TGI earnings call 2Q 14 vf

August 2014

Strictly Private and Confidential

TGI 2Q RESULTS

2

Table of contents

1. TGI overview and history

2. Key updates

3. Financial and operating highlights

4. Questions and Answers

Appendix

1. Economic industry and regulatory environment

2. Shareholders and management team

3. EEB Overview

1. TGI overview and history

4

Overview

Stable and growing Colombian economy with sound investment environment

Constructive and stable regulatory framework

Largest natural gas pipeline system in Colombia

Stable and predictable cash flow generation, strongly indexed to the US Dollar

Strong and consistent financial performance

Experienced management team with solid track record in the sector

Expertise, financial strength and support of shareholders

Natural monopoly in a regulated environment

Strategically located pipeline network

Company history

TGI history Pipeline network Highlights

Owns ~61% of the national pipeline network (3,957 km) and transports 52% of the gas consumed in the country

− Serves ~70% of Colombia’s population, reaching the most populated areas (Bogota, Cali, Medellin, the coffee region and Piedemonte Llanero, among others)

− Has access to the two main production regions, La Guajira and Cusiana/Cupiagua

25% interest in Contugas (Peru)

− 30-year concession for natural gas transportation and distribution

TGI was created as a result of the privatization of Ecogás and has experienced remarkable growth since then, under

the leadership of its controlling shareholders, EEB and CVCI

Creation of Ecogas

1997

2005

Start of Ecogas Privatization Process

2006

Ecogas assets awarded to EEB

Creation of TGI

Inaugural bond issuance

Transfer of first

BOMT pipeline

(GBS)

Pipelines

exchange with

Promigas

CVCI

capitalization

Transfer of

second BOMT

pipeline

(Centragas)

Cusiana

expansion phase

I: start of

operations

Refinancing of

subordinated debt

with EEB

2008

TGI takes over the O&M of owned pipelines

Refinancing of

bonds issued in

2007

Cusiana

expansion

phase II: start of

operations

TGI takes over

the O&M of

compressor

stations

Awarded

investment

grade rating by

Moody’s and

Fitch

2010

Awarded

investment grade

rating by S&P

Headquarters

relocation from

Bucaramanga to

Bogotá

Redesign of

organizational

structure

2012

2013

2007

2009

2011

2014

EEB acquired

31.92% stake in

TGI from TRG

(formerly CVCI)

Cartagena Refinery

Barrancabermeja Refinery Bucaramanga

Bogota

Neiva

Cali

Medellin

3.15 tcf

1.97 tcf

Eastern Producers: Ecopetrol Equion

Upper Magdalena Valley

Lower and Middle Magdalena Valley

Northern Producers: Chevron Ecopetrol 1.89 tcf

References

TGI Pipelines

Natural Gas Reserves

City

Field Refinery

Third Party Pipelines

Source: Mining and Energy Planning Unit. National Hydrocarbons Agency.

5

Sabana Compressor

starts operations

Contugas Concession

starts operations

2. Key Updates

6

TGI’s acquisition

7

• On December 11th 2013, EEB’s Board of Directors authorized to exercise its Right of First Offer (ROFO)

under the Shareholder’s Agreement for the acquisition of a 31.92% stake in TGI, after the end of the

lock-up period (3 years). Offer was submitted on March 25th 2014

• The offer, for a value of USD 880 million, was accepted by The Rohatyn Group (formerly CVCI) on April

3rd 2014.

• Closing is expected to take place within 90 days after this date.

• Rating Agencies have reviewed the transaction and affirmed TGI´s ratings.

• EEB closed the Acquisition on July 2, 2014, according to the timetable, through a SPV created for that

purpose. To bridge the Acquisition, EEB used cash on hand and short term financings.

Key updates

La Sabana Compression Plant

Key updates

8

• On July 7th TGI´s started operations of Sabana Compression plant

• This is a critical project to provide additional capacity to Bogota and surrounding areas

• Capacity was increased from 143 MMscfd to 215 MMscfd

• Built with pioneer and unique technology in Latin America (MOPICO) reducing noise

emission and minimizing visual impact (essential requirement of the zone)

• The incremental annual revenues of this expansion will be of around USD15,5 million

• TGI had invested USD 25 million of a 52 million total amount

9

CONTUGAS

• Contugas started commercial operations on April 30th 2014

(on schedule with contractual deadline). The main pipeline

has a length of 290 km and currently the secondary pipeline

(polyethylene) has a length of more than 850 km.

• The pipeline is currently serving more than 18.000 residential

customers and over 10 industries.

• On September 2013 the company concluded the financial

closing of a USD 310 million, six year bullet loan

• TGI and EEB provide support through an equity

contribution agreement in proportion of their respective

ownership (25%/75%).

• Currently all of the debt has been disbursed

• The total estimated CAPEX of the project is over USD 355

million by the end of 2015.

Key updates

Intercompany loans to EEB

• Due to TGI´s high liquidity, since last year and 2014, TGI has given support to EEB and its subsidiaries

trough short and mid term intercompany loans.

• TGI has disbursed a total amount of USD 350 million

• New or additional intercompany loans could be disbursed in the future, considering and prioritizing TGI´s

expansion needs.

3. Financial and operating highlights

10

371 396

422 420 422 454

544

2008 2009 2010 2011 2012 2013 20142Q

427 437

485

560

604 628

650

90% 92% 90% 92% 85%

88% 91%

2008 2009 2010 2011 2012 2013 20142Q

11

Solid operational performance

(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. Source: Company information.

Network length

(km)

Capacity

(MMscfd)

Firm Contracted Capacity(1)

(MMscfd)

Transported Volume Gas Losses Load factor

(MMscfd) (%) (%)

0.10%

0.20%

0.57% 0.54% 0.52%

0.41%

0.02%

2008 2009 2010 2011 2012 2013 20142Q

66% 69% 71%

58% 59% 61% 67%

2008 2009 2010 2011 2012 2013 20142Q

3,702

3,529

3,774 3,774

3,957 3,957 3,957

2008 2009 2010 2011 2012 2013 20142Q

478 478 548

618

730 730 730

2008 2009 2010 2011 2012 2013 20142Q

12

Strong contract structure and stable and predictable cash flow generation

TGI’s revenues are highly predictable, with approximately 98% coming from regulated tariffs that are reviewed at least every 5 years, ensuring cash flow stability and attractive rates of return

Main sectors served by the Company (74(1)% of revenues) present stable consumption patterns (no seasonality)

The Company enjoys excellent contract quality

− 100% of TGI’s contracts are firm contracts with an average life of 7,5 years

− 82% of regulated revenues are fixed tariffs, not dependent on transported volume

− Approximately 77%(2) of EBITDA denominated in US Dollars

Revenues breakdown

(% of revenues)

Source: Company information. (1) Includes Distributors, Ecopetrol´s refinery and Natural gas for Vehicles. (2) TGI calculations (3) Ecopetrol accounts for most of this revenue.

TGI’s revenues are highly predictable as a result of regulated tariffs and stable consumption

Source: TGI as of June 30- 2014

Distributor 57%

Refinery 13%

Thermal 20%

Traders 3%

Vehicles 4%

Others 3%

Ecopetrol 15%

Gas Natural

21%

Gases de Occidente

16%

EPM 12%

Isagen 7%

Others 29%

By Client By Sector

13


Revenues EBITDA and EBITDA margin

Funds from operations (1)

(US$ in millions – average exchange rate for each period)

Source: Company information

Historical Capex

(US$ in millions – average exchange rate for each period)

(US$ in millions – average exchange rate for each period) (US$ in millions – average exchange rate for each period)

(1)FFO calculated as net income plus depreciation, amortization and provisions, adjusted for effect from exchange rate and hedges.

On 2012 FFO includes the LM transaction premium~ USD 69 million (one time event)

238 252 294

338

390

465 486

2008 2009 2010 2011 2012 2013 LTM 20142Q

194 196 222

257 289

359 383

82% 78% 75% 76% 74%

77% 79%

2008 2009 2010 2011 2012 2013 LTM 20142Q

84 96

108 117 133

268 250

2008 2009 2010 2011 2012 2013 2014 2Q

14

69

174

387

185

35 23

2008 2009 2010 2011 2012 2013 2014 2Q

14


Total debt / EBITDA

Financial debt breakdown (2)

Subordination Agreement

The lender is EEB (major shareholder)

No repayment of principal allowed before payment of senior debt

Interest can only be paid if there is no default or event of default and if the payment does not trigger any such scenario

Subordinated debt acceleration is not allowed until senior debt is not repaid

Source: Company information. Total debt includes senior debt, subordinated debt and mark-to-market. Note: Ratios calculated in local currency. (1) Interest coverage ratio calculated as EBITDA / Net interest (2) Senior debt stands for the US$750 million Senior Unsecured Notes due 2022. Subordinated debt stands for intercompany loan with EEB.

Senior net debt / EBITDA Interest coverage (1)

6.53 5.57 5.35

4.87 4.17

3.54 3.15

2008 2009 2010 2011 2012 2013 20142Q

2.02 2.00 2.06 2.54

4.03

5.93 6.43

2008 2009 2010 2011 2012 2013 20142Q

Senior Debt USD; 759;

61% M2M

Hedging USD; 111;

9%

Subordinated Debt USD;

370; 30%

3.69 3.30 3.39

2.66 2.41

1.46 2.05

2008 2009 2010 2011 2012 2013 20142Q

4. Questions and answers

16

Investor Relations

For more information about TGI contact our Investor Relations team:

Antonio José Angarita Vega

CFO

+57 (1) 3138400 - ext 2110

[email protected]

Sergio Andrés Hernández Acosta

Finance Manager

+57 (1) 3138400 - ext. 2450

[email protected]

Fabián Sánchez Aldana

IR Advisor - EEB

+57 (1) 3268000 - ext. 1827

[email protected]

http://www.tgi.com.co

mailto:[email protected]





Appendix 1 – Economic industry and regulatory environment

9 10 11 11 14 15 15

21 24 25

28 32

37

44 46

00%

05%

10%

15%

20%

25%

30%

35%

40%

45%

0

10

20

30

40

50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

International reservesDebt as % of GDP

2 3 2 2 3

10

7

9 11

7 6

15 15 16

3

-

3.00

6.00

9.00

12.00

15.00

18.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20141Q

Source: Banco de la República, DNP, MINHACIENDA., Bloomberg

5-year CDS Foreign currency reserves

Real GDP growth and inflation Foreign direct investment

(US$ in billions) (% growth)

(%) (US$ in billions)

Stable and growing Colombian economy with sound investment environment

Despite the recent global economic slowdown, Colombia has experienced positive economic growth and an increase in industrial activity, supported by a steady flow of investment

5% 5%

7% 7%

4%

2%

4%

7%

4% 4% 4% 6% 5%

4%

6%

8%

2%

3% 4%

2% 2%

3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014(e)-

Real GDP growth

Inflation

0

100

200

300

400

500

600

700

695 731 723 810

860 892 905

1047 1072 1083

1270

2006 2007 2008 2009 2010 2011 2012 2013 2014-1H

2016 2018

CAGR: 2006-2013: 5,6%

CAGR: 2013-2018: 4,3%

…

Source: UPME, ANH, Concentra 1 Mining and Energy Planning Unit. Reserves as 2012. 2 National Hydrocarbons Agency. Reserves as 2012.

Energy sources 2012

Growing Demand of Natural Gas Significant Availability of Natural Gas

Reserves mostly located

in the north and east

regions of the country

Key fields (Ballena,

Chuchupa, Cusiana and

Cupiagua) concentrate

virtually all of the natural

gas production

Long distances between

production and main

consumption areas

Minimal gas storage

capacity across the

country

Total

Domestic

Demand

(mmcf/d)

Expected

2013A-2018E

Growth by

Sector

Natural Gas in Colombia: Increasing Demand and Vast Reserves

Bucaramanga

Bogotá

Cali

Medellín

3.15 Tcf

1.97 Tcf

Eastern

Producers:

Ecopetrol

Equion

Lower and Middle

Magdalena Valley

Northern

Producers:

Chevron

Ecopetrol References

Natural Gas Reserves

Main Oil & Gas Basins

City

1.89 Tcf

Llanos

Orientales

Catatumbo

Guajira

Sinu

Tumaco

Choco

Cordillera

Oriental

Valle Inferior

Del

Magdalena

Valle Medio

Del

Magdalena

(0.0)%

0.8% 1.9%

17.0%

6.3%

13.2%

Petro-chemical

Industrial Residential PowerGeneration

NGV Refinery

19

2012 total natural gas reserves of 7.01 tcf (5.73 tcf proven and 1.28 Tcf unproven), source MME & ANH

Data from UPME as of 31-Dec-2012 Data from ANH as of 31-Dec-2013

11.7

6.4

RESERVES PER UPME RESERVES PER ANH

Proved Probable + possible Yet to Find Conventional Non Conventional

Organic 9,1%

Coal 9,8%

Natural Gas

25,1%

Hydro 12,9%

Oil 43,2%

(Million Equivalent Oil Tons)

Regulatory framework established to attract private sector investment

Law 142 (1994) establishes system of open entry to the natural gas transportation sector − No term limitation for the provision

of the service − Assets used in the provision of the

service are not owned by the state but by the company providing such service

CREG required by law to seek input from market participants

CREG is an independent regulatory body that controls natural gas regulation − Sets tariffs, promotes competition

and monitors quality of service

Tariff calculation based on the principle of financial feasibility and economic efficiency

Tariffs are set in order to allow the service provider to: − Recover operational costs and

investments − Obtain a return on investment

comparable to what an efficient company would obtain in a sector of similar risk

Cost recovery, attractive regulated return on investment and protection against inflation

Transporters are given full recovery of operating and maintenance expenses − Adjusted by Colombian Price

Index (CPI) Dollar indexation of investment

remuneration tariff Different rates of return applied

when determining fixed and variable charges

Constructive and stable regulatory framework

Source: Company information.

The Colombian gas transportation regulatory framework was established to attract private strategic investors and to provide adequate cost recovery and regulated returns

CREG RESOLUTION 094 OF 2014

Establishes regulations for natural gas market.

Definition of contractual arrangements in the primary market.

Definition of marketing mechanisms.

Defines secondary market with its respective regulations.

The following reliability aspects in the Decree have not yet been defined by the Regulatory Commission:

The CREG will establish the reliability criteria which shall secure the demand coverage and must set the rules for the evaluation and remuneration of these investment projects.


Recent Regulatory Decisions

The regulatory framework for natural gas transportation in Colombia is in a stage of important definitions. The main recent regulatory decisions are:


21

DECREE 2100 OF 2011

Establishes the principles that will be considered in the next natural gas transportation tariff update process.

The resolution mentions the principles that will be kept from the actual tariff methodology.

Remuneration based on contracts. Price cap methodology.

It also mentions aspects that must be evaluated.

System expansion based on government signals.

Tariff calculation based on historical demand and not projected. Establishes the selection of ‘Bolsa

Mercantil de Colombia’ as the Market Operator for the natural gas market in Colombia.

According to the expected dates for the process, the Market Operator must start its operations in January 2015.

Appendix 2 – Shareholders and management team

23 Source: Company information.

Ricardo Roa

Barragán CEO

20 Mechanical Engineering degree from the Universidad Nacional and post-graduate degree in

Engineering management systems from the Pontificia Universidad Javeriana.

Over 23 years of experience in the private and public sectors, including experience as

Energy Business Manager of organizacion Ardila Lulle, CEO of Poliobras S.A. ESP,

Marketing and Trading Manager and CEO of Electrificadora de Santander S.A. ESP (ESSA),

Energy and Gas Sectorial Secretary of The National Association of Utilities (ANDESCO) and

Advisor of the Colombia’s Superintendency of Domestic Public Services (Superintendencia

de Servicios Públicos Domiciliarios).

CEO of TGI since March 2012

Antonio J.

Angarita CFO

20

Officer Key highlights Years of relevant experience


TGI is led by an experienced and seasoned management team

Carlos A. Torres

Vice-President of

Legal Affairs

20 Lawyer (Universidad de Los Andes); Business Law (Universidad de Los Andes)

Over 20 years of experience in the Oil and Gas Industry

Former General Counsel at Petrobras Colombia

Alberto Pretelt Vice-President of

Growth and

Development

18 Mechanical Engineer (Universidad de los Andes); Postgraduate studies in marketing and

leadership (Universidad de Los Andes)

Over 20 years of experience in Latin America and the United Kingdom. Former Business

Development VP for Wood Group in Latam, more than 14 years experience in the O&G

sector, and has also occupied managerial positions in other industries such as

Transportation, Chemicals, Logistics, IT and Manufacturing

Vice president of Growth and Development since July 2014

Degree in Civil Engineering and MBA from Universidad de los Andes (Bogotá)

Over 20 years of experience in financial management in different industries, former IRO in

EEB, CFO in Bayport Colombia, Regional CFO in Amnet Central America (Tigo Home),

Financial Controller and Financial Planning Manager in Colombia Movil (Tigo), Head of

Financial Planning in ETB, Head of Management Control in Codensa and Advisor of the CFO

in EEB.

TGI’s CFO since July 2014

24

Jorge Gonzalez

COO

20 Civil Engineer (Universidad de Los Andes); Specialization Studies in Finance (Universidad

de Los Andes)

Over 17 years of experience in the natural gas industry

Former NGV Manager at Gas Natural S.A.E.S.P.

Carlos Toledo Vice-President for

Administration and

services

7 Degree in Law from the Universidad UNICIENCIA.

Degree in Electrical Engineering and specialization in telecommunications from Universidad

Industrial de Santander Master’s degree in Applied Political Studies from FIIAPP.

Master in Social Cohesion from Universidad de Mendez Pelayo, España.

Over 7 years serving the public and private sectors, including experience as IT manager of

the Bucaramanga´s Health institute , CEO of TELNETCO, and as advisor of the Santander

Department Government .

Vice-President for Administration and Public Relations since May 2012.


Leading energy holding company with interests across the electricity and natural gas sectors in Colombia, Peru and Guatemala

Founded in 1896 and controlled by the City of Bogota (with a 76.28% ownership stake)

Participates in the electricity and natural gas sectors through controlling and non-controlling investments

− Controlling investments in electricity transmission (Energia de Bogota and Trecsa), electricity distribution (EEC), natural gas transportation (TGI) and natural gas distribution (Contugas and Calidda)

− Non-controlling investments in electricity transmission (REP Peru, CTM Peru and Isa), electricity generation (Emgesa and Isagen), electricity districution (Codensa and Electrificadora del Meta), natural gas transportation (Promigas) and natural gas distribution (gasNatural Fenosa)

USD 1.0 Billion EBITDA LTM (2Q 2014) and USD 9.3 bn in assets (as of June 2014)

Expertise, financial strength and support of shareholders

TGI as part of the EEB Group

25

(99.9% of TGI)

Appendix 3 – EEB Overview

EEB Strategy and Overview Strategy

Transportation and distribution

of energy

Key facts

More than 100 years’ experience in the sector; founded in 1896.

Regional leader in the energy sector; major player in the entire electricity

and natural gas value chains (except E&P); operations in Colombia,

Peru, and Guatemala.

Largest stockholder is the District of Bogota - 76.2%.

Stock listed on the Colombia stock exchange; EEB adheres to global

standards of corporate governance.

The EEB Group is one of the largest issuers of equity and debt in

Colombia

USD Million 2Q 2014

Operating revenue 597.5

Operating profit 230.9

EBITDA LTM 1,047.5

Net Income 508.6

Consolidated - Covenants 2Q 2014

Leverage Ratio 1.25

Interest Coverage Ratio 11.44

Focus on

natural

monopolies

Ample access

to capital

markets

Ambitious

projects in

execution

Growth in

controlled

subsidiaries

Sound

regulatory

framework

Experienced

management

and partners

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.