TGI 1Q 2014 results May 2014 Strictly Private and Confidential
Table of contents TGI Overview and History 1. Key updates 2. Financial and operating highlights 3. Questions and Answers 4. Appendix Economic, industry and regulatory environment 1. Shareholders and management team 2. EEB Overview 3. 2
1. Overview and History
Overview Stable and growing Colombian economy with sound investment environment Largest natural gas pipeline system in Colombia Strategically located pipeline network Natural monopoly in a regulated environment Constructive and stable regulatory framework Stable and predictable cash flow generation, strongly indexed to the US Dollar Strong and consistent financial performance Experienced management team with solid track record in the sector Expertise, financial strength and support of shareholders 4
TGI history Highlights Pipeline network Owns ~61% of the national pipeline network (3,957 Northern Producers: References km) and transports 46% of the gas consumed in the Chevron TGI Pipelines Ecopetrol 1.89 tcf country Third Party Pipelines Cartagena Refinery Natural Gas Reserves − Serves ~70% of Colombia’s population, reaching City the most populated areas (Bogota, Cali, Medellin, Field Refinery the coffee region and Piedemonte Llanero, among Lower and Middle others) Magdalena Valley 2.11 tcf Barrancabermeja − Has access to the two main production regions, La Refinery Bucaramanga Guajira and Cusiana/Cupiagua Medellin 25% interest in Contugas (Peru) Bogota − 30-year concession for natural gas transportation Eastern Producers: and distribution 2.99 tcf Cali Ecopetrol Equion Source: Neiva Mining and Energy Planning Unit. Upper Magdalena Valley 0.02 tcf National Hydrocarbons Agency. Company history TGI was created as a result of the privatization of Ecogás and has experienced remarkable growth since then, under the leadership of its controlling shareholders, EEB and CVCI 2014 TGI takes over the O&M Ecogas assets EEB announces of owned pipelines 2013 awarded to EEB agreement to 2012 acquire 31.92% Creation of Ecogas stake in TGI from TRG Refinancing of (formerly CVCI) 2010 2011 bonds issued in 2007 Awarded CVCI Cusiana investment grade capitalization 2009 2008 expansion rating by S&P Transfer of 2006 phase II: start of Headquarters second BOMT 2007 operations 2005 relocation from pipeline Bucaramanga to TGI takes over (Centragas) Bogotá the O&M of Transfer of first Cusiana Creation of TGI compressor 1997 Redesign of expansion phase BOMT pipeline Inaugural bond issuance stations organizational Start of Ecogas (GBS) I: start of Awarded structure Privatization operations Pipelines investment Process exchange with Refinancing of grade rating by Promigas subordinated debt Moody’s and with EEB Fitch
2. Key Updates
Key updates TGI ´ acquisition • On December 11th 2013, EEB’s Board of Directors authorized to exercise its Right of First Offer (ROFO) under the Shareholder’s Agreement for the acquisition of a 31.92% stake in TGI, after the end of the lock-up period (3 years). Offer was submitted on March 25th 2014 • The offer, for a value of USD 880 million, was accepted by The Rohatyn Group (formerly CVCI) on April 3rd 2014. • Closing is expected to take place within 90 days after this date. • Rating Agencies have reviewed the transaction and affirmed TGI ´ s ratings. Dividend Distribution • On March 31 st , TGI ´ s Shareholders Meeting approved its first dividend payment since beginning operations. • The approved dividend is equal to the 100% of 2013 net income (COP 130,067 MM - approx. USD $ 67.5 MM) • The dividend payment dates were set at April 24 and May 26, 2014 7
Key updates Expansion Projects • The Sabana Compression Station expansion project is currently under construction and is expected to be operational in August 2014 • Ecopetrol has declined to continue pursuing the Cusiana – Apiay – San Fernando expansion project • TGI is considering further expansions to its domestic infrastructure • To this effect, on March 4 2014 TGI held a meeting with its most important customers to present the following prospective expansion projects: Cusiana Phase III – 20 mmcfd capacity increase, estimated cost USD 33.5 MM Ballena - Barranca Bidirectionality – 45 mmcfd capacity, estimated cost USD 7 MM Cusiana – Apiay – 70 mmcfd capacity increase, estimated cost USD 215 MM Mariquita – Gualanday – 12.6 mmcfd capacity increase, estimated cost USD 90MM • After the meeting, TGI formally requested proposals from shippers interested in signing long term contracts for the upcoming expansions • Once proposals are received, TGI will evaluate the financial viability of the projects and will decide which projects to pursue 8
Key updates Hedge Restructuring • During the first quarter of 2014, TGI executed synthetic unwinds to cap losses related with 3 of 4 cross-currency swaps booked in 2009 • These swaps had a negative MTM of USD $ 114.3 MM as of December 2013 • TGI took advantage of the depreciation of the COP that occurred on the first 3 months of 2014 FX RATE 0 (20) (40) (60) (79) (80) (100) (120) (140) (160) (180) (200) 9
3. Financial and operating highlights
Solid operational performance Network length Capacity Firm Contracted Capacity (1) (km) (mmscfd) (mmscfd) 628 645.8 3,957 3,957 3,957 730 730 730 604 618 560 3,774 3,774 548 3,702 478 478 485 3,529 437 427 92% 92% 90% 90% 91% 88% 85% 2008 2009 2010 2011 2012 2013 2014 2008 2009 2010 2011 2012 2013 2014 2008 2009 2010 2011 2012 2013 2014 1Q 1Q 1Q Transported Volume Gas Losses Load factor (mmscfd) (%) (%) 66% 69% 71% 58% 59% 61% 61% 469 454 422 420 422 0.57% 396 0.54% 0.52% 371 0.41% 0.20% 0.10% 0.03% 2008 2009 2010 2011 2012 2013 2014 2008 2009 2010 2011 2012 2013 2014 2008 2009 2010 2011 2012 2013 2014 1Q 1Q 1Q (1)The trend line refers to the ratio: Firm contracted capacity/available capacity. The Available capacity differs from the Total Capacity as TGI requires a percentage of it for its own use. Source: Company information. 11
Strong contract structure and stable and predictable cash flow generation TGI’s revenues are highly predictable as a result of regulated tariffs and stable consumption TGI’s revenues are highly predictable, with approximately 97% coming from regulated tariffs that are reviewed at least every 5 years, ensuring cash flow stability and attractive rates of return Main sectors served by the Company (75 (1) % of revenues) present stable consumption patterns (no seasonality) The Company enjoys excellent contract quality 100% of TGI’s contracts are firm contracts with an average life of 8,01 years – 87% of regulated revenues are fixed tariffs, not dependent on transported volume – Approximately 79% (2) of EBITDA denominated in US Dollars – Natural gas transportation market share Revenues breakdown (% of revenues) (% of natural gas transported volume) Vehicu By Client By Sector lar Others Others; 9% Ecopetr 6% 14.8% ol Trader Others 16% s 29% 3% Therm al Gas TGI; 48.2% 16% Natural 21% Isagen Gases Promigas; 7% Distrib de 37.0% utor Refine Occident EPM ry 58% e 11% 14% 16% Source: TGI as of March 31- 2014 Source: Natural gas transportation companies ’ Electronic Bulletin of Operations Source: Company information. Includes Distributors, Ecopetrol ´ s refinery and Natural gas for Vehicles. (1) (2) TGI calculations. 12
Strong and consistent financial performance Revenues EBITDA and EBITDA margin (US$ in millions – average exchange rate for each period) (US$ in millions – average exchange rate for each period) 359 367 465 467 390 289 257 338 222 294 196 194 252 238 82% 79% 78% 77% 76% 75% 74% 2008 2009 2010 2011 2012 2013 LTM 2008 2009 2010 2011 2012 2013 LTM 2014 1Q 2014 1Q Funds from operations (1) Historical Capex (US$ in millions – average exchange rate for each period) (US$ in millions – average exchange rate for each period) 387 266 264 133 185 174 117 108 96 84 69 35 14 12 2008 2009 2010 2011 2012 2013 LTM 2014 2008 2009 2010 2011 2012 2013 2014 1Q 1Q Source: Company information (1)FFO calculated as net income plus depreciation, amortization and provisions, adjusted for effect from exchange rate and hedges. 13 On 2012 FFO includes the LM transaction premium~ USD 69 million (one time event)
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