Agreement with TransAlta to construct
Inter-Alberta Pipeline Network
Tidewater Midstream and Infrastructure Ltd.
(“Tidewater”) (TSX:TWM) and TransAlta Corporation (“TransAlta”)
(TSX:TA) (NYSE:TAC) announced today that the two companies have
entered into a Letter of Intent (“LOI”) for Tidewater to construct
a 120 km natural gas pipeline from its Brazeau River Complex
(“BRC”) to TransAlta’s generating units at Sundance and
Keephills. The pipeline is expected to cost approximately
$150 million and is supported by a 15 year take or pay agreement
with TransAlta.
The pipeline will provide initial capacity of
130 MMcf/d by 2020, and have expansion capability to 340 MMcf/d,
which represents approximately 50% of TransAlta’s gas requirements
at full capacity of the generating units at Sundance and
Keephills. Under the LOI, TransAlta has the option to invest
up to 50% in the pipeline.
“Construction of the natural gas pipeline
supports our strategy of being a low-cost provider of firm, clean
and reliable energy”, said Dawn Farrell, President and Chief
Executive Officer of TransAlta. “In addition, having greater access
to natural gas allows TransAlta to blend natural gas with the coal,
prior to fully converting the units, allowing us to take advantage
of low natural gas prices and reduce our carbon
costs.”
“Tidewater is excited to enter into a long term
arrangement with TransAlta which is supported by a 15 year take or
pay agreement that provides oil and gas producers throughout
Western Canada with direct connectivity to a new, large demand
source”, said Joel MacLeod, President and Chief Executive Officer
of Tidewater. “This agreement with TransAlta enables Tidewater to
transport production direct from the wellhead through Tidewater’s
extensive natural gas processing and storage infrastructure network
direct to an end market.”
Proposed issuance of senior unsecured
notes
Tidewater intends to issue, subject to market
and other conditions, a proposed private placement of senior
unsecured notes (the “Notes”).
Tidewater intends to use the net proceeds from
the offering for a non-permanent repayment of indebtedness under
Tidewater’s existing credit facility, drawn to fund its various
capital projects, and for general corporate purposes.
The Notes will not be qualified for distribution
to the public under the securities laws of any province or
territory of Canada and may not be offered or sold in Canada,
directly or indirectly, other than pursuant to applicable private
placement exemptions. The Notes will not be registered under the
U.S. Securities Act of 1933, as amended, and may not be offered or
sold in the United States absent registration or an applicable
exemption from the registration requirements of such Act. This
press release shall not constitute an offer to sell or the
solicitation of an offer to buy the Notes in any jurisdiction.
Deep Basin and Montney region
acquisition
Tidewater’s previously announced acquisition of
certain assets in the Deep Basin and Montney region for net cash
consideration of $34 Million, subject to customary adjustments, has
closed in escrow. Final closing of the transaction is subject
to regulatory license transfer approvals and is expected to occur
in December 2017. An immaterial portion of the assets is
being held in escrow pending resolution of a right of first refusal
challenge.
Closing of credit facility
increase
Tidewater is pleased to announce that an
increase to its credit facility has closed. Tidewater’s
banking syndicate increased this credit facility from $180 million
to $250 million.
Tidewater's Business
Tidewater is traded on the TSX under the symbol
“TWM”. Tidewater’s business objective is to build a diversified
midstream and infrastructure company in the North American natural
gas and natural gas liquids (“NGL”) space. Its strategy is to
profitably grow and create shareholder value through the
acquisition and development of oil and gas infrastructure.
Tidewater plans to achieve its business objective by providing
customers with a full service, vertically integrated value chain
through the acquisition and development of oil and gas
infrastructure including: gas plants, pipelines, railcars, trucks,
export terminals and storage facilities.
Cautionary Notes
Advisory Regarding Forward-Looking
Statements
In the interest of providing Tidewater's
shareholders and potential investors with information regarding
Tidewater, including management's assessment of Tidewater's future
plans and operations, certain statements in this press release are
“forward-looking statements” within the meaning of the United
States Private Securities Litigation Reform Act of 1995 and
“forward-looking information” within the meaning of applicable
Canadian securities legislation (collectively, “forward-looking
statements”). In some cases, forward-looking statements can be
identified by terminology such as “anticipate”, “believe”,
“continue”, “could”, “estimate”, “expect”, “forecast”, “intend”,
“may”, “objective”, “ongoing”, “outlook”, “potential”, “project”,
“plan”, “should”, “target”, “would”, “will” or similar words
suggesting future outcomes, events or performance. The
forward-looking statements contained in this press release speak
only as of the date thereof and are expressly qualified by this
cautionary statement.
Specifically, this press release contains
forward-looking statements relating to but not limited to: plans to
construct a 120 km natural gas pipeline from Tidewater’s Brazeau
River Complex to TransAlta’s Sundance and Keephills facility and
expected costs of such project and associated take or pay
agreement; expectations regarding initial capacity of the planned
pipeline and expansion capability; TransAlta’s expected gas
requirements; potential future investment in the pipeline project;
a proposed offering of Notes by Tidewater; the timing and
completion of the proposed offering of Notes, and the use of
proceeds from the offering of Notes; the anticipated closing
of the Deep Basin and Montney acquisition including timing thereof
and regulatory approval of related licence transfers; and pending
resolution of rights of first refusal in connection to the Deep
Basin/Montney acquisition.
These forward-looking statements are based on
certain key assumptions including: legislative or regulatory
developments, including as it pertains to the Alberta capacity
market; the Federal and/or Provincial governments not implementing
legislation or regulations facilitating the conversion from coal
generation to gas generation; changes in economic and competitive
conditions; inability to secure natural gas supply and the
construction of a natural gas pipeline on terms satisfactory to
Tidewater; Tidewater’s ability to execute on its business plan;
operating activities; general market and other conditions; the
ability of Tidewater to market natural gas liquids to current and
new customers; the timely receipt of required governmental and
regulatory approvals; future natural gas liquids prices; laws and
regulations continuing in effect (or, where changes are proposed,
such changes being adopted as anticipated); royalty rates, taxes
and capital, operating, general & administrative and other
costs; general business, economic and market conditions; with
respect to current and planned development projects, expansions,
planned capital expenditures, completion dates and capacity
expectations: that third parties will provide any necessary
support; that any third-party projects relating to Tidewater’s
growth projects will be sanctioned and completed as expected; that
any required commercial agreements can be negotiated and effected;
that all required regulatory and environmental approvals can be
obtained on the necessary terms and in a timely manner; that
counterparties will comply with contracts in a timely manner; and
that there are no unforeseen events preventing the performance of
contracts or the completion of the relevant facilities; the ability
of Tidewater to generate sufficient cash flow from operations and
other sources to meet current and future obligations, including
costs of anticipated projects and repayment of debt; the ability of
Tidewater to obtain equipment, services, supplies and personnel in
a timely manner and at an acceptable cost to carry out its
activities; and anticipated timelines and budgets being met in
respect of Tidewater’s projects. Readers are cautioned that such
assumptions, although considered reasonable by Tidewater at the
time of preparation, may prove to be incorrect.
Actual results achieved will vary from the
information provided herein as a result of numerous known and
unknown risks and uncertainties and other factors including but not
limited to: risks related to regulatory approval; the ability of
management to execute its business plan; risks inherent in
Tidewater’s marketing operations, including credit risk;
fluctuations in crude oil, natural gas liquids and natural gas
prices; health, safety and environmental risks; uncertainties as to
the availability and cost of financing; the possibility that
governmental policies or laws may change or governmental approvals
may be delayed or withheld; the sufficiency of budgeted capital
expenditures in carrying out planned activities; the availability
and cost of labour and services; and other risks and uncertainties
described elsewhere in this document or in Tidewater’s other
filings with Canadian securities regulatory authorities.
The above summary of assumptions and risks
related to forward-looking statements in this press release has
been provided in order to provide shareholders and potential
investors with a more complete perspective on Tidewater's current
and future operations and such information may not be appropriate
for other purposes. There is no representation by Tidewater that
actual results achieved will be the same in whole or in part as
those referenced in the forward-looking statements and Tidewater
does not undertake any obligation to update publicly or to revise
any of the included forward-looking statements, whether as a result
of new information, future events or otherwise, except as may be
required by applicable securities law.
Tidewater Midstream & Infrastructure Ltd.
Joel MacLeod
Chairman, President and CEO
587.475.0210
jmacleod@tidewatermidstream.com
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