Company Presentation 2Q 2014 SING Arica ~4,000 MW COLBUN AT A - PowerPoint PPT Presentation

Company Presentation 2Q 2014

SING Arica ~4,000 MW COLBUN AT A GLANCE ~17 TWh Business Power Generation Antofagasta Tal-Tal Size 2 nd largest generator in Chile’s Central Grid (SIC), SIC with over 21% market share (MW) ~14,000 MW ~51 TWh The SIC covers 75% of Chile’s electricity demand Capacity 3,278 MW Santiago 48% hydro and 52% thermal Generation 11,253 GWh in 2013 43% hydro and 57% thermal Power plants 16 hydro plants in 4 different basins 7 thermal plants in 4 different regions Ownership Matte Group: ~49% Chaitén SEA Angelini Group: ~10% Pension funds: ~17% and others: ~24% Cochrane As of June 2014: Assets US$ 6.1 billion SAM Pto. Natales Equity US$ 3.7 billion Pto. Market Cap US$ 4.4 billion Williams EBITDA Jun.14’ LTM US$ 393 million Source: CNE, December 2013 2

CHILEAN POWER MARKET STRUCTURE 1 2 Electricity Market Structure Leading Player in the SIC G ENERATORS Market Share 38% >15 players R EGULATED U NREGULATED S POT C USTOMERS C USTOMERS M ARKET 21% 23% 18% D ISTRIBUTION “F REE ” CDEC C OMPANIES C USTOMERS Regulated Spot Price Unregulated Tender /Marginal Tariffs Tariffs Cost Endesa Colbún Gener Others Auctioned under Market Price: settled The variable cost by both parties, the supervision of of the most the National generator and free expensive customer. Energy dispatched plant Commission. at each moment. 3

GENERATION AND PRICE EVOLUTION IN CHILE’S CENTRAL GRID (+) Development based on gas turbine (diesel) Development based on hydro + competitive natural gas • (+) LNG re-gasification terminal since 2009 • Power purchase agreements signed under fixed prices (set by (+) Coal- power plants regulator for distribution clients ) → New law: PPA tenders with price indexation 50 300 45 250 Annual Power Generation – SIC 40 35 200 30 USD/MWh TWh 25 150 20 100 15 10 50 5 0 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Others Diesel-Fuel LNG Coal /Petcoke Gas Hydro Average SIC PPA Price Average Spot Market Price Source: CNE; CDEC; www.systep.cl 4

STEADY GROWTH OVER THE PAST DECADE 1 2 Capacity (MW) Total Operating Revenues (MMUSD) 3,278 3.500 1.800 MW 3.000 1.600 USD 1,632 1.400 2.500 million 1.200 2.000 1.000 1.500 800 USD 258 600 1.000 million 400 CAGR: 10% 1,260 CAGR: 19% 500 MW 200 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2Q14 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2Q14 3 4 3-year Moving Average EBITDA (MMUSD) Market Cap (MMUSD) 6.000 400 USD 4,400 350 USD 359 million 5.000 million 300 4.000 250 3.000 200 USD 1,323 million 150 2.000 100 USD 131 1.000 million CAGR: 10% 50 CAGR: 12% 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2Q14 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2Q14 Source: Company Financial Statements; Bloomberg 5

GENERATION ASSETS NEHUENCO COMPLEX: 874 MW ACONCAGUA BASIN: 213 MW 7 thermal power plants (1,689 MW) GAS/DIESEL Chacabuquito (29 MW)* Blanco ( 60 MW) Nehuenco I (368 MW) Combined Cycle Los Quilos ( 39 MW)* Juncal (29 MW) * Nehuenco II (398 MW) Open Cycle Nehuenco III (108 MW) Hornitos (55 MW) Juncalito (1 MW)* Coal-fired CARENA POWER PLANT: 9 MW 16 hydro power plants (1,589 MW) CANDELARIA POWER PLANT: 270 MW Carena (9 MW)* GAS/DIESEL Run of the River (*NCRE mini-hydro) Candelaria Unit I (133 MW) MAULE BASIN: 630 MW Reservoir Unit II (137 MW) Colbún (474 MW) Machicura (95 MW) SANTA MARIA I POWER PLANT: 342 MW San Ignacio (37 MW)* Chiburgo (19 MW)* COAL San Clemente (5 MW)* Santa María I (342 MW) LAJA BASIN: 249 MW LOS PINOS POWER PLANT: 100 MW Rucúe (178 MW) Quilleco (71 MW) DIESEL Los Pinos (100 MW) BIOBÍO BASIN: 316 MW Angostura (316 MW) ANTILHUE POWER PLANT: 103 MW DIESEL CHAPO LAKE: 172 MW Antilhue Unit I : 51 MW Canutillar (172 MW) Unit II : 52 MW 6

GENERATION ASSETS Capacity (MW) & *Estimated Generation (TWh/year) Breakdown MW TWh 19.5 TWh 3.500 3,278 MW 20 3.000 581 4.0 15 2.500 766 5.0 2.000 342 10 Colbún – Reservoir 2.5 1.500 316 1.5 1.000 5 1,273 6.5 500 0 0 Capacity (MW) Generation (TWh/year) Hydro CCGT Diesel/Gas Angostura Peaking Diesel/Gas Coal Santa María I – Coal-fired power plant *For hydro considers medium-to-dry hydrological conditions, for CCGT and peaking, they are estimated yearly productions (85% plant factor). Gas generation will depend upon *For hydro considers medium-to-dry hydrological conditions, for CCGT and peakers, estimated yearly productions (85% plant factor). Gas generation will depend upon gas availability. 7 7 gas availability

INCREASINGLY EFFICIENT GENERATION MATRIX • Increasingly diversified generation matrix lowers volatility. • Santa María I has become a key component of our thermal production. • Recent market changes have resulted in higher LNG supply. • Angostura will provide a significant portion of zero-variable-cost generation production. Colbun Thermal Production Breakdown (GWh) More Colbun Total Production (GWh) Expensive 8% 8% 9% 35% 43% 6,335 2,980 6,396 67% 4,415 51% 54% 3,836 57% 94% 35% 4,037 3,612 55% 6,580 5,567 5,462 5,233 4,857 41% 38% 35% 33% 29% 2,730 2,245 Less 6% 2% Expensive 2009 2010 2011 2012 2013 2Q13 2Q14 2009 2010 2011 2012 2013 2Q13 2Q14 Coal LNG/Gas Diesel Hydro Thermal Source: Audited consolidated financial statements. 8

INCREASINGLY BALANCED COMMERCIAL POSITION Contractual Sales vs. Generation (GWh) GWh 120% 11,535 11,655 12.000 595 10,687 9,805 546 9,639 100% 2,240 8,831 10.000 3,564 4,431 4,365 3,234 1,901 80% 4,602 2,893 2,802 2,242 2,563 8.000 4,879 2,418 2,662 323 0 60% 5,031 1,273 1,853 2,616 6.000 95 40% 4.000 7,224 7,170 6,912 6,578 6,085 5,566 5,462 5,342 5,233 4,857 4,760 20% 2.000 3,800 0 0% 2009 2010 2011 2012 2013 2Q14 LTM Hydro Coal LNG Diesel Regulated Sales Unregulated Sales (Hydro+Coal+LNG)/Contractual Sales 9 Graph Source: Colbun. Unregulated Sales 2013 & 2Q14 LTM excludes sales to Codelco at Marginal Cost

EBITDA VS. HYDRO GENERATION EVOLUTION TWh MMUSD 500 7 400 6 300 200 5 100 0 4 2013 2Q14 LTM 2011 2012 2009 2009 5 6 2010 2010 7 8 2011 9 10 2012 11 12 2013 13 132 1Q14 14 LTM EBITDA Hydro Generation 10

HIGH QUALITY CLIENTS 1 2 Sales by Type of Costumer (%) Sales Volume by Customer (%) AngloAm Chilectra erican - BBB+ Unregulated BBB 26% Regulated 10% 40% CGED - Codelco - 60% Local A+ A 20% 16% Saesa - Others Local AA 10% 17% 3 4 Historic Sales by Type of Costumer (GWh) Average Historic Monomic Price 14.000 150 (US$/MWh) 12.000 10.000 100 8.000 6.000 50 4.000 2.000 - 0 2011 2012 2013 2Q13 2Q14 LTM LTM Regulated Clients Unregulated Clients Regulated customers Nonregulated customers 11 Graphs Sources: 1), 2), 3) Colbun as of Jun14 LTM. 4) Average monomic prices are calculated by dividing the total amount of sales in US$, by physical energy sales in MWh.

ADVANCED COMMERCIAL STRATEGY Maximize returns from our current and future assets Manage volatility given relevant hydro component Predictable Cash Flows 1. DEVELOPMENT COST 4,000 GWh – OC 5,000 GWh – Dual CCGT 2. INCORPORATE 2,500 GWh – Coal INDEXATION FORMULAS IN SALE PRICES 8,000 GWh – Hydro(*) 3. DEFINE OPTIMAL PPA LEVEL -Active Risk Management -Financial Hedges -Natural gas for certain periods (*) Under medium-to-dry hydrological conditions. For CCGT and peaking, estimated yearly productions (85% plant factor). Gas generation will depend upon gas availability 12 .

CHILE HAS GROWING ENERGY REQUIREMENTS • In the next decade, Chile is expected to become the first developed economy (by OECD standards) in Latin America. We expect this transition to result in increased demand for power generation. • The National Energy Commission projects a CAGR of electricity demand of 4.8% for Chile by year 2020. MWh/person Electricity per capita consumption 20 18 16 14 12 ~8.3 MWh/capita 10 8 6 ~3.3 MWh/capita 4 2 0 13 Source: World Bank

COLBUN HAS SEVERAL GROWTH OPPORTUNITIES Searching for investment opportunities in La Mina - Hydroelectric Project the region :  34 MW of Installed Capacity Special focus on assets in Colombia and Perú  180 GWh of expected annual generation  Phase: Environmentally Approved Country Attractiveness:  Qualifies as NCRE  Attractive business environment  Positive economic perspective Santa María II - Coal-fired Project  Well established regulatory framework  350 MW of Installed Capacity  Growing electricity consumption  2,500 GWh of expected annual generation  Diversification of:  Phase: Environmentally Approved  Geography  Generation technology  Access to fuel sources San Pedro - Hydroelectric Project  150 MW of Installed Capacity  930 GWh of expected annual generation  Phase: Existing Environmental Approval to be modified  Water Rights ∼ 500 MW  Optimization* of existing CCGT (766 MW) and Open cycles (270 MW)  Potential Acquisitions of existing Power Plants  Licitaciones ERNC * Subject to securing competitive and long-term natural gas supply 14