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1
Investment Thesis
Investment Thesis
One of the largest private sector power generators in Brazil
ENEVA currently operates 2.4GW (2.9 GW in 2014) in coal and gas-fired power plants
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
ENEVA at a Glance
A Brazilian thermal generator with asset exposure to energy fossil fuels (natural gas and coal)
Company Description
2.9GW with inflation-protected, long-term PPAs
Geographic Footprint
Amapari Energia
o
o
2.4GW in operation
524MW 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 Natural Gas Exploratory blocks
Itaqui
Pecm I
Pecm II
Solar Tau
ENEVA 100% Solar - 1MW
Parnaba I
BNDES
10.3%
Parnaba II
Parnaba III
50%
Parnaba IV
2
Company Overview
Company History
2.9GW with inflation-protected long-term PPAs developed since 2007
IPO: US$1.1bn raised Contracts for 1,080 MW in the A-5 Auction Acquisition of interest in 7 onshore exploratory blocks in the Parnaba Basin Operational capacity reached 2.4GW with the COD for Itaqui, Parnaba I, Pecm II, Parnaba III and Parnaba IV E.ON increased its stake to 36% and joins controlling block Company name changed to ENEVA Successful singing of M&A with E.ON and Cambuhy for recapitalization of Parnaiba Gs Natural, safeguarding fuel supply for Parnaiba assets
2007
2008
2009 ...
2011
2012
2013
Partnership with E.ON, including a R$1.0bn investment and the creation of a JV Contracts for 365MW in the A-5 Auction Contracts for 517MW in the A-3 Auction Acquisition of greenfield wind projects (Ventos) Beginning of commercial operations at Pecm I ENEVAs first large scale power plant
Itaqui
Pecm I
Pecm II
Energy Source: Coal ENEVA Stake: 100% Installed Capacity: 360MW Sold Energy: 315MW Fixed Revenue: R$317.3MM p.a. Start-up: Feb, 13
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: 365MW Sold Energy: 276MW Fixed Revenue: R$284.9MM p.a. Start-up: Oct, 13
Note: 1) Fixed revenues are indexed to inflation index IPCA (Database: Nov, 2013)
Parnaba I (OCGT)
Parnaba IV
Energy Source: Natural Gas ENEVA Stake: 70% Installed Capacity: 676MW Sold Energy: 450MW
Fixed Revenue: R$445.9MM p.a.
Energy Source: Natural Gas ENEVA Stake: 70% Installed Capacity: 176MW Sold Energy: 98MW
Energy Source: Natural Gas ENEVA Stake: 70% Installed Capacity: 56MW
Sold Energy: 46MW (Free Market)
Start-up: Apr, 13
Notes: 1) Fixed revenues are indexed to inflation index IPCA (Database: Nov, 2013); 2) 169MW already in operation
Parnaba II (CCGT)
Start-up: 1H14
Note: 1) Fixed revenues are indexed to inflation index IPCA (Database: Nov, 2013)
Geographic Footprint
Parnaba Gs Natural
Imetame, DELP, Orteng 30% 70% Blocks 1-7 50% Block 8 50%
10
6.0
Declaration of commerciality with Development Plan for 3 gas fields: o o o Gavio Real Gavio Azul Gavio Branco
Wells
Current
Power Plant
Parnaba I, Parnaba III and Parnaba IV 16
1Q14
Parnaba II 1st GU
16
2H14
Parnaba II 2nd GU
19
Gavio Real field is producing since Jan, 2013: o 16 producing wells out of 5 clusters
Current capacity already allows connection of the 1st generating unit of Parnaba II
o
o
Upcoming Events
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)
11
Capital Increase will guarantee funds to cover Parnaba Gs capex needs in 2014 E.ON E&P team will provide technical and operational expertise
Cambuhy also entered into share purchase agreements with the purpose to either:
o o OGPar: Buy for R$200MM the remaining stake of OGPar; or ENEVA: Buy for R$200MM the eventually foreclosed shares of OGPar by Parnaba Gs Naturals lending banks
9.1%
18.2%
72.7%
3
Short-Term Value Triggers
EBITDA amounted -R$5.9MM, impacted by high operating costs mostly attributable to:
-31.3 o o Unavailability charges (R$21.7MM) High fuel costs: Coal (R$55.6MM), diesel (R$3.6MM) and quicklime (R$3.9MM) 1Q13 2Q13 124.1 3Q13 114.0 3Q13/ 1Q13 -31.5%
-95.3
1Q13
2Q13
3Q13
166.5
Itaqui Availability
65% 71%
38%
1Q13
2Q13
3Q13
14
EBITDA amounted to R$58.8MM (EBITDA margin: 27.7%), reflecting full operations of all four generating units during 3Q13
58.8
Parnaba I Availability
96% 91% 96%
1Q13
2Q13
3Q13
15
2Q13
106.2
3Q13
109.6
Pecm I Availability
71%
64% 40%
1Q13
2Q13
3Q13
16
Oct, 19 Oct, 25
Oct, 26 Nov, 1
Nov, 2 Nov, 9
Oct, 19 Oct, 25
Oct, 26 Nov, 1
Nov, 2 Nov, 9
Pecm II o Synchronized to the system on Oct 15 and was granted authorization for commercial operation on Oct 18 o Stable operations since then, resulting from actions carried out within the recovery plan designed for the coal plants o Availability to mid-November >90%
Parnaba III o Reached full capacity on the same day it synchronized to the system (Oct 14) and has been stable since then 17
350
350
Itaqui Deb. Bridge
300
1,150
HoldCo Debt
1,150
Clear strategy in place to push down debt from HoldCo level to project level and reduce HoldCo indebtedness to R$500MM until the end of 2015
Short Term
Long Term
18
Regulatory Issues
Main ongoing discussions with Aneel
Ongoing
Pecm II Fixed Revenue and Pecm II ICB Online Reimbursement
o Fixed revenue reimbursement request for Pecm II from the moment it was ready to operate, relative to the month of July and August, 2013. Additionally ICB Online reimbursement request is still pending
Solved
Pecm II Fixed Revenue
o Fixed revenue reimbursement request for Pecm II for the month of September, 2013 until it was granted COD, on October 18, 2013
19
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
20
4
Brazilian Power Market and Greenfield Portfolio
Southeast Reservoirs
56%
29%
10%
0%
Dry Season
Hydro
Gas
Coal
Nuclear
Wind
Others
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug 2012
Sep
Oct 2013
Nov
Dec
Average 2007-2011
Source: ANEEL
22
86.5
78.1
GWavg
75 ENERGY DEMAND
10
70
65.2
5 65
64.7
2014 2015 2016 2017
0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2013
60 2013
Source: ONS
23
Parnaba Complex
Solar Tau
1 MW
Attractive load factor Just 30km from grid connection Land ownership assured 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 Integrated to the Seival Mine (proven reserves: 152 M ton) Low operation costs
Parnaba Complex
2,166 MW
Au
Au (Coal + Gas)
Seival Mine
727 MW
Sul
Seival
600 MW
24
5
Appendix | Images
Pecm I & II
26
Itaqui
27
Parnaba Complex
28
29
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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