/THIS RELEASE IS INTENDED FOR DISTRIBUTION OUTSIDE
THE UNITED STATES ONLY AND IS NOT
AUTHORIZED FOR DISTRIBUTION WITHIN THE
UNITED STATES/
CALGARY, March 29, 2018 /CNW/ - Tidewater Midstream and
Infrastructure Ltd. ("Tidewater" or the
"Corporation") (TSX: TWM) is pleased to announce that it has
filed its audited consolidated financial statements, Management's
Discussion and Analysis ("MD&A") and Annual Information
Form for the year ended December 31,
2017.
RECENT HIGHLIGHTS
Financial Earnings Highlights
- Tidewater delivered its tenth consecutive quarter of growth
reporting Adjusted EBITDA of $17.0
million or $0.05 per share for
the fourth quarter of 2017 compared to $11.8
million or $0.04 per share for
the same period in 2016.
- The Corporation maintained a conservative payout ratio of
approximately 29% with distributable cash flow of $11.5 million in the fourth quarter of 2017.
- The Corporation's previously guided 2017 exit run-rate Adjusted
EBITDA of $80 million was achieved
with exit net debt of approximately $150
million.
- Tidewater remains focused on delivering approximately 20%
annualized EBITDA per share growth over the next 24 months.
Increased Financial Flexibility Highlights
- Tidewater completed its first debt placement of $125 million of 6.75% senior unsecured term notes
due December 2022, creating long term
balance sheet stability, better matching the Corporation's
long-term asset base.
- The Corporation increased total availability under its credit
facility from $180 million to
$250 million.
- Tidewater received approval from the TSX to graduate from the
TSX Venture Exchange and list its common shares on the TSX.
Tidewater's shares began trading on the TSX on November 20, 2017.
Continued Long Term Contract Growth Highlights
- Announced the first definitive agreement with TransAlta
Corporation ("TransAlta") to procure long lead items in order to
construct a 120 km natural gas pipeline from Tidewater's Brazeau
River Complex ("BRC") to TransAlta's power generating units at
Sundance and Keephills. The pipeline will be supported by a
15 year take-or pay agreement with TransAlta. Construction of the
pipeline remains subject to certain customary conditions and
regulatory approval
- Entered into a six-year firm storage service commitment with an
investment grade counterparty at its Pipestone Gas Storage Facility
for approximately 5 Bcf of storage capacity.
- Entered into a five-year, 17.2 net Bcf volume commitment with
an investment grade counterparty to process incremental net raw gas
volumes of approximately 15 MMcf/d which will decline over a
five-year timeframe at the Ram River facility.
- Continued to move forward on major construction, regulatory and
contracting milestones on the 100 MMcf/d sour, deep cut
Montney gas plant with acid gas
injection and 20,000 bbls/d of NGL processing capability, as well
as an extensive gathering pipeline network in the Pipestone area near Grande Prairie, Alberta, which, subject to
regulatory approval, is expected to be commissioned in the second
quarter of 2019. The project is initially anchored by two,
five-year take-or-pay agreements totalling approximately 55 MMcf/d.
Additionally, the Corporation recently signed a third customer to a
reserve dedication agreement. The project remains subject to
regulatory approval.
Continued Opportunistic Acquisition Highlights
- Tidewater announced a $35 million
acquisition of assets with a replacement value in excess of
$900 million and generating EBITDA of
approximately $10 million in 2018.
The acquisition creates a backbone for the Tidewater network
between the Montney and Deep Basin
and includes a ten-year reserve dedication agreement.
Financial Overview
(In thousands
of Canadian dollars, except per share data)
|
|
|
Three-months
ended
December 31,
|
Year ended
December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
EBITDA1
|
$
|
12,331
|
$
|
9,719
|
$
|
51,701
|
$
|
34,084
|
Adjusted
EBITDA2
|
$
|
16,974
|
$
|
11,768
|
$
|
61,560
|
$
|
37,871
|
Adjusted EBITDA per
common share - basic2
|
$
|
0.05
|
$
|
0.04
|
$
|
0.19
|
$
|
0.15
|
Total cash and cash
equivalents
|
$
|
52,494
|
$
|
8,010
|
$
|
52,494
|
$
|
8,010
|
Total
assets
|
$
|
934,624
|
$
|
580,430
|
$
|
934,624
|
$
|
580,430
|
Bank debt
|
$
|
60,000
|
$
|
50,000
|
$
|
60,000
|
$
|
50,000
|
Notes
payable
|
$
|
121,708
|
$
|
-
|
$
|
121,708
|
$
|
-
|
Cash flow from
operating activities3
|
$
|
14,076
|
$
|
11,654
|
$
|
51,725
|
$
|
36,851
|
Cash flow from
operating activities per common share –
basic3
|
$
|
0.04
|
$
|
0.04
|
$
|
0.16
|
$
|
0.14
|
Distributable cash
flow4
|
$
|
11,506
|
$
|
10,113
|
$
|
43,160
|
$
|
34,717
|
Distributable cash
flow per common share – basic4
|
$
|
0.03
|
$
|
0.04
|
$
|
0.13
|
$
|
0.13
|
Dividends
declared
|
$
|
3,290
|
$
|
2,846
|
$
|
13,157
|
$
|
11,309
|
Dividends declared
per common share
|
$
|
0.01
|
$
|
0.01
|
$
|
0.04
|
$
|
0.04
|
Total common shares
outstanding (000s)
|
|
328,973
|
|
284,158
|
|
328,973
|
|
284,158
|
Notes:
|
|
|
1
|
EBITDA is calculated
as income or loss before finance costs, taxes, depreciation and
amortization. EBITDA is not a standard measure under GAAP. See
"Non-GAAP Financial Measures" in the Corporation's MD&A for a
reconciliation of EBITDA to its most closely related GAAP
measure.
|
|
|
2
|
Adjusted EBITDA is
calculated as EBITDA adjusted for incentive compensation,
unrealized gains/losses, non-cash items, transaction costs and
items that are considered non-recurring in nature. Adjusted EBITDA
per common share is calculated as Adjusted EBITDA divided by the
weighted average number of common shares outstanding for the year
ended December 31, 2017. Adjusted EBITDA and Adjusted EBITDA per
common share are not standard measures under GAAP. See "Non-GAAP
Financial Measures" in Corporation's the MD&A for a
reconciliation of Adjusted EBITDA and Adjusted EBITDA per common
share to their most closely related GAAP measures.
|
|
|
3
|
Cash flow from
operating activities is calculated as net cash used in operating
activities before changes in non-cash working capital less any long
term incentive plan expenses. Cash flow from operating activities
per common share is calculated as cash flow from operating
activities divided by the weighted average number of common shares
outstanding for the year ended December 31, 2017. Cash flow from
operating activities and cash flow from operating activities per
common share are not standard measures under GAAP. See "Non-GAAP
Financial Measures" in the Corporation's MD&A for a
reconciliation of cash flow from operating activities and cash flow
from operating activities per common share to their most closely
related GAAP measures.
|
|
|
4
|
Distributable cash
flow is calculated as net cash used in operating activities before
changes in non-cash working capital and after any expenditures that
use cash from operations. Distributable cash flow per common share
is calculated as distributable cash flow over the weighted average
number of common shares outstanding for the year ended December 31,
2017. Distributable cash flow and distributable cash flow per
common share are not standard measures under GAAP. See "Non-GAAP
Financial Measures" in the Corporation's MD&A for a
reconciliation of distributable cash flow and distributable cash
flow per common share to their most closely related GAAP
measures.
|
OUTLOOK AND CORPORATE UPDATE
Tidewater continues to position itself to offer producers
additional egress solutions and better pricing for its products in
a difficult commodity price environment through development and
connectivity of its infrastructure and access to end markets.
Ram River Gas Plant
During the first quarter of 2018, Tidewater announced that it
has entered into a five-year, 17.2 net Bcf volume commitment with
an investment grade counterparty to process incremental raw gas
volumes of approximately 15 MMcf/d which will decline over a
five-year timeframe at the Ram River gas plant.
BRC Expansion
Tidewater completed the 50 MMcf/d expansion at the BRC on-time
and on-budget in late December 2017.
Tidewater also completed construction of the previously disclosed
key strategic pipelines from the BRC both on-time and on-budget.
The pipelines provide access to a new core area for the BRC which
is supported by a 55,000 acre reserve dedication and a three to
four horizontal well drilling commitment. The Corporation continues
to move forward on several egress solutions around the BRC
including the Brazeau Gas Storage Facility and the Intra-Alberta
Pipeline to TransAlta's power generating units at Sundance and Keephills.
The Corporation extended the term of a take-or-pay processing
agreement at the BRC by an additional two years to December 2020 and increased the volume commitment
by approximately 10 MMcf/d to 30 MMcf/d with a provision to deliver
volumes up to 45 MMcf/d throughout the term. The agreement is with
a well-capitalized, intermediate-sized producer which will underpin
the recently announced expansion of the BRC.
Tidewater expects to commence its planned maintenance and
turnaround operations in April 2018
at the BRC which is scheduled to occur every four years. As a
result, throughput at the BRC will be reduced in the second quarter
of 2018. Planned activities continue to remain on-schedule and
on-budget.
Natural Gas Storage
Tidewater has entered into a six-year firm storage service
agreement with an investment grade customer at its Pipestone infrastructure/egress hub
("Pipestone Gas Storage Facility") for approximately 5 Bcf of
storage capacity. Tidewater can currently inject approximately 40
MMcf/d at the Pipestone Storage Facility and is working on
additional injection capacity up to 55 MMcf/d by the end of the
second quarter in 2018.
Tidewater has also been injecting 25 – 30 MMcf/d of producer gas
at the Brazeau Gas Storage Facility which has helped increase
egress capacity at the BRC. Total combined injection capability at
the Brazeau and Pipestone Gas Storage Facilities is approximately
70 MMcf/d with potential to increase to 85 MMcf/d by the summer of
2018. Tidewater's storage facilities are well positioned to benefit
from the low commodity price environment while acting as a natural
hedge to Tidewater's core business thereby achieving its goal of
offering additional egress options and better pricing to
producers.
NGL Extraction and Fractionation Facilities
The Corporation's extraction plants in the Edmonton area performed well in the quarter
and together with natural gas storage continue to act as a natural
hedge to low AECO gas prices.
Tidewater successfully reactivated the recently acquired deep
cut extraction plant in late July
2017, ahead of schedule and under budget and is currently
operating at 50% of expected capacity. Overall throughput on
Tidewater's extraction facilities is approximately 95 MMcf/d.
Tidewater's 10,000 bbl/d C2+ fractionation facility and 40
MMcf/d of additional deep cut processing capacity at the BRC
continue to outperform and throughput levels have exceeded
expectations with no material downtime since commissioning.
Power Supply and Generation
Tidewater has seen significant demand for low cost power and is
responding by contracting tolls for small scale industrial power
supply related to computer processing, which will generate
approximately $1 million of
annualized EBITDA in the next 30 days for zero capital investment
by Tidewater. Tidewater may, subject to significant future
contingencies, grow this opportunity to $5-$10 million of
annualized EBITDA over the next 12 to 18 months without investing
capital, but will evaluate future equity ownership for non-cash
consideration given upside potential.
CAPITAL PROGRAM
Tidewater completed its 2017 capital program on-time and
on-budget with the commissioning of 50 MMcf/d of additional
processing capacity at the BRC and completion of the strategic
gathering lines into the BRC late in December 2017.
Pipestone Montney Sour Gas Plant
Tidewater continues to move forward on major regulatory and
construction milestones as well as contracting at the Pipestone
Plant with an increased commitment from Kelt Exploration Ltd.
("Kelt") to 25 MMcf/d of firm raw gas processing under a five-year
take-or-pay agreement. The Pipestone facility is also anchored by
Blackbird Energy Inc. ("Blackbird") with a 30 MMcf/d five-year
take-or-pay agreement for total contracted volumes at Pipestone of 55 MMcf/d. Blackbird and Kelt
have options to exercise ownership in the facility for 20% and 15%
respectively.
Capital costs for Tidewater's Pipestone Montney Sour Gas Plant
remain on-budget with expected in service date of mid-2019 where
Tidewater's two anchor tenants have the option to purchase a
combined working interest of approximately 35% prior to
commissioning the plant. The project is being funded through a
combination of internally generated cash flow and undrawn capacity
under the Corporation's Credit Facility. Tidewater continues to
work with multiple producers to contract the remaining capacity at
the facility. The project remains subject to regulatory
approval.
Intra-Alberta Pipeline to TransAlta
In the fourth quarter of 2017, Tidewater entered into a Letter
of Intent with TransAlta to construct a 120 km natural gas pipeline
from the BRC to TransAlta's power generating units at Sundance and Keephills. The pipeline will be supported by a
15 year take-or-pay agreement with TransAlta. Subsequently,
Tidewater entered into a definitive agreement with TransAlta for
the procurement of long lead items such as the steel and associated
valves to construct the 120 km natural gas pipeline (the
"Development Agreement"). The Development Agreement pertains
primarily to the early work and procurement necessary to construct
the pipeline and describes the key terms that will be contained in
subsequent definitive agreements to see the project to completion,
including provision for a 15 year take-or-pay commitment by
TransAlta and an option for TransAlta to invest up to 50% in the
pipeline. The parties agreed in the Development Agreement to
negotiate in good faith and execute the remaining definitive
agreements over the summer 2018 timeframe. The TransAlta Pipeline
is a significant step toward Tidewater providing producers with
increased optionality, improved pricing, and direct access to an
end market. Construction of the project remains subject to
certain customary conditions and regulatory approvals. The
project remains on-schedule and on-budget.
Stock Options and RSUs
The Corporation has approved a grant of 2,350,000 restricted
share units and 2,250,000 stock options to directors, officers,
employees and consultants of the Corporation. The options will have
an exercise price equal to the price per common share on the date
of grant, will vest over a period of three years, and will expire
five years from the date of grant. The Corporation has determined
that exemptions from the various requirements of TSX Policies are
available for the granting of the options and RSUs.
Fourth Quarter, 2017 Earnings Call
In conjunction with this earnings release, investors will have
the opportunity to listen to Tidewater senior management review its
fourth quarter and full year results of fiscal 2017 via conference
call on Thursday, March
29th at 11:00 am
MDT.
To access the conference call by telephone, dial 647-427-7450
(local / international participant dial in) or 1-888-231-8191
(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:
http://event.on24.com/wcc/r/1624042-1/F8D075910E8A202D9870DFA3C5810BBD
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.
A digital rebroadcast will be available approximately two hours
after the conclusion of the live event on March 29th until April 5, 2018. To access the rebroadcast, please
dial 416-849-0833 or 1-855-859-2056 and enter pass code 1689684
#.
The Corporation'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 BRC to TransAlta's
Sundance and Keephills facility and associated take or pay
agreement; potential future investment in the pipeline project;
negotiation and execution of definitive agreements related to the
pipeline project; capital costs with respect to the pipeline
project; future regulatory approval of Tidewater projects; future
development plans of the Pipestone Plant; a future option for an
anchor tenant in the Pipestone Plant to convert a part of its
take-or-pay arrangement into an ownership interest in the Pipestone
Plant; Tidewater's efforts to work with multiple producers to fully
contract the Pipestone Plant; expectations regarding gas storage
customers; projections with respect to guidance and run rate
EBITDA; anticipated reduction in throughput at the BRC; and,
anticipated EBITDA growth and in particular related to small scale
industrial power supply; and, potential for ownership in a computer
processing entity.
These forward-looking statements are based on certain key
assumptions regarding our ability to execute on our business plan
including with respect to construction of the BRC to Sundance and Keephills and construction of the Pipestone
Plant; our operating activities and current industry conditions;
the timely receipt of required regulatory approvals; general
business, economic and market conditions; the ability of Tidewater
to obtain the required capital to finance its operations;
anticipated timelines and budgets being met with respect to
Tidewater's operations; future natural gas liquids prices and laws
and regulations continuing in effect (or, where changes are
proposed, such changes being adopted as anticipated). 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 the Corporation'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; uncertainties regarding aboriginal claims and
in maintaining relationships with local populations and other
stakeholders; processing, pipeline, de-ethanization and
fractionation infrastructure outages, disruptions and constraints;
rail transportation curtailments, disruptions and constraints; the
availability and cost of labour and services; cryptocurrency price
volatility and uncertainty regarding world financial markets; risk
of cyber security threats; risk of cryptocurrency loss, theft or
restriction on access; uncertainty regarding regulations regarding
cryptocurrency; and other risks and uncertainties described
elsewhere in this document or in the Corporation'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.
Non-GAAP Financial Measures
This press release refers to "EBITDA", "Adjusted EBITDA" and
"Adjusted EBITDA per common share" which do not have any
standardized meaning prescribed by generally accepted accounting
principles in Canada
("GAAP"). EBITDA is calculated as income or loss before
interest, taxes, depreciation and amortization. Adjusted
EBITDA is calculated as EBITDA adjusted for incentive compensation,
unrealized gains/losses, non-cash items, transaction costs and
other items considered non-recurring in nature. Adjusted EBITDA per
common share is calculated as Adjusted EBITDA divided by the
weighted average number of common shares outstanding for the year
ended December 31, 2017.
Tidewater Management believes that EBITDA, Adjusted EBITDA and
Adjusted EBITDA per common share provide useful information to
investors as they provide an indication of results generated from
the Corporation's operating activities prior to financing, taxation
and non-recurring/non-cash impairment charges occurring outside the
normal course of business. Management utilizes Adjusted EBITDA to
set objectives and as a key performance indicator of the
Corporation's success. In addition to its use by Management,
Tidewater also believes Adjusted EBITDA is a measure widely used by
securities analysts, investors and others to evaluate the financial
performance of the Corporation and other companies in the midstream
industry. Investors should be cautioned that EBITDA and Adjusted
EBITDA should not be construed as alternatives to earnings, cash
flow from 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.
For more information with respect to financial measures which
have not been defined by GAAP, including reconciliations to the
closest comparable GAAP measure, see the "Non-GAAP and Additional
Measures" section of Tidewater's most recent MD&A which is
available on SEDAR.
U.S. Securities Laws
This press release does not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
these securities, in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such jurisdiction. The
securities have not been and will not be registered under
the United States Securities
Act of 1933, as amended, or any state securities laws and may
not be offered or sold within the United
States unless an exemption from such registration is
available.
Not for distribution to U.S. Newswire Services or for
dissemination in the United
States. Any failure to comply with this restriction may
constitute a violation of U.S. securities laws.
SOURCE Tidewater Midstream and Infrastructure Ltd.