
Auction: A-5/2008
COD: Dec, 2013
Capacity: 676MW
37% efficiency
Fix. Rev: R$443MM/year
CVU: R$114/MWh
Auction: A-5/2008
COD: Apr, 2013
Parnaba IV Parnaba III Parnaba I
Notes: (1) Bertin project developed by ENEVA; (2) Fixed revenues indexed to infl ation index IPCA (Database: Nov, 2013)
Parnaba Complex overviewA unique case in Brazil power generation sector with 910MW already in operation
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Cambuhy/E.ON investment in Parnaba Gs NaturalSecuring ENEVAs power plants gas supply
In 2H13, ENEVA and E.ON led efforts to rescue PGN from
OGPsjudicial recovery process and secure the gas supply for
ENEVAspower plants
o Cambuhy Investimentos was brought onboard to replace OGP in
the shareholding structure of PGN
o Reinforcing its commitment to Brazil, E.ON agreed to join the
control group of PGN
In Feb, 2014, Cambuhy and E.ON carried out a Capital
Increase at PGN amounting to R$250MM, guaranteeing funds
to cover PGNscapex needs in 2014o Additional R$750MM in LT financing were secured
Cambuhy also entered into a share purchase agreement to
buy OGPsremaining stake at PGN for R$200MM
o This last step of the transaction will be completed as part of
OGPsjudicial recovery process
ENEVA and E.ON have the right for a 2-year term to increase
their joint participation at PGN to 33.3%
After execution of the sale and
18.2%
Parnaba Gs Na
9.1%
Controlling Block (1
18.2%9.1% 36.4%
Controlling Block (63.7%)
Current
Successful rescue plan of PGN
GaBTG 30%
Shareholding Structure
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Only part of Parnaba Basin is yet l icensed an
Declaration of commerciality for 3 gas field
Azul and Gavio Branco
o Santa Vitria discovery in Jan, 2014 (well OGX
New management team led by Pedro Zinner
o New COO Hubert Mainitz (E.ON E&P)
Challenges
o High dispatch scenario increases draw on
analysis on optimization of reservoir managem
o Additional investment may be required to keep
Overview
Parnaba Gs Natural (PGN)3 commercial gas fields fully committed to supply ENEVA power plants
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Operating & Financial Performance of Power
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Operating Costs
Operational Performance (Itaqui)
EBITDA (R$MM)
Availability
Sources: ONS & Company
Ash disposal solution hit Operational costs in the quarter
NOTE: 1) Does not include Depreciation & Amortization.
3Q14
Operating Costs (R$ million) 21.1
Gross Energy Generated (GWh) 679.5
Operating Costs per Gross EnergyGenerated (R$/MWh)
31.1
63%
83% 84%
87%
75% 77%
87%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
3Q14 (Adj) excludes unavailability costs reimbursemen
20.1-1.8 -6.1
100.5
-0.6
112.1
EBITDA 2Q14 NetOperatingRevenues
OperatingCosts
UnavailabilityAdjustments
OperatingExpenses
EBITDA 3Q14
Highest historical availability recorded in
Significant decrease in Operating coimproved availability
Operating revenues positively impact
leading to higher variable revenues
decrease in Energy for resale (-R$22.2M
Operating costs increased by higher
plants higher availability (+R$14.5MM)
reflecting incremental cost for ash dispos
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Operational Performance (Parnaba I)
Sources: ONS & Company
Reduced availability undermined 3Q14 EBITDA despite lower fuel costs
NOTE: 1) Does not include Depreciation & Amortization.
N.A.
91%
97% 96% 99% 98%
94%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
50.3-35.8
-11.017.8
-0.9
20.3
EBITDA 2Q14 NetOperatingRevenues
OperatingCosts
UnavailabilityAdjustments
OperatingExpenses
EBITDA 3Q14
3Q14
Operating Costs (R$ million) 189.8
Gross Energy Generated (GWh) 1,173
Operating Costs per Gross EnergyGenerated (R$/MWh)
161.8
3Q14 (Adj) excludes unavailability costs adjustment (R
Availability reduction since mid-May 201
by Parnaba Complex
Operating revenues negatively impact
which compromised variable revenues in
Despite lower fuel costs (-R$15.9MM), a
availability, operating costs increased ma
o Unavailability costs (+R$12.1MM, ne
Court ruling, accounted in Sep, 2014)
o Lease cost (+R$13.9MM), due to fixe
contract readjustment
Availability
Operating CostsEBITDA (R$MM)
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Operational Performance (Pecm I)
NOTES: 1) Figures consider 100% of Pecm I; 2) Does not include Depreciation & Amortization.
Revenues and costs compromised by GU01 stator burnout on Aug 25, 2014
Sources: ONS & Company
72%
41%
66%51%
83%77%
70%
72%
32%
73%
26%
80%71%
50%
N.A.
73%
59%
78%
86%83% 86%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Pecm I UG1 UG2
32.5 -20.3 -7.1
237.0
1.9
244.1
EBITDA 2Q14 Net OperatingRevenues
OperatingCosts
UnavailabilityAdjustments
OperatingExpenses
EBITDA 3Q14
UG01 stator burnout on Aug 25, 2014 h
2014, GU02 recorded 2ndbest historical ava
Operating revenues negatively impacted by
which decreased variable revenues in the q
Despite lower fuel costs (-R$25.0MM), a
availability, operating costs increased main
o Unavailability costs (+R$14.4MM) an
(+R$3.5MM), both due to higher spot p
o Equipment and machinery repair (+R$4
3Q14 (Adj) excludes unavailability costs reimbursemen
3Q14
Operating Costs (R$ million) 26.4
Gross Energy Generated (GWh) 965.2
Operating Costs per Gross EnergyGenerated (R$/MWh)
27.4
Operating CostsEBITDA (R$MM)
Availability
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N.A. N.A. N.A.
100% 99%
77% 82%
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Operational Performance (Parnaba III)
NOTES: 1) Figures consider 100% of Parnaba III; 2) Does not include Depreciation & Amortization.
Sources: ONS & Company
Recurring negative EBITDA as a result of gas optimization at Parnaba Complex since
-8.4
-1.5
-17.0 18.7
-0.6
-8.8
EBITDA 2Q14 Net OperatingRevenues
OperatingCosts
UnavailabilityAdjustments
OperatingExpenses
EBITDA 3Q14 3Q14 (Adj) excludes unavailability costs adjustment (R
3Q14
Operating Costs (R$ million) 63.4
Gross Energy Generated (GWh) 233.1
Operating Costs per Gross EnergyGenerated (R$/MWh)
272.2
Operating CostsEBITDA (R$MM)
Availability reduction since mid-May 201
by Parnaba Complex
Operating revenues negatively impact
which decreased variable revenues in th
offset by higher revenue from surplus ba
Despite lower fuel costs (-R$6.2MM), a
availability, Operating costs up main
Unavailability costs (+R$23.4MM), whic
spot prices (+46.3%)
Availability
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Regulatory Update
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Background: Delayed 450MW PPA, with initial supply date as of
Mar 2014
Balanced negotiation with Aneel, preserving the PPA and
mitigating potential high regulatory/contractual penalty
Main agreement conditions:
o Conclude construction by Dec 31, 2014
o 20-year PPAs start date postponed to Jul 1, 2016
o Penalty amounting to R$333MM, to be paid:
In annual installments as of 2022
Through the partial reduction in annual fixed revenues over the
term of PPAs
o Commitment to close the cycle of Parnaba I OCGT in next 5 years
(extendable for +5 years by Aneel), subject to certain conditions
precedent, such as:
Sale of energy in the regulated market
Ability to secure long-term financing for the project
Parnaba II Agreement with Aneel
Pecm II and Parnaba I & III
Regulatory developments (1)Parnaiba II PPA restructuring
Gas optimization of Parnaba Thermo
by Aneel: Parnaba III and 2 gastemporally substituted by Parnaba I
available.
All plants PPAs terms and conditions
gas production, as recommended
development of other gas areas (4.4-4
Parnaba Gas Optimization
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Unavailability charges were being paid on an hourly-based methodology, while PPAs provided for a 60-month rolling
In Jan 2014 and Sep 2014, Federal Court ruled in favor of ENEVA, in line with PPAs terms and conditions
All operating plants currently protected against hourly-based unavailability charges
Unavailability costs paid amount to +R$315MM1, 2
In Sep 2014, Aneel granted to Pecm I and Itaqui reimbursement of unavailability charges overpayment. On No
received approx. R$336MM
Pecm II, Parnaba I and Parnaba III will request to Aneel to be also reimbursed for overpayment
Plant 100% Ownership adjusted
Itaqui R$100.6MM R$100.6MM
Pecm I R$247.4MM R$123.7MM
Pecm II R$61.0MM R$30.5MM
Parnaba I R$61.9MM R$43.3MM
Parnaba III R$39.6MM R$20.8MM
Total R$510.5MM R$318.9MM
Regulatory developments (2)Unavailability charges (ADOMP) now calculated and paid as provided for in PPAs
NOTES: 1) Consider hourly-based methodology for unavailability charges until Aug 2014; 2) Does not consider amounts paid since Federal Court decisions.
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Financial Stabilization Update
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May 12, 2014 2Q14 / 3Q14
Signing of term-sheet with banks for:
R$1.5Bi capital increase
o Phase I:R$316.5MM cash-only; and
o Phase II:R$1.5Bi minus funds raised on
Phase I (cash or asset capitalization or
debt conversion)
HoldCo. Debt renegotiation
o R$600-700MM debt drop-down to
ENEVAssubsidiaries/projects
o 5-year maturity extension of remaining
HoldCo. debt (approx. R$1.5Bi), with
amortization starting only in Jun, 2017
Sale of Pecm II
o Backstop guarantee by E.ON of up to
R$400MM for 50% of the asset
R$100MM short-term bridge financingto Pecm II disbursed
Capital Increase Phase I concluded,
raising R$174MM (R$120MM by E.ON)
Shareholding Structure after CI I
Pecm II partial sale by executing
E.ON backstop guarantee (R$408MM)
Successful regulatory outcomes
o Parnaba II Agreement with Aneel
o All plants protected from hourly-based
unavailability charges
42.9%20.0%
FreeFloat
EikeBatista
Controlling Block
37.1%
Financial Stabilization on course
4Q14
R$300MM long-tPecm II approv
Launch of Capita
comprising of
o Cash;
o Debt conversio
o Asset capitaliza
Execution/effecdown/roll over
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Brazilian Power Market and Greenfield Por
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Southeast Reservo
~70% of total storage ca
Source: ANEEL
Brazils Generation Capacity: 136 GW
Breakdown by source April, 2014
Brazil is highly dependent on hydro generation with increasingly faster depletion of re
Brazilian energy matrix
63,5%10,5%
2,5%
1,5%
2,2%
19,8%
Hydro Gas Coal Nuclear Wind Others
67%
75%
38%
43%39%
40% 43% 42% 43% 40%
3
20%
30%
40%
50%
60%
70%
80%
90%
Jan Feb Mar Apr May Jun Jul A
Average 2007-2011 2012
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ENEVA fi ld tf li
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ParnabaComplex
Integrated to natural gas resources
Located in a tax-advantaged region
Ventos WindComplex
Located in one Brazilsbest wind resource areas
Attractive load factor
Just 30km from grid connection
Land ownership assured
Au(Coal + Gas)
Located at a port with a regasification terminal buildlicense
150km from Campos Basin natural gas accumulations
Environmental licensed to both coal and gas operations
Sul & Seival Integrated to the Seival Mine (proven reserves: 152 M ton)
Low operation costs
Power
supply-demand
unbalanced
Hydropower
concentrated
matrix
Spot prices at
historical highs
Demand for base-
load generation2 3 4 51
Sul727 MW
ParnabaComplex
2,166 MW
Se600
Solar 1 MW
ENEVAs greenfield portfolioAttractive licensed greenfield projects in various development stages
P b I Cl i f th l (1)
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Part of Parnaba II Agreement settled with Aneel in Sep, 2014
Bottoming of open cycle gas turbines from Parnaiba I powerplant provides extra 360MW
Competitive project as no additional gas needed
Installation Environmental License issued
Plug and Play: 500kV electrical substation and water supply
already built
Known technology, original design of Parnaiba Generation
Complex done to enable modular expansion, leading toefficient implementation and operation
o ENEVA recent experience in Parnaba II combined-cycle plant at
neighboring site
Cost sharing efficiency (O&M, administrative, HSSE, spare
parts etc.) with Parnaba Generation Complex make the project
even more competitive
Highlights Parnaba Site
Bottoming #1
Note:(1) To enable expansion additional fuel mainly for PPA/contract harmonization and internal consumption
Parnaba I: Closing of the cycle (1)Highly competitive expansion to existing site
Parnaba I: Closing of the cycle (2)
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Net power output: 352,8 MW
Plantsupside efficiency: 51% (previously 37%)
Additional gas consumption: zero
Contractor: TBD (first phase performed by Duro Felguera)
Implementation schedule: 36 months
CAPEX: approx. R$1.75 billion
Target capital structure: 70/30, with BNDES financing
Target IRR: 15% real
Main equipment/delivery time
o Steam Turbine + Generator: 18 months
o Heat Recovery Steam Generator (boilers): 14 months
o Cooling Tower: 13 months
o Pumps (feed water, condensate, cooling water): 13 months
New equipment
Parnaba I: Closing of the cycle (2)Highly competitive expansion to existing site
Disclaimer
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The material that follows is a presentation of general background information about ENEVA S.A. and its subsidiaries (collectively, ENE
the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty,
concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of this information.
This presentation may contain certain forward-looking statements and information relating to ENEVA that reflect the current view
Company and its management with respect to its performance, business and future events. Forward looking statements include, with
that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like may, p
expect, envisages, will likely result, or any other words or phrases of similar meaning. Such statements are subject to a numb
assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, object
and intentions expressed in this presentation. In no event, neither the Company, any of its affiliates, directors, officers, agents o
placement agents shall be liable before any third party (including investors) for any investment or business decision made or ac
information and statements contained in this presentation or for any consequential, special or similar damages.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities.
Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.
Recipients of this presentation are not to construe the contents of this summary as legal, tax or investment advice and recipients shou
in this regard.
The market and competitive position data, including market forecasts, used throughout this presentation were obtained from intern
publicly available information and industry publications. Although we have no reason to believe that any of this information or these
material respect, we have not independently verified the competitive position, market share, market size, market growth or other dat
by industry or other publications. ENEVA, the placement agents and the underwriters do not make any representation as to the accurac
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or i
written consent.
Disclaimer
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Thank you.www.eneva.com.br