Contact Energy Limited · NZX:CEN
Contact Energy — Merger or Acquisition (December 2017)
12 slides from Contact Energy's merger presentation, Dec 21, 2017
Slide 1: Sale of the Ahuroa Gas Storage facility
Sale of the Ahuroa Gas Storage facility Portfolio optimisation Dennis Barnes, Chief Executive Officer Graham Cockroft, Chief Financial Officer Contact Energy Annual meeting of shareholders 21 December 2017 December 2017
Slide 2: Disclaimer
Disclaimer Not financial product advice: This presentation is for information purposes only and is not financial or investment advice or a recommendation to acquire Contact Energy's (Contact) securities, and has been prepared without taking into account the objectives, financial situation or needs o
Slide 3: Contents
Contents Strategic rationale 4-7 Key transaction terms 8 Financial impact and timeline 9 - 10 Commercialising AGS 11 AGS history 12 Contact Energy December 2017 Sale Annual of the meeting Ahuroa Gas of shareholders Storage Facility 3
Slide 4: Contact's strategy is to optimise the Customer and Generation businesses to deliver strong cash flows
Contact’s strategy is to optimise the Customer and Generation businesses to deliver strong cash flows Customer Generation Will deliver value by providing customers A low cost, long life and flexible generation with choice, certainty and control while portfolio with a continuous improvement reducing
Slide 5: Executing our strategy – Transaction summary
Executing our strategy – Transaction summary » Contact has entered into an agreement to sell the Ahuroa Gas Storage facility (AGS) to Gas Services New Zealand (GSNZ) an associate of First Gas Limited (First Gas). » GSNZ is a provider of operational services for First Gas and other customers. GSNZ op
Slide 6: Creating value for Contact shareholders through the sale of AGS
Creating value for Contact shareholders through the sale of AGS The AGS reservoir is larger than Contact’s Monetising unused GSNZ is a higher Reduction in gas Independent requirements capacity value owner storage costs owner of storage and is capable » By selling the last » GSNZ has a lower » Commit
Slide 7: Contact retains access to competitive storage services compatible with thermal requirements
Contact retains access to competitive storage services compatible with thermal requirements Flexible thermal Supporting Economically 15 year gas Flexible gas at generation is reasonable cost renewables delivering flexibility storage agreement fundamental » Gas storage » New Zealand’s » The amount of
Slide 8: Key transaction terms
Key transaction terms On Completion Post initial expansion (targeted June 2018) (Completion +24 months) Sale price $200m Net cash proceeds $151m - - after tax payable and $1 million in transaction costs Accounting book value $184m Initial term of 15 years, with the ability to extend for further peri
Slide 9: Key financial impacts
Key financial impacts Economics of the 01 BORROWINGS $151m transaction expected to Net cash proceeds applied to borrowings improve with Contact’s foundation rights maintained EBITDAF ($14m) 02 » AGS initial expansion will Annual storage service fee less Contact’s historic costs to operate the facili
Slide 10: Conditions precedent and transaction timeline
Conditions precedent and transaction timeline Limited conditions precedent Contact is targeting transaction completion by the end of FY18 01 Ministerial consent for the transfer of the petroleum mining permit and change of operator Targeted transaction completion. Repayment of 02 Overseas Investment
Slide 11: Commercialising AGS - Available capacity at AGS for new customers
Commercialising AGS - Available capacity at AGS for new customers 25% of the capacity of AGS is available for long term contracting. This will increase post expansion. Current available Post initial Gas storage capacity for expansion services additional (Completion customers +24 months) Storage capa
Slide 12: AGS history
AGS history » In December 2007, in conjunction with Origin Energy’s acquisition of the New Zealand assets of Swift Energy, Contact acquired from Origin the rights to develop an underground gas storage facility using the depleted Ahuroa gas field. The cost of the acquisition was $164m, including 4 PJ
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