POLARIS INFRASTRUCTURE INC. TSX : PIF

Transcription

1 POLARIS INFRASTRUCTURE INC. TSX : PIF JUNE 2017

2 1 IMPORTANT NOTICE This Presentation includes general background information with respect Polaris Infrastructure Inc. ( Polaris ) and does not purport to be complete. It has been prepared solely for informational purposes and is not to be considered a solicitation or an offer to buy or sell any securities and should not be treated as investment advice. The information contained in this Presentation is confidential and the property of Polaris. It is made available strictly for the purposes referred to above. This Presentation must not be disclosed, copied, published, reproduced or distributed in whole or in part at any time without the prior written consent of Polaris and, by accepting this Presentation, you agree not to do so. You also agree to return any written copy of this Presentation to Polaris at the request of Polaris.

3 POLARIS INFRASTRUCTURE OVERVIEW

4 3 SNAPSHOT Own and operate San Jacinto Geothermal power plant in Nicaragua PPA wit h nati onal gri d cont ract ual pri ce per MWh, with annual escalator, to 2029 Recapitalized in May 2015 Fixed balance sheet New Management and Board Cash flow positive; initiated dividend in Q Strong organic growth expected in cash flow in next months

5 4 CAPITAL MARKETS SNAPSHOT S y m b o l : P I F Price* (C$): C$16.82 Shares Outstanding (FD): 15.7 mm Market Cap. (C$): 264 mm Market Cap (US$): 201 mm Cash On Hand Mar 31 (US$): 48.4 mm Debt Mar 31 (US$): mm Enterprise Value (US$): 331 mm Run Rate EBITDA (US$): ~ 50 mm EV/EBITDA: ~ 6.6x Quarterly Dividend (US$): $0.12 * as of June 16, 2017

6 5 IMPROVEMENT IN FINANCIAL METRICS Annualized Run-rate Results * 2016 reflects annualized results once 2 new wells brought online 2 new wells drilled

7 6 RECENT OPERATING RESULTS USD million Q4/16 Per Share Revenue EBITDA Less: Interest & Bank Fees Sustaining Capex * Discretionary CF 8.2 US$0.52/ C$0.71 Less: Principal Repayment Free Cash Flow 6.1 US$0.39/ C$0.53 Q1/17 Per Share 5.8 US$0.37/ C$ US$0.21/ C$0.29 *As estimated by management, on a long term, average basis.

8 DIVIDEND GROWTH 7 Ability to raise dividend based on both growth in cash flow and/or payout ratio Note: Q payout ratio was impacted by planned turbine maintenance * Calculated using management's estimated sustaining capital expenditure

9 SAN JACINTO GEOTHERMAL PLANT

10 9 PROJECT OVERVIEW 72 MW capacity turbines both online since January 2013 PPA in US$ for up to 72MW net, to 2029 US$123/MWh in 2017 with 3% per annum price escalator for 6 years; 1.5% per annum thereafter (to 2029) 10 production wells with productive capacity of approximately: tph of steam and 1,500-1,700 tph of hot brine. Production wells 500m to 2,500m in depth Current steam can result in power capacity of approx MW (net of ~5 MW internal consumption) 6 Injection wells re-inject the hot brine into the reservoir to create a closed loop renewable energy in literal sense Plant re-certified for CO2 credits - ~250,000 tons per year available

11 10 STABLE/GROWING PLANT-LEVEL EBITDA * Plant-level EBITDA defined as Revenue less Direct Costs

12 2015/2016 SAN JACINTO DRILLING PROGRAM

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14 /2016 DRILLING PROGRAM Drilled 3 new wells target 2 new production wells ($23.4MM) SJ 6-3 SJ 9-4 SJ 14-1 Mechanical workover of 4 existing injection wells ($8.2MM) Selected infrastructure investments ($6.4 million): Roads Drilling pads New separation station Well connection piping etc

15 DRILLING PROGRAM RESULTS 14

16 FUTURE GROWTH OPTIONS

17 16 FUTURE GROWTH OPTIONS San Jacinto geothermal project Drilling further production and injection wells Plant output optimization project s Binary Unit Carbon credits Develop Western Sector Acquisitions / Project Development Casita San Cristobal Geothermal Field Feasibility and Development Project

18 17 FURTHER PRODUCTION WELLS Drilling rig is on-site, available Have 2-3 well sites identified Will validate location(s) through planned geological studies in Q1 -Q Target commencement of drilling July 2017 Likely to drill shallow wells to target steam cap Steam cap is a key development in the lifecycle of the San Jacinto resource Estimate cost of approximately $7.5 million / well Capital cost is funded by internal cash Possible long-term expansion into Western Sector of San Jacinto concession

19 18 BINARY UNIT Separate generating unit generates power from hot geothermal fluids (brine) before reinjecting Low risk means of generating additional power No exploration risk Low technical risk Competitive nature of OEM market will result in attractive pricing Design finalized procurement finalized July/August timeframe Total cost of approximately $30 million Estimate additional 8 10 MW Equates to approx. $6 8 million additional cash flow Approx. 4-5 year payback

20 19 NEAR TERM CAPACIT Y GROWTH Pre-Existing Productive Capacity (net) ~50 MW 2015/2016 Drilling Program ~10 12 MW Current Productive Capacity (net) * ~60 62 MW 2017 Drilling Program ~0 10 MW Plus: Binary Unit ~8 10 MW Total (net) ~68 82 MW * Until infrastructure improvements in Q3 -Q are complete, power production will be constrained by ~2 MW

21 20 NEAR TERM GROWTH IMPACT Increase in Cash Flow (% Increase) De-bottleneck Line Capacity $2-4 mm (7% to 13%) Two Production Wells $0-15 mm (0% to 50%) Binary Unit $7-9 mm (23% to 30%) Total (net) $9-28 mm (30% to 80%) Polaris has the capital to significantly grow free cash flow in next months 2 options are risk free Drilling provides upside with an outcome most likely at the midpoint i.e. $7-8 million in free cash flow

22 21 SAN JACINTO TARGET PRODUCTION Annualized Run-rate Results Assuming Binary Unit Assuming 1 new production well * reflects annualized results once new production brought online

23 22 ACQUISITIONS/DEVELOPMENT Grid in Central America is small/fragmented and has a significant number of renewable projects Numerous MW projects in the region Large power companies and infrastructure funds not active Owners are small companies and / or HNW individuals Implication is that: Good targets for acquisitions without significant competiti on Much higher I RR projects available to devel op (i. e % IRR vs % in North America)

24 23 NICARAGUA OVERVIEW Daniel Ortega President elected in 2007 Ortega won national election in November more years of stability Highest growth rate and safest country in central America Left Leaning politically but open economically Polaris project is a showcase project for the country One of the largest foreign investments in country to date Renewable energy World bank and other global development banks as lenders

25 24 RESEARCH ANALYST COVERAGE * as of May 11, 2017

26 SAN JACINTO PHOTOS 25