CALGARY, May 14, 2018 /CNW/ - Tidewater Midstream and
Infrastructure Ltd. ("Tidewater" or the
"Corporation") (TSX: TWM) is pleased to announce that it has
filed its condensed interim consolidated financial statements and
Management's Discussion and Analysis ("MD&A") for the
three-month period ended March 31,
2018.
Highlights
Financial Earnings Highlights
- Tidewater delivered another strong quarter of growth reporting
Adjusted EBITDA of $20.0 million or
$0.06 per share for the first quarter
of 2018 compared to $14.4 million or
$0.04 per share for the same period
in 2017.
- The Corporation maintained a conservative payout ratio of
approximately 23% with distributable cash flow of $14.5 million in the first quarter of 2018.
- The Corporation achieved its first quarter annualized Adjusted
EBITDA target of $80 million with net
debt at the end of Q1 of approximately $177
million.
- Tidewater remains focused on delivering approximately 20%
annualized Adjusted EBITDA growth over the next 24 months.
Continued Long Term Contract Growth Highlights
- Entered into its first definitive agreement with TransAlta
Corporation ("TransAlta") 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 is supported by a 15
year take-or-pay agreement with TransAlta.
- 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 declines 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.
The Corporation recently signed a third customer to a reserve
dedication agreement and expects to have the facility fully
contracted by the end of 2018.
- Acquired an additional three proven natural gas storage
reservoirs at the BRC through a jointly owned subsidiary with
existing investment grade storage customers.
Selected financial and operating information is outlined below
and should be read with Tidewater's condensed interim consolidated
financial statements and related MD&A as at and for the
three-month period ended March 31,
2018 which are available at www.sedar.com and on our website
at www.tidewatermidstream.com.
Financial Overview
Consolidated Financial Highlights
(in thousands
of Canadian dollars, except per share
information)
|
|
|
|
Three months
ended
March 31,
|
|
|
|
2018
|
|
2017
|
EBITDA1
|
$
|
18,215
|
$
|
12,889
|
Adjusted
EBITDA2
|
$
|
20,001
|
$
|
14,382
|
Adjusted EBITDA per
common share – basic2
|
$
|
0.06
|
$
|
0.04
|
Total cash
|
$
|
10,965
|
$
|
7,555
|
Total
assets
|
$
|
960,058
|
$
|
629,810
|
Bank debt
|
$
|
76,500
|
$
|
25,100
|
Notes
payable
|
$
|
121,890
|
$
|
-
|
Cash flow from
operating activities3
|
$
|
16,209
|
$
|
13,133
|
Cash flow from
operating activities per common share –
basic3
|
$
|
0.05
|
$
|
0.04
|
Distributable cash
flow4
|
$
|
14,487
|
$
|
12,150
|
Distributable cash
flow per common share – basic4
|
$
|
0.04
|
$
|
0.04
|
Dividends
declared
|
$
|
3,291
|
$
|
3,288
|
Dividends declared
per common share
|
$
|
0.01
|
$
|
0.01
|
Total common shares
outstanding (000s)
|
|
329,091
|
|
328,389
|
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
three-month period ended March 31, 2018. Adjusted EBITDA and
Adjusted EBITDA per common share are not standard measures under
GAAP. See "Non-GAAP Financial Measures" in the Corporation's
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 three-month period ended March 31, 2018. 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 three-month period
ended March 31, 2018. 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 challenging commodity price environment through development and
connectivity of its infrastructure and access to end markets.
Through the first ten days of May
2018, AECO 5A gas prices averaged less than $0.50/GJ forcing some gas producers to
curtail volumes through Tidewater infrastructure. AECO gas prices
are not expected to materially recover through the summer months
with balance of summer forward prices trading below $1.00/GJ. While Tidewater's NGL extraction and
natural gas storage operations are expected to perform well, acting
as a natural hedge to low prices through the summer months,
processing and transportation volumes are expected to decrease
through the second and third quarter of 2018 before returning to
historical levels in the fourth quarter of 2018.
Ram River Gas Plant
During the first quarter of 2018, Tidewater announced that it
had 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.
Brazeau River Complex
Tidewater commenced its planned maintenance and turnaround
operations in April and May 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 was successful in the first quarter at
increasing injection capability at the Pipestone Gas Storage
Facility from 40 MMcf/d to 55 MMcf/d with minimal capital and ahead
of schedule.
Tidewater has also been injecting approximately 25 MMcf/d of
producer gas at the Brazeau Gas Storage Facility which has helped
alleviate constraints on the TransCanada Pipeline system. Total
combined injection capability at the Brazeau and Pipestone Gas
Storage Facilities is approximately 90 MMcf/d. Tidewater also
acquired, through a jointly owned subsidiary, an additional three
proven natural gas storage reservoirs at Brazeau with existing
investment grade storage customers. The Corporation continues to
inject cushion gas and develop its storage assets at Brazeau.
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 currently has approximately 100 MMcf/d of natural gas
straddle volumes flowing through its extraction facilities
generating significant liquids while NGL prices remain near
three-year highs.
Tidewater's 10,000 bbl/d C2+ fractionation facility and 40
MMcf/d of additional deep cut processing capacity at the BRC also
continued to perform well through the quarter.
CAPITAL PROGRAM
Pipestone Montney Sour Gas Plant
Tidewater continues to move forward on major regulatory and
construction milestones as well as contracting at the proposed
Pipestone plant with an increased
commitment from Kelt Exploration Ltd. to 25 MMcf/d of firm raw gas
processing under a five-year take-or-pay agreement. The
Pipestone facility is also
anchored by a 30 MMcf/d five-year take-or-pay agreement with
Blackbird Energy Inc. 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. The
project is being funded through a combination of internally
generated cash flow and undrawn capacity under the Corporation's
Credit Facility. In addition, Tidewater's two anchor tenants have
the option to purchase a combined working interest of approximately
35% prior to commissioning the plant. Tidewater continues to work
with multiple producers to contract the remaining capacity at the
facility and expects the facility will be fully contracted by
year-end. The project remains subject to customary conditions and
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 including 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 contains the key terms for subsequent definitive
agreements through to completion, including a 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
have agreed in the Development Agreement to negotiate in good faith
and execute the remaining definitive agreements over the summer
2018 timeframe. The project remains subject to customary conditions
and regulatory approval. The TransAlta Pipeline is a significant
step toward Tidewater providing producers with increased
optionality, improved pricing, and direct access to an end market.
The project remains on-schedule and on-budget.
About Tidewater
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.
Additional information relating to Tidewater is available on
SEDAR at www.sedar.com and at www.tidewatermidstream.com.
Advisory Regarding Forward-Looking Statements
Certain statements contained in this news release constitute
forward-looking statements and forward-looking information
(collectively, "forward-looking statements"). Such forward-looking
statements relate to possible events, conditions or financial
performance of the Corporation based on future economic conditions
and courses of action. All statements other than statements of
historical fact are forward-looking statements. The use of any
words or phrases such as "seek", "anticipate", "plan", "continue",
"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 are
intended to identify forward-looking statements. 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 there is a reasonable basis
for the expectations reflected in the forward-looking statements,
however no assurance can be given that these expectations will
prove to be correct and the forward-looking statements included in
this news release should not be unduly relied upon by
investors.
Specifically, this news release contains forward-looking
statements relating to but not limited to: expectations regarding
regulatory approval of Tidewater's planned projects; planned
commissioning in Q2 of 2019 of Tidewater's planned Pipestone area plant and projections with
respect to contracting capacity at this proposed plant;
expectations to execute definitive agreements related to
Tidewater's planned pipeline from the BRC to power generating units
at Sundance and Keephills; projections with respect to
commodity prices; projected reduction in throughput at the BRC in
Q2, 2018; expectations regarding performance of NGL extraction and
natural gas storage operations; expectations regarding funding of
capital projects; projections regarding cash flow from operating
activities.
Such forward-looking statements of information are based on a
number of assumptions which may prove to be incorrect. In
addition to other assumptions identified in this document,
assumptions have been made regarding, among other things: general
economic and industry trends; oil and gas industry expectation and
development activity levels; the success of the Corporation's
operations; future natural gas, crude oil and NGL prices; the
Corporation's ability to obtain and retain qualified staff and
equipment in a timely and cost-effective manner; the impact of
increasing competition; receipt of regulatory approvals; that
counterparties will comply with contracts in a timely manner; that
there are no unforeseen material costs relating to the facilities
which are not recoverable from customers; funds flow from
operations and cash flow consistent with expectations; future
capital expenditures to be made by the Corporation; the ability to
obtain additional financing on satisfactory terms; the ability of
Tidewater to successfully market its products; the Corporation's
future debt levels and the ability of the Corporation to repay its
debt when due; foreign currency, exchange and interest rates; that
any third-party projects relating to the Corporation's growth
projects will be sanctioned and completed as expected; the amount
of future liabilities relating to lawsuits and environmental
incidents and the availability of coverage under the Corporation's
insurance policies; anticipated timelines and budgets being met in
respect of the Corporation's projects and operations; the ability
of the Corporation to obtain equipment, services, supplies and
personnel in a timely manner and at an acceptable cost to carry out
its evaluations and activities.
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:
general economic, political, market and business conditions,
including fluctuations in interest rates, foreign exchange rates
and stock market volatility; activities of producers and customers,
the regulatory environment and decisions and First Nations and
landowner consultation requirements; operational matters, including
potential hazards inherent in the Corporation's operations and the
effectiveness of health, safety, environmental and integrity
programs; fluctuations in commodity prices, inventory levels and
supply/demand trends; actions by governmental authorities,
including changes in government regulation, tariffs and taxation;
changes in operating and capital costs, including fluctuations in
input costs; changes in environmental and other regulations;
competition for, among other things, business, capital, acquisition
opportunities, requests for proposals, materials, equipment, labour
and skilled personnel; environmental risks and hazards, including
risks inherent in the transportation of NGLs which may create
liabilities to the Corporation in excess of the Corporation's
insurance coverage, if any; non-performance or default by
counterparties to agreements which the Corporation or one or more
of its subsidiaries has entered into in respect of its business;
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 political environment and public
opinion; risks and liabilities associated with the transportation
of dangerous goods; effects of weather conditions; reputational
risks; reliance on key personnel; technology and security risks;
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 recently completed 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 Annual Information Form and in other
documents on file with the Canadian Securities regulatory
authorities.
The above summary of assumptions and risks related to
forward-looking statements in this news release is intended 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 news release refers to "EBITDA" and "Adjusted EBITDA" 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 items that are considered
non-recurring in nature.
Tidewater Management believes that EBITDA and Adjusted EBITDA
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 security
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.
SOURCE Tidewater Midstream and Infrastructure Ltd.