CALGARY, Oct. 1, 2018 /CNW/ -
Definitive Agreement with TransAlta Corporation for
intra-Alberta pipeline
Tidewater Midstream and Infrastructure Ltd. ("Tidewater"
or the "Corporation") announces today that it and TransAlta
Corporation ("TransAlta") have executed definitive
agreements (the "Definitive Agreements") for the
construction, operation and tolls payable with respect to the
previously announced pipeline connecting Tidewater's Brazeau River
Complex to TransAlta's generating units at Sundance and Keephills. The Definitive
Agreements provide for Tidewater to construct and operate a
20-inch, 120 km natural gas pipeline with initial capacity of
130 MMcf/d which may be expanded to approximately 440 MMcf/d.
The pipeline project is supported by a fifteen (15) year firm
take-or-pay shipping agreement with TransAlta. As design of
the project progressed and to address demand, Tidewater and
TransAlta determined to increase maximum capacity of the pipeline
to approximately 440 MMcf/d compared to the original design
capacity of 340 MMcf/d. As a result of the increased capacity
of approximately 30%, the current budget for the project has
increased by approximately 5%-10% when compared to the previously
announced budget estimate of $150
million. TransAlta has an option to participate in the
pipeline by acquiring up to a 50% ownership interest in the project
and it is likely that TransAlta will exercise this option.
The project remains on schedule, with a projected in-service date
in Q3/Q4 of 2019 and remains subject to customary conditions and
regulatory approval.
Update on Pipestone Montney, Sour Deep-Cut Gas Processing
Complex
Tidewater continues to progress its plans to construct and
operate its previously announced Pipestone Montney, Sour Deep-Cut
Gas Processing Complex (the "Pipestone Plant") in the
Pipestone area near Grande Prairie, Alberta. Tidewater is
pleased to announce that a definitive agreement has been executed
with a large oil and gas producer with respect to the previously
announced (September 11, 2018)
memorandum of understanding regarding a 25 MMcf/d commitment at the
Pipestone Plant over a five-year term. The Pipestone Plant is
designed to process approximately 100 MMcf/d of natural gas and is
currently 80% contracted with firm commitments of 80
MMcf/d with the remaining capacity of 15-20 MMcf/d subject to
non-binding letters of intent that are expected to be formalized by
definitive agreements within 30 days. The additional agreements at
the Pipestone Plant are expected to increase total forecasted
annualized EBITDA from the project by 10% – 20%.
Overall project costs remain in-line with previous guidance with
a forecast total capital outlay to Tidewater of approximately
$210MM. This amount excludes the 32MW cogeneration units all
or a portion of which Tidewater expects to monetize. The
cogeneration units would generate both heat and electricity from
the same fuel input to the Pipestone Plant. The units could
be sold to a third party or to a subsidiary of Tidewater in
connection with Tidewater's power supply business. The sale of the
cogeneration units was contemplated in the original Pipestone Plant
project economics and is not expected to impact forecasted EBITDA.
The Pipestone Plant remains subject to regulatory
approval which Tidewater hopes to receive shortly.
Additional Tidewater applications remain before the Alberta
Energy Regulator for infrastructure in the Pipestone area that would ultimately connect
to the Pipestone Plant.
Crude oil storage, transportation and infrastructure
agreements
Tidewater is pleased to announce that it has entered into crude
oil storage and transportation agreements with various
counterparties, including an investment grade counterparty.
Tidewater will provide crude oil terminalling services at three
existing Tidewater owned, operated and pipeline connected
facilities in the Valhalla,
Brazeau River and Acheson areas of Alberta. In addition,
Tidewater will transport crude oil by rail to various markets in
North America from its rail
facility located at Acheson,
Alberta utilizing Tidewater's rail car fleet. The
aforementioned agreements are for terms of less than twelve months,
however, Tidewater intends to grow this business and negotiate
longer term agreements with existing and new customers.
Tidewater has currently invested minimal capital in new
infrastructure related to crude oil storage and transportation
services while also utilizing its existing infrastructure.
Based on this minimal capital investment, Tidewater expects to
generate approximately 5% - 10% of incremental annualized EBITDA in
2019.
Tidewater began its crude oil operations subsequent to the
expiration of a non-competition covenant made by certain members of
Tidewater's executive in relation to the sale of a company prior to
the formation of Tidewater.
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 news release contains forward-looking
statements relating to but not limited to: expectations regarding
regulatory approval of Tidewater's planned intra-Alberta pipeline and Pipestone Plant;
projected commissioning in Q3/Q4 of 2019 of Tidewater's planned
intra-Alberta pipeline to
TransAlta's Sundance and
Keephills facilities; the
likelihood of TransAlta exercising its option to acquire an
ownership interest in the pipeline project; plans to construct and
operate the Pipestone Plant as well as the related budget to do so;
management's expectations to monetize all or a portion of the
Pipestone Plant cogeneration units; plans to transport crude oil by
rail and plans to execute longer term agreements related thereto;
and, expectations and forecasts regarding EBITDA.
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; receipt of regulatory approvals for
the Corporation's proposed intra-Alberta pipeline project and Pipestone Plant;
that any remaining definitive agreements will be executed with
counterparties that contain terms and conditions consistent with
executed letters of intent, term sheets and memorandums of
understanding; the Corporation's ability to execute on its business
plan; and anticipated timelines and budgets being met in respect of
the Corporation's projects and operations.
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; a failure to conclude definitive
agreements with counterparties that contain terms and conditions
consistent with executed letters of intent and term sheets;
activities of producers and customers; changes to the regulatory
environment and decisions and First Nations and landowner
consultation requirements; actions by governmental authorities,
including changes in government regulation including environmental,
tariffs and taxation; security threats; reliance on technology and
related cybersecurity risk; transportation of hazardous materials;
various events which could disrupt operations including natural
events such as severe weather, droughts, fires, floods and
earthquakes; risks and liabilities arising from derailments;
changes in operating and capital costs, including fluctuations in
input costs; competition for, among other things, business,
capital, acquisition opportunities, requests for proposals,
materials, equipment, labour and skilled personnel; 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; and, the availability of capital on
acceptable terms; and, reliance on key personnel.
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" which does 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.
Tidewater Management believes that EBITDA provides useful
information to investors as it provides 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. Investors
should be cautioned that 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.