Valuation & Capital Structure
Director Power & Renewable Energy
Lars Ove Skorpen, Pareto Securities AS
January 31, 2013
Tlf: +47 22 87 87 16
E-mail:
[email protected]
Equity: Top 10 deals in Norway
Bonds: Top 10 deals in Norway
Pareto is consistently part of the top deals in both equity and debt
0.8
0.9
0.9
1.2
1.3
1.4
1.4
1.5
1.6
2.8
1.2
1.3
1.3
1.3
1.4
1.5
1.5
1.8
2.1
3.0
Chloe Marine
PA Resources
Jasper
BOA
DNO
Songa
FOE
Aker Drilling
Stolt-Nielsen
Ocean Rig
Floatel
Seadrill
Golar LNG
Oro Negro
Deep Drilling
Aker Solutions
Stolt Nielsen
Pacific Drilling
NAUR
OSX-3
NOKbn
2012
2011
0.4
0.5
0.5
0.6
0.6
0.7
0.9
1.1
2.0
0.4
0.6
0.7
0.7
1.0
1.2
1.3
1.5
1.5
1.9
Prospector
SpB1 NN
DETNOR
Panoro Energy
DOF
Höegh LNG
Archer
Standard Drilling
Sevan Drilling
Aker Drilling
NORECO
Selvaag Bolig
Songa Offshore
SpB1 SMN
DETNOR
Höegh LNG
REC
SpB1 SR
Dockwise
NAUR
NOKbn
2012
2011
4.0
M&A – proven capabilities within renewable energy
M&A – Hydro
power
M&A - Utilities
M&A – Other
renewable/
infrastructurere
Experience to related renewable and industry sectors Best-in-class execution within the utility sector Top-ranked M&A advisor within thehydro power sector Financial Advisor to
E-Co Energi AS
Sale of E-CO’s 30% stake in EB Kraftproduksjon Financial Advisor to Fjellkraft AS Sale of 78% of Fjellkraft Financial Advisor to Hafslund ASA Acquisition of Viken Fjernvarme AS from the
City of Oslo
Financial Advisor to Boliden AB
Sale of AS Tyssefaldene and power contract (20
TWh)
Financial Advisor to Oslo kommune
Purchase of 20% of E-CO Vannkraft
Financial Advisor to Orkla ASA
Sale of 7 power plants
Financial advisor to Malvik municipality
Merger of Malvik Everk and TrønderEnergi Nett
Financial advisor to several municipal owners Sale of 49% of the company Financial advisor to several municipal owners
Sale of shares in the company
Financial advisor to Gjøvik and Østre Toten
kommuner
Share sale
Financial advisor to Eidsiva
Merger of HEAS, HrE and LGE. Merger with Hedemark Energi (distr. and retail)
Financial advisor to the City of Oslo
Merger with Hafslund
Financial Advisor to Hafslund ASA
Sale of Hafslund’s fiber network activities to EQT
Financial advisor to OCAS
Sale of technology assets from OCAS to Vestas
Financial advisor to Fortum Sale of Fortum’s ownershare (24,5%)
M&A - Wind
Best knowledge within the windsector Financial advisor to
TrønderEnergi AS
Acquisition of 100% of the shares in Trondheim
Energi Nett Financial Advisor to SKS AS Acquistions of Norsk Hydros’s stake in SKS Produksjon AS Financial advisor to Agder Energi Valuation of Agder Energi’s wind power
portfolio
Financial advisor to Statoil ASA
Sale of Arctic Wind to Finnmark Kraft
Financial advisor to Vardar
Valuation of Vardar’s wind power parks and
projects in the Baltic States
Financial advisor to Statoil ASA
Sale of Sarepta Energi (50%) to TrønderEnergi
Kraft
Financial advisor to Statoil ASA
Sale of smaller wind power parks and
projects
Financial advisor to Havgul AS
Sale of offshore wind project – Havsul I to Vestavind Financial advisor to Nettpartner and Fredrikstad Energi Merger of Nettpartner and EB Energimontasje
Critical assumptions in valuation of a wind park
WACC
Terminal value
Economic lifetime
Other
Wind speed (m/S) and full load hours
Size of park & expansion possibilities
Grid (central & regional)
Access to park (24/7 and seasons)
Climate (temperature, snow, icing, extreme wind, saltcontent)
Geology and topography
Critical assumptions in valuation of a wind park
Power price
Price area
Seasonality (day/night and season)
Price of ElCert
Power price
Opex
Service agreement with turbine supplier
Feed-in cost and transmission loss
Land lease & property tax
Turbine
Infrastructure costs
Roads & internal roads
Quay (length, depth, storage capability and load capacity)
Grid (investment contribution?)
Transformers & cabling
Low spot price in 2012 - also in longer perspective
7
11.2
10.3
18.6
20.1
29.1
24.2
23.5
39.1
22.4
36.9
30.6
42.5
36.7
23.4
0
5
10
15
20
25
30
35
40
45
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
øre/kWh
0
10
20
30
40
50
60
70
80
90
100
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Kraftpris
Elsertifikat
Total pris
Årlig gj.snitt og gj.snitt av forwardkursene
Øre / kWh
However the combined price of approx. 50 øre/kWh is challenging with
regard to building new capacity
64,7
56,7
63,7
52,7
37,8
49,8
2012
Long run marginal cost for onshore wind according to Arise Windpower
(SEK 63 /MWh)
Valuation case
ElCert prices + inflation
3200 full load hours
20 years assumed
No terminal value
ElCert price
CAPEX
OPEX
Economical life
All in CAPEX NOK 11m/MW
11
Source and use of capital
Many are cautious and scaling down their balance sheet
Good relations to several banks important
Shop around
Banks
Increased interest in bonds and new issuers are entering the market
Well functioning market
Construction risk an issue
Bonds
Owners will have to adjust their view on future dividends
Utility owners and
dividend
Utilities will have to prioritize hard between various projects
Investments
Falling equity ratio for Norwegian utilities together with lower power
prices, creates challenges in financing wind parks
Capital structure – Høg Jæren
Financing provided by:
50%
50%
Uses
€ m
Sources
€ m
CAPEX
112
Enova grant
62
Development costs
15
Debt
52
Financing costs
4
Equity
24
Contingency
4
Debt Service Reserve
3
Summary - valuation Norway vs. Sweden
15
Norway
Sweden
Wind speed
>
Wind speed
Depreciation
<
Depreciation
Taxes
<
Taxes
CAPEX pr MW
<
CAPEX pr MW
Feed-in cost
<
Feed-in cost
Investment contribution
>
Investment contribution
Permitting process
≤
Permitting process
Area prices
≤
Area prices
ElCert duration
<
ElCert duration
Property tax
≤
Property tax
Grid access
<
Grid access
Contact details and disclaimer
Disclaimer
These materials have been prepared by Pareto Securities AS and/or its affiliates (together “Pareto”) exclusively for the benefit and internal use of the client named on the cover in order to indicate, on a preliminary basis, the feasibility of one or more potential transactions. The materials may not be used for any other purpose and may not be copied or disclosed, in whole or in part, to any third party without the prior written consent of Pareto.
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