December, 2014

1
Company Overview

Company overview

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

Ongoing restructuring initiatives

- Reorganization of the companys structure and continuous TPPs operation stabilization

- Strengthening of the companys capital structure

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

Geographic Footprint

2.9GW inflation-protected, long-term PPAs

Amapari Energia

2.4GW in operation

518MW under construction

ENEVA 51% / Eletronorte 49%

Diesel - 23MW

Itaqui

Long-term PPAs guarantee R$2.2 billion in annual inflation-adjusted

ENEVA 100%
Coal - 360MW

capacity payments

Pecm I

ENEVA 50% / EDP 50%

Coal - 720MW

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

Natural Gas
Exploratory
blocks

Contracted production
of 8.4MM m3/day

capacity

Pecm II

ENEVA 100%
Coal - 365MW

Solar Tau
ENEVA 100%
Solar - 1MW

ENEVA ownership structure

Free Float (37.1%)

Parnaba I

ENEVA 70% / Petra 30%

Natural Gas - 676MW

Controlling Block

Other

BNDES

Eike
Batista

28.5%

8.6%

20.0%

Parnaba II
42.9%

50%

ENEVA 100%
Natural Gas - 517MW

Parnaba III
50%

ENEVA Participaes
ENEVA/E.ON
Joint Venture

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

ENEVA 70% / Petra 30%

Natural Gas - 176MW

Parnaba IV

ENEVA 70% / Petra 30%

Natural Gas - 56MW

Coal generation portfolio overview

1.4 GW of installed capacity in full operation

Itaqui

Pecm II

Pecm I

Capacity: 360MW

Capacity: 720MW

Capacity: 365MW

Fix. Rev.: R$312.7MM/year

Fix. Rev.: R$637.0MM /year

Fix. Rev.: R$302.1MM /year

CVU: R$111/MWh

CVU: R$107/MWh

CVU: R$116/MWh

Auction: A-5/2007

Auction: A-5/2007

Auction: A-5/2008

COD: Feb, 2013

COD: Dec, 2012

COD: Oct, 2013

5
Note: (1) Fixed revenues are indexed to inflation index IPCA (Database: Nov, 2014)

Parnaba Complex overview

A unique case in Brazil power generation sector with 910MW already in operation
Parnaba III

Parnaba IV

3 Wrtsil GMs x 18MW

1 GE GT x 168,8MW
+ 1 Wrtsil GM x 7,3MW

Parnaba II

Parnaba I

2 GE GTs x 168,8MW
+ 1 GE ST x 181MW

4 GE GTs x 168,8MW

Gas
Treatment
Unit

Parnaba III

Parnaba IV

Parnaba I

Parnaba II

Capacity: 56MW

Capacity: 178MW

Capacity: 676MW

Capacity: 517MW

46% efficiency

38% efficiency

37% efficiency

51% efficiency

Fix. Rev: R$54MM/year

Fix. Rev: R$104.9MM/year

Fix. Rev: R$472.6MM/year

Fix. Rev: R$398.3MM/year

CVU: R$69/MWh

CVU: R$171/MWh

CVU: R$109/MWh

CVU: R$63/MWh

Free market

Auction: A-5/2008

Auction: A-5/2008

Auction: A-3/2011

COD: Dec, 2013

COD: Dec, 2013

COD: Apr, 2013

Completion: est. 4Q14

6
Notes: (1) Bertin project developed by ENEVA; (2) Fixed revenues indexed to inflation index IPCA (Database: Nov, 2014)

Cambuhy/E.ON investment in Parnaba Gs Natural

Securing ENEVAs power plants gas supply
Successful rescue plan of PGN

Shareholding Structure
Current

In 2H13, ENEVA and E.ON led efforts to rescue PGN from

OGPs judicial recovery process and secure the gas supply for

Controlling Block (63.7%)

ENEVAs power plants

o Cambuhy Investimentos was brought onboard to replace OGP in
the shareholding structure of PGN

OGP
9.1%

18.2%

36.4%

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

36.3%

70%

BTG

Gas blocks

30%

to cover PGNs capex needs in 2014

o Additional R$750MM in LT financing were secured

Cambuhy also entered into a share purchase agreement to

After execution of the sale and purchase agreement

Controlling Block (100%)

buy OGPs remaining stake at PGN for R$200MM

o This last step of the transaction will be completed as part of
OGPs judicial recovery process

9.1%

18.2%

72.7%

ENEVA and E.ON have the right for a 2-year term to increase
their joint participation at PGN to 33.3%

Parnaba Gs Natural

Parnaba Gs Natural (PGN)

3 commercial gas fields fully committed to supply ENEVA power plants
Overview
Only part of Parnaba Basin is yet licensed and explored

Declaration of commerciality for 3 gas fields: Gavio Real, Gavio

Azul and Gavio Branco
o

Santa Vitria discovery in Jan, 2014 (well OGX-121)

New management team led by Pedro Zinner (ex-BG director)

o

New COO Hubert Mainitz (E.ON E&P)

Challenges
o

High dispatch scenario increases draw on existing wells, requiring

analysis on optimization of reservoir management

Additional investment may be required to keep production levels

2
Operating & Financial Performance of Power Plants

Operational Performance (Itaqui)

Ash disposal solution hit Operational costs in the quarter
EBITDA (R$MM)

Operating Costs
-0.6

100.5

20.1
EBITDA 2Q14

112.1

Gross Energy Generated (GWh)

-1.8

-6.1

Net
Operating
Revenues

Operating
Costs

Unavailability
Adjustments

Operating
Expenses

EBITDA 3Q14

Operating Costs per Gross Energy

Generated (R$/MWh)

3Q14
(Adj)

2Q14

3Q14 (Adj)
/2Q14

21.1

121.6

115.5

5.3%

679.5

679.5

462

47.1%

31.1

179.0

249.9

-28.4%

3Q14 (Adj) excludes unavailability costs reimbursement (R$100.5MM)

Availability
83%

Operating Costs (R$ million)

3Q14

Highest historical availability recorded in Sep. 2014: 95%

84%

87%

87%
75%

77%

Significant decrease in Operating costs/MWh as a result of

improved availability

63%

Operating revenues positively impacted by better availability

leading

to

higher

variable

revenues

(+R$19.4MM),

despite

decrease in Energy for resale (-R$22.2MM)

Operating costs increased by higher fuel consumption due to
1Q13

2Q13

3Q13

4Q13

Sources: ONS & Company

NOTE: 1) Does not include Depreciation & Amortization.

1Q14

2Q14

3Q14

plants higher availability (+R$14.5MM) and Outsourced services

reflecting incremental cost for ash disposal (+R$5.9MM)
10

Operational Performance (Parnaba I)

Reduced availability undermined 3Q14 EBITDA despite lower fuel costs
EBITDA (R$MM)

Operating Costs

-35.8

50.3

-0.9
17.8

-11.0
EBITDA 2Q14

Net
Operating
Revenues

Operating
Costs

Unavailability
Adjustments

20.3
Operating
Expenses

EBITDA 3Q14

3Q14
(Adj)

2Q14

3Q14 (Adj)
/2Q14

Operating Costs (R$ million)

189.8

207.6

196.6

-3.4%

Gross Energy Generated (GWh)

1,173

1,173

1,412

-16.9%

Operating Costs per Gross Energy

Generated (R$/MWh)

161.8

177.0

139.3

16.2%

3Q14 (Adj) excludes unavailability costs adjustment (R$17.8MM)

Availability

91%

3Q14

Availability reduction since mid-May 2014 due to gas optimization

97%

96%

99%

98%

by Parnaba Complex
94%

Operating revenues negatively impacted by lower availability,

which compromised variable revenues in the quarter (-R$39.6MM)
Despite lower fuel costs (-R$15.9MM), as a result of plants lower
availability, operating costs increased mainly by higher:
o Unavailability costs (+R$12.1MM, net of effect of the Federal

N.A.
1Q13

Court ruling, accounted in Sep, 2014); and

2Q13

3Q13

4Q13

Sources: ONS & Company

NOTE: 1) Does not include Depreciation & Amortization.

1Q14

2Q14

3Q14

o Lease cost (+R$13.9MM), due to fixed gas treatment unit lease

contract readjustment
11

Operational Performance (Pecm I)

Revenues and costs compromised by GU01 stator burnout on Aug 25, 2014
EBITDA (R$MM)

Operating Costs
1.9
Operating Costs (R$ million)
237.0

-20.3

32.5

244.1

Operating Costs per Gross Energy

Generated (R$/MWh)

-7.1

EBITDA 2Q14 Net Operating

Revenues

Gross Energy Generated (GWh)

Operating
Costs

Unavailability
Adjustments

Operating
Expenses

EBITDA 3Q14

Availability

3Q14

3Q14
(Adj)

2Q14

3Q14 (Adj)
/2Q14

26.4

263.4

256.3

2.8%

965.2

965.2

1,186

-18.6%

27.4

272.9

216.1

26.3%

3Q14 (Adj) excludes unavailability costs reimbursement (R$237.0MM)

UG01 stator burnout on Aug 25, 2014 hit 3Q14 availability. In Sep
2014, GU02 recorded 2nd best historical availability: 97.1%

73%

72%

78%

73%

83%

59%

72%

66%
32%

86%
80%

86%

83%

Operating revenues negatively impacted by lower availability of GU01,

71%

77%

51%

70%
50%

26%

41%

Despite lower fuel costs (-R$25.0MM), as a result of plants lower

availability, operating costs increased mainly by higher:

N.A.

1Q13

which decreased variable revenues in the quarter (-R$24.6MM)

o
2Q13

3Q13

4Q13

Pecm I

UG1

1Q14

2Q14

3Q14

UG2

Sources: ONS & Company

NOTES: 1) Figures consider 100% of Pecm I; 2) Does not include Depreciation & Amortization.

Unavailability costs (+R$14.4MM) and Energy cost for resale

(+R$3.5MM), both due to higher spot prices (+46.3%); and

Equipment and machinery repair (+R$4.5MM)

12

Operational Performance (Pecm II)

Lower availability hurt operating revenues and higher spot prices increased unavailability costs
EBITDA (R$MM)

Operating Costs
3Q14

3Q14
(Adj)

2Q14

3Q14 (Adj)
/2Q14

79.0

110.1

105.4

-25.1%

Gross Energy Generated (GWh)

618.3

618.3

736.7

-16.1%

Operating Costs per Gross Energy

Generated (R$/MWh)

127.7

178.0

143.1

-10.8%

-0.8
31.1

-13.3
-4.6

33.5

EBITDA 2Q14

45.8

Net
Operating
Revenues

Operating
Costs

Unavailability
Adjustments

Operating
Expenses

EBITDA 3Q14

Operating Costs (R$ million)

3Q14 (Adj) excludes unavailability costs adjustment (R$31.1MM)

Availability

Availability reduction in 3Q14 due to coal mills and forced

97%

ventilation fan repair for 10 days in Sep 2014

96%

85%

77%

Operating revenues negatively impacted by lower availability,

which decreased variable revenues in the quarter (-R$13.6MM)
Despite lower fuel cost (-R$12.7MM), as a result of plants lower
availability, and also a decrease in Equipment and machinery
repair (-R$1.2MM) operating costs increased mainly by higher:

N.A.

N.A.

N.A.

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

Sources: ONS & Company

o Unavailability costs (+R$16.4MM); and

o Energy cost for resale (+R$2.5MM), both due to higher spot
prices (+46.3%)

NOTES: 1) Figures consider 100% of Pecm II; 2) Does not include Depreciation & Amortization.

13

Operational Performance (Parnaba III)

Recurring negative EBITDA as a result of gas optimization at Parnaba Complex since mid-May 14
EBITDA (R$MM)

Operating Costs

-8.4

3Q14

3Q14
(Adj)

2Q14

3Q14 (Adj)
/2Q14

63.4

82.1

65.1

-2.6%

Gross Energy Generated (GWh)

233.1

233.1

265.7

-12.3%

Operating Costs per Gross Energy

Generated (R$/MWh)

272.2

352.4

245.1

11.0%

-8.8
-0.6

-1.5
18.7

-17.0

EBITDA 2Q14 Net Operating

Revenues

Operating
Costs

Operating Costs (R$ million)

Unavailability
Adjustments

Operating
Expenses

EBITDA 3Q14

3Q14 (Adj) excludes unavailability costs adjustment (R$18.7MM)

Availability
Availability reduction since mid-May 2014 due to gas optimization
100%

99%

by Parnaba Complex
77%

82%

Operating revenues negatively impacted by lower availability,

which decreased variable revenues in the quarter (-R$4.7MM), but
offset by higher revenue from surplus ballast energy (+R$3.7MM)

N.A.

N.A.

N.A.

1Q13

2Q13

3Q13

Despite lower fuel costs (-R$6.2MM), as a result of plants lower

availability, Operating costs up mainly due to increase on
4Q13

1Q14

2Q14

3Q14

Sources: ONS & Company

NOTES: 1) Figures consider 100% of Parnaba III; 2) Does not include Depreciation & Amortization.

Unavailability costs (+R$23.4MM), which were inflated by higher

spot prices (+46.3%)
14

3
Regulatory Update

Regulatory developments (1)

Parnaiba II PPA restructuring
Parnaba II Final Agreement with Aneel

Parnaba Gas Optimization

Background: Delayed 450MW PPA, with initial supply date as of Mar

Gas optimization of Parnaba Thermoelectric Complex approved by

2014

Aneel: Parnaba I substituted by Parnaba II, as soon as it becomes

Balanced negotiation with Aneel, preserving the PPA and mitigating

available.

potential high regulatory/contractual penalty

Final terms and conditions:
o

20-year PPAs start date postponed to Jul 1, 2016

R$333MM, to be paid as tariff contribution

In annual installments starting in 2022
- 2022 until 2025: R$13.0MM
- 2026 until 2036: R$25.6MM

Through the partial reduction in annual fixed revenues over the term

All plants PPAs terms and conditions fulfilled with a restricted gas
production, as recommended by ANP until further development of
other gas areas (4.4-4.8 million m/day)

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

Pecm II and Parnaba I & III

16

Regulatory developments (2)

Unavailability charges (ADOMP) now calculated and paid as provided for in PPAs

Unavailability charges were being paid on an hourly-based methodology, while PPAs provided for a 60-month rolling average
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

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

R$510.5MM

R$318.9MM

Total

In Sep 2014, Aneel granted to Pecm I and Itaqui reimbursement of unavailability charges overpayment. On Nov 10, 2014, these plants
received approx. R$336MM
Pecm II, Parnaba I and Parnaba III will request to Aneel to be also reimbursed for overpayment
NOTES: 1) Consider hourly-based methodology for unavailability charges until Aug 2014; 2) Does not consider amounts paid since Federal Court decisions.

17

4
Financial Stabilization Update

Financial Stabilization on course

May 12, 2014

Next Step

2Q14 / 3Q14

Signing of term-sheet with banks for:

R$100MM short-term bridge financing

to Pecm II disbursed

R$1.5Bi capital increase

o

Phase I: R$316.5MM cash-only; and

Phase II: R$1.5Bi minus funds raised on

Phase I (cash or asset capitalization or

Pecm II approved by BNDES

Capital Increase Phase I concluded,

raising R$174MM (R$120MM by E.ON)
Shareholding Structure after CI I

debt conversion)

Controlling Block

HoldCo. Debt renegotiation

o

R$600-700MM

debt

drop-down

to

Free
Float

Eike
Batista

37.1%

20.0%

debt

(approx.

R$1.5Bi),

comprising of
o

Cash;

Debt conversion; and

Asset capitalization

Execution/effective of debt drop

down/roll over

5-year maturity extension of remaining

HoldCo.

Launch of Capital Increase Phase II,

42.9%

ENEVAs subsidiaries/projects
o

R$300MM long-term credit facility to

with

amortization starting only in Jun, 2017

Pecm II partial sale by executing

E.ON backstop guarantee (R$408MM)

Sale of Pecm II
o

Backstop guarantee by E.ON of up to

R$400MM for 50% of the asset

Successful regulatory outcomes

o

Parnaba II Agreement with Aneel

All plants protected from hourly-based

unavailability charges

19

5
Brazilian Power Market and Greenfield Portfolio

Brazilian energy matrix

Brazil is highly dependent on hydro generation with increasingly faster depletion of reservoirs

Brazils Generation Capacity: 136 GW

Southeast Reservoirs

Breakdown by source April, 2014

~70% of total storage capacity

100%

19,8%

90%
80%

75%

70%

2,2%
1,5%
2,5%

67%

56%

60%
50%
40%

10,5%

63,5%

30%

43% 42% 43%

43%
40%
39% 40%

43%

34%
29%

38%

23%

31%
19%

20%
10%
Hydro

Gas

Coal

Nuclear

Wind

Others

0%
Jan

Feb

Mar

Apr

May

Average 2007-2011

Source: ANEEL

Jun

Jul
2012

Aug

Sep
2013

Oct

Nov

Dec

2014

21

Electric system reliability

New thermal plants are necessary to guarantee reliable power supply

Water storage capacity has stagnated,

Economic growth will boost power demand

leading to decreased system autonomy

leading to a supply deficit in 2016

30
90

86
85

20

GWavg

80

Current reservoir
autonomy ~6 months

15

78

75

10

70

65

60
2013

ENERGY DEMAND

Autonomy = Storage Capacity / (Load Thermal Generation)

Source: ONS

2012
2013

2010

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

65

1970

Reservoirs Autonomy (Months)

25

PHYSICAL GUARANTEE
(with signed PPAs)

65
2014

2015

2016

2017

2018

2019

2020

2016-on: New generation required

~8 GWavg required until 2020

22

ENEVAs greenfield portfolio

Attractive licensed greenfield projects in various development stages

Power
supply-demand
unbalanced

Parnaba
Complex

Hydropower
concentrated
matrix

Spot prices at
historical highs

Demand for baseload generation

Integrated to natural gas resources

Opportunities
for ENEVAs
growth

Solar Tau
1 MW

Located in a tax-advantaged region

Ventos Wind
Complex
600 MW

Located in one Brazils best wind resource areas

Ventos Wind
Complex

Attractive load factor

Just 30km from grid connection
Land ownership assured

Au
(Coal + Gas)

Parnaba
Complex
2,166 MW

Au

2,100 MW Coal
3,300 MW Natural Gas

Located at a port with a regasification terminal build

license

Seival Mine

150km from Campos Basin natural gas accumulations

License granted
152 M ton in proven reserves

Environmental licensed to both coal and gas operations

Sul & Seival

Integrated to the Seival Mine (proven reserves: 152 M ton)

Low operation costs

Sul

727 MW

Seival
600 MW

23

Parnaba I: Closing of the cycle (1)

Highly competitive expansion to existing site

Highlights

Parnaba Site

Part of Parnaba II Agreement settled with Aneel in nov, 2014

Bottoming of open cycle gas turbines from Parnaiba I power
plant provides extra 360MW
Competitive project as no additional gas needed
Installation Environmental License issued
Plug and Play: 500kV electrical substation and water supply

Bottoming #1

Bottoming #2

already built
Known technology, original design of Parnaiba Generation
Complex done to enable modular expansion, leading to
efficient 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
24
Note: (1) To enable expansion additional fuel mainly for PPA/contract harmonization and internal consumption

Parnaba I: Closing of the cycle (2)

Highly competitive expansion to existing site
Net power output: 352,8 MW
Plants upside efficiency: 51% (previously 37%)
Additional gas consumption: zero
Contractor: TBD (first phase performed by Duro Felguera)

New equipment

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

Existing
facilities

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
25

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.