parnaÍba gÁs natural

PARNAÍBA GÁS NATURALMarch/2015

Link to PGN’s Institutional Video

The Company

Portfolio

Operations and Business Plan

Gas Monetization

Financial Highlights

This material is for informational purposes only and should not be construed as an offer or solicitation of an offer to buy or sell securities. This material contains selected information from our business plan which shall be construed jointly with more detailed information, such as reports issued by ANP, our financial statements and its related notes. Despite our belief that our future projections are based on reasonable premises, the results may differ from the forecast due to several risks and uncertainty.

Disclaimer

https://www.youtube.com/watch?v=tzkQKSH1sZ4

THE COMPANY

Portfolio Operations and Business Plan Gas Monetization Financial Highlights 4The Company

THE COMPANY

Created in September 2009

Operator in a total area of 7,000 km², in the Parnaíba Basin

February 2014: R$ 250 Million capital increase resulted in a change of control and in a new management team

Second largest operator gas producer in Brazil since 20141

More than 100 direct employees, and over 1,000 indirect employees

1 Regulatory Agency Monthly Report - www.anp.gov.br

VISIONTo be a world class company in the Oil & Gas sector and act as a key player in the sustainable development of Brazil

MISSIONTo thrive in the Brazilian Oil & Gas market, seizing opportunities that assure value creation for shareholders and society, combining entrepreneurial spirit, talented people and innovative business solutions

PGN IS SEEKING TO INCREASE IT’S ROLE IN THE OIL&GAS INDUSTRY

Current core business

1-3 Years

Consolidating our Position

3-5 Years

Achieving our Vision

> 5 Years

Guarantee gas supply to Eneva

Develop a constructive agenda with the Maranhão State Government to foster gas-intensive industry growth in our influence area

Elaborate and implement a strategy for the next bid round of oil and gas blocks (13th Round, 2015, Brazil - expected)

Evaluate new oportunities for gas monetization and establish relevant partnerships

Evaluate farm-in opportunities in onshore and/or shallow waters

Enhance geological studies in the Parnaíba Basin

Evaluate and establish partnerships in E&P with new or existing players

THE COMPANYSTRATEGY


FOCUS ON EXECUTION IS CRITICAL TO INCREASE PRODUCTION CAPACITY AND TO DELIVER SUCCESS IN THE SHORT TERM

24 months from discovery to production in Gavião Real Field 72 wells drilled and 11.000 km of seismic acquired in 4 year campaignOperations with low impact on environment and local communitiesEffective in a constructive dialogue on best practices related to the Brazilian Regulatory Framework

Dry gas accumulations discovered in an unique petroleum system, with good quality sandstones reservoirsThe Parnaíba Basin is an area with good access to roads, ports and other vital infrastructure

Geoscientists with an average experience of more than 30 years in Brazilian sedimentary basinsGeological success index of 72%Geological model for the Parnaíba Basin is recognized as a standard by the Brazilian Regulatory Agency

ASSET QUALITY, EXPLORATION CAPABILITIES AND EXCELLENCE IN EXECUTION ARE THE MAIN LEVERS TO SUPPORT GROWTH AND SUSTAINABLE RETURNS

THE COMPANYCOMPETITIVE ADVANTAGES

Asset Quality

Exploration Expertise

Excellence in Execution


Marcelo Medeiros Cambuhy InvestimentosChairman of the Board

SHAREHOLDERS

72.73% 9.09% 18.18%

BOARD OF DIRECTORS

Alex Amorim Cambuhy Investimentos

Guilherme Bottura Cambuhy Investimentos

Fábio Bicudo ENEVA S.A.

Haakon Haaland E.ON Exploration & Production

David Zylbersztajn DZ Negócios com Energia Independent

THE COMPANYSHAREHOLDERS AND BOARD OF DIRECTORS

João Salles Cambuhy Investimentos

Cambuhy acquired shares held by OGX Petróleo e Gás S.A. – Em recuperação judicial (in judicial recovery) through an action process held pursuant to Brazilian Bankruptcy Law (law no. 11,101 of February 9, 2005). Effective transfer of the corporate stake from OGX to Cambuhy shall be performed only after the final and unappealable judicial award approving OGX’s judicial recovery plan is granted.


R$ 250 MILLION CAPITAL INCREASE IN FEBRUARY 2014 HAS GUARANTEED RESOURCES TO ACCELERATE EXPLORATION AND DEVELOPMENT ACTIVITIES

THE COMPANYCEO AND EXECUTIVE DIRECTORS

Over 20 years of experience in strategy, risk management, finance and corporate planning

Previous experiences:_ Group Treasurer & Group Head of Tax.

Acting Head of Global Shared Services at BG Group in the United Kingdom, SVP

_ Global Head of Treasury & Corporate Finance, Senior Managing Director at Vale

_ Global Head of Corporate Risk Management at Vale in Switzerland

_ Investments Analysis M&A and Private Equity at Banco Icatu

Education: BA in Economics from PUC-RJ and MBA from the University of Chicago Booth School of Business

PEDRO ZINNERCEO

Over 30 years of experience in External Relations, Public Policy, Communications and Foreign Trade Policy

Previous experiences:_ Vice-President of External Relations and

Public Policy at BG Group Brazil for 3 years_ Senior Vice President External Relations

of EMBRAER for 9 years_ Director of External Relations and

International Trade of Xerox do Brazil Ltda for 14 years

Education: Master in Urban, Regional and Economic Planning by the University of California, Los Angeles

VP Institutional Relations and Communication

Over 23 years of experience in the Oil & Gas Industry, with emphasis in project management, well construction, petroleum and natural gas extraction and production

Previous experiences:_ Vice President for Integrated Projects

at Schlumberger South America_ Operations Director at Schlumberger Brazil_ Integrated Project Operations Manager

at Schlumberger_ Project Manager on Gas field development

in North of Mexico, at Schlumberger IPM, Mexico and Central America (MCA).

Education: Degree and Post Graduation in Mechanical Engineering, both from PUC/RJ Master in Project Management of Oil & Gas Development by Heriot-Watt University, Edinburgh - Scotland

VP Operations

Over 35 years of experience in Petroleum Exploration covering most of the Brazilian sedimentary basins

Previous experiences:_ Exploration Manager at Petrobras Colombia_ Exploration Portfolio Manager at Petrobras_ Exploration Executive Manager at OGX

Education: Degree in Geology at UFRGS and Master in Structural Geology at UFOP

VP Exploration


THE COMPANYCEO AND EXECUTIVE DIRECTORS

Over 13 years of experience in infrastructure focusing on Oil & Gas and electric energy sectors

Previous experiences:_ Responsible for creating and implementing

the contractual structure of the Parnaíba Complex

_ Leader of both litigation law and regulatory law departments at L.O Baptista, Schmidt, Valois Law Firm

_ Judging Counsel of the Ethics and Discipline Court of the Bar Association of Brazil (OAB).

Education: Post-graduation degree in Public Law from UERJ, BA of Law from PUC-RJ

General Counsel

MANAGEMENT TEAM WELL PREPARED TO SUPPORT PGN´S GROWTH STRATEGY IN BRAZIL

Over 15 years of experience in corporate planning, finance and governance

Previous experiences:_ Corporate Finance General Manager at Vale_ Integration General Manager at Vale_ Planning General Manager at Vale_ Senior Consultant at Booz & Company

Education: Master of Business Administration from the Anderson School of University of California, Los Angeles

VP Corporate Services

Over 15 years of experience in finance, treasury and risk management for large public companies in mining, telecom and banking industries

Previous experiences:_ General Manager of Finance at Vale_ Head of Derivatives Sales at BBM Bank_ Financial Risk Manager at Telemar

Education: BA in Mathematics from PUC-RJ and Master of Science in Electric Engineering from PUC/RJ

VP Finance


EXPERIENCE IN BRAZILIAN BASINSAmazonas - Barreirinhas - Camamu - Almada Campos - Cumuruxatiba - Espírito Santo - Jequitinhonha - Pará-Maranhão - Pelotas - Potiguar - Recôncavo Baiano São Francisco - Sergipe-Alagoas - Solimões - Tucano

INTERNATIONAL EXPERIENCEGermany - Angola - Saudi Arabia - Bolivia - Canada - Kazakhstan - Chile - Dubai - Egypt - Spain - United States - France - Netherlands - Iraq - Libya - Malaysia - Mexico - Nigeria - Oman - Russia - Syria - Turkmenistan - Sweden - Venezuela

Antonio WanderGeologist

38 years of O&G experience

Roque Sad

Geologist41 years of O&G

experience

Aladino CandidoGeologist


Alcides PetroliGeologist


Rudy MulderEngineer


Mara OliveiraChemical


Celso MartinsGeologist


Elvira GalvãoEngineer


Damian PopoloDiplomat


José CorreaGeologist


Jesus PereiraEngineer


José Patrício

Engineer35 years of O&G

experience

João CaldeiraGeologist


Paulo CunhaGeologist


Homero Menezes


experience

George Fernandes


experience

Raimundo GuedesGeologist


MANAGEMENT TEAM WELL PREPARED TO SUPPORT PGN´S GROWTH STRATEGY IN BRAZIL

THE COMPANYTECHNICAL TEAM WITH EXTENSIVE EXPERIENCE IN BRAZIL AND ABROAD


FIELDS AND EVALUATION PLANS

12The Company Operations and Business Plan Gas Monetization Financial Highlights

FIELD AREA (Km2) 1st GAS

Gavião Real 317 November 12

Gavião Branco 220 February 16

Gavião Azul 64 Under Analysis

EVALUATION PLAN AREA (Km2) EXPECTED DATA FORTHE END OF ACTIVITIES

SE Bom Jesus 80 May 2015

Santa Isabel 80 May 2015

Fazenda Santa Vitória 980 May 2015

Fazenda Chicote 980 June 2015

Esperantinópolis 980 February 2016

Morada Nova 80 June 2015

Fazenda Tianguar 1.057 July 2016

Basílios 560 August 2016

Araguaína 1.087 October 2016

Axixá 1.087 December 2016

Fazenda Havana 980 December 2016

Angical 1.087 June 2017

FazendaTianguar

PN-T-48BT-PN-4PGN S.A

BPMB


BPMB

PN-T-85BT-PN-10

PGN S.ABPMB


BPMB


BPMB

PN-T-102BT-PN-1PGN S.ACEMES


BPMB

SE BomJesus

FazendaHavana

MoradaNova

Basílios

Axixa

Araguaina

FazendaSanta Isabel

FazendaSanta Vitória

Angical

FazendaChicote

GVR

GVA

UTG

GVBEPGVB


BPMB

PN-T-86BT-PN-3

PETROBRAS

PN-T-66BT-PN-2

PETROBRAS

Relinquished area

Field

Evaluation Plan

Esperantinópolis

70% 30%

PARTNERSHIPS

50% 50%

FazendaTianguar


BPMB


BPMB

PN-T-85BT-PN-10

PGN S.ABPMB


BPMB


BPMB



BPMB

SE BomJesus

FazendaHavana

MoradaNova

Basílios

Axixa

Araguaina

FazendaSanta Isabel


Angical

FazendaChicote

GVR

GVA

UTG

GVBEPGVB


BPMB

PN-T-86BT-PN-3

PETROBRAS

PN-T-66BT-PN-2

PETROBRAS

Relinquished area

Field

Evaluation Plan

Esperantinópolis

FazendaTianguar


BPMB


BPMB

PN-T-85BT-PN-10

PGN S.ABPMB


BPMB


BPMB



BPMB

SE BomJesus

FazendaHavana

MoradaNova

Basílios

Axixa

Araguaina

FazendaSanta Isabel


Angical

FazendaChicote

GVR

GVA

UTG

GVBEPGVB


BPMB

PN-T-86BT-PN-3

PETROBRAS

PN-T-66BT-PN-2

PETROBRAS

Relinquished area

Field

Evaluation Plan

Esperantinópolis

FazendaTianguar


BPMB


BPMB

PN-T-85BT-PN-10

PGN S.ABPMB


BPMB


BPMB



BPMB

SE BomJesus

FazendaHavana

MoradaNova

Basílios

Axixa

Araguaina

FazendaSanta Isabel


Angical

FazendaChicote

GVR

GVA

UTG

GVBEPGVB


BPMB

PN-T-86BT-PN-3

PETROBRAS

PN-T-66BT-PN-2

PETROBRAS

Relinquished area

Field

Evaluation Plan

Esperantinópolis


PGN IS THE OPERATOR IN ALL AREAS AND

OWNS DEEP KNOWLEDGE RELATED TO THE PARNAÍBA BASIN

ACCOMPLISHMENTS OF 6 YEARS OPERATING IN THE PARNAÍBA BASIN

PGN REACHED A GEOLOGICAL AND ECONOMIC SUCCESS RATE OF 72% AND 49%, RESPECTIVELY, IN ITS EXPLORATORY CAMPAIGN IN A NEW FRONTIER BASIN

72 wells drilled

Producer

28

Exploratory

44

Number of wells drilled since 2010

More than 10.000 km of 2D seismic acquired and

500 km2 of 3D

FazendaTianguar


BPMB


BPMB

PN-T-85BT-PN-10

PGN S.ABPMB


BPMB


BPMB



BPMB

SE BomJesus

FazendaHavana

MoradaNova

Basílios

Axixa

Araguaina

FazendaSanta Isabel


Angical

FazendaChicote

GVR

GVA

UTG

GVBEPGVB


BPMB

PN-T-86BT-PN-3

PETROBRAS

PN-T-66BT-PN-2

PETROBRAS

Relinquished area

Field

Evaluation Plan

Esperantinópolis


Declaration of commerciality of new fields in 2015:3 fields in the 1st semester e 1 field in the 2nd semester

SINCE JULY 2016 PGN WILL REACH A PRODUCTION CAPACITY OF 8.4 MILLION M³ PER DAY

Evaluation Campaign focusing on discoveries nearest to the installed production complex

Four declarations of commerciality forecasted in 2015

DISCOVERIES EVALUATION PLANS

1. Declaration of Commerciality depends on the conclusion of the Evaluation Plans submitted to ANP.

15The Company Portfolio Operations and Business Plan Gas Monetization Financial Highlights

Santa VitóriaFm. Poti

1-OGX-121-MA

Gas Column:92 m

Gas Column:80 m

Gas Column:69 m

Gas Column:52 m

Gas Column:50 m

1-OGX-107-MA 3-PGN-4-MA 4-OGX-111-MA 1-OGX-22-MA

Faz. ChicoteFm. Poti

SE Bom Jesus 2Fm. Poti

SE Bom JesusFm. Poti

Faz. São JoséFm. Poti

DISCOVERY OF SIGNIFICANT GAS COLUMNS


PGN MADE SIGNIFICANT

GAS COLUMNS DISCOVERIES IN A NEW

FRONTIER BASIN

WELL TESTING RESULTS

TEST RESULTS CONFIRM THE GREAT POTENTIAL OF PGN DISCOVERIES

3-OGX-88-MA

Qg : 491.000 m³ in ¾’’AOF : 1.800.000 m³/dFlare : 16m

Qg : 340.000 m³ in ¾’’AOF : 785.000 m³/dFlare : 18m



Qg : 500.000 m³ in ¾’’AOF : 6.500.000 to 8.000.000 m³/dFlare : 22m

7-GVR-20D-MA 1-OGX-22-MA 7-GVB-2D-MA 3-PGN-4-MA

Last testJanuary 2015


GVR, GVB AND GVA FIELDS

* Based on Annual Reserves Report submited to ANP in January 2015.** Recoverable volume already excluding volumes produced until december 2014.*** BCM: Billion Cubic Meter


PRODUCTION

PGN IS THE SECOND LARGEST OPERATOR GAS PRODUCER IN BRAZIL

84.8

Petrobras

5.6

PGN

0.8

Shell

0.3

Chevron

0.1

Statoil RJ ES AM SP BA MA SE

31.1

15.4 13.4 12.2 8.6 5.6 2.8

1. Regulatory Agency Monthly Production Report – November 2014, available at www.anp.gov.br

2. PGN’s production capacity target will fulfill its main clients under de Gas supply Agreements of Parnaíba I, II, III and IV power plants.

3. Government contribution measured until October 2014.


PGN is the second largest operator gas producer in Brazil and has already produced 3.4 Billion m³ of gasPGN’s production placed Maranhão State as the sixth largest gas Producer in BrazilPGN’s production generated more than R$ 130 Million in Royalties, Special Participation, Research and Development and Land Owner Production Participation3

Jul/2016Jan/2015

8.4

4.9

+ 71%July 2016: Production capacity target²Million m³ per day

Expedite the evaluation of PGN’s discoveries

Declaration of Commerciality of new fields

Gavião Branco Field production development, including the construction of a 40 km pipeline

Over R$ 700 Million of total investments expected in 2015

PGN WILL INCREASE ITS PRODUCTION CAPACITY IN 2016


SINCE JULY 2016 PGN WILL REACH A PRODUCTION CAPACITY OF 8.4 MILLION M³ PER DAY

Georadar and CPGeo were hired to perform PGN’s 2014-2015 Seismic Campaign

The new seismic lines will enhance PGN’s knowledge over its gas discoveries

SEISMIC ACQUISITION AND PROCESSING


NEW SEISMIC CAMPAIGN (2014-2015): 3.800 KM OF PROPRIETARY SEISMIC

DRILLING CAMPAIGN

PGN WILL EXECUTE THE LARGEST ONSHORE PRIVATE DRILLING CAMPAIGN IN BRAZIL IN 2015

PGN will drill more than 40 wells in

2 years

2015

23

2016

19

Number of wells to be drilled in 2015-2016


UP TO FOUR RIGS IN OPERATIONS IN 2015¹

1. Subject to operational planning confirmation

BCH-5 / BCHDrilling Capacity:

3.500 mIn operation

FAXE-2 / FAXEDrilling Capacity:

5.000 mIn operation

OIL 120 / OILDrilling Capacity:

3.000 mIn operation

OIL 126 / OILDrilling Capacity:

2.500 mStart of operation:

May 2015


WELLS OPERATIONS AND MAIN SUPPLIERS

Main supply resources for the Drilling Campaign are guaranteed

With more than 70 wells drilled, PGN was able to improve its learning curve and reduce drilling costs

Main costs per well:

ALL MAJOR SUPPLIERS ALREADY CONTRACTED FOR THE DRILLING CAMPAIGN

DRILLING CAMAPIGN MAIN SUPPLIERS

RigsFAXE: FAXE-2BCH: BCH-05OIL: OIL-120OIL: OIL-126

Engineering, Cementing,Logging & Completions

Drilling and Completion fluids and solids control

Drill bit + BHA + Fishing Tools

Directional Drilling

Well control

Wellhead

Casing

Mudlogging

Liner Hangers + Accessories

Well Test

Coring

* Wildcat, without completion

DRILLING COMPLETION WELL TESTING

2010 US$ 25 million __ __

Budget US$ 5 million US$ 2,5 million US$ 1,7 million

Actual US$ 4 million US$ 1,7 million US$ 300 mil (rig-less)


LOGISTIC BASE

Since 2010 PGN owns a Logistic Base in Santo Antônio dos Lopes

26,000 m², operated by BSM

Casings storage, drilling and completion equipment

PGN IS THE ONLY OPERATOR WITH ITS OWN LOGISTIC BASE TO SUPPORT OPERATIONS IN THE PARNAÍBA BASIN


OUR CLIENTS: PARNAÍBA I, III AND IV

MODELO GAS-TO-WIRE MODELO GAS-TO-WIRE GAS-TO-WIRE MODEL

TODAY PGN MONETIZES ITS GAS THROUGH A UNIQUE GAS-TO-WIRE MODEL


THE PARNAÍBA COMPLEX ACCOUNTS FOR APPROXIMATELY 7% OF BRAZIL’S THERMAL POWER PLANT CAPACITY

GAS MONETIZATIONOur Clients: Parnaíba I, III and IV Thermal Power Plants

Parnaíba I Parnaíba III Parnaíba IV

Capacity (MW) 676 176 56

Volume of gas (Mm³/day) 4.2 1.1 0.3

“Take or Pay” Clause __ __ Yes

Contract Period 15 years 15 years 15 years

* Parnaíba II will start operation in July 2016.


POTENTIAL USES FOR GAS

Gas PGN

PGN GAS CAN BE USED IN SEVERAL DIFFERENT SEGMENTS


LOW EXPOSURE TO THE BRAZILIAN ECONOMY FLUCTUATIONS


Solid cash position in December 2014: R$ 131 Million

EBITDA reached R$ 404 Million, with a substantial increase of 72% compared to 2013

R$ 122 Million of net income, approximately 9 times greater than in 2013 162

1Q14

140

2Q14

144

3Q14

136

4Q14

582

2014 Total

In R$ Million

Net Revenue 80% greater in 2014 than in 2013

Net Revenue

Thermal power plants average dispatch

97%

91%

88%

82%

OUR KEY ROLE IN THE BRAZILIAN ENERGY MATRIX ENABLES A HIGH REVENUE PREDICTABILITY

2014 POSITIVE RESULTS DRIVEN BY OUR FOCUS ON OPERATIONAL EXCELLENCE

13

2013

SUBSTANTIAL EBTIDA MARGIN OF 69%, SUSTAINED BY A COMPETITIVE LIFTING COST OF APPROXIMATELY R$ 0,04 PER M³

Long term contracts with thermal power plants provide stable cash flow

Gas-to-wire model icreases predictability in gas monetization

Low exposure to commodity price due to long term gas supply agreements adjusted annually by inflation

234

2013

404

2014

In R$ MillionNET INCOME

122

2014


FINANCIAL DISCIPLINE IN CASH FLOW MANAGEMENT

Cash Position (4Q14): R$ 131 Million

Maturity: 2020

PROFILENET DEBT / EBITDA

2,68 X

1,57 X

2013 2014

In R$ MillionCAPEX

318

221

506

2013 2014 2015E

ROBUST 2015 INVESTMENT PLAN TO ENSURE GAS PRODUCTION AND SALES IN LINE WITH RAISING MARKET DEMAND AND POTENCIAL DIVERSIFICATION

R$ 250 Million capital increase in February 2014 and rescheduling of corporate debt in the long term

Stable balance sheet, with an efficient allocation of resources and diligent control of financial leverage

General & Administrative expenses reduction from 7,9 % of total net revenue in 2013 to 5,3% in 2014

2015 Investment plan amounting to R$ 506 Million, and reaching R$ 723 Million when considering our partners commitments


www.pgnsa.com.br

Parnaíba Gás Natural

http://www.pgnsa.com.br/

http://www.pgnsa.com.br/

parnaÍba gÁs natural

Engineering

gas blocks

oil gas sector

brazilian oil gas market

yearsguarantee gas supply

gasintensive industry

parnaba basinevaluate

parnaba basinfebruary

financial statements