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15 November 2017 | 11:43AM BRST

Eneva SA (ENEV3.SA)
A key solution to enhance electricity supply in Brazil: Initiate with Buy
Buy

  
 
  

  
Bruno Pascon
+55(11)3372-0103 | bruno.pascon@gs.com
Goldman Sachs do Brasil CTVM S.A.

We initiate on the power generation and E&P company Eneva S.A. Victor Hugo Menezes
+55(11)3371-0857 | victorhugo.menezes@gs.com
with a Buy rating and a 12-month sum-of-the-parts DCF-based price Goldman Sachs do Brasil CTVM S.A.

target of R$17.0, implying 31% upside vs. 23% for the sector. We Gabriel Francisco
+55(11)3371-0705 | gabriel.francisco@gs.com
view the companys Reservoir-to-Wire model as one of the key Goldman Sachs do Brasil CTVM S.A.
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solutions to increase the robustness of Brazilian power supply given


that it provides the system with base load capacity at lower costs.
With a 75%/25% power / E&P business mix, we forecast Enevas Key Data __________________________________
operating assets to yield 2018-20 free cash flow of 20.6% vs. 12.0% 
  
 
  
for peers, while the portfolio of growth projects could unlock an 
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additional R$13.8-21.8/share, with development visibility starting in %&'


1H2018. GS Forecast ________________________________


   
 
    
 
   
Catalyst  
    
We believe key catalysts over a 12-month timeframe are: (1) the 

  

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potential participation in upcoming greenfield generation auctions
for the companys wind (426 MW) and closing of the cycle (382 GS Factor Profile ____________________________

MW) projects that could unlock an additional R$6.0-7.9/share, as per


 
our assumptions, and (3) improvements in the availability conditions
  
of its coal plant Itaqui (365 MW).
 


Valuation and key risks




 
         
Eneva trades at an implied IRR of 23.2% in real terms and


 
 


2018E-20E free cash flow yields of 20.6%/year vs. the average 

  
    


15.9% and 12.0%/year for its industry peers. Key risks include (1)
Source: Company data, Goldman Sachs Research estimates.
lack of natural gas supply for existing PPAs, (2) lower coal plant See disclosures for details.

availability, and (3) lower success rates in exploratory campaigns.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result,
investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this
report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC
certification and other important disclosures, see the Disclosure Appendix, or go to
www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/qualified as research
analysts with FINRA in the U.S.
Goldman Sachs Eneva SA (ENEV3.SA)

Eneva SA (ENEV3.SA) Balance Sheet (R$ mn) ____________________________________


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15 November 2017 2
Goldman Sachs Eneva SA (ENEV3.SA)

Table of Contents
Detailing Enevas business model 4

A key solution to enhance electricity supply in Brazil: Initiate with Buy 8

1. Legacy assets overdiscounted at current valuations (the status quo) 10

2. Why Enevas model is center-stage in the discussion to improve the power supply robustness in Brazil 12

3. Positive track record in developing and optimizing assets 14

4. Assessing the growth opportunities 15

Revisiting Brazils power S&D and assessing dispatch scenarios for the Parnaiba Complex 16

How to evaluate E&P assets and assess the economics of the Parnaiba Basin 22
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Detailing Enevas potential growth opportunities 29

Appendix 1: A brief overview of Enevas history and ownership structure 35

Appendix 2: E&P brownfield opportunities 38

Appendix 3: Enevas subsidiaries P&L, balance sheet and cash flow 39

Appendix 4: Brazilian Utilities valuation table 54

Disclosure Appendix 55

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Goldman Sachs Eneva SA (ENEV3.SA)

Detailing Enevas business model

Eneva is a power generation and integrated natural gas E&P company, with 2,155 MW
of fully operational generation capacity, and is the operator of 7 natural gas fields with
18.5BCM in 2P reserves in the Parnaiba onshore sedimentary basin in Brazils Maranhao
state. The companys current natural gas production of 8.4mn m3/day is fully connected
to its 1,429MW natural gas thermal complex (Parnaiba complex) and, based on our
estimated average dispatch levels of 50% for the complex per year, the existing
reserves should cover the remaining 10-11 years of useful life of PPAs.

Eneva is the only company that operates under the Reservoir-to-Wire (R2W) model in
Brazil, which basically consists on building thermal power plants supplied by the
companys onshore natural gas reserves. In our view, this business model is among the
key solutions for electricity supply in Brazil given (1) its marginal cost competitiveness
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vs. other thermal generation sources (we estimate R$191/MWh vs. R$257/MWh for
nuclear and R$315/MWh, (2) its relatively short construction period of 2-3 years vs. 4-5
for coal and 7 for nuclear and (3) its suitability to supply peak demand periods and
mitigate spot price volatility. In addition, we highlight the attractive returns of such
integrated energy platform, generating real levered IRRs of 15% at the power plant level
and unlevered IRRs of 20-25% at the wellhead based on Enevas current PPA prices.

Exhibit 1: Enevas power generation assets and portfolio of growth projects


In MW
Installed Capacity Net Capacity
Operational assets Location Source Stake PPA end date
(MW) (MW)
Operational assets
Parnaiba I Maranhao Natural Gas 676.0 100% 676.0 Dec, 2027
Parnaiba II Maranhao Natural Gas 519.0 100% 519.0 Apr, 2036
Parnaiba III Maranhao Natural Gas 178.0 100% 178.0 Dec, 2027
Parnaiba IV Maranhao Natural Gas 56.0 100% 56.0 Dec, 2018
Itaqui Maranhao Coal 360.0 100% 360.0 Dec, 2026
Pecem II Ceara Coal 365.0 50% 182.5 Dec, 2027
Taua Ceara Solar 1.0 100% 1.0
Total operational 2,155.0 1,972.5

Projects with environmental license


Parnaiba expansion Maranhao Natural Gas 2,114.0 100% 2,114.0
Ventos wind complex Rio Grande do Norte Wind 426.0 100% 426.0
Araguaina Complex Maranhao Natural Gas 110.0 100% 110.0
Total potential projects 2,650.0 2,650.0
Grand total 4,805.0 4,622.5

Source: Company data, Goldman Sachs Global Investment Research

Power generation business


Given the fully contracted status of the bulk of Enevas thermal plants, the power
generation business of the company entails above average predictability on the back of
its long term PPAs with an average useful life of 10-11 years, which we estimate
guarantees R$2.2bn in fixed revenue fully adjusted by inflation on an annual basis. As a

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Goldman Sachs Eneva SA (ENEV3.SA)

result, the efficiency of the companys power operations is measured by the variable
component of the revenues, which is ultimately determined by the power plants
availability conditions vs. the contracted availability level at the time of the auction to
build up the plant, that needs to be observed during the entire 20-year PPA period.

If the company was an independent power producer (i.e., not being the supplier of the
fuel for a portion of its thermal plants), the cost of the fuel purchase would have an
100% pass-through nature whenever a given power plant is called to dispatch. This
results in a neutral impact on the thermal plants economics as long as the plants
availability is equal to the levels required by the regulator.

However, in the case of the natural gas thermal plants (two-thirds of its installed
generation capacity), the company is also the supplier of the natural gas. Therefore, the
more efficient the company produces fuel on a cost basis, the higher the return for the
E&P component of the business (as the PPA price of the thermal plants implies a fixed
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natural gas price in US$/MBtu that allows the company to benefit or be penalized if the
cost of the natural gas is lower or higher vs. the PPA reference). As a result, should the
natural gas production price mirror the sale price embedded in the PPA, the EBITDA of
the E&P business would be zero vs. the current R$300mn/year reference (or 25% of
the total estimated EBITDA of the company between 2018-21E).

Exhibit 2: Enevas historical and forecast EBITDA 2015A-2020E


Breakdown in terms of power generation and E&P business segments

57.0% 55.4% 61.3% 66.2% 68.2% 69.2% 70.3%

43.0% 44.6% 38.7% 33.8% 31.8% 30.8% 29.7%

2015A 2016A 2017E 2018E 2019E 2020E 2021E

E&P segment Utilities segment

Source: Company data, Goldman Sachs Global Investment Research

With respect to Enevas coal plants (the remaining one-third of the installed generation
capacity), the company does not own its coal resources and the cost of the commodity
is fully passed through to the PPA based on CIF ARA prices. Given that one of its plants
has an availability below the 95% requirement (UTE Itaqui), there is a negative impact
on the variable portion of this plant upon dispatch for Eneva (although still EBITDA
positive given the fixed revenue component of the plant of R$419mn/year).

Natural Gas integrated E&P business


Enevas E&P business exposure comprises onshore natural gas conventional resources
located in the Parnaiba Basin. The company has concession rights covering an area of
27,547 km2, which is equivalent of 90% of the entire Vaca Muerta area in Argentina

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Goldman Sachs Eneva SA (ENEV3.SA)

(Neuquen basin) of 30,000 km2 (the world second-largest shale gas and fourth-largest
shale oil recoverable resources).

Currently, the entire production capacity of 8.4mn m3/day comes from three fields
(Gavio Real, Gavio Branco and Gavio Vermelho), but Eneva already discovered natural
gas in four other fields (Gavio Azul, Gavio Branco Norte, Gavio Caboclo and Gavio
Preto) that, once developed, could support further capacity increases or lengthening of
existing PPAs or, at least, fully de-risk the scenario of gas supply regardeless of the
existing plants dispatch levels.

The existing 18.5BCM of 2P proven reserves (for more details about the classification of
reserves and an overview of how to evaluate Oil & Gas resources, please refer to the
section How to evaluate E&P assets and assessing the economics of the Parnaiba
Basin) has been consumed at a pace of 1.56BCM per year at the current thermal
dispatch levels of 50% per year.
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The pace of further development of reserves is contigent on (1) additional exploratory


campaigns to de-risk further prospective resources, but more important (2) further
projects to monetize gas resources and the associated economics. This is because the
calculation of reserves is not merely a physical volumes calculation, but rather an NPV
analysis. As a result, if, for example, the company keeps the same cost structure, but oil
prices reduce by 20% in one year, the reserves will go down according to the
reavaluation of the NPV at the new oil price under the same discount rate that, as per
the SEC and SPE (Society of Petroleum Engineers) is normally 10% (or PV10, Present
Value 10, meaning a 10% real discount rate).

Thus, given that Eneva has already found natural gas in four additional fields, the
development of such contigent resources depends on the economic assessment of
future needs of natural gas and which are the alternatives for monetizing such
resources. The learning curve with the onshore natural gas business development has
been accretive for Eneva, with (1) finding costs being reduced to R$0.06/m3 in 2016
(from R$0.13/m3 in 2014), and (2) development costs reaching R$0.06/m3 in 2017 (vs.
R$0.12/m3 in 2014).

It is important to highlight that the assessment of risk for onshore conventional


resources is lower vs. unconventional (shale, tight gas) and notably lower vs. deepwater
offshore resources. Conventional resources development technology dates back to the
mid-1800s, and costs and capex references are predominantly local currency
denominated vs. USD-denominated for offshore deep water resources. Nevertheless, it
is still higher Beta / risk in nature vs. power utilities, as finding and developing reserves
depend on the success rate of exploratory campaigns and also the conversion ratio of
resources into reserves which does not have a linear / normal type of probability curve.

The Reservoir-to-Wire (R2W) model


The power generation and the onshore natural gas businesses intermingle in the
Reservoir-to-Wire (R2W) model. Essentially the model consists of building a natural gas
fired thermal plant at the wellhead and connecting the plant to the Interconnected
Electricity System (SIN) through a dedicated transmission line. In the case of the

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Goldman Sachs Eneva SA (ENEV3.SA)

Parnaiba complex, the plants are only 40-70km away from the SIN. Eneva is currently
the only company that has implemented this model but we expect other companies to
follow given the economics of this model and our view that natural gas thermal plants
will become the key solution to improve the electricity supply robustness in Brazil
(discussed further in the section Why Enevas model is center-stage discussion to
improve the power supply robustness in Brazil).

The attractiveness of the model is that by selling electricity at an average PPA price of
R$216.5/MWh (as of YE2016), Eneva was able to (1) obtain a 15% levered return in real
terms at the thermal plant level, and (2) secure a natural gas sale price of US$4.5/MBtu
vs. the US$1.2-1.5/MBtu production cost implying a 20-25% unlevered return in real
terms at the wellhead (thus for the E&P business). We believe such economics can be
maintained in future developments, as upon the discovery of further natural gas
resources and according to our project finance models for greenfield natural gas
combined cycle plants, the company would require an electricity price of R$191/MWh,
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which would represent one of the cheapest sources of electricity in Brazil and aligned
with the average contracted electricity price in the Regulated Market (ACR) of
R$175-200/MWh (as of YE16). (see our 2017 Outlook note for further details on our
marginal cost estimates in Exhibit 3).

Exhibit 3: Marginal Cost assumptions for each electricity source in Brazil


In R$/MWh
Marginal cost Marginal cost
Construction Leverage and re-leverage Load
Source capex (US$/MW) capex (R$/MW) debt / equity (R$/MWh) - IRR* (US$/MWh) -
period (years) assumptions factor (%)
of 13% IRR* of 13%
Wind 1,182 3,900 3 70/30 5.3% 47.5% 165 50.0

CCGT - R2W 1,047 3,455 3 70/30 5.3% 90.0% 191 57.8

Solar 1,450 4,785 1 85/15 5.3% 27.3% 196 59.5

SHP 1,900 6,269 5 70/30 5.3% 60.0% 230 69.6

HPP 1,186 3,915 5 50/50 5.3% 45.0% 252 76.4

Nuclear 2,183 7,202 7 40/60 5.3% 90.0% 257 77.9

Biomass 1,650 5,445 3 70/30 5.3% 45.0% 278 84.2

CCGT - LNG 1,163 3,839 5 70/30 5.3% 90.0% 289 87.6

Coal 2,100 8,402 5 50/50 5.3% 80.0% 315 95.4

Average 1,540 5,246 4 65/35 5.3% 63.9% 241 73.2

* levered and in real terms

Source: Goldman Sachs Global Investment Research

In addition, we highlight the Ministry of Mines and Energy (MME) already included up to
17 GW of new combined cycle natural gas plants in the 10-year plan (2017-2026)
elaborated by the Electricity Planning Company (EPE), out of which 5.0 GW are in the
form of traditional power supply and up to 12 GW are in the form of peak demand
coverage.

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Goldman Sachs Eneva SA (ENEV3.SA)

A key solution to enhance electricity supply in Brazil: Initiate with Buy

We initiate coverage of Eneva (ENEV3.SA) with a Buy rating and a 12-month


sum-of-the-Parts DCF-based target price of R$17 (presented in Exhibit 4), which implies
an estimated total return of 31% vs. the 23% average for the sector. Eneva is a power
generation and integrated natural gas E&P company with a 75%/25% power / E&P
business mix that we believe is strategically positioned for the new power sector model
in Brazil.

Exhibit 4: SOTP target methodology for Eneva


Price target applies to a 12-month timeframe
CFTE Value R$ / sh Stake CFTE (net)
Parnaiba I 1,072.0 3.4 100.0% 3.4
Parnaiba II 1,781.0 5.7 100.0% 5.7
Parnaiba III 441.4 1.4 100.0% 1.4
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Parnaiba IV / V 28.3 0.1 100.0% 0.1


ItaquI 342.6 1.1 100.0% 1.1
Pecem II 215.8 1.4 50.0% 0.7
Parnaiba Gas Natural 1,088.7 3.5 100.0% 3.5
Holding (151.7) (0.5) 100.0% (0.5)
Fiscal Credit benefits 507.4 1.6 100.0% 1.6
Total 4,818 17.6 17.0

Source: Goldman Sachs Global Investment Research

In our opinion, the four key strengths of the Eneva are:

1. Predictable cash flow generation based on long term PPAs - Enevas generation
volumes (70% of EBITDA) are contracted through PPAs, with a weighted average
remaining life of circa 10-11 years (as of 2017) and possibility of renewal for another
15 years (per regulatory contracts) upon the discovery of additional gas reserves. Per
the terms of the PPAs, base prices are adjusted for fluctuations in inflation on an
annual basis. Such predictable / fully contracted cash flows imply a free cash flow
yield of 20.6%/year for the 2018-20E period, which compares favorably with its pure
generation, transmission and integrated utilities peers trading at 12.0%.
2. Pioneer fully integrated energy platform in Brazil - Eneva is the pioneer in Brazil of
the fully integrated energy platform model, in our view. As per our Project Finance
assumptions for greenfield natural gas-fired power plants and our onshore E&P
development model, we see an average levered IRR of 15% at the power plant level
(75% of equity value) and unlevered IRRs of 20-25% at the wellhead based on
Enevas average PPA prices (25% of equity value).
3. Positive track record in generation projects development and asset
optimization - The company has a proven track record in developing greenfield
natural gas-fired thermal plants, based on (i) average of 14 months between
beginning of construction works and first MWh injected into the electricity grid vs.
historical construction period for the sector of 24-30 months, and ii) capex of
US$600k/MW for open cycle plants (or 25% more efficient vs. industry references
for the regular cost to build up such plants of US$775-850k/MW as per our estimates
and historical projects). In terms of assets optimization, the company runs 1.4 GW of

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Goldman Sachs Eneva SA (ENEV3.SA)

natural gas thermal plants with 154 employees (less than 3% of total fixed revenues)
and total fixed costs represent less than 8% of its fixed revenues.
4. Above average growth opportunities - We see an additional R$17.4/share NPV for
Eneva with the development of companys mapped portfolio of growth projects, out
of which R$6.0-7.9/share does not require additional natural gas reserves (namely, a
wind generation complex and the closing of the cycle of the Parnaiba I plant). We
expect visibility about the gradual development of such initiatives to materialize until
1H2018 period based on companys estimates.

Among the key risks, we highlight:

1. Lack of natural gas supply - Eneva has been using 100% of its natural gas
production of 8.4mn m3/day to cover the dispatch of its 1.4 GW natural gas-fired
thermal plants (Parnaiba complex).If dispatch levels were to significantly rise above
our estimated 50% average for the complex, the company might have to develop
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additional reserves to fulfill its PPAs, which could bring volatility to the stock
performance / risk perception of the case.
2. Lower coal plant availability - Should Enevas coal plants TPP Itaqui and Pecm II
(50% stake) encounter below-average availability conditions (e.g., additional
maintenance stoppages) vs. their contractual commitments of 95%, the companys
EBITDA and earnings could be negatively impacted by associated electricity purchase
costs.
3. Lower success rates in exploratory campaigns - Eneva has a portfolio of
environmentally licensed natural gas thermal projects that could be developed upon
the discovery of additional natural gas resources and the conversion of such
resources into proven reserves. In case of lower success rates in exploratory
campaigns, the potential development of such projects could be jeopardized and the
company may incur higher expenses in additional campaigns to de-risk such
development.

Stock performance since the Re-IPO / valuation


Since Enevas re-IPO offering (October 5, 2017), the stock outperformed the utilities
sector and the equity index (IBovespa) by 20% and 12%, respectively. Based on (1) the
offering size (R$876mn), (2) the 40% free float (or US$566mn), and (3) US$1.4bn market
cap, we expect average daily trading volumes (ADTV) of US$1.5-2.5mn/day (avg volume
range since IPO effects stabilized) which compares to US$100k/day pre-offering and the
average US$9.5mn/day for its peer group. We also highlight that Eneva has been more
defensive vs. pure generation names (AES Tiete and Engie Brasil) given the absence of
generation scaling factor (GSF) risks for Eneva (100% thermal exposure) vs. the stock
performance of such peers that have been weighting negatively for such impacts
(particularly AES Tiete).

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Goldman Sachs Eneva SA (ENEV3.SA)

1. Legacy assets overdiscounted at current valuations (the status quo)

In our TP of R$17.0, we value only the operating assets of Eneva, out of which the last
one became fully operational by May 2016 (Parnaiba II thermal plant). We believe the
NPV of such assets is currently overdiscounted in Enevas valuation. With the offering
being priced at an EV/EBITDA multiple of 4.9x (as of 2018) vs. 6.0x-6.2x for its peer
group, we see the economics of the 10-11 years PPAs as not fully appreciated by
investors.

In our opinion, there are two main concerns from investors regarding legacy assets for
Eneva: (1) potential lack of natural gas supply to fulfill the PPAs under higher dispatch
assumptions for the Parnaibas thermal complex, and (2) the sub-optimum availability of
its coal thermal plants, particularly for UTE Itaqui given higher maintenance
requirements.
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While we share investors concerns about the availability of Enevas coal thermal plants
(and fully reflect the associated impacts in our model), we are less concerned with the
situation of the natural gas supply and dispatch levels for the thermal plants. We outline
briefly below our arguments with respect to both (1) natural gas supply conditions and
risk reward, and (2) our expected thermal dispatch levels. For a detailed assessment of
the dispatch discussion, please refer to the section Revisiting Brazils power S&D and
assessing dispatch scenarios for the Parnaiba Complex.

Natural gas dispatch: more of an opportunity rather than a risk, in our opinion
Currently, 100% of the natural gas production of 8.4mn m3/day comes from three fields
(Gavio Real, Gavio Branco and Gavio Vermelho) out of the seven fields that Eneva
found natural gas. Such production has been consumed at a pace of 1.56BCMs per year,
implying a 10-11 years reserve life given the companys 18.5BCM of 2P Reserves (for
details about reserves category and how to evaluate E&P resources, please refer to the
section How to evaluate E&P assets and assessing the economics of the Parnaiba
basin).

While some investors have raised concerns about natural gas dispatch levels at the
thermal plants and implications for the model, we highlight that (1) the higher the natural
gas dispatch, the higher the front-loading of the 20-25% real returns vs. the 15% return
at the thermal plant as per our project finance model assumptions, and (2) the
incremental EBITDA in the scenario of higher dispatch levels vs. our model assumptions
would suffice to finance exploratory and development of additional natural gas reserves.

Hypothetically assuming a 100% dispatch proxy vs. the 50% assumed by our model,
our estimated EBITDA for Eneva would increase to R$1.65bn/year vs. our R$1.25bn/year
(all else equal) an incremental cash generation of R$300mn/year (net of taxes) that
could be used to finance the R$100-300mn full costs in the development of additional
gas reserves (we note the company is currently undergoing a deleveraging process).
With the higher EBITDA and front-loaded IRR, we believe market concerns are based
primarily on the risks that additional exploratory campaigns may not yield any results and
Eneva would run out of natural gas in 5-6 years vs. the PPA life of 10-11 years.

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Goldman Sachs Eneva SA (ENEV3.SA)

Moreover, given that the Parnaiba region has a geographic isolation from structural gas
pipelines, we believe one viable option (given the lack of intrastructure in the region) to
monetize gas in the region is to develop gas-fired thermal power plants (TPPs) and sell
electricity to the grid. As a result, Eneva could potentially acquire proven reserves from
pure E&P players that operate in the Parnaiba region in order to de-risk gas shortages to
cover the already in-place PPAs. There are more than 72,718 km2 in concession blocks
in the Parnaiba Basin from E&P players (Petrobras, Ouro Preto, Galp and Vipetro) that
could be potential targets for Eneva, and increase the companys gas reserves (for more
details please see Appendix 2).

As such, we see any announcement of additional natural gas discoveries, the conversion
of resources into proven reserves, and M&A activity as a key catalyst for the stock
(de-risking the supply of existing PPAs and / or unlocking additional power capacity to be
built).
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15 November 2017 11
Goldman Sachs Eneva SA (ENEV3.SA)

2. Why Enevas model is center-stage in the discussion to improve the


power supply robustness in Brazil

Brazil has had a predominant renewable component in its electricity mix since the early
stages of the power sector, when the large hydro power plants were built between the
1940s and the 1960s. With the advent of the 2001-02 power rationing owing to poor
hydrology, there was a concentrated effort in building up thermal power capacity to turn
the system less rainfall/hydrology dependent an effort that was only resumed by
2007-08 when the coal plants of Eneva were auctioned. Since the introduction of the
new sector model rules in March 2014 and the implementation of auctions for new
generation capacity, there was a heightened focus on developing run-of-the-river hydro
plants in the Amazon region, combined with biomass, small hydro power plants and,
more predominantly, wind capacity during the 2009 and 2015 period. More recently,
there has also been some focus on developing solar power plants given lower
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development costs.

While from an economic point of view we believe there shouldnt be issues in the
continued development of unconventional renewable sources as the government has
been providing the proper returns for investments from a supply robustness point of
view, the fact that Brazil has been developing sources with above-average dispatch
variability has turned the sector excessively dependent to rainfall conditions. In fact, as
discussed in our Reshaping Brazilian Power Utilities note (July 30, 2017), the
reservation capacity of the power system in Brazil which is measured by the amount
of months in a year that the existing reservoir capacity could cover the demand without
a single drop of rainfall declined from eight months in 2005 to 4.3 months in 2016.
With the dry season in Brazil lasting seven months every year (May to November), the
Beta of the spot electricity price (measured by its volatility) increased significantly.
Depending on the level of rainfall vs. the historical average, the spot price could vary
between the minimum R$30-35/MWh to the maximum of R$800-850/MWh in a matter
of months.

Given this context, since the new Ministry of Mines and Energy (MME) cabinet took
office on May 12, 2016, the government introduced an open dialogue practice in order to
discuss, among other things, how to guarantee the supply of electricity in the lowest
possible cost in Brazil, while offering a secure and predictable business environment to
reinstate the secular defensiveness of the power sector and providing a correct pricing
signal for short term electricity prices.

As a result of this consultation process (an ongoing one), it became clear for the
government that, on top of continuing to develop unconventional renewable sources,
Brazil would need to put in place more thermal capacity both as base load and also peak
demand coverage in order to improve the robustness of the power supply. Among the
three key alternatives (natural gas, coal and nuclear), natural gas thermal plants emerged
as the most competitive source in terms of marginal costs and also the most adapted to
cover peak demand in the new power sector that started to be designed, given it
provides the system with baseload capacity.

15 November 2017 12
Goldman Sachs Eneva SA (ENEV3.SA)

Therefore, the MME with a coordinated effort to look at the natural gas chain both
through the eyes of the energy (Gas para Crescer and REATE initiatives) and utility
(Public Consultation #33) sectors considers the R2W model as a key one to be
replicated to the other sedimentary basins in Brazil (Sao Francisco, Recncavo Baiano,
Paran, Amazonas, Parecis, Solimes).

Key advantages of a natural gas thermal plant vs. other thermal sources, in our view:

1. It has the lowest marginal cost amongst the thermal sources: We estimate
R$191/MWh vs. R$257/MWh for nuclear and R$315/MWh for coal based on our
Project Finance models and our estimated 13% levered IRR in real terms for
greenfield generation projects.
2. It has the shortest construction period (onshore resources): A combined cycle
natural gas thermal plant can be constructed in 2-3 years vs. 4-5 years for coal plants
and 7 years for nuclear plants.
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3. It is the most suitable source to supply peak demand: Peak hours demand are
regular and therefore the government can set specific time for the dispatch of the
thermal plant within the 24 hours of the day. By having a predictable dispatch
assumption, companies can optimize the pressure in natural gas wells so that it
could maximize the useful life of a given field.
4. It reduces the systems operational costs and spot electricity price volatility:
Similar to Chile, it is important to have backup thermal capacity that would only be
dispatched upon scenarios of stress in hydrology. According to our estimates, if
Brazil had invested in LNG-fired thermal plants during the 2013-2016 period, our
analysis implies it could have reduced the negative impact from the GSF (Generation
Scaling Factor) by 50% (from R$46bn to R$23bn) by capping the spot prices at the
sources average dispatch prices of R$275-325/MWh vs. witnessed levels of up to
R$800-850/MWh (or to 25%-35% of the value if it had invested in onshore natural
gas plants). Therefore, by increasing the natural gas capacity, the electricity systems
costs will reduce significantly, as well as the volatility in spot prices and GSF negative
economic impacts.

15 November 2017 13
Goldman Sachs Eneva SA (ENEV3.SA)

3. Positive track record in developing and optimizing assets

Eneva has a proven track record in developing greenfield natural gas-fired thermal plants
(62% of its equity value):

n Average of 14 months between beginning of construction works and first MWh


injected into the electricity grid;
n Capex of US$0.6mn/MW for open cycle plants: 25% more efficient vs. the regular
cost to build up open cycle plants of US$775-850mn/MW, as per our estimates and
historical projects;
n Capex of US$1.15mn/MW for combined cycle plants: 4% more efficient vs. the
regular cost to build up combined cycle plants of US$1.1-1.3mn/MW, as per our
estimates and historical projects.
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The company also has lean operations:

n 154 professionals to run 1.4 GW of commercial natural gas capacity (< 3% of total
fixed revenues);
n Start-up of Parnaiba II (July 2016) led to 75% increase in fixed revenues vs. 16%
reduction in operating costs in 1H17 (yoy);
n Fixed costs account for < 8% of fixed revenues.

For the E&P business (21% of the equity value), the company was able to reduce since
2014 (1) drilling costs by 16%, (2) lead time of drilling from 25 to 14 days, and (3)
pipeline costs by 16%, or a combined cost per unit reduction of 31% (from R$10.5mn to
R$7.2mn).

The only portion of the business that lacks operational upgrades are the coal-fired
thermal plants (11% of its equity value) that, could lead to an incremental EBITDA of
R$50mn/year based on our model assumptions on top of the current R$150mn/year,
when and if turned around.

15 November 2017 14
Goldman Sachs Eneva SA (ENEV3.SA)

4. Assessing the growth opportunities

Eneva has a portfolio of growth generation projects of 2,650 MW, out of which 2,224
MW from natural gas-fired thermal plants and 426 MW from wind power plants. On top
of such projects, the company has also two additional sources of growth being (1) the
closing of the cycle of the Parnaiba I thermal plant (382 MW), and (2) the potential
repricing of existing PPAs for another 15 years (per regulatory contracts) upon the
maturity in 10-11 years, in order to match the plants concession terms.

Both the wind and the closing of the cycle are projects that dont require additional
natural gas discoveries and we estimate could add R$5.97-7.86/share to Enevas current
SOTP equity value, when and if developed. We estimate the remaining 2,224 MW of
greenfield natural gas plants and the potential re-pricing of the existing PPAs would
require the development of additional 63.2bn m3 of reserves vs. the existing 18.5bn
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m3. We provide our assumptions for each of the projects in detail in the section
Detailing Enevas growth opportunities.

Exhibit 5: Enevas growth opportunities


In R$/sh

Eneva's potential growth opportunities

NPV impact (R$/sh)

Project Methodology description

Lower range Upper range

Based on our proprietary model for the closing of the cycle of Parnaiba I, in
1 Parnaiba I closing of the cycle 5.27 6.31
addition to dispatch assumptions between 50% and 100%.

Based on our project finance references for wind generation projects, in


2 Santo Expedito wind project 0.70 1.55 addition to (1) load factors between 42% and 48% and (2) the inclusion or
not of the ADENE fiscal benefit of 75% of income tax

Subtotal - not natural gas dependent 5.97 7.86

3 New Parnaiba Complex 6.89 9.91

Based on our project finance model assumptions for R2W projects, in


3.1 Natural gas thermal plants 3.74 6.76 addition to real levered IRRs between 11% and 15% (in line with the
variation of the Brazilian CDS over the last two years)

3.2 Natural gas supply (E&P) 3.15 3.15

4 Araguaina Project 0.36 0.52

Based on our project finance model assumptions for R2W projects, in


4.1 Thermal plant 0.19 0.35 addition to real levered IRRs between 11% and 15% (in line with the
variation of the Brazilian CDS over the last two years)

4.2 Natural gas supply (E&P) 0.16 0.16

Assumes a real levered IRRs between 11% and 15% (in line with the
5 Renewal of existing PPAs 0.60 3.50
variation of the Brazilian CDS over the last two years)

Total growth opportunities (1+2+3+4+5) 13.82 21.79

Source: Goldman Sachs Global Investment Research

15 November 2017 15
Goldman Sachs Eneva SA (ENEV3.SA)

Revisiting Brazils power S&D and assessing dispatch scenarios for the
Parnaiba Complex

The Brazilian National Interconnected System (SIN) is composed of four main


subsystems: (1) the Southeast/Center-West (or SE/CO); (2) the South (or S); (3) the
Northeast (or NE) and (4) the North (or N). The Parnaiba Complex is a part of the North
sub-system which, despite its significant electricity production capacity, is not able to
fully export its production given the partial isolation of the subsystem.

In our view, we see two dispatch dynamics for the Parnaiba complex during the
2018-2027 period (the range of the majority of Enevas PPAs): (1) 50% dispatch levels
until YE23, reflecting of transmission restrictions in the North subsystem that prevent a
higher dispatch scenario (given the excess supply generated from hydro power plants in
the rainy season mainly from HPP Belo Monte and Tucurui), and (2) 75-80% dispatch
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levels from 2024 onwards, with the full start-up of the transmission assets which were
previously owned by Abengoa by YE23, therefore allowing low cost energy exports to
other Brazilian sub-systems (mainly from TPP Parnaiba I and II). In the section below, we
outline the main assumptions for our dispatch scenarios.

Dispatch levels to remain at 50% until 2023 on transmission constraints


The North sub-system has a total installed capacity of 18.7GW (as of October 2017),
which is divided into (1) reservoir hydro power plants (with 11.3GW, or 60.0% of the
total); (2) run-of-the-river hydro power plants (HPP Belo Monte, with 3.7GW, or 19.6% of
the total) and (3) thermal power plants (with 3.8GW, or 20.4% of the total). Moreover,
additional capacity is expected through the expansion of HPP Belo Monte, that is
scheduled to reach 7.4GW by May 2019 and its full 11.3GW capacity by YE2021.

Exhibit 6: Snapshot of North sub-system


Sub-system Installed Capacity
North (N) 18,701 MW
Total Installed capacity (Oct/17) 18,701 MW Projected expansion of the N export capacity (MW)
Reservoir HPPs 11,225 MW
HPP Belo Monte 3,667 MW 12,600
8,600
Thermal power plants 3,809 MW
5,600

North's exports capacity 5,600 MW


Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19

North sub-system installed capacity breakdown (Oct-17) HPP Belo Monte installed capacity ramp-up (MW)

Thermal HPP Belo 7,333


6,722
power Monte 6,111
plants 19.6% 5,500
20.4% 4,889
4,278
Reservoir 3,667
HPPs
60.0%
Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19

Source: ONS, Goldman Sachs Global Investment Research

The current supply capacity of the sub-system is more than enough to cover its demand
of 4GW, and therefore could export its excess electricity to the rest of the country with
a lower marginal cost (CVU) vs. the maximum spot price of R$533/MWh allowed by
regulator ANEEL (anything beyond is considered out of merit dispatch). Nevertheless,

15 November 2017 16
Goldman Sachs Eneva SA (ENEV3.SA)

the current sub-systems export capacity is constrained at 5.6GW due to the delays in
transmission lines previously owned by Abengoa (that will be re-auctioned), which are
expected to be fully developed only by YE2023. As a result, higher thermal dispatch
from low marginal cost power plants is prevented given excess supply generated from
hydro power plants, and therefore TPPs with higher costs are dispatched in other
sub-systems to cover their own demand needs.

Exhibit 7: Thermal dispatch in the North sub-system could be higher in case there were no exports limitations

16,000.0 700.0
Lower marginal electricity prices in
14,000.0 Start-up of HPP Belo the North; if there were no exports
limitation, N's TPPs would have 600.0
Monte's operations
supplied the SE/CO
12,000.0
500.0
10,000.0
400.0
8,000.0
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

300.0
6,000.0
200.0
4,000.0

2,000.0 100.0

0.0 0.0
Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17

Hydro generation (MW) North sub-system spot prices (R$/MWh) SE/CO sub-system spot prices (R$/MWh)

Source: ONS, Goldman Sachs Global Investment Research

In the scenario of continued transmission constraints, based our proprietary S&D model
for the North sub-system, we estimate that the average dispatch levels of the Parnaiba
thermal power plant complex should remain in the 50-60% levels (in-line with dispatch
observed in 2017), despite the low CVU of Enevas TPP (Parnaiba I and II with CVUs
below R$120/MWh). Our analysis assumes (1) normalized hydrology scenarios of 100%
of the historical average, and (2) electricity demand growth of 3% yoy (as per our
regression models).

15 November 2017 17
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 8: Base case reservoir supply and demand model for the North sub-system
Assuming 0% discount to historical rainfall levels and 3GW exports addition in Mar/18

Assuming HPPs' 18E/19E generation 15%/20% above assured energy

Total Supply North sub-system Rainy season 2017/2018 Dry season 2018 Rainy season 2018/2019 Dry season 2019 2018 2019
Reservoir hydro generation (MW) 6,427.0 6,386.8 6,962.3 6,664.5 6,547.6 6,832.3
Belo Monte generation (MW) 2,893.3 1,694.8 4,661.2 2,510.6 2,504.7 3,684.8
Installed capacity (MW) - eop 4,278.0 6,111.0 6,722.0 7,333.0 6,111.0 7,333.0
Capacity additions (MW) 611.0 1,833.0 611.0 611.0 2,444.0 1,222.0
Load factor (%) 72.3% 32.4% 72.3% 34.2% 53.1% 53.1%
Total Hydro generation (MW) 9,320.4 8,081.6 11,623.4 9,175.1 9,052.3 10,517.1

Total demand (MW) 10,551.3 12,737.9 12,662.2 12,870.3 12,174.8 13,129.4

Electricity exports capacity (MW) - eop 8,600.0 8,600.0 8,600.0 8,600.0 8,600.0 12,600.0
capacity additions (MW) 3,000 0 0 0 3,000 4,000

North sub-system Demand (MW) 3,940.3 4,137.9 4,062.2 4,270.3 4,059.7 4,189.6
yoy (%) 2.2% 2.9% 3.1% 3.2% 2.9% 3.2%

Conventional thermal generation 1,967.0 5,063.7 2,304.1 4,617.4 3,692.9 3,704.6


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Eneva's generation (MW) 462.7 1,141.7 472.2 917.8 805.0 696.8


Parnaiba II 174.9 431.6 179.6 346.9 304.3 264.0
Parnaiba I 227.8 562.1 232.5 451.9 396.3 343.1
Parnaiba III 60.0 148.0 60.0 119.0 104.4 89.7

Dispatch levels (%) 33.7% 83.2% 34.4% 66.8% 58.6% 50.8%


Parnaiba II 33.7% 83.2% 34.6% 66.8% 58.6% 50.9%
Parnaiba I 33.7% 83.2% 34.4% 66.8% 58.6% 50.8%
Parnaiba III 33.7% 83.2% 33.7% 66.8% 58.6% 50.4%

Source: Goldman Sachs Global Investment Research

We highlight that dispatch levels in the Parnaiba complex are highly dependent on
hydrology scenario, given 80% of the North sub-system power capacity comes from
hydro resources. As a result, for illustrative purposes, we have developed a sensitivity
analysis of the average dispatch for Enevas gas fired TPP under different hydrology
scenarios. As per our proprietary S&D model, assuming (1) hydrology of 70% of the
historical average (in-line with 2017), we estimate an average dispatch of 78%-92% and,
(2) hydrology of 50% of the historical average (worst rainfall observed in the dataset
available) we estimate an average dispatch of 100%.

15 November 2017 18
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 9: 30% discount to historical rainfall - reservoir supply and demand model for the North sub-system
Assuming 30% discount to historical rainfall levels and 3GW exports addition in Mar/18

Assuming 18E/19E GSF cuts of 20%/15%

Total Supply North sub-system Rainy season 2017/2018 Dry season 2018 Rainy season 2018/2019 Dry season 2019 2018 2019
Reservoir hydro generation (MW) 4,668.6 4,443.0 4,919.8 4,720.7 4,554.9 4,839.5
Belo Monte generation (MW) 2,893.3 1,694.8 4,661.2 2,510.6 2,504.7 3,684.8
Installed capacity (MW) - eop 4,278.0 6,111.0 6,722.0 7,333.0 6,111.0 7,333.0
Capacity additions (MW) 611.0 1,833.0 611.0 611.0 2,444.0 1,222.0
Load factor (%) 72.3% 32.4% 72.3% 34.2% 53.1% 53.1%
Total Hydro generation (MW) 7,561.9 6,137.8 9,580.9 7,231.3 7,059.5 8,524.3

Total demand (MW) 10,551.3 12,737.9 12,662.2 12,870.3 12,174.8 13,129.4

Electricity exports capacity (MW) - eop 8,600.0 8,600.0 8,600.0 8,600.0 8,600.0 12,600.0
capacity additions (MW) 3,000 0 0 0 3,000 4,000

North sub-system Demand (MW) 3,940.3 4,137.9 4,062.2 4,270.3 4,059.7 4,189.6
yoy (%) 2.2% 2.9% 3.1% 3.2% 2.9% 3.2%

Conventional thermal generation 2,989.4 6,600.0 3,098.7 5,896.6 5,115.3 4,743.5


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Eneva's generation (MW) 1,180.2 1,343.0 992.2 1,141.7 1,262.3 1,067.6


Parnaiba II 448.5 519.0 403.5 431.6 484.0 417.7
Parnaiba I 581.2 676.0 498.2 562.1 629.0 530.4
Parnaiba III 150.5 148.0 90.5 148.0 149.2 119.5

Dispatch levels (%) 86.0% 97.8% 72.3% 83.2% 91.9% 77.8%


Parnaiba II 86.4% 100.0% 77.8% 83.2% 93.3% 80.5%
Parnaiba I 86.0% 100.0% 73.7% 83.2% 93.0% 78.5%
Parnaiba III 84.5% 83.2% 50.8% 83.2% 83.8% 67.1%

Source: Goldman Sachs Global Investment Research

Exhibit 10: 50% discount to historical rainfall - reservoir supply and demand model for the North sub-system
Assuming 50% discount to historical rainfall levels and 3GW exports addition in Mar/18

Assuming 18E/19E GSF cuts of 43%/40%

Total Supply North sub-system Rainy season 2017/2018 Dry season 2018 Rainy season 2018/2019 Dry season 2019 2018 2019
Reservoir hydro generation (MW) 3,513.0 3,165.6 3,477.1 3,332.2 3,245.3 3,416.1
Belo Monte generation (MW) 2,893.3 1,694.8 4,661.2 2,510.6 2,504.7 3,684.8
Installed capacity (MW) - eop 4,278.0 6,111.0 6,722.0 7,333.0 6,111.0 7,333.0
Capacity additions (MW) 611.0 1,833.0 611.0 611.0 2,444.0 1,222.0
Load factor (%) 72.3% 32.4% 72.3% 34.2% 53.1% 53.1%
Total Hydro generation (MW) 6,406.3 4,860.5 8,138.2 5,842.8 5,750.0 7,101.0

Total demand (MW) 10,551.3 12,737.9 12,662.2 12,870.3 12,174.8 13,129.4

Electricity exports capacity (MW) - eop 8,600.0 8,600.0 8,600.0 8,600.0 8,600.0 12,600.0
capacity additions (MW) 3,000 0 0 0 3,000 4,000

North sub-system Demand (MW) 3,940.3 4,137.9 4,062.2 4,270.3 4,059.7 4,189.6
yoy (%) 2.2% 2.9% 3.1% 3.2% 2.9% 3.2%

Conventional thermal generation 4,145.0 7,877.4 4,524.0 7,027.4 6,424.8 6,028.4

Eneva's generation (MW) 1,373.0 1,373.0 1,373.0 1,343.0 1,373.0 1,357.9


Parnaiba II 519.0 519.0 519.0 519.0 519.0 519.0
Parnaiba I 676.0 676.0 676.0 676.0 676.0 676.0
Parnaiba III 178.0 178.0 178.0 148.0 178.0 162.9

Dispatch levels (%) 100.0% 100.0% 100.0% 97.8% 100.0% 98.9%


Parnaiba II 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Parnaiba I 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Parnaiba III 100.0% 100.0% 100.0% 83.2% 100.0% 91.5%

Source: Goldman Sachs Global Investment Research

Long term dispatch to reach 75-80% and bring robustness to Brazils power S&D
Since 2015, the Brazilian electricity market has experienced an 8% cumulative demand
reduction on the back of the downturn in domestic economic activity (reaching pre-2013
demand levels) resulting in an oversupply status in the Brazilian power market. As a

15 November 2017 19
Goldman Sachs Eneva SA (ENEV3.SA)

result, there were only 4 auctions for new generation capacity took place between
2015-17, and therefore the contracted capacity increase for the next decade is limited to
a 1.7% CAGR (or a 27.2GW addition).

Exhibit 11: Contracted expansion to the Brazilian Installed Capacity


In MW

Source 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Biomass 129 172 324 71 155 0 0 0 0 0
Wind 2,818 2,755 1,048 0 0 0 0 0 0 0
Hydro 5,148 5,000 2,162 0 0 142 0 0 0 0
SHP 232 218 123 264 0 0 0 0 0 0
Solar 940 1,029 670 0 0 0 0 0 0 0
Thermal 591 28 340 1,521 0 0 0 0 0 1,405

Source: Goldman Sachs Global Investment Research


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Moreover, 3Q2017 distribution volumes have shown signs of an inflection point in power
demand as the Brazilian economy starts to recover, which combined with the below
average rainfall levels and the auctions to un-contract electricity to address the power
distributors over-contracted status, have reduced the previous power oversupply and
started to pressure upwards marginal costs. As such, assuming our electricity demand
growth of 3% per year, we estimate that by 2025 demand would exceed the already
contracted generation capacity in the country (in the absence of further auctions).

Exhibit 12: Evolution of spot prices and rainfall levels in Brazil Exhibit 13: With our electricity demand growth of 3% per year,
demand could exceed the available supply by 2025

14,000.0 600.0
90,000
12,000.0 500.0
85,000
10,000.0
400.0 80,000
8,000.0
300.0 75,000
6,000.0
200.0 70,000
4,000.0
65,000
2,000.0 100.0
60,000
0.0 0.0
55,000
Jul-15

Jul-16

Jul-17
Jan-15

Jan-16

Jan-17
Oct-15

Oct-16

Oct-17
Apr-15

Apr-16

Apr-17

50,000
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
ENA - Rainfall (MW - LHS) Spot prices (R$/MWh - RHS)
Total Brazilian Supply (MW) Total Demand - Gross of Losses (MW)

Source: ONS, CCEE Source: Goldman Sachs Global Investment Research

In order to increase the robustness of the Brazilian power S&D, the government plans to
increase the export capacity from the North sub-system by 3GW in March 2018 and
4GW in 2020 (vs. the current constrained capacity of 5.6GW), since the excess
generation in the North could compensate shortages in the other sub-systems,
especially after Belo Montes full additional capacity is incorporated. In addition, the
transmission lines previously owned by Abengoa that experienced severe delays vs. the
initial start-up date, will be re-auctioned and are expected to be fully developed only by
YE2023.

15 November 2017 20
Goldman Sachs Eneva SA (ENEV3.SA)

As per our calculations, assuming no transmission lines restrictions and the full
connection of Belo Montes capacity of 11.3GW, the North sub-system could export a
total 9-12GW / year to the SE/CO and NE sub-systems, thereby reducing the overall
marginal cost of operation in the Brazilian matrix.

In the scenario of increased export capacity in the North sub-system, based on our
proprietary reservoir power models, we expect the Parnaiba Complex to dispatch an
average 75% given the low marginal cost of the thermal power plants. In our base case
scenario, we assume (1) Parnaiba II (with a CVU of R$77/MWh) should dispatch almost
full time (92% yearly dispatch), (2) Parnaiba I (with a CVU of R$112/MWh) should
dispatch from April through November (75% yearly dispatch), and (3) Parnaiba III (with a
CVU of R$188/MWh) should dispatch 5-6 months per year (50% yearly dispatch).

Exhibit 14: Brazilian S&D model assuming full Belo Monte capacity and no exports limitations
Brazil S&D model assuming full Belo Monte capacity and no exports limitations
Normalized ENA (0% discount to historical avregae) and no GSF cuts
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Total Supply North sub-system Rainy season 2023/2024 Dry season 2024 Rainy season 2024/2025 Dry season 2025 2024 2025
North 7,572.8 8,764.9 15,766.6 8,764.9 11,676.5 11,661.5
Reservoir hydro generation (MW) 9,250.5 5,129.4 6,493.1 5,129.4 5,696.9 5,693.6
Belo Monte generation (MW) 11,233.0 3,635.5 9,273.5 3,635.5 5,979.6 5,968.0
Installed capacity (MW) - eop 11,233.0 11,233.0 11,233.0 11,233.0 11,233.0
Capacity additions (MW) 0.0 0.0 0.0 0.0 0.0
Load factor (%) 82.4% 32.4% 82.6% 32.4% 53.2% 53.1%
Northeast 6,038.6 5,287.5 6,177.1 5,287.5 5,640.0 5,655.5
Southeast/Center West 30,551.2 28,627.9 31,132.0 28,627.9 29,582.8 29,663.9
South 9,616.8 9,312.8 9,338.3 9,312.8 9,297.9 9,323.3
Total Hydro generation (MW) 63,029.9 51,993.1 62,414.0 51,993.1 56,197.3 56,304.2

Total Wind generation 5,481.1 7,861.6 5,783.6 7,861.6 6,998.3 7,001.9


Load factor 32.9% 47.2% 34.7% 47.2% 42.0% 42.1%
Total Solar generation 499.6 488.6 491.5 488.6 489.9 489.8
Load factor 18.8% 18.4% 18.5% 18.4% 18.4% 18.4%
Total Nuclear generation 1,994.9 1,789.1 1,828.8 1,789.1 1,806.1 1,805.5
Load factor 100.2% 89.9% 91.9% 89.9% 90.8% 90.7%

Total supply ex-thermal (MW) 71,005.5 62,132.4 62,113.7 62,132.4 65,491.5 65,601.5

Total demand (MW) - gross of losses 74,835.9 71,947.5 72,274.8 74,249.8 72,978.5 75,520.2
yoy (%) 3.2% 3.2% 3.2% 3.2% 3.2% 3.2%
Losses 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

Conventional thermal generation 3,830.4 9,815.1 10,161.1 47,502.6 7,487.0 9,918.7

Eneva's generation (MW) 386.0 1,252.3 1,347.2 1,347.2 1,070.0 1,270.2


Parnaiba II 386.0 519.0 519.0 519.0 475.0 519.0
Parnaiba I 329.6 581.1 676.0 676.0 506.0 618.6
Parnaiba III 0.0 152.2 152.2 152.2 89.0 132.6

Dispatch levels (%) 52.1% 91.2% 98.1% 98.1% 77.9% 92.5%


Parnaiba II 74.4% 100.0% 100.0% 100.0% 91.5% 100.0%
Parnaiba I 48.8% 86.0% 100.0% 100.0% 74.9% 91.5%
Parnaiba III 0.0% 85.5% 85.5% 85.5% 50.0% 74.5%

Reservoir levels (%) eop 64.8% 31.8% 35.5% 37.6% 35.5% 40.9%

Source: Goldman Sachs Global Investment Research

15 November 2017 21
Goldman Sachs Eneva SA (ENEV3.SA)

How to evaluate E&P assets and assess the economics of the Parnaiba
Basin

Enevas business plan revolves around the Reservoir-to-Wire (R2W) model, that basically
consists of Enevas thermal power plants being supplied by the companys onshore
natural gas fields. In this section, we explain how the E&P business works by dividing its
chain into four stages.

The exploration stage


In Brazil, regulator ANP is responsible for auctioning new exploratory blocks, with
companies acquiring concessions to explore a given area. These concessions are
granted through three main E&P models, which are (1) the Concession model, (2) the
Production Sharing model and (3) the Transfer of Rights model. Given the Concession
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model is the usual method to acquire onshore natural blocks, we provide in Exhibit 15 a
summary of the Concession auctions held in Brazil to date. This model predicts a total
government take comprising (1) royalties, with tax rate ranging between 5%-15%, (2)
income and other indirect taxes, (3) special participation fees, (4) area occupation
payments and (5) reimbursement for the land expropriation.

Exhibit 15: Summary of the Concession Oil Rounds in Brazil to date


1st 2nd 3rd 4th 5th 6th 7th 9th 10th 11th 12th 13th 14th
Oil Rounds Total
1999 2000 2001 2002 2003 2004 2005 2007 2008 2013 2013 2015 2017
Blocks offered 27 23 53 54 908 913 1,134 271 130 289 240 266 287 4,595
Blocks auctioned 12 21 34 21 101 154 251 117 54 142 72 37 37 1,053
Onshore 0% 43% 21% 48% 20% 58% 84% 56% 100% 61% 100% 95% 65% 65%
Offshore 100% 57% 79% 52% 80% 42% 16% 44% 0% 39% 0% 5% 35% 35%
Auctioned area (th.km2) 54.7 48.1 48.6 25.3 22.0 39.7 194.7 45.6 48.0 100.4 47.4 33.6 25.0 733.1
Area offshore (%) 100% 79% 95% 58% 97% 93% 4% 29% 0% 35% 0% 4% 33% 38%
Blocks to Eneva 0 0 0 0 0 0 0 7 0 0 0 7 5 19

Source: Goldman Sachs Global Investment Research

After the exploratory blocks are granted, companies will start to conduct their
exploratory campaigns, which usually last between three and seven years. During this
period, geological and geophysical analysis will take place to try to identify the fields
real potential, with the main technique being the seismic data, which basically uses the
principles of sound refraction to determine the geological formation of the fields. If the
conclusions are positive, operators will contract oilfield services companies to drill an
exploratory well (or wildcat well) and reach the natural gas reservoir to make a final
decision on whether to continue E&P activities in the fields or to abandon them. Given
the uncertainty around the actual presence of hydrocarbons in the exploratory blocks,
the E&P is considered a high risk - high reward business.

Specifically for Eneva, the company is the sole operator of onshore fields in the Parnaiba
basin under the concession model. The Parnaiba basin is one of the four big paleozoic
Brazilian syneclises, providing above average quality dry gas accumulations with high
quality sandstone reservoirs. Out the over 100 drilled wells in the Parnaiba Basin, the
average exploratory success rate of wildcat wells has reached 37%, reducing the finding
costs to R$0.06/m3 (vs. R$0.13/m3 in 2014).

15 November 2017 22
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 16: Enevas E&P assets portfolio Exhibit 17: Map of Enevas E&P assets
Eneva's concessions
Bid Round Field Area (km2)
9 Gavio Real 152
9 Gavio Branco 269
9 Gavio Vermelho 66
9 Gavio Azul 64
9 Gavio Branco Norte 12
9 Gavio Caboclo 66
9 Gavio Preto 261
Bid Round Field Area (km2)
9 7 Evaluation plans 5329
13 7 exploratory blocks 21,328
14 5 exploratory blocks 13,509
Total Area under concession 41,056
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Source: Company data Source: Company data

The appraisal stage


The E&P business is all about wells; after companies decide to continue activities in a
field, operators will intensify drilling activities in order to determine more precisely the
volumes of hydrocarbons in place. However, we note that volume in place and actual
reserves are different concepts. The volume in place is a physical concept that defines
the quantity of hydrocarbons in a reservoir, while the reserves are an economic
concept, being the quantity of gas that can be economically recovered assuming an
hurdle rate (given international crude oil prices). As a result, reserves will be only a
fraction of the fields volume in place, with this fraction being denominated as recovery
factor. For context, the global average recovery factor is 35%. Finally, we highlight that
reserves assume different probability scenarios, with the main references being:

1. 1P reserves (also P90 reserves or proven reserves): the quantity of gas that can be
economically recovered with a 90% probability.
2. P50 reserves (also probable reserves): the additional quantity of gas (on top of the
P90 reserves) that can be economically recovered with a 50% probability.
3. 2P reserves: the sum of the P90 and P50 reserves, which will have a weighted
probability of being recovered between 50% and 90%.
4. P10 reserves (also possible reserves): the additional quantity of gas (on top of the
P90 and P50 reserves) that can be economically recovered with a 10% probability.
5. 3P reserves: the sum of P90, P50 and P10 reserves, which will have an weighted
probability of being recovered between 10% and 90%.

15 November 2017 23
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 18: Oil and gas reserves definition

1P (or P90 P50 2P reserves P10 3P reserves


reserves)

Source: Goldman Sachs Global Investment Research

The development stage


In possession of the appraisal information, operators will determine which will be the
best strategy to maximize the recovery factor of the fields with the lower possible cost.
The most important factor that influences this decision is whether the field contains
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conventional or unconventional resources. The main difference between both is not


the hydrocarbons (which are essentially the same), but rather the extraction methods
that have to be adopted to explore them (Exhibit 19). Given their lower complexity,
conventional resources are traditionally more scarce as they have been already explored
since the dawn of the oil & gas industry and, therefore prompted the development of
new technologies for unconventional resources, which are the key basis for the future of
the Oil and Gas industry (e.g., US Shale and Argentinas Vaca Muerta).

Exhibit 19: Conventional vs. unconventional resources


Method of hydrocabons' recovery Comment

Conventional resources Vertical (or slightly deviated) wells In conventional fields, the natural pressure of the well is responsible for pumping the hydrocarbons up.

In unconventional fields, hydrocarbons are trapped within rocks,


with the rocks' low porosity contributing to a much more difficult recovery process.
Unconventional resources Horizontal wells and hydraulic fracturing (or fracking) As a result, the horizontal drilling will introduce an horizontal pipe along the rock formation
and will use the hydraulic fracturing technique (or fracking), as it introduces a mixture of water, sand and
chemicals to create multiple small fractures in the rocks to facilitate the flow of hydrocarbons to the pipe.

Source: Goldman Sachs Global Investment Research

Once defined the best strategy to the address the fields potential, Eneva will have to
deploy all the necessary capex to set up conditions to start producing natural gas in the
future, which are key to determine what will be the daily wells capacity to produce
hydrocarbons. Over the first Exploratory Cycle, Eneva has discovered and certified over
25.5bn m3 in the Parnaiba Basin.

15 November 2017 24
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 20: Enevas reserves portfolio evolution

17.7 18.5

4.3

-3.4
-6.8 -6.9

Jan / 2015 Dec / 2016 Apr / 2017

2P reserves (BCM) Accumulated production (BCM)

Source: Company data

The production stage


Once the productive wells are drilled, fields will start the production stage. The most
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important aspect at this point is what will be the wells production curve. Usually, after
its first-oil, a new well will take a couple years to ramp-up to its peak production levels,
which are the maximum productivity levels reached by this well. Then, plateau levels
should persist for 5-7 years before the production starts to deplete until the end of the
fields life (normally 24-30 years).

After Eneva starts extracting hydrocarbons from its fields, the natural gas needs to be
transported from the field to the companys thermal facilities through pipelines.
However, before the natural gas can be transported, it needs to go through a gas unit
treatment, which will then send the gas to the gas pipelines to ultimately reach the
Parnaiba complex. Once there, the natural gas will be used as fuel to generate
electricity.

15 November 2017 25
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 21: Map of Enevas E&P business Exhibit 22: The destination of Enevas current 8.4MMm3/d natural
gas production capacity
In MMm3/d

8.4 0.3

1.2

4.9 2.3

4.6

2015 2016 Natural gas destination

Parnaiba I Parnaiba II Parnaiba III Parnaiba IV


For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Source: Company data Source: Company data

Once the wells start to deplete rapidly, operators may pursue improved oil recovery
methods, which although are able to raise the fields recovery factors (therefore its
reserves), can raise significantly the lifting (extraction) cost. There are three oil recovery
categories, for which a provide a summary in Exhibit 23. The increase in recovery factors
following each of the methods depends on the fields characteristics.

If operators decide not to pursue these strategies given it is no longer economic to


continue extracting hydrocarbons, they will trigger the Well plug and abandonment
(P&A) process. The main idea behind the process is to minimize environmental damage
in the perpetuity by (1) removing all the equipment used during the wells life and
restoring the original environment and (2) sealing all the wells with cement to avoid
hydrocarbons leakage.

Exhibit 23: Oil recovery methods


Methods Additional classification Definition

Primary oil recovery - - Wells' natural pressure

Secondary oil recovery Improved oil recovery (IOR) - Water injection

Chemicals injection, thermal stimulation


Tertiary oil recovery Improved oil recovery (IOR) Enhanced oil recovery (EOR)
and miscible material injection

Source: Goldman Sachs Global Investment Research

15 November 2017 26
Goldman Sachs Eneva SA (ENEV3.SA)

Assessing the economics of the Parnaiba Basin


The learning curve with the onshore natural gas business development has been
accretive for Eneva, with (1) finding costs being reduced to R$0.06/m3 in 2016 (from
R$0.13/m3 in 2014), and (2) development costs reaching R$0.06/m3 in 2017 (vs.
R$0.12/m3 in 2014).

Exhibit 24: Enevas learning curve with onshore natural gas development
figures in BRL
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Source: Company data, Goldman Sachs Global Investment Research

We have developed a proprietary onshore gas model in order to evaluate Enevas E&P
potential. Our analysis suggests potential real IRRs of 9.5% and NPVs of R$127mn for
every 5bcm developed by Eneva assuming gas prices of US$4.5/mmBtu (in-line with the
transfer price from the E&P to the Utilities segment, including leasing revenues). Main
assumptions for our model include, (1) 37% exploratory success rate , (2) a 6-year
exploratory phase with finding costs of R$0.06/m3 , (3) development phase broken
down into 4 rounds (matching the necessity of dispatch in its gas-fired TPP) with a
development cost of R$0.10/m3 , and (4) lifting costs of R$0.051/m3; all assumptions
are in in line with levels already achieved by the company.

15 November 2017 27
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 25: Onshore gas project in the Parnaiba Basin


Full E&P project (R$ 000')

Exploratory campaign Exploratory + Development phase Production stage

Net Income (before IOE) 0 0 0 0 0 0 47,259 47,259 47,259 47,259 45,818

Minorities 0 0 0 0 0 0 0 0 0 0 0

Depreciation & Amortization 0 0 0 0 0 0 31,250 31,250 31,250 31,250 31,250

Cash Earnings 0 0 0 0 0 0 78,509 78,509 78,509 78,509 77,068

Exploration capex (12,524) (17,078) (52,941) (61,821) (77,305) (78,330) 0 0 0 0 0

Development capex 0 0 0 (41,667) (41,667) (41,667) 0 0 0 (41,667) (41,667)

FCF Before Financing (12,524) (17,078) (52,941) (103,488) (118,972) (119,996) 78,509 78,509 78,509 36,843 35,401

Financing / Debt Flows 0 0 0 0 0 0 0 0 0 0 0

Equity Flows (12,524) (17,078) (52,941) (103,488) (118,972) (119,996) 78,509 78,509 78,509 36,843 35,401

Real IRR 9.5%


NPV (R$ mn) 127

Source: Goldman Sachs Global Investment Research


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Furthermore, given the higher risk nature of exploratory activity which depend on the
success rate of exploratory campaigns and also the conversion ratio of resources into
reserves which does not have a linear / normal type of probability curve, finding costs
could be considered as sunk costs once the project enters into the
development/production phase. In such a scenario, we estimate real IRRs of 21.5% at
GSe long term gas prices of US$3.0/mmBtu for the development/production phase of
projects in the Parnaiba Basin.

Exhibit 26: Development and Production phases of an onshore project in the Parnaiba Basin
Development and Production phases (R$ 000')

Development phase Production stage

Net Income (before IOE) 0 0 0 19 19 19 19 18 17 17 17

Depreciation & Amortization 0 0 0 31 31 31 31 31 31 31 31

Cash Earnings 0 0 0 50 50 50 50 49 48 48 48

Exploration capex 0 0 0 0 0 0 0 0 0 0 0

Development capex (42) (42) (42) 0 0 0 (42) (42) (42) 0 0

FCF Before Financing (42) (42) (42) 50 50 50 8 8 6 48 48

Financing / Debt Flows 0 0 0 0 0 0 0 0 0 0 0

Equity Flows (42) (42) (42) 50 50 50 8 8 6 48 48

Real IRR 21.5%


NPV (R$ mn) 181

Source: Goldman Sachs Global Investment Research

15 November 2017 28
Goldman Sachs Eneva SA (ENEV3.SA)

Detailing Enevas potential growth opportunities

While we do not take a view on any final outcome and acknowledge other outcomes
could exist outside our analysis, for illustrative purposes we outline our NPV analysis for
Enevas pipeline of growth projects, namely: (1) the expansion of the Parnaiba Complex
(2,114MW of licensed capacity), (2) the Santo Expedito wind complex (426MW of
installed capacity), (3) the Araguaina complex (110 MW of licensed capacity), (4) the
closing of the cycle of the Parnaiba I complex and (5) the extension of the companys
PPAs for 15 additional years. We note that we do not include any of these projects in our
official estimates and would see them as only additive to our investment thesis, when
and if announced.

Expansion of the Parnaiba Complex (Parnaiba V)


Eneva has environmental licenses already in place to install an additional 2,114MW
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generation capacity in the Parnaiba Complex, with its development contingent on the
closing of the cycle of the Parnaiba I and III plants and in the results of its exploratory
campaign. Based on our proprietary project finance model for R2W projects
(assumptions detailed in Exhibit 28) in addition to real levered IRRs between 11% and
15% (in line with the variations of the Brazilian CDS over the past two years), we
estimate the company would need to invest a total of R$17.4bn in the expansion,
comprising (1) R$7.3bn in the construction of a combined cycle thermal power plant, (2)
R$3.8bn in the exploratory campaign and (3) R$6.3bn in the development of its
reserves. Our analysis implies a total NPV impact to Eneva between (i) R$3.74-6.76/sh
for the complexs thermal power plant and (ii) R$3.15/sh for the E&P segment. We
highlight that under our model assumptions, the complex would require 63.2bn m3 in
gas reserves to fulfill a 20-year PPA under our dispatch assumption, which compares to
the 25.5bn m3 discovered in Enevas first exploratory cycle.

15 November 2017 29
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 27: Free cash flow to equity model for the thermal power plant and E&P segment of the Parnaiba expansion
Units indicated
Parnaiba Complex expansion

Thermal Power Plant (R$ 000')

Construction phase Operational phase

Net Income (before IOE) (35,975) (105,483) (188,090) 126,344 137,592 153,218 168,844 184,470 200,095 194,004 206,495 

Minorities 0 0 0 0 0 0 0 0 0 0 0 

Depreciation & Amortization 0 0 33,083 396,992 396,992 396,992 396,992 396,992 396,992 396,992 396,992 

Cash Earnings (35,975) (105,483) (155,007) 523,336 534,584 550,210 565,836 581,462 597,087 590,996 603,487 

Increase / Decrease in WK (18,533) (54,340) (96,895) (170,197) 43,522 48,478 53,415 58,353 63,290 6,137 326 

Capex (2,796,680) (2,771,666) (1,735,408) 0 0 0 0 0 0 0 0 

FCF Before Financing (2,851,188) (2,931,489) (1,987,310) 353,139 578,106 598,688 619,251 639,814 660,377 597,133 603,813 

Financing / Debt Flows 2,011,057 2,099,989 1,466,687 (13,088) (317,980) (317,980) (317,980) (317,980) (317,980) (317,980) (317,980) 

Equity Flows (840,131) (831,500) (520,622) 340,051 260,127 280,709 301,272 321,834 342,397 279,154 285,833 

E&P Segment (R$ 000')


For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Exploratory campaign Exploratory + Development phase Production stage

Net Income (before IOE) 0 0 0 0 0 0 508,250 508,250 508,250 508,250 508,250 

Minorities 0 0 0 0 0 0 0 0 0 0 0 

Depreciation & Amortization 0 0 0 0 0 0 394,999 394,999 394,999 394,999 394,999 

Cash Earnings 0 0 0 0 0 0 903,249 903,249 903,249 903,249 903,249 

Exploration capex (158,299) (215,863) (669,174) (781,423) (977,138) (990,090) 0 0 0 0 0 

Development capex 0 0 0 (526,665) (526,665) (526,665) 0 0 0 (526,665) (526,665) 

FCF Before Financing (158,299) (215,863) (669,174) (1,308,088) (1,503,803) (1,516,755) 903,249 903,249 903,249 376,584 376,584 

Financing / Debt Flows 0 0 0 0 0 0 0 0 0 0 0 

Equity Flows (158,299) (215,863) (669,174) (1,308,088) (1,503,803) (1,516,755) 903,249 903,249 903,249 376,584 376,584 

Per Share impact to Eneva (R$/sh) 11% IRR 15% IRR


Thermal Power Plant 3.7 6.8
E&P 3.1 3.1
Total Parnaiba expansion 6.9 9.9

Source: Goldman Sachs Global Investment Research

15 November 2017 30
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 28: Summary of assumptions for GS proprietary project finance model for the expansion of the Parnaiba complex
Units indicated
Power plant assumptions Parnaiba Expansion Investment and Debt Assumptions - power plant Parnaiba Expansion
FX - Base Year (R$ / US$) 3.30 Debt-to-Capital 70.0%
Real/US$ FX devaluation 0.0% Investments (%) 100%
Inflation - IGP-M (%) - annual 0.0% Capex / Installed Capacity (R$000 / MW) 3,455
Installed Capacity (MWs) 2114.00 PIS / Cofins Tax Exemption 9.3%
Firm Energy (%) 90% Capex / Installed Capacity (US$000 / MW) 1,047
Firm Energy (MWs) 1902.60 Total Investments (R$000) 7,303,754
Contracted Energy (MWhs) 16,416,774 Equity (R$000) 2,191,126
Energy Losses (%) 1.5% Debt Investment - Total (R$000) 5,112,628
Average Energy Price (R$/MWh) - Regulated Market (15 Years) 105.5 Debt Investment - EPC (R$000) 5,112,628
Average Energy Price (R$/MWh) - Free Market (After Contract) 105.5 Debt Grace Period - BNDES (years) 3.5
Average Energy Price (R$/MWh) - including gas price 190.7 Debt Period / terms- BNDES (years) - (12 / 13 / 14 / 15) 21.5
Total energy generation + Losses (MWhs) 16,666,776 Scheduled Amortizations (months) 1
Depreciation Period 20.0 Interest Methodology (juro/iguais) juros
Transmission Revenues 0.0 Cash Amortization (sim / no) no
RGR & CCC Expenses (% of gross revenue) 0.0% Real Annual Interest Rate 5.3%
Other Operational Expenses (% of Gross Revenues) 0.0 Interest Coverage - Year-1 3.0
Cofins (%) -Real Income 7.60% Re-leverage (Yes=1 / No=0) 1.0
Cofins (%) - Presumed Income 3.00% Interest Rates - (Real Selic) 5.3%
PIS (%) -Real Income 1.65% Re-Leverage Ratio (Debt-to-EBITDA) 3.5
PIS (%) - Presumed Income 0.65% Annual maintenance tax 0.0%
CPMF (%) 0.00% Fee Advisor - (%) 0%
Regulatory Charges (ANEEL / ANA) (R$/Mwh) 0.20 Annual Maintenance Rate - 24 months Capitalization 0.00
Average Monthly Wage / Employee (R$) 6,000 Fee Advisor - (R$000) -
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Labor Charges (%) 65% Structuring Costs 0


MWs / Direct Employee 423
Materials and Equipment Expenses (% of Net Revenues) 1.0% E&P assumptions Parnaiba Expansion
Third Party Expenses (O&M) - (R$/MWh) 25.00 Revenues Assumptions
Hydro Resources Fee / Royalties / Environmental (R$ / Mwh) 0.00 FX rate (BRL / USD) 3.30
TUST (R$/Kw) 10.0 Heat factor (mmBtu / MWh) 6.81
Transmission and Distribution Costs (R$ / Mwh) 11.6 Realization price (US$ / mmBtu) 2.80
Transmission Costs Real Annual Growth Rate 0.0% Cluster Capacity (mn m3 per day) 12.2
Administrative Expenses (% of Net Revenue) 0.50% Lease revenues (R$ / mn m3) 0.132
Insurance Expenses (% of Net Revenue) 2.55% Direct taxes (%) 12.5%
R&D (% of Net Revenues) 1.00% All in gas price 4.2
Other Operational Expenses (%) 0.00% Costs / SG&A Assumptions
Income Tax Bracket 25.0% Conversion Rate (mmBtu / mn m3) 28.26
Social Contribution Bracket 9.0% O&M costs (R$ / m3) 0.033
Fiscal Credits from Build-Up - Amortization (% do EBT) 30.0% SG&A expenses (R$ / m3) 0.025
Fiscal Benefits from ADA Terms (as a % of Income Tax 2012-22) 75.0% Depreciation (R$ / m3) 0.125
Income Tax Bracket (Presumed Income) - % of gross 8.0% Royalties (%) 15.0%
Social Contribution Bracket (Presumed Income) - % of gross 12.0% Capex Assumptions
Receivables (days) 30 Total required resources 63.2
Suppliers (days) 30 Exploratory capex / sysmics (R$ / m3) 0.06
Days Sales Outstanding / Tax Payments (days) 30 Exploratory capex / sysmics schedulle 0
Tax Methodology - Real Income (yes, no, hybrid) yes Development Capex (R$ / m3) 0.10
Tax Methodology - Presumed Income (yes, no, hybrid) no Financing
Debt to capital 0.0%
Debt Maturity 5.00
Average real costs 7.0%

Source: Goldman Sachs Global Investment Research

Santo Expedito Wind Complex


The Santo Expedito complex (also known as Ventos project) is a wind project in
development stage located in the Rio Grande do Norte state, with environmental
licenses already in place for 426MW of generation capacity. We estimate a potential
NPV addition between R$0.70/sh and R$1.55/sh for the complex based our proprietary
project finance model for wind generation projects (assumptions detailed in Exhibit 30),
in addition to (1) load factors between 42% and 48% (in line with the range of
renewable generation projects in Brazil and the companys reference at a P50
assumption for wind speed, respectively) and (2) the inclusion or not of the ADENE
fiscal benefit of 75% of income tax (given the ongoing debate related to the
maintenance of the special tax regime for projects in the Northeast).

15 November 2017 31
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 29: Summary of NPV impact and FCF to equity model for Santo Expedito Wind Complex
Units indicated
Santo Expeditos Wind Complex

NPV Impact to Eneva (R$/sh) Free-Cash-Flow-to-equity model (R$ 000')

Load Factor assumption 2018 2019 2020 2021 2022 2023 2024 2025-40

1.32 42% 48% Net Income (before IOE) (7,991) (23,587) (41,487) 82,381 34,764 35,197 37,400 1,026,163

Minorities 0 0 0 0 0 0 0 0
Income Tax methodology

With ADENE Depreciation & Amortization 0 0 7,525 90,305 90,305 90,305 90,305 1,250,788
0.85 1.55
fiscal benefit Cash Earnings (7,991) (23,587) (33,961) 172,686 125,068 125,501 127,705 2,276,951

Increase / Decrease in WK (4,117) (12,151) (21,372) 17,216 4,343 239 93 2,181

Capex (692,813) (528,703) (439,884) 0 0 0 0 0

Without ADENE FCF Before Financing (704,921) (564,441) (495,217) 189,902 129,411 125,740 127,798 2,279,132
0.70 1.29
fiscal benefit Financing / Debt Flows 496,969 405,830 363,252 416 (64,947) (64,947) (64,947) (917,700)

Equity Flows (207,952) (158,611) (131,965) 190,319 64,464 60,793 62,851 1,361,431

Source: Goldman Sachs Global Investment Research

Exhibit 30: Summary of assumptions for the proprietary project finance model for the Santo Expedito Wind Complex
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Units indicated
Operating Assumptions Santo Expedito Complex Investment and Debt Assumptions Santo Expedito Complex

FX - Base Year (R$ / US$) 3.30 Debt-to-Capital 70.0%


Real/US$ FX devaluation 0.0% Investments (%) 100%
Inflation - IGP-M (%) - annual 0.0% Capex / Installed Capacity (R$000 / MW) 3,900
Installed Capacity (MWs) 426.00 PIS / Cofins Tax Exemption 9.3%
Firm Energy (%) 49.2% Capex / Installed Capacity (US$000 / MW) 1,182
Firm Energy (MWs) 209.7 Total Capex (R$000) 1,661,400
Contracted Energy (MWhs) 1,791,245 Equity (R$000) 498,420
Energy Losses (%) 2.5% Debt Investment - Total (R$000) 1,162,980
Average Energy Price (R$/MWh) 165.0 Debt Investment - EPC (R$000) 1,162,980
Total energy generation + Losses (MWhs) 1,837,174 Debt Grace Period - BNDES (years) 3.5
Depreciation Period 20.. Debt Period / terms- BNDES (years) 23.5

Transmission Revenues 0.0 Scheduled Amortizations (months) 1


RGR Expenses (% of gross revenue) 0.0% Interest Methodology (interest/price) interest

Other Operational Expenses (% of Gross Revenues) 0.0 Cash Amortization (yes/no) no


Cofins (%) -Real Income 7.60% Real Annual Interest Rate 5.3%
Cofins (%) - Presumed Income 3.00% Interest Coverage - Year-1 37.4
PIS (%) -Real Income 1.65% Re-leverage (Yes=1 / No=0) 1.0
PIS (%) - Presumed Income 0.65% Interest Rates - (Real Selic) 5.3%

CPMF (%) 0.00% Re-Leverage Ratio (Debt-to-EBITDA) 3.5


Regulatory Charges (ANEEL / ANA) (R$/Mwh) 0.53 Re-Leverage Ratio (Debt-to-Capital) 25%
Average Monthly Wage / Employee (R$) 6,000 Covenants (Yes=1 / No=0) 1.0
Labor Charges (%) 65% Annual maintenance tax 0.0%
MWs / Direct Employee 85 Fee Advisor - (%) 0%
Materials and Equipment Expenses 2.4% Annual Maintenance Rate - 24 months Capitalization 0.00
Third Party Expenses (O&M) - (R$/MWh) 16.50 Fee Advisor - (R$000) -
Hydro Resources Fee / Royalties / Environmental 0.00 Structuring Costs 0
TUST (R$/Kw) 4.87 Auditing costs 0
Transmission and Distribution Costs (R$ / Mwh) 11.6
Transmission Costs Real Annual Growth Rate 0.0%
Administrative Expenses (% of Net Revenue) 0.00%
Insurance Expenses (% of Net Revenue) 1.00%
R&D (% of Net Revenues) 1.00%
Other Operational Expenses (%) 0.00%
Income Tax Bracket 25.0%
Social Contribution Bracket 9.0%
Fiscal Credits from Build-Up - Amortization 30.0%
Fiscal Benefits from ADA Terms 0.0%
Income Tax Bracket (Presumed Income) 8.0%
Social Contribution Bracket (Presumed Income) 12.0%
Receivables (days) 30
Suppliers (days) 30

Days Sales Outstanding / Tax Payments (days) 30


Tax Methodology - Real Income (yes, no, hybrid) yes
Tax Methodology - Presumed Income (yes, no, hybrid) no

Source: Goldman Sachs Global Investment Research

15 November 2017 32
Goldman Sachs Eneva SA (ENEV3.SA)

Araguana Discovery
As part of its exploratory campaign, Eneva has identified potentially viable natural gas
resources in two wells located 114km south of the Parnaiba Complex. According to the
company, should the existence of gas reserves be confirmed (i.e., considered
economically viable), the area could potentially support a thermal power plant of 110MW
of capacity. Based on the previously outlined assumptions from our proprietary project
finance model for a R2W complex, in addition to real levered IRRs between 11% and
15%, we estimate a potential NPV impact between R$0.36-0.52/sh for the Araguaina
Discovery, being R$0.19-0.35/sh for the thermal power plant and R$0.16/sh for the E&P
segment. We highlight that the complex would require total investments of R$906.2mn,
broken into (i) R$380.0mn for the thermal power plant (assuming a combined cycle), (ii)
R$197.3mn in the exploratory campaign and (iii) R$328.9n in the development of its
reserves. Finally, we estimate that the complex would require reserves 3.3bn m3 in
reserves to fulfill a 20-year PPA under our dispatch assumptions, which compare to
companys estimates of 6bn m3 of volume of gas in place in the Araguana discovery.
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Exhibit 31: Free cash flow to equity model for the thermal power plant and E&P segment of the Araguana Complex
Units indicated
Araguana Complex

Thermal Power Plant (R$ 000')

Construction phase Operational phase

Net Income (before IOE) (1,872) (5,489) (9,787) 6,529 7,114 7,927 8,740 9,553 10,366 10,084 10,704 

Minorities 0 0 0 0 0 0 0 0 0 0 0 

Depreciation & Amortization 0 0 1,721 20,657 20,657 20,657 20,657 20,657 20,657 20,657 20,657 

Cash Earnings (1,872) (5,489) (8,066) 27,186 27,771 28,584 29,397 30,210 31,023 30,741 31,361 

Increase / Decrease in WK (964) (2,828) (5,042) (8,914) 2,250 2,508 2,765 3,022 3,279 403 19 

Capex (145,523) (144,221) (90,300) 0 0 0 0 0 0 0 0 

FCF Before Financing (148,359) (152,537) (103,408) 18,272 30,021 31,092 32,162 33,232 34,302 31,143 31,381 

Financing / Debt Flows 104,643 109,271 76,318 (681) (16,546) (16,546) (16,546) (16,546) (16,546) (16,546) (16,546) 

Equity Flows (43,715) (43,266) (27,090) 17,591 13,476 14,547 15,617 16,687 17,757 14,598 14,835 

E&P Segment (R$ 000')

Exploratory campaign Exploratory + Development phase Production stage

Net Income (before IOE) 0 0 0 0 0 0 26,446 26,446 26,446 26,446 26,446 

Minorities 0 0 0 0 0 0 0 0 0 0 0 

Depreciation & Amortization 0 0 0 0 0 0 20,553 20,553 20,553 20,553 20,553 

Cash Earnings 0 0 0 0 0 0 47,000 47,000 47,000 47,000 47,000 

Exploration capex (8,237) (11,232) (34,820) (40,661) (50,844) (51,518) 0 0 0 0 0 

Development capex 0 0 0 (27,405) (27,405) (27,405) 0 0 0 (27,405) (27,405) 

FCF Before Financing (8,237) (11,232) (34,820) (68,065) (78,249) (78,923) 47,000 47,000 47,000 19,595 19,595 

Financing / Debt Flows 0 0 0 0 0 0 0 0 0 0 0 

Equity Flows (8,237) (11,232) (34,820) (68,065) (78,249) (78,923) 47,000 47,000 47,000 19,595 19,595 

Per Share impact to Eneva (R$/sh) 11% IRR 15% IRR


Thermal Power Plant 0.19 0.35
E&P 0.16 0.16
Total Araguana Complex 0.36 0.52

Source: Goldman Sachs Global Investment Research

Closing of the Cycle at Parnaba I Complex


As per TPP Parnaibas II Conduct Adjustment Commitment Term (TAC) signed in
November 2014, the closing of the cycle of the four gas turbines of TPP Parnaiba I

15 November 2017 33
Goldman Sachs Eneva SA (ENEV3.SA)

should hbe developed within five years of the TACs signature. Moreover, the regulator
should hold an appropriate auction in order to Parnaiba I have its energy sold fully in the
regulated market. We note the aforementioned auction has not been carried out, Eneva
has not developed such project, and the regulator still has to hold an appropriate auction
for the closing of the cycle of Parnaiba I.

As a result, for illustrative purposes, we have developed a proprietary model for the
closing of the cycle of Parnabia I, and estimate a potential real leverd IRR of 18.9% and
an NPV impact between R$5.3-6.3/sh, assuming dispatch levels between 50% (current
levels for the Parnaiba Complex) and 100%. Our main assumptions include (1) a 382MW
installed capacity (in line with the terms from TPP Parnaibas II Conduct Adjustment
Commitment Term -TAC - signed with ANEEL), (2) total invesments of R$1.8bn within a
2-year construction period (as per companys guidance), (3) 20-year regulated PPA, with
fixed revenues of R$109/MWh (in-line with Parnaibas II references) and a CVU of
R$112/MWh (same reference as in Parnaiba I), and (4) no gas consumption until YE2027,
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

given the additional combined cycle capacity benefits from the gas steam generated
from the already in-place 450MW regulated PPA for Parnaiba I.

Exhibit 32: Parnaibas I closing of the cycle model


In R$mn, unless otherwise stated
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11-20 Year 21
Gross Revenues (R$mn) - - 553 553 553 553 553 553 553 553 553 5,528 553
Capacity Fee revenues - - 366 366 366 366 366 366 366 366 366 3,661 366
Revenues from Sale at spot price - - 187 187 187 187 187 187 187 187 187 1,867 187
Deductions - - (57) (57) (57) (57) (57) (57) (57) (57) (57) (567) (57)
R&D Contribution - - (6) (6) (6) (6) (6) (6) (6) (6) (6) (55) (6)
PIS Cofins taxes - - (51) (51) (51) (51) (51) (51) (51) (51) (51) (511) (51)
Net Revenues (R$mn) - - 496 496 496 496 496 496 496 496 496 4,962 496
Fuel component cost - - - - - - - - - (154) (154) (1,536) (154)
Aneel Fiscalization Fee + CCEE contribution - - (4) (4) (4) (4) (4) (4) (4) (4) (4) (41) (4)
Fixed O&M - - (11) (11) (11) (11) (11) (11) (11) (11) (11) (106) (11)
Variable O&M Cost - - (8) (8) (8) (8) (8) (8) (8) (8) (8) (76) (8)
TUST transmission Costs - - (18) (18) (18) (18) (18) (18) (18) (18) (18) (182) (18)
EBITDA (R$mn) - - 456 456 456 456 456 456 456 302 302 3,021 302
0.0% 0.0%
Free Cash Flow 0 -
0 -
EBITDA - - 456 456 456 456 456 456 456 302 302 3,021 302
Depreciation 239.3 239.3 239.3 239.3 239.3 239.3 239.3 239.3 239.3 239.3 239.3 2,392.5 239.3
Income tax - - (62) (64) (67) (69) (71) (74) (74) (21) (21) (214) (21)
Capex (923) (923) (9) (9) (9) (9) (9) (9) (9) (9) (9) (91) (9)
Free cash flow before financing (R$mn) (923) (923) 385 382 380 378 375 373 373 272 272 2,716 272
0 -
Debt balances (bop) 914 783 653 522 392 261 131 - - - - - -
Debt balances (eop) 783 653 522 392 261 131 - - - - - - -
Interest expenses (48) (42) (35) (28) (21) (14) (7) - - - - - -
Debt ammortization (131) (131) (131) (131) (131) (131) (131) - - - - - -
Free cash flow after financing (R$mn) (188) (1,095) 220 224 229 233 238 373 373 272 272 2,716 272

Real IRR (%) 18.9%


NPV (R$ m) at 5.7% real WACC $1,661
NPV / share $5.3

Source: Goldman Sachs Global Investment Research

Extension of Enevas PPAs


We see the achievement of higher success rates in its future exploratory campaigns as
a potential source of upside for Eneva, given it would allow the company to extend the
PPAs in place for the Parnaiba I, II and II power plants. Should we assume (1) an
additional exploratory capex of R$1.29bn between 2018-2022, (2) an additional
development capex of R$1.28bn over the life of Parnaiba complex (in line with our model
assumptions), (3) the required maintenance capex to allow the extension of the thermal
power plants operations (4) our long-term price electricity price assumption of
R$180-185/MWh (in real terms) for the renewal of the PPAs and real levered IRRS
between 11% and 15%, we estimate a potential NPV addition between R$0.6-3.5/sh, all
else held equal.

15 November 2017 34
Goldman Sachs Eneva SA (ENEV3.SA)

Appendix 1: A brief overview of Enevas history and ownership structure

Enevas origins trace back to April 2001, when the company was founded under the
name MPX Minerao e Energia Ltda., with the purpose of operating in the power
generation business. In November 2007, the company changed its name to MPX
Energia S.A., and a month later would complete its IPO, with a total offer of R$2.0bn.

Until 2004, the companys main investment consisted in a majority stake (51%) in
Termocear, the operator of TPP Senador Carlos Jereissati in the Ceara state, later
acquired by Petrobras. Only in the A-5 generation auction held in October 2007 would
Eneva begin to effectively consolidate its generation portfolio, when the company placed
winning bids to contract 15-year PPAs, comprising (1) 615MW for its subsidiary Porto do
Pecm Gerao de Energia S.A. (Pecm I, a 50/50 JV with Energias do Brasil) and (2)
315MW for the Itaqui coal-fired thermal power plant (100% stake). In September 2008,
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

the company contracted a15-year, 276MW PPA for its TPP Energia Pecm II (Pecm)
project.

Enevas first step towards the R2W model took place in 2009, after OGX Petroleo e Gas
S.A. (OGX) acquired a 70% stake from Petra Energia S.A (Petra) in 7 exploratory
blocks in the Parnaba Basin. In September 24, 2009, Eneva signed an MOU to acquire
part of OGXs stake in such blocks, which culminated in the creation of OGX Maranho
Petrleo e Gs Ltda. (later denominated Parnaba Gas Natural), jointly controlled by
Eneva and OGX at a 33.3/66.7% stake, respectively.

In June 2011, the company acquired from Bertin Energia e Participaes two
subsidiaries which in 2008 had placed winning bids to build LNG-powered thermal
power plants, with 15-year PPAs for 450MW and 660MW of installed capacity. In August
2011, ANEEL would grant Eneva the right to change the technical aspects and location
of the projects to the Parnaba Complex, thereby culminating in the creation of the
Parnaba I thermal power plant. In the A-3 new energy auction held in the same year, the
company would successful contract a 450MW, 20-year PPA for its Parnaba II project,
with 518MW of installed capacity.

The company signed a JV with German utility company E.ON (currently Uniper SE
following the groups corporate restructuring in January 2016) in January 2012 to develop
power generation assets in Brazil. The agreement would be formalized in April 2012,
with E.ON fully subscribing to a R$1.0bn capital increase in Eneva (ending with an 11.7%
stake). In July of the same year, Eneva would also sign the acquisition of the Ventos
wind project, currently denominated Santo Expedito wind complex.

In April 2013, Eneva signed the acquisition of a stake in the TPP MC2 Nova Venecia (later
TPP Parnaba III), with 176.2MW of installed capacity and with a 98MW, 15-year PPA in
place. The Parnaba IV plant (56MW of installed capacity) would be constituted shortly
after, in partnership with Petra and Kinross Brasil Minerao S.A. In May 2013, Uniper
and Enevas controlling shareholder, announced an agreement according to which the
former acquired 141,544,637 shares of the company. Following the transaction, Uniper
ended with a 36.2% stake in Eneva, and would exercise joint control of the company

15 November 2017 35
Goldman Sachs Eneva SA (ENEV3.SA)

with the controlling shareholder. In July, the company underwent a a R$800mn capital
increase, after which Uniper emerged with a 38% stake. The company would change its
name from MPX Energia S.A. to Eneva S.A. in September 2013.

In May 2014, the company announced an agreement with Uniper and financial
institutions to improve its capital structure, which essentially consisted of a R$1.5bn
capital increase and the restructuring of Enevas debt obligations. As a result of the
agreement, Eneva sold a 50% stake in TPP Pecm II to Uniper for R$400mn in July
2014. In December 2014, TPP Pecm I would be acquired by Energias do Brasil for
R$300mn.

The company filed for Legal Recovery (i.e., bankruptcy protection) at the Rio de Janeiro
State Court of Justice in December 2014. A detailed recovery plan was presented by
Enevas board of directors in February 2015, which would be approved by the Creditors
Committee in April 2015. As part of the recovery process, a private capital increase of up
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

to R$3.65bn was approved in an Extraordinary Shareholders Meeting held in August


2015, with the transaction being concluded in November 2015. The capital increase
comprised (1) the commitment by the company of R$1.3bn in assets, (2) the
capitalization of R$983mn in debt obligations against the company and (3) a cash
payment of R$9.1mn. Following the transaction, (1) the company would own 100% of
the thermal power plants Parnaba I, II, III and IV and 27.3% of E&P company Parnaba
Gs Natural and (2) a controlling shareholder and Uniper had their stakes diluted to
1.04% and 12.25%, respectively. The Legal Recovery process officially ended in June 29,
2016.

In October 2016, the company announced an agreement with Cambuhy and OGX to
acquired the remaining stake in Parnaba Gas Natural, thereby finally becoming a fully
integrated R2W player.

Eneva is listed under the Novo Mercado segment of the B3, in line with tstringent
corporate governance standards (including equal voting and 100% tag-along rights) and
trading only through ON shares. The company is a full corporation, with its largest
shareholders being (1) Banco BTG Pactual S.A. with a 26.79% stake, (2) Cambuhy
Fundo de Investimento em Participaces with 22.99%, (3) Uniper Holding (subsidiary of
Uniper SE) with 6.10% and (4) Ita Unibanco S.A., with 5.89%.

15 November 2017 36
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 33: Enevas corporate structure

Source: Company data


For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

On October 5, 2017, Eneva completed its follow on offering of 79.7mn shares priced at
R$11/share, implying a total offering of R$876mn (US$278mn). Per the terms of the
transaction, the aforementioned shareholders are subject to a lock-up period of 180 days
starting from the placement of the offer on October 5. We acknowledge the existence
of overhang risks related to potential block trades following the expiration of the lock-up
period given the current shareholder structure of the company.

15 November 2017 37
Goldman Sachs Eneva SA (ENEV3.SA)

Appendix 2: E&P brownfield opportunities

As already discussed, the Parnaiba region has a geographic isolation from structural gas
pipelines, one of the only forms to monetize gas in the region is to develop gas-fired
TPPs and sell electricity to the grid. As a result, Eneva could potentially acquire proven
reserves from pure E&P players that operate in the Parnaiba region in order to de-risk
gas shortages to cover the already in-place PPAs. There are more than 72,718km2 in
concession blocks in the Parnaiba Basin from E&P players (Petrobras, Ouro Petro , Galp
and Vipetro) which could be potential M&A targets from Eneva, and increase the
companys gas reserves.

In Exhibit 34, we provide a complete summary of all the exploratory blocks in the
Parnaiba region. Given their exploration stage, we note that there are no information on
reserves and potential resources for the mapped exploratory blocks.
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Exhibit 34: Summary of all exploratory blocks in the Parnaiba region

Block Operator Area (km2) Stake Other owner Stake Oil Round Current status Current exploration period deadline

Blocks close to Eneva's plants

PN-T-65 Ouro Preto 1,917.0 100% - - 13th round Exploration December-21


PN-T-66 Petrobras RETURNED ON NOVEMBER 11, 2014
PN-T-86 Petrobras 3,064.7 100% - - 9th round Exploration August-19

Total 4,981.7

Other blocks in the state of Maranhao

PN-T-114 Ouro Preto 4,955.0 100% - - 11th round Exploration November-19


PN-T-145 Ouro Preto 2,099.2 100% - - 13th round Exploration December-21
PN-T-162 Ouro Preto 3,049.9 100% - - 13th round Exploration December-21
PN-T-165 Ouro Preto 9,008.0 100% - - 11th round Exploration August-19
PN-T-149 Vipetro 3,053.3 100% - - 13th round Exploration December-21
PN-T-166 Petrobras 12,650.0 50% Galp 50% 11th round Exploration August-19
PN-T-182 Galp 3,820.0 50% Petrobras 50% 11th round Exploration August-19
PN-T-150 Petrobras 12,650.0 50% Galp 50% 11th round Exploration August-19
PN-T-151 Ouro Preto 3,004.0 100% - - 11th round Exploration SUSPENDED
PN-T-136 Galp 3,447.0 50% Petrobras 50% 11th round Exploration SUSPENDED
PN-T-137 Ouro Preto 10,000.0 100% - - 11th round Exploration November-19

Total 67,736.4

Grand Total 72,718.1

Source: ANP, Goldman Sachs Global Investment Research

15 November 2017 38
Goldman Sachs Eneva SA (ENEV3.SA)

Appendix 3: Enevas subsidiaries P&L, balance sheet and cash flow


Exhibit 35: Eneva consolidated - Income statement and balance sheet
In R$mn, unless otherwise stated

Income Statement (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Net Revenues 1,518.6 2,161.0 2,477.4 2,586.4 2,636.0 2,752.3
% yoy 42.3% 14.6% 4.4% 1.9% 4.4%
Operating expenses -953.8 -1,339.7 -1,772.7 -1,699.3 -1,639.8 -1,695.2
Personnel -137.1 -137.6 -138.9 -144.4 -150.9 -149.0
Materials -21.1 -26.0 -0.5 -0.5 -0.5 -0.6
Services -352.2 -271.2 -163.9 -161.1 -146.1 -148.8
Electricity Purchased -28.3 -54.1 -403.3 -301.4 -280.2 -293.6
Fuel Consumption / Generation input costs -269.1 -214.3 -282.6 -294.4 -300.2 -312.8
Depreciation & Amortization -147.6 -356.4 -443.3 -463.1 -402.5 -412.0
Provisions -33.7 -36.4 -18.6 -0.5 -0.5 -0.5
Hydro resources compensation 0.0 0.0 0.0 0.0 0.0 0.0
Cost of Natural Gas Prospection -9.9 -92.1 -113.8 -117.9 -142.7 -152.3
Regulatory Charges 118.2 -129.4 -180.1 -187.2 -186.8 -195.2
Other expenses -73.0 -22.2 -27.8 -28.8 -29.4 -30.5
Operating Income 564.8 821.3 704.6 887.0 996.2 1,057.2
Operating margin % 38.0% 28.4% 34.3% 37.8% 38.4%
EBITDA 598.5 857.7 723.2 887.5 996.7 1,057.7
EBITDA margin % 39.7% 29.2% 34.3% 37.8% 38.4%
Net interest income (expenses) 18.1 -548.4 -514.8 -319.5 -220.7 -172.9
Interest expenses -465.5 -630.9 -733.7 -499.4 -422.9 -388.6
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Interest income 42.3 59.8 210.8 197.2 223.7 241.1


Other financial expenses / gains 441.4 22.7 8.1 -17.3 -21.5 -25.4
Equity income -47.3 -40.8 -13.1 12.9 20.8 29.4
Non-operating result -387.8 -220.4 -24.2 0.0 0.0 0.0
EBT 147.9 11.7 152.6 580.4 796.3 913.6
Interest on Equity 0.0 0.0 -19.6 -19.5 -36.5 -35.9
Profit Sharing -36.9 0.0 0.0 0.0 0.0 0.0
Minority Interest 5.5 3.0 0.0 0.0 0.0 0.0
Income Tax / Social Contribution 26.1 -122.9 -5.3 -33.7 -62.9 -82.0
Net Income 142.6 -108.1 147.2 546.7 733.4 831.6
Net margin % -5.0% 5.9% 21.1% 27.8% 30.2%

Balance Sheet (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Assets
Short Term 921.6 1,249.6 3,229.2 2,975.2 3,296.1 3,469.6
Cash and Equivalents 248.6 626.8 2,511.5 2,206.0 2,520.6 2,658.9
Receivables 338.6 315.2 366.4 382.4 386.5 403.5
Dividends Receivable 0.0 0.0 -13.1 12.9 20.8 29.4
Fiscal Credits 79.1 101.3 100.4 102.2 104.0 105.9
Intercompany Transactions 0.0 0.0 51.8 51.8 51.8 51.8
Inventories 129.2 163.2 168.9 176.1 168.5 175.8
Others 126.1 43.2 43.4 43.7 43.9 44.2
Long Term 785.3 1,041.0 1,010.8 980.5 950.3 920.1
Receivables 29.2 10.4 10.4 10.4 10.4 10.4
Deferred Taxes 308.4 396.3 366.1 335.8 305.6 275.4
Legal Credits / Escrow Account 52.1 166.9 166.9 166.9 166.9 166.9
Related parties 271.3 265.2 265.2 265.2 265.2 265.2
Others 124.2 202.2 202.2 202.2 202.2 202.2
Permanent 6,737.8 8,225.5 8,231.7 7,949.4 7,811.9 7,829.6
Investment 519.9 440.8 564.5 564.5 565.9 571.1
Net Fixed Assets 5,451.3 6,528.1 6,410.6 6,128.4 5,989.4 6,001.9
Net Deferred Assets 766.6 1,256.6 1,256.6 1,256.6 1,256.6 1,256.6
Total Assets 8,444.6 10,516.1 12,471.7 11,905.1 12,058.3 12,219.2

Liabilities and SHE


Short Term 1,433.6 1,693.4 1,854.7 958.7 884.6 888.4
Debt 1,010.6 1,193.0 1,458.8 562.2 512.2 512.5
Interest Payable 0.0 0.0 0.0 0.0 0.0 0.0
Estimated Obligations 0.0 0.0 0.0 0.0 0.0 0.0
Profit Sharing Payables 0.0 0.0 0.0 0.0 0.0 0.0
Related Parties 67.7 19.7 19.7 19.7 19.7 19.7
Suppliers 122.7 177.2 134.1 132.6 110.0 112.0
Taxes 61.3 153.5 100.0 100.9 98.2 98.5
Dividends Payable 3.3 0.0 0.0 0.0 0.0 0.0
Inbalance Pension Fund Debt 0.0 0.0 0.0 0.0 0.0 0.0
Labor and Other Provisions 20.6 37.0 29.1 30.3 31.5 32.8
Others 147.3 112.9 112.9 112.9 112.9 112.9
Long Term 3,424.0 4,329.0 5,151.4 5,085.4 4,790.1 4,350.4
Debt 3,198.3 3,902.6 3,257.6 2,697.6 2,187.5 1,677.0
Refinanced Debt 0.0 0.0 1,711.5 2,205.1 2,419.4 2,489.8
Deferred Income Tax / REFIS 23.2 252.7 8.6 9.0 9.4 9.8
Inbalance Pension Fund Debt 0.0 0.0 0.0 0.0 0.0 0.0
Related Parties 41.2 101.8 101.8 101.8 101.8 101.8
Others / Legal Liabilities 171.1 84.8 84.8 84.8 84.8 84.8
Minority Participation -9.8 -12.9 -12.9 -12.9 -12.9 -12.9
SHE 3,587.0 4,493.7 5,465.6 5,861.0 6,383.6 6,980.4
Capital 7,007.6 8,025.9 8,902.1 8,902.1 8,902.1 8,902.1
Reserves 14.4 10.2 10.2 10.2 10.2 10.2
Retained Earnings -3,435.1 -3,542.5 -3,446.8 -3,051.4 -2,528.7 -1,932.0
Total Liab. & SHE 8,444.6 10,516.1 12,471.7 11,905.1 12,058.3 12,219.2

Source: Company data, Goldman Sachs Global Investment Research

15 November 2017 39
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 36: Eneva consolidated - cash flow to equity model


In R$mn, unless otherwise stated

Cash flow statement (R$mn) 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029-41E 2042E

Operating Income 887.0 996.2 1,057.2 1,147.3 1,250.2 1,360.8 1,681.8 1,769.9 1,919.4 1,721.0 566.6 5,184.6 -57.8
Cash Interest Income / Expenses -514.5 -442.3 -412.1 -364.5 -295.3 -245.5 -239.1 -216.1 -185.0 -159.6 -92.1 -512.4 4.9
Depreciation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Decrease / (Increase) WC -5.3 -33.7 -62.9 -82.0 -99.8 -132.4 -163.3 -200.5 -217.7 -229.6 -307.3 -3,456.3 -162.3
(Capex) 463.1 402.5 412.0 389.8 357.3 373.2 394.9 370.8 318.0 205.3 138.2 1,369.5 39.9
Dividends -24.8 -22.5 -22.9 -24.7 -23.8 -22.9 -110.3 -21.5 -32.5 178.0 267.9 352.6 -1.2
Free CF -963.0 -345.8 -439.9 -810.6 -1,004.4 -345.0 -189.3 -489.0 -419.6 -154.6 -477.9 -787.9 0.0
Income Tax -180.8 -264.9 -429.6 -122.9 -474.7 -396.8 -47.4 -48.0 -48.6 -117.2 -106.2 -283.0 -14.7
Financing 12.9 20.8 29.4 38.1 47.1 53.4 59.7 67.8 76.6 85.0 -11.0 -69.8 -7.4
Fiscal Benefits IOE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF (ex Tax) -325.4 310.2 131.1 170.6 -243.6 644.8 1,387.1 1,233.4 1,410.6 1,528.4 -21.9 1,797.4 -198.6
0.0%

Source: Company data, Goldman Sachs Global Investment Research


For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

15 November 2017 40
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 37: Parnaiba I - Income statement and balance sheet


In R$mn, unless otherwise stated

Income Statement (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Net Revenues 856.1 927.1 766.8 800.1 835.0 871.3
% yoy 8.3% -17.3% 4.4% 4.4% 4.4%
Operating expenses -645.7 -774.3 -565.9 -577.8 -597.3 -622.6
Personnel -24.3 -30.6 -32.6 -33.7 -35.3 -36.8
O&M / Other SG&A costs -255.2 -262.5 -217.1 -226.5 -236.4 -246.7
Services -46.6 -56.2 -46.5 -48.5 -50.7 -52.9
Fuel consumption costs -271.1 -324.1 -160.8 -167.3 -174.0 -181.1
Electricity Purchased 0.0 -5.2 -35.6 -27.4 -25.0 -26.5
Transmission Expenses 0.0 -40.4 -22.4 -23.3 -24.4 -25.5
Depreciation & Amortization -50.7 -53.9 -49.7 -49.8 -50.4 -51.9
Provisions 0.0 0.0 0.0 0.0 0.0 0.0
Regulatory Charges / reimbursment for dispatch 0.0 0.0 0.0 0.0 0.0 0.0
Other expenses 2.2 -1.4 -1.2 -1.2 -1.3 -1.3
Operating Income 210.4 152.7 200.9 222.4 237.6 248.8
Operating margin % 16.5% 26.2% 27.8% 28.5% 28.5%
EBITDA 261.1 206.6 250.6 272.2 288.0 300.6
EBITDA margin % 22.3% 32.7% 34.0% 34.5% 34.5%
Net interest income (expenses) -94.6 -87.7 -70.7 -52.5 -58.7 -60.7
Interest expenses -82.2 -68.7 -65.1 -42.9 -40.8 -40.6
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Interest income 6.4 9.7 16.7 13.4 6.1 4.9


Other financial expenses / gains -18.8 -28.6 -22.3 -23.1 -24.0 -25.0
Equity income 0.0 0.0 0.0 0.0 0.0 0.0
Non-operating result -6.2 9.0 0.0 0.0 0.0 0.0
EBT 109.6 74.1 130.2 169.9 178.9 188.1
Minority Interest 0.0 0.0 0.0 0.0 0.0 0.0
Deffered taxes -13.7 -12.3 0.0 0.0 0.0 0.0
Income Tax -6.1 -3.9 -17.6 -24.1 -25.4 -30.1
Net Income 89.8 57.9 112.6 145.8 153.5 158.0
Net margin % 6.2% 14.7% 18.2% 18.4% 18.1%

Balance Sheet (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Assets
Short Term 205.3 237.9 308.9 248.5 186.1 227.5
Cash and Equivalents 31.5 89.4 186.1 120.5 52.6 88.3
Receivables 154.8 134.2 111.0 115.8 120.9 126.1
Dividends Receivable 0.0 0.0 0.0 0.0 0.0 0.0
Fiscal Credits 0.0 0.0 0.0 0.0 0.0 0.0
Inventories 11.3 12.2 9.6 10.0 10.5 10.9
Fiscal Credits from Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0
Receivables with Related Parties 0.0 0.0 0.0 0.0 0.0 0.0
Others 7.7 2.2 2.2 2.2 2.2 2.2
Long Term 73.0 76.7 78.0 79.7 81.5 83.4
Receivables with Related Parties 29.2 37.0 38.3 40.1 41.9 43.7
Fiscal Credits from Goodwill Amortization 38.1 34.1 34.1 34.1 34.1 34.1
Legal Credits / Escrow Account 0.0 0.0 0.0 0.0 0.0 0.0
Others 5.7 5.6 5.6 5.6 5.6 5.6
Permanent 1,134.6 1,106.1 1,065.2 1,150.3 1,212.2 1,170.5
Investment 0.0 0.0 0.0 0.0 0.0 0.0
Net Fixed Assets 1,134.6 1,106.1 1,065.2 1,150.3 1,212.2 1,170.5
Net Deferred Assets 0.0 0.0 0.0 0.0 0.0 0.0
Total Assets 1,413.0 1,420.6 1,452.1 1,478.5 1,479.8 1,481.4

Liabilities and SHE


Short Term 119.9 261.0 246.1 246.7 247.6 248.6
Debt 51.1 63.4 65.5 65.5 65.5 65.5
Suppliers 31.6 20.2 14.2 14.5 15.0 15.6
Taxes 6.6 7.9 7.9 7.9 7.9 7.9
Dividends Payable 2.3 11.1 0.0 0.0 0.0 0.0
Related parties 3.0 7.0 7.2 7.6 7.9 8.3
Electricity reimbursment 0.0 0.0 0.0 0.0 0.0 0.0
Others 25.4 151.3 151.3 151.3 151.3 151.3
Long Term 729.9 566.4 556.4 509.3 509.8 510.3
Debt 555.5 509.0 499.0 433.5 368.0 302.5
Refinanced Debt 0.0 0.0 0.0 18.4 84.4 150.4
Taxes 0.0 0.0 0.0 0.0 0.0 0.0
Others / Legal Liabilities 174.4 57.4 57.4 57.4 57.4 57.4
Minority Participation 0.0 0.0 0.0 0.0 0.0 0.0
SHE 563.2 593.3 649.6 722.5 722.5 722.5
Capital 456.7 456.7 456.7 456.7 456.7 456.7
Reserves 0.1 0.1 0.1 0.1 0.1 0.1
Retained Earnings 106.4 136.6 192.9 265.7 265.7 265.7
Total Liab. & SHE 1,413.0 1,420.6 1,452.1 1,478.5 1,479.8 1,481.4

Source: Company data, Goldman Sachs Global Investment Research

15 November 2017 41
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 38: Parnaiba I - Cash flow to equity model


In R$mn, unless otherwise stated

Cash flow statement (R$mn) 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029-41E 2042E

Operating Income 222.4 237.6 248.8 261.1 273.3 286.4 303.8 320.0 336.3 353.6 -26.2 0.0 0.0
Cash Interest Income / Expenses -42.9 -40.8 -40.6 -38.7 -35.2 -31.9 -28.8 -25.9 -24.8 -25.1 -12.6 0.0 0.0
Depreciation 49.8 50.4 51.9 53.5 54.9 56.2 57.2 58.1 59.0 59.8 0.0 0.0 0.0
Decrease / (Increase) WC -4.9 -5.0 -5.1 -5.3 -5.5 -5.8 -41.4 -7.9 -8.1 -8.5 203.9 0.0 0.0
(Capex) -134.8 -112.3 -10.1 -10.4 -10.7 -11.0 -11.2 -11.4 -11.6 -11.8 -12.0 0.0 0.0
Dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF 89.5 129.9 244.8 260.2 276.8 293.9 279.6 332.8 350.8 367.9 153.1 0.0 0.0
Income Tax -24.1 -25.4 -30.1 -32.4 -34.6 -37.0 -39.7 -42.4 -45.2 -48.2 6.0 26.0 3.3
Financing -46.7 0.8 0.9 -43.3 -40.8 -38.5 -33.5 -34.7 1.0 1.0 -326.2 9.1 0.9
Fiscal Benefits IOE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF (ex Tax) 18.7 105.3 215.6 184.5 201.4 218.4 206.4 255.8 306.6 320.8 -167.0 35.1 4.3
0.0%

Source: Goldman Sachs Global Investment Research


For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

15 November 2017 42
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 39: Parnaiba II - Income statement and balance sheet


In R$mn, unless otherwise stated

Income Statement (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Net Revenues 283.4 378.0 668.4 698.4 729.9 762.7
% yoy 33.4% 76.8% 4.5% 4.5% 4.5%
Operating expenses -115.6 -265.7 -397.1 -409.9 -424.8 -441.0
Personnel -6.2 -5.4 -5.7 -5.9 -6.2 -6.5
O&M / Other SG&A costs -0.5 -3.6 -6.4 -6.7 -7.0 -7.3
Services -13.9 -29.6 -52.3 -54.7 -57.1 -59.7
Fuel consumption costs 0.0 -108.1 -176.2 -183.3 -190.7 -198.4
Electricity Purchased -0.5 -14.3 -5.5 -4.2 -3.9 -4.1
Transmission Expenses -46.4 -54.5 -99.5 -103.5 -108.1 -113.0
Depreciation & Amortization -47.5 -49.5 -50.3 -50.4 -50.5 -50.6
Provisions 0.0 0.0 0.0 0.0 0.0 0.0
Regulatory Charges / reimbursment for dispatch 0.0 0.0 0.0 0.0 0.0 0.0
Other expenses -0.6 -0.7 -1.2 -1.3 -1.3 -1.4
Operating Income 167.8 112.3 271.3 288.5 305.1 321.7
Operating margin % 29.7% 40.6% 41.3% 41.8% 42.2%
EBITDA 215.2 161.8 321.6 338.9 355.5 372.3
EBITDA margin % 42.8% 48.1% 48.5% 48.7% 48.8%
Net interest income (expenses) -166.3 -162.8 -144.5 -86.9 -78.8 -76.2
Interest expenses -143.2 -159.5 -153.9 -99.1 -80.5 -69.4
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Interest income 1.6 4.7 21.0 24.4 14.4 6.5


Other financial expenses / gains -24.7 -8.0 -11.7 -12.2 -12.7 -13.2
Equity income 0.0 0.0 0.0 0.0 0.0 0.0
Non-operating result 8.3 -24.2 0.0 0.0 0.0 0.0
EBT 9.7 -74.7 126.7 201.7 226.3 245.5
Minority Interest 0.0 0.0 0.0 0.0 0.0 0.0
Deffered taxes 69.7 25.4 0.0 0.0 0.0 0.0
Income Tax 0.0 0.0 -16.5 -16.1 -24.9 -27.0
Net Income 79.5 -49.3 110.2 185.5 201.4 218.5
Net margin % -13.0% 16.5% 26.6% 27.6% 28.7%

Balance Sheet (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Assets
Short Term 69.8 194.1 447.4 494.5 317.5 285.5
Cash and Equivalents 0.4 87.6 259.6 298.5 112.8 71.7
Receivables 11.2 77.7 137.3 143.5 150.0 156.7
Dividends Receivable 0.0 0.0 0.0 0.0 0.0 0.0
Fiscal Credits 0.0 0.0 0.0 0.0 0.0 0.0
Inventories 26.1 26.5 48.2 50.1 52.4 54.8
Fiscal Credits from Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0
Receivables with Related Parties 0.0 0.0 0.0 0.0 0.0 0.0
Others 32.0 2.4 2.4 2.4 2.4 2.4
Long Term 130.4 170.7 172.7 175.2 178.0 180.8
Receivables with Related Parties 0.0 55.6 57.6 60.2 62.9 65.7
Fiscal Credits from Goodwill Amortization 85.3 110.7 110.7 110.7 110.7 110.7
Legal Credits / Escrow Account 0.0 0.0 0.0 0.0 0.0 0.0
Others 45.0 4.4 4.4 4.4 4.4 4.4
Permanent 1,261.7 1,234.1 1,193.7 1,153.4 1,113.1 1,072.5
Investment 0.0 0.0 0.0 0.0 0.0 0.0
Net Fixed Assets 1,261.7 1,234.1 1,193.7 1,153.4 1,113.1 1,072.5
Net Deferred Assets 0.0 0.0 0.0 0.0 0.0 0.0
Total Assets 1,461.8 1,598.8 1,813.8 1,823.2 1,608.5 1,538.9

Liabilities and SHE


Short Term 745.4 920.3 986.7 91.0 92.6 94.3
Debt 725.2 843.7 897.1 0.0 0.0 0.0
Suppliers 15.8 21.1 34.1 35.4 36.8 38.4
Taxes 1.6 2.3 2.3 2.3 2.3 2.3
Dividends Payable 0.0 0.0 0.0 0.0 0.0 0.0
Related parties 2.9 2.5 2.5 2.7 2.8 2.9
Electricity reimbursment 0.0 0.0 0.0 0.0 0.0 0.0
Others 0.1 50.7 50.7 50.7 50.7 50.7
Long Term 280.6 255.6 349.1 1,161.4 945.2 873.8
Debt 264.5 247.7 0.0 0.0 0.0 0.0
Refinanced Debt 0.0 0.0 341.1 1,153.4 937.2 865.8
Taxes 0.0 0.0 0.0 0.0 0.0 0.0
Others / Legal Liabilities 16.1 8.0 8.0 8.0 8.0 8.0
Minority Participation 0.0 0.0 0.0 0.0 0.0 0.0
SHE 435.9 422.9 478.1 570.8 570.8 570.8
Capital 562.0 638.3 638.3 638.3 638.3 638.3
Reserves 40.7 0.7 0.7 0.7 0.7 0.7
Retained Earnings -166.8 -216.1 -161.0 -68.2 -68.2 -68.2
Total Liab. & SHE 1,461.8 1,598.8 1,813.8 1,823.2 1,608.5 1,538.9

Source: Company data, Goldman Sachs Global Investment Research

15 November 2017 43
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 40: Parnaiba II - cash flow to equity model


In R$mn, unless otherwise stated

Cash flow statement (R$mn) 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029-41E 2042E

Operating Income 288.5 305.1 321.7 339.3 357.5 376.5 428.6 452.3 476.0 500.9 526.9 4,737.8 0.0
Cash Interest Income / Expenses -99.1 -80.5 -69.4 -64.2 -61.7 -61.9 -62.5 -60.6 -58.4 -58.6 -56.6 -388.5 0.0
Depreciation 50.4 50.5 50.6 50.8 51.0 51.3 51.6 51.9 52.2 52.5 52.8 435.7 0.0
Decrease / (Increase) WC -6.9 -7.3 -7.5 -7.9 -8.2 -8.6 -38.4 -11.0 -11.3 -11.8 -12.3 282.6 0.0
(Capex) -10.1 -10.1 -10.1 -10.1 -10.2 -10.2 -10.3 -10.3 -10.4 -10.4 -10.5 -97.7 0.0
Dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF 222.8 257.7 285.3 307.9 328.4 347.1 369.0 422.2 448.1 472.5 500.3 4,969.9 0.0
Income Tax -16.1 -24.9 -27.0 -29.2 -31.4 -33.6 -42.7 -45.6 -48.6 -146.4 -155.6 -1,436.9 1.7
Financing -84.7 -216.1 -71.2 -65.1 2.3 2.4 12.7 -60.3 3.0 3.1 -55.7 -703.8 0.3
Fiscal Benefits IOE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF (ex Tax) 122.0 16.7 187.0 213.7 299.4 315.9 338.9 316.4 402.5 329.2 289.0 2,829.1 2.0
0.0%

Source: Goldman Sachs Global Investment Research


For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

15 November 2017 44
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 41: Parnaiba III - Income statement and balance sheet


In R$mn, unless otherwise stated

Income Statement (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Net Revenues 272.9 256.2 188.2 196.7 205.5 214.8
% yoy -6.1% -26.5% 4.5% 4.5% 4.5%
Operating expenses -175.6 -182.4 -141.5 -125.6 -129.8 -135.3
Personnel 0.0 0.0 0.0 0.0 0.0 0.0
O&M / Other SG&A costs -101.8 -77.7 -56.9 -59.4 -62.1 -64.9
Services -11.8 -12.3 -9.0 -9.4 -9.8 -10.3
Fuel consumption costs -77.8 -67.7 -31.9 -33.2 -34.5 -35.9
Electricity Purchased -3.2 -3.2 -10.3 -7.9 -7.2 -7.6
Transmission Expenses -10.1 -10.0 -5.3 -5.5 -5.7 -6.0
Depreciation & Amortization -5.7 -7.3 -7.5 -7.6 -7.6 -7.7
Provisions -2.4 -1.7 -18.6 -0.5 -0.5 -0.5
Regulatory Charges / reimbursment for dispatch 38.1 0.4 0.0 0.0 0.0 0.0
Other expenses -1.1 -2.9 -2.2 -2.3 -2.4 -2.5
Operating Income 97.3 73.8 46.7 71.1 75.7 79.5
Operating margin % 28.8% 24.8% 36.1% 36.8% 37.0%
EBITDA 103.0 81.1 54.2 78.6 83.3 87.1
EBITDA margin % 31.6% 28.8% 40.0% 40.6% 40.6%
Net interest income (expenses) -1.2 5.9 15.2 18.9 20.5 22.1
Interest expenses -19.5 -19.6 -13.8 -7.5 -2.5 0.0
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Interest income 16.4 26.6 29.9 27.3 23.9 23.0


Other financial expenses / gains 2.0 -1.1 -0.9 -0.8 -0.9 -0.9
Equity income 0.0 0.0 0.0 0.0 0.0 0.0
Non-operating result 0.0 0.0 0.0 0.0 0.0 0.0
EBT 96.1 79.7 62.0 90.0 96.2 101.6
Minority Interest 0.0 0.0 0.0 0.0 0.0 0.0
Deffered taxes -12.1 -4.3 0.0 0.0 0.0 0.0
Income Tax -5.3 -11.1 -9.3 -13.5 -14.4 -15.2
Net Income 78.7 64.4 52.7 76.5 81.8 86.4
Net margin % 25.1% 28.0% 38.9% 39.8% 40.2%

Balance Sheet (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Assets
Short Term 170.0 152.8 165.9 157.9 111.7 115.7
Cash and Equivalents 86.4 104.2 129.3 119.9 72.1 74.5
Receivables 50.3 26.4 19.4 20.3 21.2 22.1
Dividends Receivable 0.0 0.0 0.0 0.0 0.0 0.0
Fiscal Credits 12.1 13.2 9.6 10.1 10.5 11.0
Inventories 11.2 4.9 3.5 3.6 3.8 4.0
Fiscal Credits from Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0
Receivables with Related Parties 0.0 0.0 0.0 0.0 0.0 0.0
Others 9.9 4.1 4.1 4.1 4.1 4.1
Long Term 81.8 95.4 98.8 103.1 107.6 112.3
Receivables with Related Parties 78.6 92.4 95.8 100.1 104.6 109.3
Fiscal Credits from Goodwill Amortization 2.8 0.0 0.0 0.0 0.0 0.0
Legal Credits / Escrow Account 0.0 0.0 0.0 0.0 0.0 0.0
Others 0.4 3.0 3.0 3.0 3.0 3.0
Permanent 176.8 173.6 167.5 161.5 155.4 149.2
Investment 0.0 0.0 0.0 0.0 0.0 0.0
Net Fixed Assets 176.8 173.6 167.5 161.5 155.4 149.2
Net Deferred Assets 0.0 0.0 0.0 0.0 0.0 0.0
Total Assets 428.5 421.8 432.2 422.5 374.7 377.2

Liabilities and SHE


Short Term 215.9 75.0 109.0 110.9 62.7 64.8
Debt 123.7 3.1 50.2 50.2 0.0 0.0
Suppliers 12.6 4.8 3.2 3.2 3.4 3.5
Taxes 1.0 4.5 4.5 4.5 4.5 4.5
Dividends Payable 7.7 13.0 0.0 0.0 0.0 0.0
Related parties 45.4 33.4 34.6 36.2 37.8 39.5
Electricity reimbursment 14.9 12.3 12.5 12.8 13.0 13.3
Others 10.6 4.0 4.0 4.0 4.0 4.0
Long Term 4.6 109.7 59.7 9.9 10.3 10.7
Debt 0.0 100.5 50.2 0.0 0.0 0.0
Refinanced Debt 0.0 0.0 0.0 0.0 0.0 0.0
Taxes 0.0 8.3 8.6 9.0 9.4 9.8
Others / Legal Liabilities 4.6 0.9 0.9 0.9 0.9 0.9
Minority Participation 0.0 0.0 0.0 0.0 0.0 0.0
SHE 208.1 237.1 263.5 301.7 301.7 301.7
Capital 167.5 167.5 167.5 167.5 167.5 167.5
Reserves 0.0 0.0 0.0 0.0 0.0 0.0
Retained Earnings 40.6 69.6 96.0 134.2 134.2 134.2
Total Liab. & SHE 428.5 421.8 432.2 422.5 374.7 377.2

Source: Company data, Goldman Sachs Global Investment Research

15 November 2017 45
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 42: Parnaiba III - cash flow to equity model


In R$mn, unless otherwise stated

Cash flow statement (R$mn) 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029-41E 2042E

Operating Income 71.1 75.7 79.5 83.6 87.7 92.0 100.4 101.2 106.3 111.6 3.6 64.8 6.8
Cash Interest Income / Expenses -7.5 -2.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Depreciation 7.6 7.6 7.7 7.7 7.8 7.8 7.9 8.0 8.0 8.1 0.0 0.0 0.0
Decrease / (Increase) WC -1.2 -1.2 -1.2 -1.3 -1.3 -1.4 -8.9 5.9 -1.6 -1.7 45.7 4.3 0.4
(Capex) -1.5 -1.5 -1.5 -1.5 -1.5 -1.6 -1.6 -1.6 -1.6 -1.6 -1.6 0.0 0.0
Dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF 68.4 78.2 84.4 88.6 92.7 96.9 97.8 113.5 111.1 116.4 47.6 69.0 7.1
Income Tax -13.5 -14.4 -15.2 -16.0 -16.8 -17.6 -18.9 -19.2 -20.2 -21.1 -12.4 -208.2 -19.8
Financing -48.3 -48.2 2.1 2.2 2.3 2.4 2.5 2.6 2.8 2.9 3.0 54.2 5.6
Fiscal Benefits IOE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF (ex Tax) 6.6 15.5 71.3 74.8 78.2 81.8 81.5 97.0 93.7 98.2 38.2 -85.0 -7.1
0.0%

Source: Goldman Sachs Global Investment Research


For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

15 November 2017 46
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 43: Parnaiba IV - Income statement and balance sheet


In R$mn, unless otherwise stated

Income Statement (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Net Revenues 38.1 56.3 59.6 61.8 0.0 0.0
% yoy 47.8% 5.8% 3.7% nm nm
Operating expenses -46.4 -61.4 -58.4 -60.3 -7.0 -7.0
Personnel -0.1 0.0 0.0 0.0 -0.1 -0.1
O&M / Other SG&A costs 25.7 4.0 4.2 4.3 0.0 0.0
Services -5.8 -5.7 -6.1 -6.3 0.0 0.0
Fuel consumption costs -29.4 -17.1 -15.9 -16.2 0.0 0.0
Electricity Purchased -25.6 -27.2 -25.0 -26.4 0.0 0.0
Transmission Expenses -5.8 -8.0 -8.3 -8.4 0.0 0.0
Depreciation & Amortization -5.3 -7.1 -6.9 -6.9 -6.9 -7.0
Provisions 0.0 0.0 0.0 0.0 0.0 0.0
Regulatory Charges / reimbursment for dispatch 0.0 0.0 0.0 0.0 0.0 0.0
Other expenses -0.1 -0.3 -0.3 -0.3 0.0 0.0
Operating Income -8.3 -5.1 1.2 1.6 -7.0 -7.0
Operating margin % -9.1% 2.0% 2.5% nm nm
EBITDA -3.1 2.0 8.1 8.5 -0.1 -0.1
EBITDA margin % 3.5% 13.7% 13.7% nm nm
Net interest income (expenses) -29.0 -35.1 1.9 1.8 1.7 1.7
Interest expenses 0.4 1.8 0.0 0.0 0.0 0.0
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Interest income -29.5 -36.6 1.9 1.8 1.7 1.7


Other financial expenses / gains 0.0 -0.3 0.0 0.0 0.0 0.0
Equity income 0.0 0.0 0.0 0.0 0.0 0.0
Non-operating result 0.7 0.0 0.0 0.0 0.0 0.0
EBT -36.7 -40.3 3.2 3.4 -5.3 -5.4
Minority Interest 0.0 0.0 0.0 0.0 0.0 0.0
Deffered taxes 2.6 -6.2 0.0 0.0 0.0 0.0
Income Tax 0.0 0.0 -0.6 -0.6 0.8 0.8
Net Income -34.1 -46.5 2.6 2.8 -4.5 -4.6
Net margin % -82.5% 4.4% 4.5% nm nm

Balance Sheet (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Assets
Short Term 39.0 32.0 36.9 42.7 24.9 22.5
Cash and Equivalents 3.6 13.7 17.8 23.2 24.8 22.4
Receivables 33.6 11.2 11.9 12.3 0.0 0.0
Dividends Receivable 0.0 0.0 0.0 0.0 0.0 0.0
Fiscal Credits 0.0 0.0 0.0 0.0 0.0 0.0
Inventories 1.2 7.0 7.1 7.1 0.0 0.0
Fiscal Credits from Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0
Receivables with Related Parties 0.0 0.0 0.0 0.0 0.0 0.0
Others 0.7 0.1 0.1 0.1 0.1 0.1
Long Term 52.3 65.6 67.9 71.0 74.2 77.5
Receivables with Related Parties 46.1 65.6 67.9 71.0 74.2 77.5
Fiscal Credits from Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0
Legal Credits / Escrow Account 0.0 0.0 0.0 0.0 0.0 0.0
Others 6.2 0.0 0.0 0.0 0.0 0.0
Permanent 150.1 153.8 148.3 142.7 137.2 131.6
Investment 0.0 0.0 0.0 0.0 0.0 0.0
Net Fixed Assets 150.1 153.8 148.3 142.7 137.2 131.6
Net Deferred Assets 0.0 0.0 0.0 0.0 0.0 0.0
Total Assets 241.5 251.4 253.1 256.4 236.2 231.6

Liabilities and SHE


Short Term 14.2 34.6 33.8 34.3 18.6 18.6
Debt 0.0 0.0 0.0 0.0 0.0 0.0
Suppliers 6.2 16.0 15.2 15.7 0.0 0.0
Taxes 8.1 12.6 12.6 12.6 12.6 12.6
Dividends Payable 0.0 0.0 0.0 0.0 0.0 0.0
Related parties 0.0 0.0 0.0 0.0 0.0 0.0
Electricity reimbursment 0.0 0.0 0.0 0.0 0.0 0.0
Others 0.0 6.0 6.0 6.0 6.0 6.0
Long Term 256.9 292.9 292.9 292.9 292.9 292.9
Debt 0.0 0.0 0.0 0.0 0.0 0.0
Refinanced Debt 0.0 0.0 0.0 0.0 0.0 0.0
Taxes 0.0 0.0 0.0 0.0 0.0 0.0
Others / Legal Liabilities 256.9 292.9 292.9 292.9 292.9 292.9
Minority Participation 0.0 0.0 0.0 0.0 0.0 0.0
SHE -29.7 -76.1 -73.5 -70.7 -75.2 -79.8
Capital 16.0 16.0 16.0 16.0 16.0 16.0
Reserves 3.6 3.6 3.6 3.6 3.6 3.6
Retained Earnings -49.2 -95.7 -93.1 -90.3 -94.8 -99.4
Total Liab. & SHE 241.5 251.4 253.1 256.4 236.2 231.6

Source: Company data, Goldman Sachs Global Investment Research

15 November 2017 47
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 44: Parnaiba IV - cash flow to equity model


In R$mn, unless otherwise stated

Cash flow statement (R$mn) 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029-41E 2042E

Operating Income 1.6 -7.0 -7.0 -7.0 -7.1 -7.1 -7.2 -7.2 -7.3 -7.3 -7.4 -101.4 -8.2
Cash Interest Income / Expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Depreciation 6.9 6.9 7.0 7.0 7.0 7.1 7.1 7.2 7.2 7.3 7.3 100.0 8.1
Decrease / (Increase) WC 0.1 3.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(Capex) -1.4 -1.4 -1.4 -1.4 -1.4 -1.4 -1.4 -1.4 -1.4 -1.4 -1.5 -19.9 -1.6
Dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF 7.2 2.3 -1.4 -1.4 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -1.5 -21.2 -1.8
Income Tax -0.6 0.8 0.8 0.8 0.9 0.9 1.0 1.0 2.4 2.5 2.6 48.6 5.4
Financing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Fiscal Benefits IOE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF (ex Tax) 6.6 3.1 -0.6 -0.6 -0.6 -0.6 -0.5 -0.5 0.9 1.0 1.0 27.4 3.7
0.0%

Source: Goldman Sachs Global Investment Research


For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

15 November 2017 48
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 45: Itaqui - Income statement and balance sheet


In R$mn, unless otherwise stated

Income Statement (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Net Revenues 583.7 541.2 582.4 607.6 634.0 661.5
% yoy -7.3% 7.6% 4.3% 4.3% 4.3%
Operating expenses -484.5 -482.4 -538.3 -450.8 -464.1 -480.1
Personnel -33.3 -35.9 -43.1 -44.7 -46.7 -48.8
O&M / Other SG&A costs -3.0 -2.8 -3.0 -3.1 -3.3 -3.4
Services -64.4 -63.1 -67.9 -70.9 -73.9 -77.2
Fuel consumption costs -257.2 -213.2 -168.7 -175.5 -182.6 -190.0
Electricity Purchased -27.2 -27.1 -115.8 -15.0 -13.7 -14.5
Transmission Expenses -24.6 -50.4 -44.6 -46.5 -48.5 -50.7
Depreciation & Amortization -74.4 -89.2 -94.3 -94.4 -94.5 -94.7
Provisions 0.0 0.0 0.0 0.0 0.0 0.0
Regulatory Charges / reimbursment for dispatch 0.0 0.0 0.0 0.0 0.0 0.0
Other expenses -0.4 -0.7 -0.8 -0.8 -0.8 -0.9
Operating Income 99.2 58.8 44.1 156.8 169.9 181.4
Operating margin % 10.9% 7.6% 25.8% 26.8% 27.4%
EBITDA 173.6 147.9 138.4 251.2 264.4 276.0
EBITDA margin % 27.3% 23.8% 41.3% 41.7% 41.7%
Net interest income (expenses) -175.2 -166.3 -153.1 -94.4 -84.3 -72.1
Interest expenses -192.7 -176.8 -152.5 -90.6 -80.1 -69.5
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Interest income 11.7 13.9 5.0 1.5 1.3 3.2


Other financial expenses / gains 5.8 -3.4 -5.6 -5.3 -5.5 -5.7
Equity income 0.0 0.0 0.0 0.0 0.0 0.0
Non-operating result -3.4 -1.7 0.0 0.0 0.0 0.0
EBT -79.3 -109.2 -109.0 62.4 85.6 109.3
Minority Interest 0.0 0.0 0.0 0.0 0.0 0.0
Deffered taxes 0.0 0.0 0.0 0.0 0.0 0.0
Income Tax 0.0 0.0 0.0 0.0 0.0 0.0
Net Income -79.3 -109.2 -109.0 62.4 85.6 109.3
Net margin % -20.2% -18.7% 10.3% 13.5% 16.5%

Balance Sheet (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Assets
Short Term 242.0 221.7 183.6 177.7 200.2 246.5
Cash and Equivalents 38.8 59.5 23.0 10.6 26.2 65.2
Receivables 116.6 80.3 86.5 90.2 94.1 98.2
Dividends Receivable 0.0 0.0 0.0 0.0 0.0 0.0
Fiscal Credits 0.0 0.0 0.0 0.0 0.0 0.0
Inventories 79.4 73.7 66.0 68.7 71.7 75.0
Fiscal Credits from Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0
Receivables with Related Parties 0.0 0.0 0.0 0.0 0.0 0.0
Others 7.2 8.2 8.2 8.2 8.2 8.2
Long Term 249.4 291.0 294.4 298.8 303.4 308.2
Receivables with Related Parties 53.3 94.8 98.2 102.7 107.3 112.1
Fiscal Credits from Goodwill Amortization 192.1 192.1 192.1 192.1 192.1 192.1
Legal Credits / Escrow Account 0.0 0.0 0.0 0.0 0.0 0.0
Others 3.9 4.0 4.0 4.0 4.0 4.0
Permanent 2,154.0 2,097.3 2,013.1 1,930.0 1,846.9 1,763.5
Investment 0.0 0.0 0.0 0.0 0.0 0.0
Net Fixed Assets 2,154.0 2,097.3 2,013.1 1,930.0 1,846.9 1,763.5
Net Deferred Assets 0.0 0.0 0.0 0.0 0.0 0.0
Total Assets 2,645.3 2,610.0 2,491.0 2,406.5 2,350.5 2,318.3

Liabilities and SHE


Short Term 121.0 183.1 272.7 268.2 269.0 269.9
Debt 10.6 55.2 142.4 142.4 142.4 142.4
Suppliers 32.5 18.8 21.1 16.4 17.0 17.7
Taxes 21.6 57.6 57.6 57.6 57.6 57.6
Dividends Payable 0.0 0.0 0.0 0.0 0.0 0.0
Related parties 4.3 3.9 4.1 4.2 4.4 4.6
Electricity reimbursment 0.0 0.0 0.0 0.0 0.0 0.0
Others 52.0 47.6 47.6 47.6 47.6 47.6
Long Term 1,745.9 1,412.3 1,312.8 1,170.4 1,028.0 885.6
Debt 1,275.0 1,254.4 1,154.9 1,012.5 870.1 727.7
Refinanced Debt 0.0 0.0 0.0 0.0 0.0 0.0
Taxes 0.0 0.0 0.0 0.0 0.0 0.0
Others / Legal Liabilities 470.9 157.9 157.9 157.9 157.9 157.9
Minority Participation 0.0 0.0 0.0 0.0 0.0 0.0
SHE 778.5 1,014.5 905.5 967.8 1,053.4 1,162.7
Capital 1,767.4 2,099.5 2,099.5 2,099.5 2,099.5 2,099.5
Reserves 0.1 0.1 0.1 0.1 0.1 0.1
Retained Earnings -989.0 -1,085.1 -1,194.1 -1,131.8 -1,046.1 -936.9
Total Liab. & SHE 2,645.3 2,610.0 2,491.0 2,406.5 2,350.5 2,318.3

Source: Company data, Goldman Sachs Global Investment Research

15 November 2017 49
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 46: Itaqui - cash flow to equity model


In R$mn, unless otherwise stated
Cash flow statement (R$mn) 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029-41E 2042E

Operating Income 156.8 169.9 181.4 193.7 206.1 219.0 232.6 246.6 261.6 -33.2 0.0 0.0 0.0
Cash Interest Income / Expenses -90.6 -80.1 -69.5 -59.0 -48.5 -38.0 -27.4 -16.9 -6.4 -0.6 0.0 0.0 0.0
Depreciation 94.4 94.5 94.7 94.9 95.2 95.5 95.8 96.2 96.6 0.0 0.0 0.0 0.0
Decrease / (Increase) WC -11.1 -6.4 -6.6 -6.9 -7.2 -7.5 -7.8 -8.2 -8.5 201.6 0.0 0.0 0.0
(Capex) -11.3 -11.3 -11.3 -11.4 -11.4 -11.4 -11.5 -11.5 -11.5 -11.6 0.0 0.0 0.0
Dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF 138.1 166.6 188.6 211.4 234.2 257.7 281.7 306.3 331.7 156.2 0.0 0.0 0.0
Income Tax 0.0 0.0 0.0 0.0 0.0 -7.8 -20.4 -26.2 -29.9 -3.1 -25.0 -435.0 -43.7
Financing -142.2 -142.2 -142.2 -142.2 -142.2 -142.2 -142.1 -142.1 -142.1 -15.5 0.3 5.1 0.5
Fiscal Benefits IOE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF (ex Tax) -4.1 24.4 46.4 69.2 92.1 107.7 119.1 138.0 159.6 137.5 -24.8 -429.9 -43.2
0.0%

Source: Goldman Sachs Global Investment Research


For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

15 November 2017 50
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 47: Pecem II - Income statement and balance sheet


In R$mn, unless otherwise stated

Income Statement (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Net Revenues 555.6 527.7 508.3 530.4 553.5 577.5
% yoy -5.0% -3.7% 4.3% 4.3% 4.3%
Operating expenses -368.2 -415.8 -399.7 -412.7 -426.7 -441.3
Personnel -11.1 -18.2 -19.3 -20.0 -20.9 -21.9
O&M / Other SG&A costs -5.5 -12.4 -12.0 -12.5 -13.0 -13.6
Services -52.5 -51.0 -49.1 -51.2 -53.4 -55.8
Fuel consumption costs -235.9 -208.8 -199.5 -207.5 -215.9 -224.6
Electricity Purchased 0.0 -5.0 0.0 0.0 0.0 0.0
Transmission Expenses 7.2 -46.0 -37.8 -39.3 -41.1 -43.0
Depreciation & Amortization -69.9 -73.8 -81.3 -81.4 -81.5 -81.6
Provisions 0.0 0.0 0.0 0.0 0.0 0.0
Regulatory Charges / reimbursment for dispatch 0.0 0.0 0.0 0.0 0.0 0.0
Other expenses -0.5 -0.7 -0.7 -0.7 -0.7 -0.8
Operating Income 187.4 112.0 108.6 117.7 126.8 136.3
Operating margin % 21.2% 21.4% 22.2% 22.9% 23.6%
EBITDA 257.3 185.8 190.0 199.1 208.3 217.9
EBITDA margin % 35.2% 37.4% 37.5% 37.6% 37.7%
Net interest income (expenses) -193.2 -176.6 -134.8 -91.9 -85.2 -77.5
Interest expenses -165.3 -125.0 -142.5 -99.1 -91.2 -83.3
For the exclusive use of OTAVIO.AIDAR@VOTORANTIMWM.COM.BR

Interest income 9.0 15.7 7.6 7.2 6.0 5.8


Other financial expenses / gains -37.0 -67.3 0.0 0.0 0.0 0.0
Equity income 0.0 0.0 0.0 0.0 0.0 0.0
Non-operating result 0.7 -0.2 0.0 0.0 0.0 0.0
EBT -5.1 -64.9 -26.2 25.8 41.6 58.8
Minority Interest 0.0 0.0 0.0 0.0 0.0 0.0
Deffered taxes 0.0 0.0 0.0 0.0 0.0 0.0
Income Tax 0.0 0.0 0.0 0.0 0.0 0.0
Net Income -5.1 -64.9 -26.2 25.8 41.6 58.8
Net margin % -12.3% -5.2% 4.9% 7.5% 10.2%

Balance Sheet (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Assets
Short Term 238.1 230.5 237.4 258.3 259.4 265.8
Cash and Equivalents 54.9 51.0 74.6 88.9 82.8 81.7
Receivables 126.9 80.0 77.0 80.4 83.9 87.5
Dividends Receivable 0.0 0.0 0.0 0.0 0.0 0.0
Fiscal Credits 0.0 0.0 0.0 0.0 0.0 0.0
Inventories 51.2 93.3 79.6 82.8 86.5 90.4
Fiscal Credits from Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0
Receivables with Related Parties 0.0 0.0 0.0 0.0 0.0 0.0
Others 5.1 6.2 6.2 6.2 6.2 6.2
Long Term 108.4 111.0 111.1 111.4 111.6 111.8
Receivables with Related Parties 0.0 4.7 4.9 5.1 5.3 5.6
Fiscal Credits from Goodwill Amortization 86.1 86.1 86.1 86.1 86.1 86.1
Legal Credits / Escrow Account 21.5 19.8 19.8 19.8 19.8 19.8
Others 0.8 0.4 0.4 0.4 0.4 0.4
Permanent 1,858.0 1,808.8 1,736.1 1,664.5 1,592.8 1,520.9
Investment 0.0 0.0 0.0 0.0 0.0 0.0
Net Fixed Assets 1,858.0 1,808.8 1,736.1 1,664.5 1,592.8 1,520.9
Net Deferred Assets 0.0 0.0 0.0 0.0 0.0 0.0
Total Assets 2,204.5 2,150.3 2,084.6 2,034.1 1,963.8 1,898.6

Liabilities and SHE


Short Term 163.9 227.3 237.3 239.8 242.5 245.2
Debt 28.7 94.3 109.2 109.2 109.2 109.2
Suppliers 73.5 65.1 60.1 62.6 65.2 67.9
Taxes 13.7 18.9 18.9 18.9 18.9 18.9
Dividends Payable 0.0 0.0 0.0 0.0 0.0 0.0
Related parties 1.6 1.4 1.5 1.5 1.6 1.7
Electricity reimbursment 0.0 0.0 0.0 0.0 0.0 0.0
Others 46.4 47.6 47.6 47.6 47.6 47.6
Long Term 1,284.2 1,231.6 1,182.2 1,116.3 1,043.2 975.3
Debt 1,051.5 982.5 873.3 764.2 655.0 545.8
Refinanced Debt 0.0 0.0 59.8 103.1 139.2 180.4
Taxes 0.0 0.0 0.0 0.0 0.0 0.0
Others / Legal Liabilities 232.8 249.1 249.1 249.1 249.1 249.1
Minority Participation 0.0 0.0 0.0 0.0 0.0 0.0
SHE 756.3 691.4 665.2 678.1 678.1 678.1
Capital 962.2 962.2 962.2 962.2 962.2 962.2
Reserves 0.3 0.3 0.3 0.3 0.3 0.3
Retained Earnings -206.2 -271.1 -297.3 -284.4 -284.4 -284.4
Total Liab. & SHE 2,204.5 2,150.3 2,084.6 2,034.1 1,963.8 1,898.6

Source: Company data, Goldman Sachs Global Investment Research

15 November 2017 51
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 48: Pecem II - cash flow to equity model


In R$mn, unless otherwise stated

Cash flow statement (R$mn) 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029-41E 2042E

Operating Income 117.7 126.8 136.3 146.1 156.4 167.2 178.4 190.1 202.4 215.2 -15.6 0.0 0.0
Cash Interest Income / Expenses -99.1 -91.2 -83.3 -75.7 -68.5 -61.5 -54.9 -48.5 -44.1 -43.0 -21.5 0.0 0.0
Depreciation 81.4 81.5 81.6 81.8 82.1 82.4 82.7 83.0 83.3 83.7 0.0 0.0 0.0
Decrease / (Increase) WC -4.2 -4.6 -4.8 -5.0 -5.2 -5.5 -5.7 -6.0 -6.3 -6.5 150.3 0.0 0.0
(Capex) -9.8 -9.8 -9.8 -9.8 -9.8 -9.9 -9.9 -9.9 -10.0 -10.0 -10.0 0.0 0.0
Dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF 86.1 102.7 120.1 137.5 155.0 172.7 190.5 208.7 225.3 239.3 103.1 0.0 0.0
Income Tax 0.0 0.0 0.0 0.0 0.0 -5.6 -11.8 -15.1 -17.0 -18.9 11.4 71.9 7.6
Financing -65.9 -73.0 -67.9 -63.3 -59.2 -55.5 -52.1 -49.1 1.9 2.0 -559.5 1.8 0.2
Fiscal Benefits IOE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF (ex Tax) 20.2 29.7 52.2 74.2 95.8 111.6 126.6 144.6 210.2 222.4 -445.0 73.7 7.8
0.0%

Source: Goldman Sachs Global Investment Research


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15 November 2017 52
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 49: Parnaiba Gas Natural - Income statement and balance sheet
In R$mn, unless otherwise stated

Income Statement (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Net Operating Revenues 617.4 784.9 623.2 642.1 657.4 677.9
% yoy 27.1% -20.6% 3.0% 2.4% 3.1%
Cost of Goods Sold -345.4 -382.0 -337.6 -357.6 -295.1 -305.0
O&M costs -70.7 -70.1 -51.3 -51.3 -52.2 -54.6
Government take -64.8 -69.9 -49.5 -50.4 -50.2 -51.2
Chemical products -0.4 -0.6 -0.5 -0.5 -0.5 -0.6
Depreciation & Depletion -201.5 -235.5 -231.7 -250.6 -187.3 -193.5
Leased Drilling Expenses -7.9 -5.8 -4.6 -4.8 -4.9 -5.1
Explorating Expenses -114.2 -49.0 -8.4 -11.4 -35.4 -41.4
Operating Expenses -53.2 -64.0 -64.5 -67.0 -69.4 -72.1
Personnel -13.5 -35.9 -37.2 -38.9 -40.6 -42.4
Services -20.0 -15.6 -12.4 -12.7 -13.1 -13.5
Rental -5.2 -6.2 -5.1 -5.2 -5.3 -5.5
Insurance -3.1 -3.0 -2.8 -2.8 -2.9 -3.0
Other Expenses -11.5 -3.3 -7.1 -7.3 -7.5 -7.7
Operating Income 104.7 289.9 212.8 206.1 257.5 259.4
Operating margin % 36.9% 34.1% 32.1% 39.2% 38.3%
EBITDA 306.2 525.4 444.5 456.7 444.8 453.0
EBITDA margin % 66.9% 71.3% 71.1% 67.7% 66.8%
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Net interest income (expenses) -75.1 -210.8 -72.6 -56.1 -13.9 -19.9
Interest expenses -119.1 -202.3 -139.4 -84.5 -63.6 -59.3
Interest income 21.3 13.5 66.8 28.4 49.7 39.4
Other financial expenses / gains 22.7 -22.0 0.0 0.0 0.0 0.0
Equity income 0.0 0.0 0.0 0.0 0.0 0.0
Non-operating result 59.8 5.0 0.0 0.0 0.0 0.0
EBT 89.4 84.0 140.2 150.0 243.6 239.6
Income Tax -33.0 -10.6 -19.6 -19.5 -36.5 -35.9
Profit Sharing 0.0 0.0 0.0 0.0 0.0 0.0
Minorities 0.0 0.0 0.0 0.0 0.0 0.0
Net Income 56.4 73.4 120.6 130.5 207.1 203.6
Net margin % 9.4% 19.3% 20.3% 31.5% 30.0%

Balance Sheet (R$mn) 2015A 2016A 2017E 2018E 2019E 2020E


Assets
Short Term 410.1 436.6 833.0 609.4 988.9 844.6
Cash and Equivalents 122.4 141.2 551.2 324.5 709.6 563.0
Receivables 0.0 0.3 0.3 0.3 0.3 0.3
Receivables from related parties 75.6 141.7 141.7 141.7 141.7 141.7
Inventories 31.3 39.0 34.5 36.5 30.1 31.1
Taxes 57.9 31.7 25.2 25.9 26.6 27.4
Loans with related parties 64.0 55.0 55.0 55.0 55.0 55.0
Receivables from partnerships 34.9 12.4 9.9 10.1 10.4 10.7
Others 24.1 15.2 15.2 15.2 15.2 15.2
Long Term 109.2 147.4 147.4 147.4 147.4 147.4
Long Term Receivables 109.2 147.4 147.4 147.4 147.4 147.4
Permanent 1,398.6 1,262.6 1,320.6 1,087.2 1,022.0 1,213.5
Investment 33.2 31.9 31.9 31.9 31.9 31.9
Net Fixed Assets 1,365.4 1,230.7 1,288.8 1,055.3 990.2 1,181.7
Total Assets 1,917.9 1,846.5 2,301.0 1,844.0 2,158.4 2,205.5

Liabilities and SHE


Short Term 633.3 354.6 363.1 367.2 359.6 362.2
Debt 405.7 201.9 215.8 215.8 215.8 215.8
Suppliers 143.5 37.3 33.0 34.9 28.8 29.8
Taxes 15.3 16.7 14.8 15.7 12.9 13.3
Salaries and personnel 18.8 25.4 26.3 27.4 28.7 30.0
Related Parties 41.3 71.3 71.3 71.3 71.3 71.3
Others 8.7 2.0 2.0 2.0 2.0 2.0
Long Term 743.6 957.8 1,283.1 691.6 806.5 647.3
Debt 651.1 724.4 674.0 458.3 242.5 26.7
Refinanced Debt 0.0 0.0 375.7 0.0 330.7 387.2
Related parties 58.2 196.2 196.2 196.2 196.2 196.2
Provisions for Abadon / Other 34.3 37.1 37.1 37.1 37.1 37.1
Minority Interests 0.0 0.0 0.0 0.0 0.0 0.0
SHE 541.1 534.2 654.7 785.2 992.3 1,195.9
Capital 619.1 619.1 619.1 619.1 619.1 619.1
Convertibles 0.0 0.0 0.0 0.0 0.0 0.0
Reserves 8.9 0.0 0.0 0.0 0.0 0.0
Retained Earnings -86.9 -84.9 35.7 166.2 373.2 576.9
Total Liab. & SHE 1,917.9 1,846.5 2,301.0 1,844.0 2,158.4 2,205.5

Source: Company data, Goldman Sachs Global Investment Research

15 November 2017 53
Goldman Sachs Eneva SA (ENEV3.SA)

Exhibit 50: Parnaiba Gas Natural - cash flow to equity model


In R$mn, unless otherwise stated

Cash flow statement (R$mn) 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029-41E 2042E

Operating Income 206.1 257.5 259.4 288.9 339.8 395.2 609.5 633.6 709.9 749.3 44.5 402.8 -1.8
Cash Interest Income / Expenses -84.5 -63.6 -59.3 -45.3 -35.2 -27.7 -26.5 -23.8 -10.9 -1.7 0.0 -0.4 -0.1
Depreciation 250.6 187.3 193.5 168.3 131.8 144.4 163.9 137.8 83.5 66.8 68.2 585.7 1.8
Decrease / (Increase) WC 0.9 -2.1 0.5 -0.7 -1.1 0.9 -12.9 0.5 -2.0 -0.5 31.9 -19.8 0.0
(Capex) -17.1 -122.1 -385.0 -77.6 -428.6 -350.0 0.0 0.0 0.0 -68.1 -68.1 0.0 0.0
Dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF 355.9 257.0 9.2 333.7 6.7 162.8 734.0 748.0 780.4 745.8 76.5 968.3 -0.1
Income Tax -19.5 -36.5 -35.9 -44.6 -52.9 -62.9 -103.7 -114.5 -134.7 -150.5 -107.8 -2,096.3 -212.2
Financing -591.5 114.9 -159.2 -137.3 -80.9 -104.7 74.4 -143.2 -192.9 -45.1 0.0 1.0 0.0
Fiscal Benefits IOE 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Free CF (ex Tax) -255.0 335.4 -186.0 151.8 -127.1 -4.7 704.6 490.4 452.8 550.1 -31.3 -1,127.0 -212.2
0.0%

Source: Goldman Sachs Global Investment Research

Appendix 4: Brazilian Utilities valuation table


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Exhibit 51: Brazilian Utilities Valuation Table


Prices as of November 14, 2017; all price targets are for a 12-month horizon
Distribution Generation Integrated Transmission Sanitation Brazil
EQTL3 Tiet EGIE3 Eneva Copel Cemig EdB Alupar CTEEP TAESA Sabesp Avg
EQTL3 TIET11 EGIE3 ENEV3 CPLE6 CMIG4 ENBR3 ALUP11 TRPL4 TAEE11 SBSP3
Shares Outstanding 198.4 393.5 652.7 315.0 273.7 1258.9 606.9 257.8 164.7 344.5 683.5
Current Price 62.68 13.15 35.92 13.12 23.06 6.55 14.20 17.67 63.15 19.79 29.46
Price (US$) 17.3 4.2 11.1 4.5 9.6 2.7 4.3 6.0 20.6 7.8 10.1
ADTV 3M (US$ mn) 21.4 6.2 11.3 1.5 5.6 22.1 7.9 3.8 7.0 10.9 16.7 10.4
Target Price 71.0 20.5 39.0 17.0 37.0 10.2 15.5 21.5 80.0 25.5 39.5
Div. yield (%) 1.3% 9.8% 7.4% 1.2% 7.0% 2.1% 4.0% 3.2% 6.4% 8.7% 3.0% 4.9%
ETR 14.5% 65.7% 15.9% 30.8% 67.5% 57.8% 13.2% 24.9% 33.1% 37.6% 37.0% 36.2%
Rating Buy Buy Neutral Buy Neutral Neutral Neutral Buy Buy Buy Buy
Market Cap (US$ mn) 3,431 1,656 7,250 1,414 2,640 3,460 2,637 1,546 3,398 2,681 6,905
EV 17E (R$ mn) 14,128 6,245 25,742 14,921 14,921 25,192 13,837 8,295 13,714 9,963 33,683
Levered real IRR 11.8% 23.6% 11.1% 23.2% 25.2% 18.1% 13.0% 11.8% 11.1% 11.9% 13.6% 15.9%
Unlevered real IRR 7.7% 23.1% 9.8% 23.2% 24.9% 16.5% 12.4% 10.5% 6.6% 9.5% 11.3% 14.2%
CoE 9.5% 9.4% 9.4% 12.0% 13.1% 13.1% 11.5% 7.5% 7.5% 7.0% 11.6% 10.1%
IRR vs. CoE spread +231bps +1427bps +169bps +1117bps +1216bps +504bps +155bps +424bps +361bps +490bps +208bps +573bps
P/E 17E 19.7x 11.6x 13.2x 28.1x 5.8x 9.8x 11.3x 15.6x 7.3x 9.7x 8.0x 12.7x
P/E 18E 12.6x 8.0x 12.2x 7.6x 4.4x 6.8x 10.4x 12.6x 6.4x 8.0x 6.2x 8.6x
P/E 19E 13.5x 6.2x 10.6x 5.6x 3.9x 4.5x 9.0x 12.2x 6.6x 8.2x 5.2x 7.8x
Average 18-19 13.0x 7.1x 11.4x 6.6x 4.2x 5.6x 9.7x 12.4x 6.5x 8.1x 5.7x 8.2x
P/BV 17E 2.8x 3.4x 3.5x 0.8x 0.4x 0.6x 1.1x 1.2x 1.0x 1.6x 1.2x 1.6x
P/BV 18E 2.4x 3.5x 3.5x 0.7x 0.4x 0.6x 1.1x 1.1x 0.9x 1.5x 1.0x 1.5x
P/BV 19E 2.2x 3.7x 3.5x 0.6x 0.4x 0.5x 1.1x 1.1x 0.9x 1.5x 0.9x 1.5x
Average 18-19 2.3x 3.6x 3.5x 0.7x 0.4x 0.5x 1.1x 1.1x 0.9x 1.5x 1.0x 1.5x
EV/EBITDA 17E 8.2x 6.6x 7.5x 6.9x 4.8x 7.6x 6.4x 5.9x 8.9x 5.5x 6.5x 6.8x
EV/EBITDA 18E 6.1x 4.8x 6.7x 5.4x 3.8x 7.0x 6.4x 5.5x 6.1x 6.4x 5.1x 5.7x
EV/EBITDA 19E 6.3x 3.8x 5.9x 4.8x 3.5x 5.7x 6.3x 6.1x 6.4x 7.0x 4.4x 5.5x
Average 18-19 6.2x 4.3x 6.3x 5.1x 3.6x 6.3x 6.3x 5.8x 6.2x 6.7x 4.7x 5.6x
Div. yield 17E (%) 1.3% 9.8% 7.4% 1.2% 7.0% 2.1% 4.0% 3.2% 6.4% 8.7% 3.0% 4.9%
Div. yield 18E (%) 2.0% 14.4% 8.0% 3.7% 9.3% 6.8% 9.3% 4.0% 10.9% 10.8% 3.8% 7.5%
Div. yield 19E (%) 3.7% 18.7% 9.2% 5.1% 10.8% 5.1% 10.6% 6.1% 13.5% 11.4% 8.9% 9.4%
Average 18-19 2.8% 16.6% 8.6% 4.4% 10.1% 6.0% 10.0% 5.0% 12.2% 11.1% 6.4% 8.5%
Payout 17E (%) 24.8% 108.7% 100.0% 35.0% 47.0% 21.9% 49.3% 50.0% 50.0% 92.2% 28.0% 55.2%
Payout 18E (%) 24.8% 109.0% 100.0% 27.7% 46.2% 50.2% 100.0% 50.0% 75.0% 92.3% 27.8% 63.9%
Payout 19E (%) 50.0% 109.3% 100.0% 28.7% 47.3% 25.0% 100.0% 75.0% 95.0% 100.0% 50.3% 71.0%
Average 18-19 37.4% 109.2% 100.0% 28.2% 46.8% 37.6% 100.0% 62.5% 85.0% 96.2% 39.0% 67.4%
FCF yield 17E 3.7% -2.6% 9.6% -8.0% -17.9% -0.3% 9.8% 37.7% 11.2% 10.3% 2.5% 5.1%
FCF yield 18E 4.0% 16.0% 10.7% 19.4% 16.8% 3.7% -6.1% 16.0% 6.7% 13.3% 3.4% 9.5%
FCF yield 19E 5.7% 19.9% 12.1% 21.2% 17.7% 26.0% -1.7% 13.3% 3.7% 8.4% 7.9% 12.2%
Average 18-19 4.8% 17.9% 11.4% 20.3% 17.3% 14.8% -3.9% 14.7% 5.2% 10.8% 5.7% 10.8%

Source: Goldman Sachs Global Investment Research

15 November 2017 54
Goldman Sachs Eneva SA (ENEV3.SA)

Disclosure Appendix
Reg AC
We, Bruno Pascon, Victor Hugo Menezes and Gabriel Francisco, hereby certify that all of the views expressed in this report accurately reflect our
personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be,
directly or indirectly, related to the specific recommendations or views expressed in this report.
Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs Global Investment Research division.

GS Factor Profile
The Goldman Sachs Factor Profile provides investment context for a stock by comparing key attributes to the market (i.e. our coverage universe) and its
sector peers. The four key attributes depicted are: Growth, Financial Returns, Multiple (e.g. valuation) and Integrated (a composite of Growth, Financial
Returns and Multiple). Growth, Financial Returns and Multiple are calculated by using normalized ranks for specific metrics for each stock. The
normalized ranks for the metrics are then averaged and converted into percentiles for the relevant attribute. The precise calculation of each metric may
vary depending on the fiscal year, industry and region, but the standard approach is as follows:
Growth is based on a stocks forward-looking sales growth, EBITDA growth and EPS growth (for financial stocks, only EPS and sales growth), with a
higher percentile indicating a higher growth company. Financial Returns is based on a stocks forward-looking ROE, ROCE and CROCI (for financial
stocks, only ROE), with a higher percentile indicating a company with higher financial returns. Multiple is based on a stocks forward-looking P/E, P/B,
price/dividend (P/D), EV/EBITDA, EV/FCF and EV/Debt Adjusted Cash Flow (DACF) (for financial stocks, only P/E, P/B and P/D), with a higher percentile
indicating a stock trading at a higher multiple. The Integrated percentile is calculated as the average of the Growth percentile, Financial Returns
percentile and (100% - Multiple percentile).
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Financial Returns and Multiple use the Goldman Sachs analyst forecasts at the fiscal year-end at least three quarters in the future. Growth uses inputs
for the fiscal year at least seven quarters in the future compared with the year at least three quarters in the future (on a per-share basis for all metrics).
For a more detailed description of how we calculate the GS Factor Profile, please contact your GS representative.

M&A Rank
Across our global coverage, we examine stocks using an M&A framework, considering both qualitative factors and quantitative factors (which may vary
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companies under our rated coverage from 1 to 3, with 1 representing high (30%-50%) probability of the company becoming an acquisition target, 2
representing medium (15%-30%) probability and 3 representing low (0%-15%) probability. For companies ranked 1 or 2, in line with our standard
departmental guidelines we incorporate an M&A component into our target price. M&A rank of 3 is considered immaterial and therefore does not
factor into our price target, and may or may not be discussed in research.

Quantum
Quantum is Goldman Sachs proprietary database providing access to detailed financial statement histories, forecasts and ratios. It can be used for
in-depth analysis of a single company, or to make comparisons between companies in different sectors and markets.

GS SUSTAIN
GS SUSTAIN is a global investment strategy focused on the generation of long-term alpha through identifying high quality industry leaders. The GS
SUSTAIN 50 list includes leaders we believe to be well positioned to deliver long-term outperformance through superior returns on capital, sustainable
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quantifiable analysis of these three aspects of corporate performance.

Disclosures
Coverage group(s) of stocks by primary analyst(s)
Bruno Pascon: Latin America-Energy, Latin America-Utilities.
Latin America-Energy: Cosan SA, Ecopetrol, Ecopetrol, Petroleo Brasileiro SA, Petroleo Brasileiro SA, Petroleo Brasileiro SA, Petroleo Brasileiro SA,
Ultrapar Participacoes SA, YPF Sociedad Annima.
Latin America-Utilities: AES Gener SA, AES Tiet Energia SA, Alupar Investimento SA, Cemig, Cemig, Copel, Copel, CPFL Energia, CTEEP, Enel
Americas SA, Enel Chile SA, Enel Generacion Chile SA, Energias do Brasil SA, Eneva SA, Engie Brasil SA, Engie Energia Chile SA, Equatorial Energia,
IEnova, Sabesp, Sabesp, TAESA.

Company-specific regulatory disclosures


The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, Goldman Sachs) and companies covered
by the Global Investment Research Division of Goldman Sachs and referred to in this research.
Goldman Sachs beneficially owned 1% or more of common equity (excluding positions managed by affiliates and business units not required to be
aggregated under US securities law) as of the month end preceding this report: Eneva SA (R$13.12)
Goldman Sachs has received compensation for investment banking services in the past 12 months: Eneva SA (R$13.12)
Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: Eneva SA (R$13.12)
Goldman Sachs had an investment banking services client relationship during the past 12 months with: Eneva SA (R$13.12)
Goldman Sachs had a non-securities services client relationship during the past 12 months with: Eneva SA (R$13.12)
Goldman Sachs has managed or co-managed a public or Rule 144A offering in the past 12 months: Eneva SA (R$13.12)

Distribution of ratings/investment banking relationships


Goldman Sachs Investment Research global Equity coverage universe

15 November 2017 55
Goldman Sachs Eneva SA (ENEV3.SA)

Rating Distribution Investment Banking Relationships


Buy Hold Sell Buy Hold Sell
Global 33% 54% 13% 64% 57% 53%

As of October 1, 2017, Goldman Sachs Global Investment Research had investment ratings on 2,717 equity securities. Goldman Sachs assigns stocks
as Buys and Sells on various regional Investment Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for
the purposes of the above disclosure required by the FINRA Rules. See Ratings, Coverage groups and views and related definitions below. The
Investment Banking Relationships chart reflects the percentage of subject companies within each rating category for whom Goldman Sachs has
provided investment banking services within the previous twelve months.

Price target and rating history chart(s)


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Regulatory disclosures
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See company-specific regulatory disclosures above for any of the following disclosures required as to companies referred to in this report: manager or
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15 November 2017 56
Goldman Sachs Eneva SA (ENEV3.SA)

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