eneva corporate presentation
TRANSCRIPT
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April, 2014
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Investment Thesis
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Investment Thesis
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 the end of year)
Integrated energy platform, with privileged access to natural resources
Only private power generator in Brazil with access to onshore gas
Short-term value triggers
- Reorganization of the companys structure and continuous TPPs operation stabilization
- Stronger role of E.ON, bringing technical expertise and cost discipline to ENEVA
Competitive greenfield portfolio
Licensed coal, gas and wind power generation projects
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A Brazilian thermal generator with asset exposure to energy fossil fuels (natural gas and coal)
ENEVA at a Glance
2.9GW inflation-protected, long-term PPAs
o 2.4GW in operation
o 517MW 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 ENEVAs power
plants
Competitive portfolio of licensed greenfield wind, coal and gas fired
capacity
Company Description
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ENEVA ownership structure
Geographic Footprint
Parnaba I ENEVA 70% / Petra 30% Natural Gas - 676MW
Amapari Energia ENEVA 51% / Eletronorte 49% Diesel - 23MW
Itaqui ENEVA 100% Coal - 360MW
Natural Gas Exploratory
blocks Contracted production
of 8.4MM m3/day
Pecm I ENEVA 50% / EDP 50% Coal - 720MW
Pecm II ENEVA 100% Coal - 365MW
Parnaba II ENEVA 100% Natural Gas - 517MW
Parnaba III ENEVA 70% / Petra 30%
Natural Gas - 176MW
Parnaba IV ENEVA 70% / Petra 30% Natural Gas - 56MW
Free Float (38.2%)
37.9% 23.9%
Other
MPX / E.ON Partipaes Joint Venture
50%
50%
BNDES
10.3%
Eike Batista
Controlling Block
27.9%
Solar Tau ENEVA 100% Solar - 1MW
Note: 1) Ownership structure assumes future MPX / E.ON Participaes JV incorporation, as disclosed on the Material Fact Notice as of July 3, 2013
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Company Overview
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Creation of MPX (2007)
1,080MW in the A-5 (2007)
IPO (USD1.1BN)
365MW in the A-5 (2008)
Parnaba Basin onshore exploratory blocks (2009)
Successful closing of E.ON partnership
Acquisition of greenfield projects
Beginning of commercial operations at Pecm I
Waivers received from the Regulatory Agency
Operational capacity reaches 2.4GW
E.ON stake increase to 36%, joining controlling block
Name changed to ENEVA
Signing of E.ON / Cambuhy recapitalization of Parnaba Gs Natural to secure gas delivery
Asset stabilization plan developed with very good imminent results
ICB Online criteria from the Regulatory Agency achieved
Asset stabilization ongoing, further improvements on availability in Jan, 2014
Successful injunction halting ADOMP in Jan, 2014
Recapitalization efforts
Balance Sheet strengthening
Further cost reduction measures
Successful start of drilling campaign in Parnaba (2010)
Parnaba II 517MW contracted in A-3 auction
Power supply contracts for Parnaba I secured (676MW), start of Parnaba complex development
2 fields in Parnaba declared commercial
Gavio Real and Gavio Azul with estimated production of up to 6MM m3/day
Unique Development Track, overcoming its Short Term Challenges
Key Milestones, Challenges & Outlook
2007 - 2009 2010 - 2011 2012
2013
2014
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2.4GW of coal and gas-fired power plants in operation
Operational Assets (1)
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Pecm I
Energy Source: Coal
ENEVA Stake: 50%
Installed Capacity: 720MW
Sold Energy: 615MW
Fixed Revenue: R$600.3MM p.a.
Start-up: May, 13
Energy Source: Coal
ENEVA Stake: 100%
Installed Capacity: 360MW
Sold Energy: 315MW
Fixed Revenue: R$317.3MM p.a.
Start-up: Feb, 13
Itaqui
Note: 1) Fixed revenues are indexed to inflation index IPCA (Database: Nov, 2013)
Energy Source: Coal
ENEVA Stake: 100%
Installed Capacity: 365MW
Sold Energy: 276MW
Fixed Revenue: R$284.9MM p.a.
Start-up: Oct, 13
Pecm II
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Parnaba I (OCGT)
Energy Source: Natural Gas
ENEVA Stake: 70%
Installed Capacity: 676MW
Sold Energy: 450MW
Fixed Revenue: R$445.9MM p.a.
Start-up: Apr, 13
Energy Source: Natural Gas
ENEVA Stake: 70%
Installed Capacity: 176MW
Sold Energy: 98MW
Fixed Revenue: R$99.0MM p.a.
Start-up: Oct, 13
Parnaba III (OCGT)
Energy Source: Natural Gas
ENEVA Stake: 70%
Installed Capacity: 56MW
Sold Energy: 46MW (Free Market)
Fixed Revenue: R$54.0MM p.a.
Start-up: Dec, 13
Parnaba IV
2.4GW of coal and gas-fired power plants in operation
Operational Assets (2)
Notes: 1) Fixed revenues are indexed to inflation index IPCA (Database: Nov, 2013); 2) 169MW already in operation
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Energy Source: Natural Gas
ENEVA Stake: 100%
Installed Capacity: 517MW
Sold Energy: 450MW
Fixed Revenue: R$373.7MM p.a.
Start-up: 2H14
Parnaba II (CCGT)
Note: 1) Fixed revenues are indexed to inflation index IPCA (Database: Nov, 2013)
Additional 517 MW under construction
Power Plant with COD in 2014
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Outstanding management capabilities
Financial strength and discipline
Sector know-how: E.ON E&P looks at a volume delivery of +170k
barrels/day and +60 licenses in GB and Norway
Tried and tested Parnaba experience, know-how of Parnaba Complex
rooted within PGN
Strong Shareholders
All Parnaba gas-fired power plants are supplied by Parnaba Gs Natural,
owner and operator of 8 onshore exploration blocks
ENEVA has a direct interest in PGN as key supplier of its TPPs
Declaration of commerciality with Development Plan for 3 gas fields:
Gavio Real, Gavio Branco and Gavio Azul
Gas supply agreements secured for 8.4MM m/day
R$250 million capital injection concluded in Feb, 2014
Highlights
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Integrated Natural Gas E&P
Strong competitive position in gas-fired generation
Parnaba Gs Natural
18.2% 9.1% 72.7%
Geographic Footprint
Note: (1) Ownership structure after execution of the sale and purchase agreement between OGP and Cambuhy, subject to approval by OGPs creditors, under its judicial recovery procedure, and authorization by ANP
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37 wells drilled, of which 26 have gas indications
o 18 wells with discoveries
o 8 wells with gas indications
Declaration of commerciality with Development Plan for 3 gas fields:
o Gavio Real
o Gavio Azul
o Gavio Branco
Gavio Real field is producing since Jan, 2013:
o 16 producing wells out of 5 clusters
o Daily Production: 6.6MM m/day of natural gas
o Connected to a 6.6MM m/day GTU Gas Treatment Unit (as of
today)
o All gas dedicated to ENEVAs Parnaba TPPs
Exploration Campaign
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Integrated Natural Gas E&P
2014 / 2015:
o Connection of 3 additional production wells and GTU expansion to
8.4MMm/day
o Gavio Branco production development and submission to ANP of
assessment plan for new discoveries (Mar, 2014)
Upcoming Events
Power Plant Parnaba I, Parnaba III
and Parnaba IV Parnaba II
Wells 16 19
Production Ramp-up (MM m/day)
6.6
8.4
Current 2H14
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Short-Term Value Triggers
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Operational Performance (Itaqui)
EBITDA (R$MM)
Availability
1st quarter of positive EBITDA since COD, due to increased
availability and reduced operating costs
EBITDA amounted R$24.2MM (EBITDA mg: 16.1%), mostly
attributable to:
o ICB Online reimbursement (R$17.2MM);
o Lower unavailability costs despite higher spot prices, as a result of
improved operational performance
o Reduction in variable cost per MWh (-18.7% QoQ)
Variable Revenue X Variable Cost (R$/MWh)
-95.3
-31.3
-5.9
24.2
1Q13 2Q13 3Q13 4Q13
Sources: ONS, Company estimates
Positive EBITDA driven by increased availability but also one-time events. Variable costs covered
by variable revenues
63%
83% 84% 87%
75%
1Q13 2Q13 3Q13 4Q13 1Q14
261
232
144 159
128 149
112
141
108 103 115
107 106 103 102 102 100 104 108 107 113 116
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
Variable Cost Variable Revenue
COD: Feb 5, 2013
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Operational Performance (Pecm II)
Startup on October 18, 2013
EBITDA amounted R$55.4MM (EBITDA mg: 37.8%) in the 4Q13,
mostly attributable to:
o Injunction granting Fixed Revenues from September until
commercial startup (R$31MM);
o Unavailability costs impacted by higher spot prices (R$22.3MM);
o ICB Online reimbursement (R$6.1MM).
Variable Revenue X Variable Cost (R$/MWh) Availability
Sources: ONS, Company estimates
Availability in the first 3 months higher than international benchmark. Recurring positive margin
on dispatch
N.A. N.A. N.A.
85%
96%
1Q13 2Q13 3Q13 4Q13 1Q14
92 99 111
114 118 122
Jan-13...Set-13 Oct-13 Nov-13 Dec-13
Variable Cost Variable Revenue
EBITDA (R$MM)
-10.7 -6.1 -8.3
55.4
1Q13 2Q13 3Q13 4Q13
COD: Oct 18, 2013
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Operational Performance (Parnaba I)
EBITDA (R$MM)
Availability
EBITDA amounted R$32.0MM (EBITDA mg: 14.9%), mostly
attributable to:
o Higher unavailability costs (R$17.5MM), primarily due to
stoppages to allow Parnaba III and Parnaba IV to be connected
to the grid (R$6MM);
o Variable cost control;
o Stable operations.
Variable Revenue X Variable Cost (R$/MWh)
Sources: ONS, Company estimates
-5.9
28.2
58.8
32.0
1Q13 2Q13 3Q13 4Q13
OBS: Dispatch margin captured by Parnaba Gs Natural
Unavailability costs impacted EBITDA, despite plants full capacity and stable operations
96% 91%
96% 96% 99%
1Q13 2Q13 3Q13 4Q13 1Q14
77 74 65
75 80 68 77 78 74 79
90
80 82 94 99 100 96 93 99 95 92
104
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
Variable Cost Variable Revenue
COD: Feb 1st, 2013 to
Apr 12, 2013
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Operational Performance (Pecm I)
EBITDA (R$MM)
Availability
NOTE: 1) Figures consider 100% of Pecm I.
EBITDA amounted R$61.7MM (EBITDA mg: 18.5%), mostly
attributable to:
o Lower Variable Revenue due to outage of Turbine #1 throughout
4Q13;
o Higher Unavailability Costs (R$83.9MM), despite accounting in
December in accordance with 60-month rolling average
unavailability (R$3.2MM);
o ICB Online reimbursement (R$107.8MM);
o Higher Fuel Costs (Coal: R$56.6MM; Diesel: R$12.3MM), inflated
due to shutting down and restarting processes from stoppages
o Lower variable cost (-7.0% QoQ)
Variable Revenue X Variable Cost (R$/MWh)
-143.4
-63.8
40.1 61.7
1Q13 2Q13 3Q13 4Q13
EBITDA benefited by one-time items, despite outage of Turbine #1 in December
Sources: ONS, Company estimates
70%
39%
64%
47%
70%
1Q13 2Q13 3Q13 4Q13 1Q14
151 127 118
318
154
117 139 138
109 119
107
134
111 105 104 100 99 99 97 102 105 106 110 114
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
Variable Cost Variable Revenue
In 4Q13 and Jan, 14, Turbine #1 was 2,327 hours unavailable
primarily due to shaft maintenance and hydrogen seal replacement
COD: Dec 1st, 2012 May 10, 2013
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Operational Performance (Parnaba III)
NOTE: 1) Figures consider 100% of Parnaba III
Availability
Start of commercial operations on October 22, 2013
EBITDA amounted R$1.1MM, impacted by R$37.9MM of net energy
acquisition costs incurred to meet contractual obligations
Variable Revenue X Variable Cost (R$/MWh)
Sources: ONS, Company estimates
OBS: Dispatch margin captured by Parnaba Gs Natural
High availability since COD
N.A. N.A. N.A.
100% 94%
1Q13 2Q13 3Q13 4Q13 1Q14
75 71
161 161
Jan-13...Out-13 Nov-13 Dec-13
Variable Cost Variable Revenue
N.A. N.A. N.A.
1.1
1Q13 2Q13 3Q13 4Q13
EBITDA (R$MM)
COD: Oct 22, 2013
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5,195
5,933 357
278
3Q13 4Q13
Net Debt Cash and Cash Equivalents
5,551
6,211
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Refinancing of Holding Debt Successful short-term debt refinance and additional credit lines secured
Consolidated Debt (R$MM)
Total Gross Debt R$6,211MM
Consolidated Gross Debt Profile (R$MM)
R$845.9MM out of the total debt balance of short-term debt is
allocated in the projects, as follows:
o R$280.4MM: Current portion of the long-term debts of Itaqui,
Pecm II and Parnaba I;
o R$85.3MM: Bridge loans to Parnaba I, maturing in December,
2014 and April, 2015. The outstanding balance will be paid-off in
installments, which started in October, 2013;
o R$480.3MM: Bridge loans to Parnaba II, which should be paid-
off with the disbursement of the long-term financing packages.
+14.2% (net debt)
Gross Short-Term Debt R$2,408MM
2,408 39%
3,802 61%
Short Term Long Term
1,562 65%
846 35%
Hold Co. Project Related
Consolidated Short-Term Debt (R$MM)
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Regulatory Update Positive outcomes in 4Q13 and early 2014
ADOMP Downtime/Unavailability Charges
Pecm I and Itaqui filed in Jan, 2014 a lawsuit against Aneel questioning hourly-based unavailability charges;
On Jan 24, 2014, a Federal Court granted an injunction halting unavailability charges as measured, establishing the methodology provided
for in PPAs (60-month rolling average);
The lawsuit also claims the reimbursement of amounts paid since PPAs beginning;
Request for revision for ADOMP methodology presented to Aneel last week
ICB Online Pass-through criteria for power purchase in case of startup delay
Aneel approved a revised reimbursement criteria for energy acquisition costs;
New criteria establishes that reimbursement be based on the current ("online") cost of the plant to the system (ICB Online), in case it was
operating commercially;
The decision was retroactive to the PPA start dates.
Pecm II Fixed Revenue Reimbursement
Pecm II filed a lawsuit claiming for fixed revenues of Jul, 2013 and Aug, 2013 (R$48MM). Decision pending;
Already received R$31MM from Sept, 2013 up to plants COD (Oct 18, 2013), as granted by an injunction
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Cost Reduction Program
ENEVA developed a Medium Term Plan 2014-2016 aimed at achieving significant cost reduction at
holding and project level through:
Leaner organizational structure
Headcount reduction
Decrease in third-party services
Reduction of fixed costs at project level
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Brazilian Power Market and Greenfield Portfolio
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Southeast Reservoirs
~70% of total storage capacity
Source: ANEEL
Brazils Generation Capacity: 131 GW
Breakdown by source 2012
68.7%
9.9%
2.2%
1.6%
1.6%
16.0%
Hydro Gas Coal Nuclear Wind Others
Brazil is highly dependent on hydro generation with increasingly faster depletion of reservoirs
Brazilian Energy Matrix
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Dry Season
67% 56%
76%
29%
38%
46%
54%
62% 63% 64% 61%
55%
49% 45%
42% 43%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Average 2007-2011 2012 2013
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Source: ONS
Autonomy = Storage Capacity / (Load Thermal Generation)
Economic growth will boost power demand
leading to a supply deficit in 2016
Water storage capacity has stagnated,
leading to decreased system autonomy
65
86
65
78
60
65
70
75
80
85
90
2013 2014 2015 2016 2017 2018 2019 2020
GW
avg
ENERGY DEMAND
PHYSICAL GUARANTEE
(with signed PPAs)
2016-on: New generation required ~8 GWavg required until 2020
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Electric System Reliability
New thermal plants are necessary to guarantee reliable power supply
0
5
10
15
20
25
30
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1972
1974
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1978
1980
1982
1984
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1990
1992
1994
1996
1998
2000
2002
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2006
2008
2010
2012
Reservo
irs A
uto
no
my (
Mo
nth
s)
2013
Current reservoir autonomy ~6 months
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Parnaba Complex
Integrated to natural gas resources
Located in a tax-advantaged region
Ventos Wind Complex
Located in one Brazils best 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 build license
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 generation
Opportunities
for ENEVAs
growth 2 3 4 5 1
Sul 727 MW
Parnaba Complex 2,166 MW
Seival 600 MW
Au 2,100 MW Coal 3,300 MW Natural Gas
Solar Tau 1 MW
Ventos Wind Complex 600 MW
Seival Mine License granted 152 M ton in proven reserves
ENEVAs Greenfield Portfolio
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Attractive licensed greenfield projects in various development stages
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Appendix | Images
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Pecm I & II
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Itaqui
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Parnaba Complex
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Natural Gas: Parnaba E&P
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Disclaimer
The material that follows is a presentation of general background information about ENEVA S.A. and its subsidiaries (collectively, ENEVA or the Company) as of the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made
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 views and/or expectations of the
Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement
that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like may, plan, believe, anticipate, expect, envisages, will likely result, or any other words or phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates
and intentions expressed in this presentation. In no event, neither the Company, any of its affiliates, directors, officers, agents or employees nor any of the
placement agents shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the
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 should consult their own advisors
in this regard.
The market and competitive position data, including market forecasts, used throughout this presentation were obtained from internal surveys, market research,
publicly available information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any
material respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or
by industry or other publications. ENEVA, the placement agents and the underwriters do not make any representation as to the accuracy of such information.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without ENEVAs prior written consent.
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