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Investor Meetings – Calpine Corp.

Calpine Corp. · May 1, 2014 · 37 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Investor Meetings – Calpine Corp. – slide 1
    Investor Meetings May 2014
  2. Investor Meetings – Calpine Corp. – slide 2
    Calpine: National Portfolio of More Than 29,000 MW Geographic Diversity Dispatch Flexibility 1 As of 05/01/2014 Geographically diversified portfolio: Scale in three most competitive power markets in America…
  3. Investor Meetings – Calpine Corp. – slide 3
    Unique Independent Power Producer Focused on Best-in-Class Operations Modern Clean 40 5 Wtd Avg Age (Years) 4 30 SO2 lbs/MWh 3 20 2 10 1 0 0 CPN DYN NRG CPN DYN NRG Source: Energy Velocity (2013). Source: Energy…
  4. Investor Meetings – Calpine Corp. – slide 4
    Strategic Secular Positioning Significant Near-Term Retirements Increasing Need for Flexible, Announced; Potential for More Dispatchable Resources Coal and nuclear plants facing retirement; compensation Increasing reliance upon…
  5. Investor Meetings – Calpine Corp. – slide 5
    Consistent Focus on Core Competitive Markets West Strategic Priority: Asset management and regulatory engagement given CA renewable integration challenges Near-Term Opportunities: SCE new build RFOs Recontracting existing plants…
  6. Investor Meetings – Calpine Corp. – slide 6
    REGIONAL OBSERVATIONS 7
  7. Investor Meetings – Calpine Corp. – slide 7
    Signs of Power Market Recovery Recent Power Price Volatility Driving Forward Prices 5,000 2,500 Houston Structural Dynamics of Maximum Daily OnPeak Avg. Hourly Price Maximum Daily OnPeak Avg. Hourly Price PJMW 4,000…
  8. Investor Meetings – Calpine Corp. – slide 8
    Texas Outlook: Nothing Has Changed Outside of Austin Fundamentals still point to tightening market conditions and increasing volatility Strong Weather-Adj. Load Growth Texas Economy On the Move Conservative Preliminary 6% 25.0% Load…
  9. Investor Meetings – Calpine Corp. – slide 9
    ERCOT Energy-Only Market: New Investment Signals Depend Upon Scarcity Pricing Deconstructing Recent Scarcity Events 72,000 Scarcity driven by combination of: Supply / Demand at Peak (MW) 70,000 Demand growth 68,000 Weather 66,000…
  10. Investor Meetings – Calpine Corp. – slide 10
    PJM Outlook: Volatility is Now Reality Capacity Market: Driving Increased Reliance Oil-Fired Generation Matters on Demand Response for Reliability Cost Advantage in Winter, Price Umbrella in Summer 20% 140 Calpine PJM Fleet Spot…
  11. Investor Meetings – Calpine Corp. – slide 11
    California Outlook: Increasing Need for Flexible Generation Near-Term Fossil Retirements Not Being Replaced in Kind California Summary: 6,000 5,000 Near-term: AB32 + Drought Price volatility 4,000 Mid-term: Regulatory reform…
  12. Investor Meetings – Calpine Corp. – slide 12
    CAPITAL ALLOCATION 13
  13. Investor Meetings – Calpine Corp. – slide 13
    Monetizing the Southeast Six Pack Selling Six Combined-Cycle Summary of Transaction Terms Power Plants in Southeast Purchaser: LS Power1 Purchase Price: 1.57 Billion2 Expected Net Proceeds: 1.53 Billion2 Assets Sold: 3,498 MW…
  14. Investor Meetings – Calpine Corp. – slide 14
    Southeast Six Pack Divestiture: Unlocking Significant Shareholder Value Valuation Transaction Benefits Southeast Region Value (MM) 2,000 Gap Remaining Captures value upfront for risk-adjusted future upside Important SE…
  15. Investor Meetings – Calpine Corp. – slide 15
    Track Record for Transformative Redeployment of Capital Strategic 2Q08: North Today*: Mid Atl. 2,822 MW 4,333 MW Repositioning 12% West East Region 17% West 7,246 MW 7,524 MW North Southeast 30% 30% 6,254 MW 77 plants 2,829 MW…
  16. Investor Meetings – Calpine Corp. – slide 16
    Capital Allocation Aligned with Adj. Free Cash Flow1 Per Share Growth ( millions) Proven Track Record of Putting Capital to Work Calpine 1,490 Growth Paradigm 1,274 1,210 847 Magnitude of Growth Drivers / Levers Fundamental /…
  17. Investor Meetings – Calpine Corp. – slide 17
    FINANCIAL OVERVIEW 18
  18. Investor Meetings – Calpine Corp. – slide 18
    Continuing to Deliver Strong Financial Results ( millions) Stable Solid Adjusted EBITDA1 Adjusted Free Cash Flow1 785 - 885 1,900 - 2,000 1,830 677 1,782 1,726 1,749 609 564 1,699 1,712 558 495 489 2008 2009 2010 2011…
  19. Investor Meetings – Calpine Corp. – slide 19
    Strong 1Q14 Results + Partial Southeast Divestiture; Reaffirmed 2014 Guidance ( millions) Record First Quarter Robust Excess Cash for Adj. EBITDA1 Capital Allocation Recent Highlights 446 2,230 - 2,330 56% Outstanding start to…
  20. Investor Meetings – Calpine Corp. – slide 20
    Capital Allocation Roadmap with Adj. FCF Per Share1 Focus ( millions) Available for: Building Substantial Excess Cash for Disciplined growth Balanced Capital Allocation Return to shareholders 755M remaining in current repurchase…
  21. Investor Meetings – Calpine Corp. – slide 21
    Adjusted FCF1 Per Share: A Comparable Valuation Metric Adj. FCF1 per Share is comparable to: Calpine Targets Superior Total Return 20% Utility earnings per share (EPS) 18% MLP distributable cash flow (DCF) per share 16% REIT…
  22. Investor Meetings – Calpine Corp. – slide 22
    APPENDIX 23
  23. Investor Meetings – Calpine Corp. – slide 23
    Selected Operating Statistics Plants with no recordable injuries and < 2 % FOF for 1Q14 Agnews Los Medanos Auburndale Magic Valley 1Q14 1Q13 1Q14 1Q13 Baytown Mankato Bethlehem Metcalf Total MWh Generated (in thousands) 1…
  24. Investor Meetings – Calpine Corp. – slide 24
    Focused on Best-in-Class Operations Employee Total Reportable Incident Rate Generation in Key Markets (000 MWh)1 8,430 7,475 7,265 EEI Top Quartile2 6,811 1.11 4,379 0.80 4,032 3,722 3,624 1,526 1,356 3-Yr. Avg. 1Q14…
  25. Investor Meetings – Calpine Corp. – slide 25
    Regional Adjusted EBITDA1: 1Q 2014 vs. 2013 ( millions, 000 MWh) West Region Texas Region Adjusted EBITDA1 Generation2 Adjusted EBITDA1 Generation2 64 8,337 8,831 8,430 122 7,265 113 33 1Q13 1Q14 1Q13 1Q14 1Q13 1Q14 1Q13…
  26. Investor Meetings – Calpine Corp. – slide 26
    Energy Margin1 Hedge Disclosures (Pro Forma for Southeast Asset Sale) Energy Hedge Profile2 Key Takeaways Hedged Volume3 83% 85% Incremental hedges added, particularly in 2014, 73% taking advantage of recent rallies; still…
  27. Investor Meetings – Calpine Corp. – slide 27
    Pro Forma Energy Margin1: Positioned to Respond to Favorable Secular Trends Energy Hedge Profile2 Sensitivities Natural Gas Price Sensitivity2 Energy Margin1,2 as % of (assuming no change in heat rate) Total Commodity Margin (by…
  28. Investor Meetings – Calpine Corp. – slide 28
    Although Calpines fleet can be difficult to model, simplifying techniques may help 1. Estimate annual generation (MWh) based on market outlook relative to disclosed 5. Adjust margin to capture items such as ancillary services and storage…
  29. Investor Meetings – Calpine Corp. – slide 29
    Capital Structure Chart ( in millions) Corporate Debt Senior Secured Notes 4,989 First Lien Term Loans 2,821 Corporate Revolver Total Corporate Debt 7,810 CCFC Notes Payable & Capital Lease Project Debt Other Obligations…
  30. Investor Meetings – Calpine Corp. – slide 30
    Calpine1 Continues to Benefit from Federal NOL Positions Federal NOLs at Dec. 31, 2013: 7.5 billion All are unrestricted 1 Includes CCFC. 31
  31. Investor Meetings – Calpine Corp. – slide 31
    Calpine Operating Power Plants As of May 1, 2014 With With Load CPN Peaking Technology Location COD Peaking Type Interest Capacity, Capacity Net West Region Agnews Power Plant Natural Gas Intermediate CA 1990 28 100% 28 Creed…
  32. Investor Meetings – Calpine Corp. – slide 32
    Calpine Operating Power Plants (contd) As of May 1, 2014 With With Load CPN Peaking Technology Location COD Peaking Type Interest Capacity, Capacity Net North Region Bayview Oil Peaking VA 1963 12 100% 12 Bethlehem Natural Gas…
  33. Investor Meetings – Calpine Corp. – slide 33
    Reg G Reconciliation: Commodity Margin ( in millions) Commodity Margin includes our power and steam revenues, sales of purchased power and physical natural gas, capacity revenue, revenue from renewable energy credits, sales of surplus…
  34. Investor Meetings – Calpine Corp. – slide 34
    Reg G Reconciliation: Adjusted EBITDA and Adjusted Free Cash Flow ( in millions, except share and per share amounts) Three Months Ended March 31, Adjusted EBITDA represents net income (loss) attributable to Calpine 2014 2013 (in…
  35. Investor Meetings – Calpine Corp. – slide 35
    Reg G Reconciliation: 2014 Adjusted EBITDA and Adjusted Free Cash Flow Guidance (As of 5/1/14) Full Year 2014 Range(1): Low High (in millions) GAAP Net Income (2) 270 370 Plus: Interest expense, net of interest income 675 675…
  36. Investor Meetings – Calpine Corp. – slide 36
    Major Maintenance and Capital Expenditure Guidance (As of 5/1/14) ( in millions) 2014E Major maintenance expense 220 A Maintenance capital expenditures 160 B Growth-related capital expenditures1 230 C Guadalupe acquisition2…
  37. Investor Meetings – Calpine Corp. – slide 37

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