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3Q 2018 TGI Results and Key DevelopmentsNovember 08, 2018
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Disclaimer
This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities
Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as
amended. Such forward-looking statements are only predictions and are not guarantees of future performance. All
statements other than statements of historical fact are, or may be deemed to be, forward-looking statements.
Forward-looking statements include, among other things, statements concerning the potential exposure of TGI, its
consolidated subsidiaries and related companies to market risks and statements expressing management’
expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are
identified by their use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”,
“may”, “plan”, “objectives”, ”outlook”, “probably”, “project”, “will”, “seek”, “target”, “risks”, “goals”, “should” and similar
terms and phrases. Forward-looking statements are statements of future expectations that are based on
management’s current expectations and assumptions and involve known and unknown risks and uncertainties that
could cause actual results, performance or events to differ materially from those expressed or implied in these
statements. Although TGI believes that the expectations and assumptions reflected in such forward-looking
statements are reasonable based on information currently available to TGI’s management, such expectations and
assumptions are necessarily speculative and subject to substantial uncertainty, and as a result, TGI cannot
guarantee future results or events. TGI does not undertake any obligation to update any forward-looking statement or
other information to reflect events or circumstances occurring after the date of this presentation or to reflect the
occurrence of unanticipated events.
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Table of contents
01 Key Updates
02 Operational and Financial Performance
03 Expansion Projects
04 Q&A
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Key Updates01
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Highlights1
During August: Natural gas transportation agreements for the Cusiana - Sebastopol route were subscribed with EPM. Approximately 15.000 Kpcd for the year 2020 and 21.400 Kpcd for the years 2021 and 2022.
September 4th: The Extraordinary General Meeting approved the issuance of bonds with maturity on 2028 for USD$750 million, according to the terms presented by the management.
September 28th: S&P Global Ratings affirmed its 'BBB-' issuer credit rating for TGI. The outlook remains stable. The company's 'bbb-' stand-alone credit profile (SACP) remains unchanged. At the same time, affirmed the 'BBB-' issue-level ratings for TGI's senior unsecured debt.
Compression unit No. 8 at Puente Guillermo station started operations during the third quarter.
Operational Performance
Financial Performance
Expansion Projects
October 9th: Fitch Ratings affirmed TGI Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs), as well as international senior unsecuredbond issuance at 'BBB’. The outlook for TGI is stable.
October 17th: TGI successfully completed the issuance of international bonds for USD$750 million, an operation that had bid-to-cover ratio ofapproximately 3,5x and accomplished a rate reduction from 5,70% to 5,55% with maturity 2028.
At the end of July: i) Initiated the commissioning of the Magdalena River Crossing, which eliminates the risk of shortage for 84 municipalities and 8departments; and ii) Loop Armenia (37 Km of pipeline in capacity) entered into operation.
An agreement with Emgesa was subscribed for 2.000 kpcd in the Cusiana - Vasconia route for the 2020- 2024 period. The agreement is associated tothe Cusiana Phase IV expansion project that is estimated to start operations towards the end of 2019 and will represent USD$32,8 millionapproximately in revenue for TGI.
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TGI Overview1
New opportunities in evaluation Pipeline Network(1)
Resolution 182 of 2017 published in December, which
addresses issues related to compensation and competitive
processes for projects included in the Natural Gas Supply Plan,
prepared by the UPME and adopted by the Ministry of Mines
and Energy through the Resolution 40006 of January 4, 2017.
On December 29, 2017, the UPME notifies the following IPAT
projects susceptible to be executed by TGI:
• Loop Marquita – Gualanday
• Bidireccionalidad Barrancabermeja – Ballena
• Bidireccionalidad Yumbo - Mariquita
Additionally, it defines projects that, given their location, are
complementary to the TGI system, and which will have a
competitive selection process, which are mentioned below:
• Regasification Plant - Buenaventura
• Buenaventura – Yumbo - Pipeline
Cartagena Refinery
Barrancabermeja Refinery
Bucaramanga
Bogota
Neiva
Cali
Medellin 2.27 tcf
0,49 tcf
EasternProducers:
EcopetrolEquion
Upper Magdalena
Valley
Lower and Middle
Magdalena Valley
NorthernProducers:
ChevronEcopetrol
0,71 tcf
Guajira
Cusiana-Cupiagua
References
TGI Pipelines
Natural Gas Reserves
City
Field
Refinery
Third Party Pipelines
Reserves in other regions 0.4 2tcf
Total reserves 3.89 tcf
Pac
ific
Oce
an
Caribbean Sea
VE
NE
ZU
ELA
(1) Has access to the three main gas production fields, Guajira and Cusiana-Cupiagua
Source: Mining and Energy Planning Unit. National Hydrocarbons Agency.
The UPME, through Resolution 280 of 2018 dated June 22,
2018, defines the Compressor Branch Jamundi – Downstream
project of the Pradera node, as a priority IPAT project and
susceptible of being executed in first instance by TGI SA ESP.
Currently, the Company is preparing the necessary information
to state interest to the CREG for its execution.
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Operational and Financial Performance02
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Solid Operational Performance2Network length
(km)
Capacity Firm Contracted Capacity(1)
Transported Volume
Load factor
(MMscfd) (MMscfd) (%)
(MMscfd)
(1)The trend line refers to the ratio: Firm contracted capacity/available capacity. The Available capacity differs from the Total Capacity as TGI requires a percentage of it for its own use.
3.957 3.957 3.957 3.957 3.957
3.994
3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q 2017 3Q 2018
446
487
555
458432
460
3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q 2017 3Q 2018
730 730 734 734754
785
3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q 2017 3Q 2018
622650
672 673687
719
85%89%
92% 92% 91% 92%
3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q 2017 3Q 2018
60%62%
67%
57%52% 52%
3Q 2013 3Q 2014 3Q 2015 3Q 2016 3Q 2017 3Q 2018
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Revenues breakdown
Stable and predictable cash flow generation2TGI’s revenues are highly predictable as a result of regulated tariffs.
Revenues by Industry Revenues by Client
USD$ million
Revenues YTD
65,0%
13,0% 10,2%
2,7%7,7%
1,5%
64,5%
13,2%10,3%
2,3%8,2%
1,6%
Distributor Refinery Thermal Commercial Vehicular Others
3Q 2017
3Q 2018
▪ TGI’s revenues are highly regulated, with approximately 99% LTM coming from
tariffs that are reviewed at least every 5 years, ensuring cash flow stability and
attractive rates of return.
▪ The Company enjoys excellent contract quality:
✓ 99% of TGI’s contracts are firm contracts with an average remaining life of
8 years.
✓ 92,3% of 3Q regulated revenues are highly predictable as a result of fixed
tariffs, not dependent on transported volume.
✓ 65,5% of 3Q revenues are nominated in USD$. Only 34,5% nominated in
local currency.
327,2 332,3
308,6
330,7
3Q 2015 3Q 2016 3Q 2017 3Q 2018
31,5%
19,5%
13,5%
9,4%
5,6%
20,4%
31,1%
18,5%
14,7%
9,2%
5,1%
21,4%
Gas Natural Gases deOccidente
Ecopetrol EPM Isagen Others
3Q 2017
3Q 2018
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EBITDA and EBITDA Margin
TGI Financial Performance – Sept 2018 (YTD)2Sales Cost | Operational & Management Expenses Operational Profit
Net Profit
USD$ million USD$ million
USD$ million USD$ in million
206,40213,62
187,78193,20
Sep.2015 Sep.2016 Sep.2017 Sep.2018
274,50 281,23
251,22 251,68
83,9% 84,6%81,4%
76,1%
Sep.2015 Sep.2016 Sep.2017 Sep.2018
119,89 118,83 121,36
143,25
Sep.2015 Sep.2016 Sep.2017 Sep.2018
11,68
62,68
97,09
72,85
Sep.2015 Sep.2016 Sep.2017 Sep.2018
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TGI Financial Performance2
(USD$ million – end-of-year exchange rate for each period)
(USD$ billion – end-of-year exchange rate for each period) (USD$ billion – end-of-year exchange rate for each period)
Liabilities | EquityPPE
Cash and EquivalentsTotal Assets
(USD$ billion – end-of-year exchange rate for each period)
3,083,24
2,812,60 2,58
2014 2015 2016 2017 Sep. 2018
229,40
258,00
229,00
79,50
56,69
2014 2015 2016 2017 Sep. 2018
2,32 2,28 2,22 2,20 2,19
2014 2015 2016 2017 Sep. 2018
1,86 1,97 2,041,79 1,80
1,221,27
0,77
0,81 0,78
2014 2015 2016 2017 Sep. 2018
Liabilities Equity
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TGI Financial Performance2Total Debt / EBITDA
Total Net debt / EBITDA EBITDA / Interest expenses
Debt Profile
4.8
1.7
LTM
LTM
LTM
Total
USD$1,2billions
3,4 3,33,4
4,03,8 3,6
2013 2014 2015 2016 2017 3Q 2018
4,45,0 5,0
4,4
3,8 4,2
2013 2014 2015 2016 2017 3Q 2018
2,4
2,69 2,72
3,16
3,563,44
2013 2014 2015 2016 2017 3Q 2018
Bond64.0%
Intercompany
31.6%
IELAH
3.4%
Leasing & Renting
1.0%
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Growth Projects 03
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Growth Projects (ongoing)3
Project Description Cost Status
Expansion Cusiana -
Apiay -Villavicencio -
Ocoa
Increase capacity in 32 MMCFD at
Cusiana – Apiay line through the
construction of 2 new compression
stations (Paratebueno and Apiay). 7,7
MMCFD of this capacity will be turn aside
to the Apiay – Ocoa line
~$ 48,3 mm • Progress project (99,70%).
• Capex Executed 3Q 2018 – USD$1,5 millions
• Entry into operation – 1Q 2018
Increase capacity in Cusiana system:
• Cusiana – Vasconia: 58 MMCFD with
39,6 Km of loops (30”).
• Puente Guillermo – Vasconia: 17
MMCFD by upgrading Puente
Guillermo compression station.
~$ 70,7 mm
• Progress project (42,2%).
• Entry into operation 2Q 2018 (17 Mmscfd)
4Q 2019 (41 Mmscfd)
• Capex Executed 3Q 2018 – USD$6,9 millions
Cusiana Phase IV
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Growth Projects (ongoing)3
Project Description Cost Status
Replacement ofBranches
• 10 pipelines of TGI´s system end their
regulatory life
• With the regulatory framework and the
analysis of the infrastructure, TGI has
decided to replace four pipelines and
to continue operating the other six.
~$ 49mm
• ~$ 17 mm
CAPEX
replacement
• ~$ 32 mm
CAPEX
maintenance
• Progress project (17,6%).
• Expected Completion date: 2Q 2019.
• Capex Executed 3Q 2018 – USD$0,5 millions
Loop Armenia
Increase capacity 8,28 MMCFD of
Armenia line through the construction of a
36 km 8” loop parallel to exiting 6”
pipeline.
~$ 19,2 mm• Progress project (99,7%).
• Capex Executed 3Q 2018 – USD$1,2 millions
• Entry into operation – 2Q 2018
• Plan to replace 4 pipelines:
❖Ramal Yarigüíes - Puerto Wilches.
❖Ramal Z. Industrial Cantagallo –
Cantagallo. Ramal Cantagallo – San
Pablo.
❖Ramal Galán – Casabe – Yondó.
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Questions and Answers 04
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Investor RelationsFor more information about TGI contact our Investor Relations team:
Julio Alarcón
CFO TGI [email protected]
+57 (1) 3138400
Valeria Marconi
Investor Relations
Officer GEB
+57 (1) 326 8000 Ext 1536
Felipe Castilla
CFO GEB [email protected]
+57 (1) 326800
Sandra JimenezInvestor Relations
Advisor GEB
+57 (1) 326 8000 Ext 1827
www.tgi.com.cowww.grupoenergiabogota.com/en/investors
Sergio Gomez
TGI Financial
Planning and Control
Director
+57 (1) 3138400Ext 2111
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TGI History
1997
• Creation of Ecogas
• Gas business transferred from Ecopetrol
2006
• Ecogas business sold to EEB
• Creation of TGI2008
• TGI takes over the O&M of owned pipelines
2010
• Beginning of operations of the Ballena expansion
• Merger of TGI and Transcogas
2007
• First bond issuance
2009
• Transfer of first BOMT pipeline (GBS)
• Pipeline exchange with Promigas
2011
• CVCI capitalization 31.92%
• Transfer of second BOMT pipeline (Centragas)
• Cusiana Phase I start up
• Refinancing of EEB subordinated debt with
2012
• Refinancing of bonds
• Cusiana II start up
• TGI takes over the O&M of compressor stations
• Investment grade by Moody’s and Fitch
2013
• Investment grade by S&P
• Headquarters relocation to Bogota
2015
• IFRS implementation
• Initiated merger with IELAH
2014
• EEB acquire 31.92% stake IELAH
• Sabana station start up
• Fitch upgrades rating from BBB- to BBB
• First dividend distribution
2016
• IELAH’s SPV absorbed by TGI
2017
• Transfer Mariquita –Cali pipeline (BOMT)
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Regulation perspectives – Tariff Review Process• The latest tariff methodology was approved by CREG Resolution No. 126 in August 2010 and became effective for TGI in December 2012 (CREG
Resolution No. 121).
• The tariff methodology review process takes place every 5 years, but the actual tariff application is usually delayed.
• The previous tariff period was effective from December 2003 to December 2012, a total of 9 years
• The new regulation is expected to be approved in 1Q 2019, with the updated tariffs coming into effect in 2020 (the starting point for the 5 year-period is set
by the CREG approval of the new tariff methodology).
• Resolution CREG 090/2016 which sets regulated WACC is currently under discussion with regulator. Expected final resolution will be in 1Q - 2019.
▪New tariff
methodology
term sheet
proposition for
discussion
▪New tariff
methodology
proposition for
discussion Res.
CREG 090-16
▪First tariff
approval
resolution for
TGI
▪Appeal/ Request
for reinstatement
by TGI
▪Approval and
implementation of
final charges for
TGI
▪Definition of final tariff
methodology and
regulatory WACC
▪Information request by
CREG for the
definition of charges
Dec. 2014
Aug 2016
Mar. 2019 Dic 2019
Jan 2020
▪Beginning of
current tariff
methodology
period
▪Tariffs
become
effective
for TGI
Dec. 2012
5 year regulatory period
Sep 2020▪End of public information audit
stage by CREG and
expressions of interest by third
parties
Jun. 2019
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Para uso restringido GRUPO ENERGÍA BOGOTÁ S.A. ESP. Todos los
derechos reservados. Ninguna parte de esta presentación puede ser
reproducida o utilizada en ninguna forma o por ningún medio sin permiso
explícito de GRUPO ENERGÍA BOGOTÁ S.A ESP.
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