(TSX: TWM)

CALGARY, AB, Nov. 9, 2023 /CNW/ - Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Corporation") (TSX: TWM) has filed its interim consolidated financial statements and Management's Discussion and Analysis ("MD&A") for the period ended September 30, 2023.

Tidewater Midstream and Infrastructure Ltd. logo (CNW Group/Tidewater Midstream and Infrastructure Ltd.)

THIRD-QUARTER 2023 HIGHLIGHTS

  • On August 31, 2023, Tidewater announced the sale of its Pipestone natural gas plant ("Pipestone Phase I"), Pipestone expansion project ("Pipestone Phase II", collectively "Pipestone"), Dimsdale natural gas storage facility ("Dimsdale") and associated gathering and other infrastructure to AltaGas Ltd. ("AltaGas") for $650 million (the "Transaction"). The form of consideration will be $325 million in cash and 12,466,437 AltaGas common shares, representing approximately $325 million using an AltaGas common share price of $26.07. The Transaction is expected to be completed in the fourth quarter of 2023, subject to certain closing conditions.
  • Third quarter consolidated adjusted EBITDA(1) increased by 10% to $48.6 million compared to the second quarter of 2023. Consolidated net loss attributable to shareholders for the quarter was $22.9 million.
  • Tidewater's downstream financial results benefitted from record throughput at the Prince George Refinery ("PGR") during the third quarter of 2023, as a result of capital investments during the planned second quarter 2023 turnaround.
  • Strong throughput and facility availability at Tidewater's midstream and downstream facilities, combined with strong financial performance from Tidewater's natural gas storage assets contributed to third quarter deconsolidated adjusted EBITDA(1)(2) of $34.1 million. Deconsolidated net loss attributable to shareholders for the quarter was $18.8 million.
  • Tidewater Renewables Ltd.'s ("Tidewater Renewables") Renewable Diesel & Renewable Hydrogen
    Complex ("HDRD Complex") produced its first renewable diesel on October 22, 2023 and as of November 7, 2023 has progressed to commercial operations. The HDRD Complex is currently producing approximately 1,500 bbl/d of on-spec cold weather diesel and Tidewater Renewables is actively working on safely increasing production rates towards the facility's 3,000 bbl/d design capacity. The HDRD Complex makes Tidewater Renewables the first standalone producer of renewable diesel in Canada. 
  • In July of 2023, Tidewater Renewables' co-processing projects located at the PGR were approved for credit generation under the Canadian Clean Fuel Regulations ("CFR"). Through its co-processing projects and the HDRD Complex, Tidewater Renewables expects to maintain its position as one of Canada's largest generators of emissions credits.
  • On November 8, 2023, Mr. Robert Colcleugh was appointed Chief Executive Officer of both Tidewater and Tidewater Renewables. Mr. Colcleugh joined Tidewater's board of directors in 2017 and has served as interim Chief Executive Officer since November 28, 2022.

"The launching of the HDRD Complex's commercial operations and the closing of the Pipestone sale with AltaGas will be transformative to our business. The Pipestone transaction highlights the underlying value of our asset base and unlocks significant value for our shareholders. The closing of the Transaction will significantly enhance our financial position, profitability and ability to maximize free cash flow generation while providing the means to invest in profitable growth opportunities within our portfolio of core assets. With the HDRD Complex producing cold weather diesel on-spec, we see an ability to generate significant cash flow to support growing shareholder value." Stated CEO Rob Colcleugh.

(1)

Adjusted EBITDA is a Non-GAAP financial measure. Please see the "Non-GAAP Measures" section of this news release for more information on the composition of these measures.

(2)

Deconsolidated results exclude the results of Tidewater Renewables Ltd. See the "Non-GAAP Measures" section of this news release for information on deconsolidated measures.

 

CONSOLIDATED AND DECONSOLIDATED FINANCIAL HIGHLIGHTS


Three months ended September 30


Tidewater

Deconsolidated (2)

Tidewater

Consolidated

(in millions of Canadian dollars except per share information)


2023


2022


2023


2022

Net loss attributable to shareholders

$

(18.8)

$

(15.2)

$

(22.9)

$

(18.8)

Net loss attributable to shareholders per

    share – basic

$

(0.04)

$

(0.04)

$

(0.05)

$

(0.05)

Adjusted EBITDA (1)

$

34.1

$

46.0

$

48.6

$

62.1

Distributable cash flow attributable to shareholders (1)

$

(0.2)

$

2.8

$

2.0

$

9.3

Distributable cash flow per share – basic (1)

$

-

$

0.01

$

-

$

0.02

Dividends declared (3)

$

4.3

$

4.3

$

4.3

$

4.3

Dividends declared per share

$

0.01

$

0.01

$

0.01

$

0.01

Net debt (4)

$

618.9

$

522.7

$

953.0

$

647.0

Total capital expenditures

$

5.7

$

31.3

$

39.3

$

89.4

(1)

Non-GAAP financial measures. See the "Non-GAAP Measures" section of this news release for more information.

(2)

Deconsolidated results exclude the results of Tidewater Renewables. See the "Non-GAAP Financial Measures" section of this news release for information on deconsolidated measures.

(3)

Dividends declared are based on Tidewater's outstanding common shares that are publicly traded on the TSX under the symbol "TWM".

(4)

Capital management measure. See the "Non-GAAP Measures" section of this news release for more information.

 


Nine months ended September 30


Tidewater

Deconsolidated (2)

Tidewater

Consolidated

(in millions of Canadian dollars except per share information)


2023


2022


2023


2022

Net (loss) income attributable to shareholders

$

(41.9)

$

47.0

$

(54.1)

$

38.5

Net (loss) income attributable to shareholders per

    share – basic

$

(0.10)

$

0.14

$

(0.13)

$

0.11

Adjusted EBITDA (1)

$

106.3

$

143.7

$

141.5

$

189.4

Distributable cash flow attributable to shareholders (1)

$

(28.7)

$

42.9

$

(28.3)

$

62.6

Distributable cash flow per share – basic (1)

$

(0.07)

$

0.12

$

(0.07)

$

0.18

Dividends declared (3)

$

12.8

$

11.1

$

12.8

$

11.1

Dividends declared per share

$

0.03

$

0.03

$

0.03

$

0.03

Net debt (4)

$

618.9

$

522.7

$

953.0

$

647.0

Total capital expenditures

$

67.7

$

71.1

$

241.4

$

238.8

(1)

Non-GAAP financial measures. See the "Non-GAAP Measures" section of this news release for more information.

(2)

Deconsolidated results exclude the results of Tidewater Renewables. See the "Non-GAAP Financial Measures" section of this news release for information on deconsolidated measures.

(3)

Dividends declared are based on Tidewater's outstanding common shares that are publicly traded on the TSX under the symbol "TWM".

(4)

Capital management measure. See the "Non-GAAP Measures" section of this news release for more information.

PIPESTONE & DIMSDALE TRANSACTION

On August 31, 2023, Tidewater announced that it has entered into an agreement with AltaGas to sell the Pipestone Phase I, Pipestone Phase II, and the Pipestone Partnership, which owns the Dimsdale natural gas storage facility and associated gathering and other infrastructure for total consideration of approximately $650 million.

Subject to completion of customary conditions, AltaGas will acquire Pipestone and Dimsdale for total consideration of $650 million plus the assumption of certain leases at Pipestone. The form of consideration will be $325 million in cash and 12,466,437 AltaGas common shares, representing approximately $325 million using an AltaGas common share price of $26.07. Assets disposed of as part of the Transaction represent $55 - $60 million of Tidewater's normalized 2023 adjusted EBITDA.

The Transaction is subject to closing adjustments and conditions customary for a transaction of this nature and is not subject to any financing condition. The Transaction is also subject to a positive final investment decision ("FID") on the Pipestone Phase II project. To facilitate reaching FID, AltaGas and Tidewater have entered into an agreement to create a new joint venture (the "Pipestone Joint Venture") to advance the final steps required to develop and construct the project. The terms of the Pipestone Joint Venture will permit the parties to continue to collaborate on the Pipestone Phase II project, even if the Transaction does not proceed.

The Transaction has been unanimously approved by the boards of directors of both Tidewater and AltaGas, and all material regulatory approvals have been obtained subsequent to the announcement of the Transaction. Closing is expected to occur in the fourth quarter of 2023, subject to satisfaction of all customary closing conditions.

DOWNSTREAM

Tidewater achieved record throughput at the PGR during the third quarter, averaging approximately 12,756 bbl/day. The increased throughput is driven by catalyst and unifer upgrades that were completed during the second quarter planned turnaround.

PGR Historical Performance:


Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023

Q3 2023

Daily throughput (bbl)

12,245

11,745

11,810

11,860

11,715

11,700

4,363

12,756

Refinery Yield (1)









  Diesel

47 %

48 %

44 %

45 %

47 %

45 %

46 %

44 %

  Gasoline

40 %

40 %

42 %

41 %

42 %

42 %

41 %

42 %

  Other (2)

13 %

12 %

14 %

14 %

11 %

13 %

13 %

14 %

(1)  Refinery yield includes crude, canola and intermediates.

(2) Other refers to heavy fuel oil (HFO), liquified petroleum gas and feedstock consumed to fuel the refinery.

 

Financial results improved during the third quarter of 2023 compared to the previous quarter, due to the completion of the scheduled turnaround and higher diesel and gasoline sales volumes during the summer driving season. Higher diesel rack pricing contributed to a 2% increase in the Prince George crack spread from the second quarter of 2023, which averaged $87/bbl during the third quarter.

MIDSTREAM

With improved facility availability at the Brazeau River Complex ("BRC"), third quarter 2023 midstream gross margin of $28.6 million represents approximately 50% of Tidewater's total gross margin for the quarter.

Midstream Gas Plant Inlet Volumes:


Q4 2021

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Q1 2023

Q2 2023

Q3 2023

Gross throughput
(MMcf/day)

364

352

358

340

369

390

321

353

Pipestone

95

98

101

69

89

104

97

95

BRC (1)

131

122

145

146

159

158

98

155

Ram River

105

101

78

102

104

112

110

88

Other

32

31

34

23

17

16

16

15

(1)  BRC Inlet volumes include volumes at the BRC straddle plant.

 

Pipestone Natural Gas Plant

Pipestone Phase I continues to produce consistent returns, with throughput volumes and facility availability moderately impacted by high ambient temperatures during the third quarter.

Brazeau River Complex and Fractionation Facility

During the third quarter the Brazeau River Complex ("BRC") facility throughput increased to 155 MMcf/day, a 58% increase from the previous quarter, which was impacted by the Alberta wildfires. The BRC's fractionation facility benefitted from approximately 87% availability during the quarter.

The BRC remains one of Tidewater's core assets and is well positioned in the Deep Basin, by offering producers multiple natural gas liquids egress options through its fractionation facility, truck loading and offloading facilities, natural gas liquids pipeline connections, along with two natural gas transportation connections. The BRC's fractionation facility serves as a key asset for Tidewater's natural gas liquids marketing business.

Ram River Gas Plant

The Ram River natural gas processing facility average throughput decreased to 88 MMcf/day during the third quarter of 2023, due to unplanned maintenance. Tidewater is actively working with local third parties to increase throughput volumes, enhance overall regional processing efficiencies and maximize contracted revenues with the plant's natural gas and sulphur handling infrastructure.

CAPITAL PROGRAM

Tidewater's 2023 growth initiatives have been primarily focused on the completion of Tidewater Renewables' HDRD Complex located at PGR. Investments during the second quarter scheduled turnaround at PGR led to increased unifiner capacity and upgraded catalyst that contributed to record throughput volumes during the quarter. Tidewater's capital allocation strategy will remain disciplined moving forward, with growth initiatives focused on the successful commissioning of the HDRD Complex and accretive small scale optimization projects. With Tidewater's 2023 maintenance capital program being weighted to the first half of 2023, consolidated maintenance capital was $5.7 million during the quarter.

OUTLOOK

The fourth quarter of 2023 will be impacted by the closing of the Transaction as well as the average HDRD production volumes as it ramps up through the quarter. These two initiatives represent transformational milestones for Tidewater that are expected to significantly enhance consolidated run rate EBITDA and cash flow, while deleveraging the Corporation. As of September 30, 2023, year to date consolidated adjusted EBITDA was $141.5 million. Incorporating the HDRD Complex and Transaction closing timelines into fourth quarter forecasts, the Corporation now expects consolidated full year adjusted EBITDA to be in the range of $180 million - $200 million.

Tidewater's 2023 maintenance capital program is weighted to the first half of 2023, resulting in third quarter maintenance focused on routine activities with limited impact to facility availability. Tidewater continues to expect full year 2023 maintenance capital to be at the higher end of the previously announced annual deconsolidated maintenance capital guidance of $55 million to $65 million.

THIRD QUARTER 2023 EARNINGS CALL

In conjunction with the earnings release, Tidewater's executive will hold a call to review its third quarter 2023 results via conference call on Thursday November 9, 2023 at 11:00 am MDT (1:00 pm EDT).

To access the conference call by telephone, dial 416-764-8659 (local / international participant dial in) or 1-888-664-6392 (North American toll free participant dial in). A question and answer session for analysts will follow management's presentation.

A live audio webcast of the conference call will be available by following this link: https://app.webinar.net/EB8xZXEWe26 and will also be archived there for 90 days.

For those accessing the call via Cision's investor website, we suggest logging in at least 15 minutes prior to the start of the live event. For those dialing in, participants should ask to be joined into the Tidewater Midstream and Infrastructure Ltd. earnings call.

ABOUT TIDEWATER MIDSTREAM

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, natural gas liquids, crude oil, refined product and renewable energy value chain. Its strategy is to profitably grow and create shareholder value Through the acquisition and development of conventional and renewable energy infrastructure.

To achieve its business objective, Tidewater is focused on providing customers with a full service, vertically integrated value chain through the acquisition and development of energy infrastructure, including downstream facilities, natural gas processing facilities, natural gas liquids infrastructure, pipelines, railcars, export terminals, storage, and various renewable initiatives. To complement its infrastructure asset base, the Corporation also markets crude, refined product, natural gas, natural gas liquids and renewable products and services to customers across North America.

Tidewater is a majority shareholder in Tidewater Renewables, a multi-faceted, energy transition company focusing on the production of low carbon fuels. Tidewater Renewables' common shares are publicly traded on the TSX under the symbol "LCFS".

Rob Colcleugh                                                                                   

Brian Newmarch

Chief Executive Officer                                                                   

Chief Financial Officer

Tidewater Midstream & Infrastructure Ltd.                             

Tidewater Midstream & Infrastructure Ltd

 

NON-GAAP MEASURES

Throughout this news release and in other materials disclosed by the Corporation, Tidewater uses a number of non-GAAP financial measures, non-GAAP financial ratios and capital management measures when assessing its results and measuring overall performance. The intent of these non-GAAP measures and ratios is to provide additional useful information to investors and analysts. These non-GAAP financial measures do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other entities. As such, these non-GAAP measures should not be considered in isolation or used as a substitute for measures of performance prepared in accordance with GAAP. Except as otherwise indicated, these financial measures will be calculated and disclosed on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods. For more information with respect to financial measures which have not been defined by GAAP, see the "Non-GAAP Measures" section of Tidewater's most recent MD&A which is available on SEDAR+ at www.sedarplus.ca.

Non-GAAP Measures

The non-GAAP financial measures used by the Corporation are adjusted EBITDA and distributable cash flow

Consolidated and deconsolidated adjusted EBITDA

Consolidated adjusted EBITDA is calculated as (loss) income before finance costs, taxes, depreciation, share-based compensation, unrealized gains and losses on derivative contracts, transaction costs, gains and losses on the sale of assets, and other items considered non-recurring in nature plus the Corporation's proportionate share of EBITDA in its equity investments. Deconsolidated adjusted EBITDA is calculated as consolidated adjusted EBITDA less the portion of consolidated adjusted EBITDA attributable to Tidewater Renewables.

In accordance with IFRS, Tidewater's jointly controlled investments are accounted for using equity accounting. Under equity accounting, net earnings from investments in equity accounted investees are recognized in a single line item in the consolidated statement of net (loss) income and comprehensive (loss) income. The adjustments made to net income, as described above, are also made to share of profit from investments in equity accounted investees.

Consolidated adjusted EBITDA is used by management to set objectives, make operating and capital investment decisions, monitor debt covenants and assess performance. In addition to its use by management, Tidewater also believes consolidated adjusted EBITDA is a measure widely used by securities analysts, investors, lending institutions, and others to evaluate the financial performance of the Corporation and other companies in the midstream industry. The Corporation issues guidance on this key measure. As a result, consolidated adjusted EBITDA is presented as a relevant measure in this news release and the MD&A to assist analysts and readers in assessing the performance of the Corporation as seen from management's perspective. In addition to reviewing consolidated adjusted EBITDA, management reviews deconsolidated adjusted EBITDA to highlight the Corporation's performance, excluding the portion of consolidated adjusted EBITDA attributable to Tidewater Renewables. Investors should be cautioned that consolidated adjusted EBITDA and deconsolidated adjusted EBITDA should not be construed as alternatives to net (loss) income, net cash provided by operating activities or other measures of financial results determined in accordance with GAAP as an indicator of the Corporation's performance and may not be comparable to companies with similar calculations.

The following table reconciles net (loss) income, the nearest GAAP measure, to adjusted EBITDA:


Three months ended
September 30,

Nine months ended
September 30,

(in millions of Canadian dollars)


2023


2022


2023


2022

Net (loss) income

$

(24.9)

$

(22.0)

$

(60.6)

$

43.8

   Deferred income tax (recovery) expense


(7.8)


(7.0)


(17.8)


16.5

   Depreciation


25.9


20.8


70.5


60.8

   Finance costs and other


26.0


17.3


73.3


51.3

   Share-based compensation


3.8


3.4


11.7


10.7

   Loss on sale of assets


0.4


7.2


1.3


9.4

   Unrealized loss (gain) on derivative contracts


14.8


38.7


44.2


(10.2)

   Transaction costs


2.8


2.9


4.5


3.7

   Non-recurring transactions


3.6


1.0


9.6


1.5

   Adjustment to share of profit from equity accounted

       investments


4.0


 

(0.2)


4.8


1.9

Consolidated adjusted EBITDA

$

48.6

$

62.1

$

141.5

$

189.4

Less: Consolidated adjusted EBITDA attributable to

    Tidewater Renewables


(14.5)


 

(16.1)


(35.2)


(45.7)

Deconsolidated adjusted EBITDA

$

34.1

$

46.0

$

106.3

$

143.7

 

Distributable cash flow attributable to shareholders

Distributable cash flow attributable to shareholders is a non-GAAP measure. Management believes distributable cash flow is a useful metric for investors when assessing the amount of cash flow generated from normal operations and to evaluate the adequacy of internally generated cash flow to fund dividends. Distributable cash flow is calculated as net cash provided by operating activities before changes in non-cash working capital, plus cash distributions from investments, transaction costs, non-recurring transactions, and less other expenditures that use cash from operations. Also deducted is the distributable cash flow of Tidewater Renewables that is attributed to non-controlling interest shareholders.

Changes in non-cash working capital are excluded from the determination of distributable cash flow because they are primarily the result of seasonal fluctuations or other temporary changes and are generally funded with short term debt or cash flows from operating activities. Transaction costs are added back as they can vary significantly based on the Corporation's acquisition and disposition activity. Non-recurring transactions that do not reflect Tidewater's ongoing operations are also excluded. Lease payments, interest and financing charges, and maintenance capital expenditures, including turnarounds, are deducted as they are ongoing recurring expenditures which are funded from operating cash flows.

Deconsolidated distributable cash flow is calculated by subtracting the portion of Tidewater Renewables' distributable cash flow that is attributed to shareholders of Tidewater from distributable cash flow attributable to shareholders.

The following table reconciles net cash provided by operating activities, the nearest GAAP measure, to distributable cash flow and deconsolidated distributable cash flow:


Three months ended
September 30,

Nine months ended

September 30,

(in millions of Canadian dollars)


2023


2022


2023


2022

Net cash provided by operating activities

$

61.4

$

67.0

$

142.7

$

176.2

Add (deduct):









Changes in non-cash operating working capital


(30.0)


(13.7)


(38.0)


(0.4)

Transaction costs


2.8


2.9


4.5


3.7

Non-recurring transactions


3.6


1.0


9.6


1.5

Interest and financing charges


(17.7)


(10.6)


(50.1)


(31.3)

Payment of lease liabilities and other, net of sublease

    payments


(11.4)


 

(11.7)


(35.3)


(36.1)

Maintenance capital


(5.7)


(22.7)


(61.5)


(42.1)

Tidewater Renewables' distributable cash flow to non-

    controlling interest shareholders


(1.0)


 

(2.9)


(0.2)


(8.9)

Distributable cash flow attributable to shareholders

$

2.0

$

9.3

$

(28.3)

$

62.6

Tidewater Renewables' distributable cash flow attributed

    to shareholders of Tidewater

$

(2.2)

$

(6.5)

$

(0.4)

$

(19.7)

Deconsolidated distributable cash flow attributable to

    shareholders

$

(0.2)

$

2.8

$

(28.7)

$

42.9

 

Growth capital expenditures are generally funded from retained operating cash flow and additional debt or equity, as required.

Non-GAAP Financial Ratios

Distributable cash flow per share

Distributable cash flow and deconsolidated distributable cash flow are non-GAAP financial measures. Management believes that these measures provide investors an indicator of funds generated from the business that could be allocated to each shareholder's equity position.

Distributable cash flow per share is calculated as distributable cash flow attributable to shareholders divided by the basic or diluted weighted average number of common shares outstanding for the period.

Deconsolidated distributable cash flow per share is calculated as deconsolidated distributable cash flow attributable to shareholders divided by the basic or diluted weighted average number of common shares outstanding for the period.


Three months ended 
September 30,

Nine months ended

September 30,

(in millions of Canadian dollars except share and per share
information)


2023


2022


2023


2022

Distributable cash flow attributable to shareholders

$

2.0

$

9.3

$

(28.3)

$

62.6

Deconsolidated distributable cash flow attributable to

    shareholders

$

(0.2)

$

2.8

$

(28.7)

$

42.9

Weighted average common shares outstanding – basic

    (millions)


425.2


380.5


424.8


354.8

Weighted average common shares outstanding –

    diluted (millions)


425.2


380.5


424.8


445.6

Distributable cash flow per share – basic

$

-

$

0.02

$

(0.07)

$

0.18

Deconsolidated distributable cash flow per share –

    basic

$

-

$

0.01

$

(0.07)

$

0.12

Distributable cash flow per share – diluted

$

-

$

0.02

$

(0.07)

$

0.14

Deconsolidated distributable cash flow per share –

    diluted

$

-

$

0.01

$

(0.07)

$

0.10

 

Capital Management Measures

Tidewater's methods for managing capital and liquidity are discussed within note 24 of the audited consolidated financial statements for the year ended December 31, 2022.

Consolidated and deconsolidated net debt

Consolidated net debt is defined as bank debt, term debt, notes payable and convertible debentures, less cash. Consolidated net debt is used by the Corporation to monitor its capital structure and financing requirements. It is also used as a measure of the Corporation's overall financial strength. In addition to reviewing consolidated net debt, management reviews deconsolidated net debt to highlight Tidewater Midstream's financial flexibility, balance sheet strength and leverage. Deconsolidated net debt is calculated as consolidated net debt less the portion attributable to Tidewater Renewables.

Consolidated and deconsolidated net debt exclude working capital, lease liabilities and derivative contracts as the Corporation monitors its capital structure based on deconsolidated net debt to deconsolidated adjusted EBITDA, consistent with its credit facility covenants as described in the "Liquidity and Capital Resources" section of the Corporation's MD&A.

The following table reconciles consolidated and deconsolidated net debt:

 (in millions of Canadian dollars)


September 30,   
2023


September 30,  
2022

Tidewater Midstream Senior Credit Facility

$

547.2

$

459.0

Tidewater Renewables Senior Credit Facility


159.4


110.1

Tidewater Renewables Term Debt Facility


175.0


-

Tidewater Renewables RNG Credit Facility


-


15.5

Convertible debentures - principal


75.0


75.0

Cash


(3.6)


(12.6)

Consolidated net debt

$

953.0

$

647.0

Less: Tidewater Renewables Senior Credit Facility


(159.4)


(110.1)

Less: Tidewater Renewables Term Debt Facility


(175.0)


-

Less: Tidewater Renewables RNG Credit Facility


-


(15.5)

Add: Tidewater Renewables cash


0.3


1.3

Deconsolidated net debt

$

618.9

$

522.7

 

Supplementary Financial Measures

"Growth capital" expenditures are generally defined as expenditures which are recoverable or incrementally increase cash flow or earnings potential of assets, expand the capacity of current operations or significantly extend the life of existing assets. This measure is used by the investment community to assess the extent of discretionary capital spending.

"Maintenance capital" expenditures are generally defined as expenditures which support and/or maintain the current capacity, cash flow or earnings potential of existing assets without the associated benefits characteristic of growth capital expenditures. These expenditures include major inspections and overhaul costs that are required on a periodic basis. This measure is used by the investment community to assess the extent of non-discretionary capital spending. Maintenance capital is included in the calculation of distributable cash flow.

Deconsolidated "net (loss) income attributable to shareholders" is comprised of net income or loss attributable to shareholders, as determined in accordance with IFRS, less the net income or loss of Tidewater Renewables attributed to the shareholders of Tidewater.

Deconsolidated "net (loss) income attributable to shareholders – per share" is calculated by dividing deconsolidated "net income or loss attributable to shareholders" by the basic weighted average number of Tidewater Midstream common shares outstanding for the period.

Deconsolidated "Total capital expenditures" is comprised of consolidated capital expenditures, as disclosed in Tidewater's statement of cash flows, less the capital expenditures of Tidewater Renewables.

OPERATIONAL DEFINITIONS

"bbl/d" means barrels per day; "MMcf/d" means million cubic feet per day.

"Crack spread" refers to the general price differential between crude oil and the petroleum products refined from it.

"Refinery yield" (expressed as a percentage) represents the percentage of finished product produced from inputs of crude oil and renewable feedstock as well as intermediates. Refinery yields are an important measure of refinery performance indicating the outputs that running a particular feedstock and intermediates through a refinery configuration will produce.

"Throughput" with respect to a natural gas plant, means inlet volumes processed (including any off-load or reprocessed volumes); with respect to a pipeline, the estimated natural gas or liquid volume transported therein; and with respect to NGL processing facilities, means the volume of inlet NGLs processed.

Advisory Regarding Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking statements and forward-looking information (collectively referred to herein as, "forward-looking statements") within the meaning of applicable Canadian securities laws. Such forward-looking statements relate to future events, conditions or future financial performance of Tidewater based on future economic conditions and courses of action. All statements other than statements of historical fact may be forward-looking statements. Such forward-looking statements are often, but not always, identified by the use of any words such as "seek", "anticipate", "budget", "plan", "continue", "forecast", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "will likely result", "are expected to", "will continue", "is anticipated", "believes", "estimated", "intends", "plans", "projection", "outlook" and similar expressions. These statements involve known and unknown risks, assumptions, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Corporation believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon.

In particular, this news release contains forward-looking statements pertaining to but not limited to the following:

  • Tidewater deconsolidated maintenance capital guidance for 2023;
  • Tidewater Renewables's development, completion and commissioning of the Tidewater Renewables HDRD Complex including cost forecasts, expected benefits of the project, including the generation of emission credits under the British Columbia Low Carbon Fuel Standard and the Canadian Clean Fuel Regulations, and expectations regarding increasing production rates;
  • The launching of the HDRD Complex's commercial operations and the closing of the Pipestone sale with AltaGas will be transformative to our business;
  • the Pipestone transaction highlights the underlying value of our asset base and unlocks significant value for our shareholders;
  • with the HDRD Complex producing cold weather diesel on-spec, we see an ability to generate significant cash flow to support growing shareholder value;
  • Tidewater's expectations regarding the completion of the Transaction and the consideration to be received as part of the Transaction;
  • the closing of the Pipestone transaction and commercial operations of the HDRD represent transformational milestones for Tidewater that are expected to significantly enhance consolidated run rate EBITDA and cash flow, while deleveraging the Corporation;
  • the Corporation's expectation that consolidated full year adjusted EBITDA to be in the range of $180 million - $200 million;
  • Tidewater's expectations regarding future growth initiatives;
  • BRC's competitive position within the Deep Basin;
  • Tidewater's ongoing efforts at the Ram River natural gas processing facility to work with local third parties to increase throughput volumes, enhance overall regional processing efficiencies and maximize contracted revenues with the plant's sulphur handling infrastructure;
  • the Corporation's 2023 expected consolidated adjusted EBITDA;
  • Tidewater's expectation that the HDRD Complex will be one of the largest generators of credits under the British Columbia's Low Carbon Fuel Standard and the Canadian Clean Fuel Regulations;
  • the Corporation's 2023 expected consolidated adjusted EBITDA;
  • the Corporation's expectations regarding updating its 2023 outlook for deconsolidated adjusted EBITDA; and
  • Tidewater's expectation that the HDRD Complex will be one of the largest generators of credits under the British Columbia's Low Carbon Fuel Standard and the Canadian Clean Fuel Regulations.

Although the forward-looking statements contained in this news release are based upon assumptions which management of the Corporation believes to be reasonable, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. With respect to forward-looking statements contained in this news release, the Corporation has assumptions regarding, but not limited to:

  • Tidewater's ability to execute on its business plan;
  • the timely completion of the Transaction;
  • the timely receipt of all governmental and regulatory approvals sought by the Corporation;
  • that PGR crack spreads remain strong and refined product demand continues to increase;
  • general economic and industry trends;
  • future commodity prices, including natural gas, crude oil, NGL and renewable energy prices;
  • impacts of commodity prices and demand on the Corporation's working capital requirements; ‎
  • continuing government support for existing policy initiatives;
  • processing and marketing margins;
  • impacts of seasonality and climate disruptions;
  • future capital expenditures to be made by the Corporation;
  • foreign currency, exchange and interest rates, and expectations relating to inflation;
  • that there are no unforeseen events preventing the performance of contracts;
  • the availability of equipment and personnel required for Tidewater to execute its business plan;
  • the amount of future liabilities relating to lawsuits and environmental incidents and the availability of coverage under the Corporation's insurance policies;
  • volume demands from the PGR are consistent with forecasts;
  • successful negotiation and execution of agreements with counterparties;
  • oil and gas industry exploration and development activity and the geographic region of such activity;
  • the Corporation's ability to obtain and retain qualified staff and equipment in a timely and cost-effective manner;
  • the amount of operating costs to be incurred;
  • that there are no unforeseen costs relating to the facilities, not recoverable from customers;
  • distributable cash flow and net cash provided by operating activities are consistent with expectations;
  • the ability to obtain additional financing on satisfactory terms;
  • the availability of capital to fund future capital requirements relating to existing assets and projects;
  • the ability of Tidewater to successfully market its products;
  • credit rating changes;
  • the successful integration of acquisitions and projects into the Corporation's existing business; and
  • the Corporation's future debt levels and the ability of the Corporation to repay its debt when due.

The Corporation's actual results could differ materially from those anticipated in the forward-looking statements, as a result of numerous known and unknown risks and uncertainties and other factors including but not limited to:

  • changes in demand for refined and renewable products;
  • general economic, political, market and business conditions, including fluctuations in interest rates, foreign exchange rates, stock market volatility, supply/demand trends, armed hostilities, acts of war, terrorism, cyberattacks, diplomatic developments and inflationary pressures;
  • activities of producers and customers and overall industry activity levels;
  • failure to negotiate and conclude any required commercial agreements;
  • non-performance of agreements in accordance with their terms;
  • failure to execute formal agreements with counterparties in circumstances where letters of intent or similar agreements have been executed and announced by Tidewater;
  • failure to close transactions as contemplated and in accordance with negotiated terms;
  • the conflict in Ukraine and the corresponding impact on supply chains and the global economy;
  • risks of health epidemics, pandemics, public health emergencies, quarantines, and similar outbreaks, including COVID-19, which may have sustained material adverse effects on the Corporation's business financial position results of operations and/or cash flows;
  • changes in environmental and other laws and regulations or the interpretations of such laws or ‎‎‎regulations‎;
  • ‎cost of compliance with applicable regulatory regimes, including, but not limited to, environmental laws and regulations, including greenhouse gas emissions;
  • Indigenous and landowner consultation requirements;
  • climate change initiatives or policies or increased environmental regulation;
  • that receipt of third party, regulatory, environmental and governmental approvals and consents relating to Tidewater's capital projects can be obtained on the necessary terms and in a timely manner;
  • that the resolution of any particular legal proceedings could have an adverse effect on the Corporation's operating results or financial performance;
  • competition for, among other things, business capital, acquisition opportunities, requests for proposals, materials, equipment, labour, and skilled personnel;
  • the ability to secure land and water, including obtaining and maintaining land access rights;
  • operational matters, including potential hazards inherent in the Corporation's operations and the effectiveness of health, safety, environmental and integrity programs;
  • actions by governmental authorities, including changes in regulation, tariffs and taxation;
  • changes in operating and capital costs, including fluctuations in input costs;
  • legal risks and environmental risks and hazards, including risks inherent in the transportation of NGLs and refining of light crude oils which may create liabilities to the Corporation in excess of the Corporation's insurance coverage, if any;
  • actions by joint venture partners or other partners which hold interests in certain of the Corporation's assets;
  • reliance on key relationships and agreements;
  • losses of key customers;
  • construction and engineering variables associated with capital projects, including the availability of contractors, engineering and construction services, accuracy of estimates and schedules, and the performance of contractors;
  • the availability of capital on acceptable terms;
  • changes in the credit-worthiness of counterparties;
  • changes in the credit rating of the Corporation, and the impacts of this on the Corporation's access to ‎private and public credit markets in the future and increase the costs of borrowing; ‎
  • adverse claims made in respect of the Corporation's properties or assets;
  • risks and liabilities associated with the transportation of dangerous goods and derailments;
  • effects of weather conditions (such severe weather or catastrophic events including, but not limited to, fires, floods, lightning, earthquakes, extreme cold weather, storms or explosions);
  • reputational risks
  • reliance on key personnel;
  • technology and security risks, including cybersecurity;
  • potential losses which would stem from any disruptions in production, including work stoppages or other labour difficulties, or disruptions in the transportation network on which the Corporation is reliant;
  • technical and processing problems, including the availability of equipment and access to properties;
  • changes in gas composition; and
  • failure to realize the anticipated benefits of acquisitions.

The foregoing lists are not exhaustive. Additional information on these and other factors which could affect the Corporation's operations or financial results are included in the Corporation's most recent AIF and in other documents on file with the Canadian securities regulatory authorities.

Management of the Corporation has included the above summary of assumptions and risks related to forward-looking statements provided in this news release in order to provide holders of common shares in the capital of the Corporation with a more complete perspective on the Corporation's current and future operations and such information may not be appropriate for other purposes.

The Corporation's actual results' performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any off them do so, what benefits the Corporation will derive therefrom. Readers are therefore cautioned that the foregoing list of important factors is not exhaustive, and they should not unduly rely on the forward-looking statements included in this news release. 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, other than as required by applicable securities law. All forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Further information about factors affecting forward-looking statements and management's assumptions and analysis thereof is available in filings made by the Corporation with Canadian provincial securities commissions available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedarplus.ca.

SOURCE Tidewater Midstream and Infrastructure Ltd.

Copyright 2023 Canada NewsWire

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