1. Q3 2017 Financial Update November 8, 2017

2. Agenda Stan Marshall President and CEO
Derrick Sturge Executive VP Finance & CFO
Questions

3. Forward-Looking Information
Certain statements in this presentation are “forward-looking statements” based on Nalcor’s current expectations, estimates, projections and assumptions, subject to risks and uncertainties. Statements containing words such as “could”, “expect”, “may”, “anticipate”, “believe”, “intend”, “estimate”, “plan” and similar expressions constitute forward-looking statements. By their nature, forward-looking statements require Management to make assumptions and are not subject to important unknown risks and uncertainties, which may cause actual results in future periods to differ materially from forecasted results. While Management considers these assumptions to be reasonable and appropriate based on information currently available, there is a risk that they may not be accurate. Nalcor assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or any other reason.

4. -Nalcor is committed to the highest possible safety standards and achieving safety excellence in all of its operations, with the top priority of keeping our people safe.
-Achieving those standards means making safety a constant and integral part of our everyday thinking.
-At Nalcor, there is nothing more important than safety.
- (Moderator has notes for specific safety moment)

5. Stan Marshall, CEO

6. LIL stringing crew

7. Soldiers Pond

8. Churchill Falls switchyard & extension

9. North Dam

10. Powerhouse

11. Muskrat Falls Generation Project

12. Derrick Sturge, EVP Finance and CFO

13. Key Metrics As at: Sept 30, 2017 Dec 31, 2016 Change
Total Assets ($ billions)
$17.7
$14.1
$3.6
Income Producing Assets ($ billions)
$4.0
$0.4
Capital Structure (Debt / Capital)
68%
61% 7%
For the period ended September 30:
YTD 2017
YTD 2016
Profit ($ millions)
$157
$74
$83
Operating Profit ($ millions)
$131
$57
EBITDA
$329
$227
$102
Funds from Operations ($ millions)
$284
$177
$107
Capital Expenditures ($ millions)1
$2,163
$2,040
$123
Electricity Sales (TWh):
Regulated
5.8
5.7
0.1
Export – Hydro Québec (HQ)2
21.7
20.7
1.0
Export – Other Markets
1.2 -
Total Assets – Increase YTD of $3.6 billion is primarily due to the inclusion of $2.9 billion of FLG2 funds.
Capital Structure – The $2.9 billion FLG2 funds is the main cause of the increase in debt to capital percentage.
Profit – Increase YTD of $83 million due to increased revenue within Bull Arm for the one time adjustment related to the close-out of the sublease agreement with Exxon Mobil. Oil & Gas due to an increase in production volumes, partially offset by a decrease in oil price and Regulated Hydro primarily due to a reversal of an allowance taken in 2016 related to the cost deferrals.
EBIDTA & FFO – The YTD increases are driven by increased profit, primarily in Hydro, Oil & Gas and Bull Arm.
Capital Expenditures – The YTD increase is primarily due to Hydro incurring supplemental capital expenditures, carry over from 2016 and increased costs and change order associated with 2017 capital projects. Export – Hydro Quebec - Increase in YTD actual energy sales due to a change in anticipated energy sales volume, a result of the interim agreement with HQ. CF has reached an interim agreement with HQ that provides for annual energy sales volume of 28,970 GWh.
1 Excludes Maritime Link
2 Export sales to Hydro Quebec reflect energy billed

14. Business Segment Profit
For the period ended September 30: ($ millions)
YTD 2017
YTD 2016
Change
Hydro 35
(5) 40
Power Development
(1) -
Power Supply1 23 32
(9)
Energy Markets 8 13
Offshore Development
105 48 57
Corporate & Intersegment
(13)
Profit
157 74 83
Regulated Hydro - YTD actual earnings increased in 2017 due to a reversal of an allowance taken in 2016 related to the cost deferrals, in addition to net savings from lower EFB expense following changes in actuarial assumptions, net savings in salaries and benefits expense, lower finance expense due to delays in long-term debt issuances originally planned in July and November of 2017, an increase in demand and rural revenue, offset by a write down of an asset in Labrador West (Alderon).
Power Supply – YTD actual earnings decreased in 2017, due primarily to lower energy sales and increased depreciation expense within Churchill Falls.
Energy Trading - YTD actual earnings decreased in 2017, due to decreased revenues primarily from lower than budgeted energy prices.
Oil & Gas - YTD actual earnings increased in 2017, due to an increase in net oil revenue (primarily due to an increase in production volumes, partially offset by a decrease in oil price).
1 Includes Nalcor’s 65.8% ownership of Churchill Falls

15. YTD Electricity Export Prices
*Realized Export Price excludes sales to HQ under Power Contract

16. YTD Oil Price & Production
Production – Increased YTD production due primarily to the Hibernia South Extension volumes being higher as a result of better than expected well performance. In addition White Rose Extension saw increased production due to better than expected drilling and reservoir performance from the North Amethyst well.

17. YTD Regulated Energy Sales
(TWh)

18. Total Assets (as at September 30, 2017)
Assets Under Development : 77%
Income Producing Assets: %
See PDF crib note

19. YTD Business Segment Capital Expenditures
For the period ended September 30 ($ millions)
YTD 2017
YTD 2016
Change
Hydro
237
125
112
Power Development
821
754 67
Power Supply1, 2
962
984
(22)
Energy Markets - 1
(1)
Offshore Development
140
173
(33)
Corporate & Intersegment 3
Total
2,163
2,040
123
Hydro – YTD capital expenditures increased primarily due to Hydro incurring supplemental capital expenditures, carry over from 2016 and increased costs and change order associated with 2017 capital projects.
Power Development – YTD capital expenditures increased due to catch up of previous delays in the Converters and Synchronous Condenser contract at Muskrat Falls, an increase in site services costs due to camp expansion at Muskrat Falls and increased IDC and financing costs relating to new debt issuance.
Decreased capital expenditure within Power Supply and Offshore Development due to the assets nearing completion within these areas.
1 Includes Nalcor’s 65.8% ownership of Churchill Falls
2 Excludes Maritime Link

20. Lower Churchill Project Capital Expenditures
For the period ended ($ millions)
YTD 2017
YTD 2016
Change
Total To Date
Muskrat Falls
743
696 47
3,684
Labrador Transmission Assets 69
122
(53)
817
Labrador-Island Link
726
734
(8)
3,162
Nalcor Facilities Capital Costs
1,538
1,552
(14)
7,663
Capitalized Interest & Financing Costs
203
144 59
7551
Transition to Operations 5 3 2 8
Total Capital Costs for Nalcor Components
1,746
1,699
8,426
LTA and LIL assets are nearing completion resulting in a decrease in capital expenditure.
Capitalized interest & Financing costs - Higher costs primarily due to higher debt levels associated with FLG2.
1 Excludes $86 million of allowance for funds used during construction on Nalcor’s Class A limited partnership units in the LIL LP that are eliminated upon consolidation

21. YTD Funds From Operations
(millions of dollars)
FFO - The YTD increase is driven by increased profit, primarily in Hydro, Oil & Gas and Bull Arm.

22. YTD 2017 Financing Activities
See PDF crib note

23. Capital Structure
Capital Structure – The $2.9 billion FLG2 funds is the main cause of the increase in debt to capital percentage.

24. Outlook for the Remainder of 2017
Strong financial performance in first nine months of 2017
Partially driven by resolution of issues related to 2013 General Rate Application and Hebron lease finalization and settlement at Bull Arm
Q4 may not be as strong as the first three quarters
Continued focus on completion of capital program, general rate application, and moving Hebron to first oil
Start to prepare for 2018 transition year
Comes from MD&A section 12 - outlook

25. Outlook for 2018
Assets moving out of the construction/ development phase (TL 267, Hebron, Labrador Island Link, Labrador Transmission Assets, and Maritime Link)
Hebron work at Bull Arm completed
First delivery of electricity from Labrador to the Island
Capital expenditures starting to reduce – but still very significant
Anticipate lower income levels in 2018

26. Questions