CALGARY, March 12, 2020 /CNW/ - Tidewater Midstream
and Infrastructure Ltd. ("Tidewater" or the
"Corporation") (TSX: TWM) is pleased to announce that it has
filed its annual consolidated financial statements and Management's
Discussion and Analysis ("MD&A") for the
year ended December 31, 2019.
Recent Market Volatility
Tidewater takes the severe downturn in the energy industry very
seriously and has been working extremely hard over the past three
years to minimize its major risks with a clear focus on
deleveraging after completing a successful 2019 capital program.
Low commodity prices, and more specifically, WTI crude oil
prices below USD$40/bbl have been a
key risk since inception. The Corporation has been focused on
growing and acquiring defensive assets that perform well in low
commodity price environments, while also focusing on materially
improving customers and contracts. These defensive assets include
its gas storage assets, which are contracted to six investment
grade counterparties, the Pioneer Pipeline which allows producers
access to an end-market for their natural gas, and more recently
its Prince George Refinery which also has a five-year offtake
agreement with an investment grade counterparty.
Approximately 50% of the Corporation's cashflow is now
derived from investment grade counterparties which is critical in
an extremely challenging energy environment. The Prince
George Refinery is now the Corporation's largest defensive asset
and continues to deliver annual Adjusted EBITDA over $75 million even with WTI priced in the low
thirties. The announcement of the sale of the Pioneer
Pipeline today reiterates the Corporation's focus on its top
priority of deleveraging and Tidewater expects to achieve its
forecasted Adjusted EBITDA range from $200
million - $220 million for
2020. Exit net debt to Adjusted EBITDA for 2020, assuming closing
of the Pioneer Pipeline sale, is expected to be approximately 3.0x.
Tidewater wishes to thank all its shareholders, employees,
customers and stakeholders for their support in these challenging
times.
Recent Highlights
- Tidewater exited 2019 with record Adjusted EBITDA of
$40.0 million or $0.12 per share in the fourth quarter of 2019,
compared to $20.9 million or
$0.06 per share in the fourth quarter
of 2018, resulting in over 90% Adjusted EBITDA per share growth in
2019. Adjusted EBITDA in the fourth quarter was positively impacted
by new assets placed into service, including the Pipestone Gas
Plant and the acquisition of the Prince George Refinery.
- On March 11, 2020, Tidewater and
TransAlta Corporation entered into a Letter of Intent to sell the
majority of the assets of Pioneer Pipeline LP ("Pioneer") to NOVA
Gas Transmission Ltd. ("NGTL") for gross proceeds of $255 million. Tidewater and TransAlta have
also entered a separate Letter of Intent whereby TransAlta will pay
Tidewater $10.5 million for certain
assets that are not part of the NGTL transaction, resulting in
approximately $138 million in total
cash consideration net to Tidewater. Proceeds from the
transaction will be used to accelerate Tidewater's commitment to
reduce debt in 2020. Tidewater expects to replace the Pioneer
EBITDA through new commercial arrangements with NGTL with no
additional capital.
- With record distributable cash flow expected for 2020, and
assuming closing of the Pioneer sale, Tidewater expects to reduce
net debt to Adjusted EBITDA to be approximately 3.0x by the end of
2020. Tidewater's top priorities for 2020 remain deleveraging and
distributable cash flow generation.
- On November 1, 2019, Tidewater
completed its acquisition of the Prince George Refinery (the
"Refinery") for total cash proceeds of $271.2 million, consisting of a $215.0 million base purchase price and inventory
(primarily related to light oil feedstock, refined product and line
fill). The Prince George Refinery is a 12.0 Mbbl/d light oil
refinery that predominantly produces low sulfur diesel and
gasoline, in addition to other products, to supply the greater
Prince George region. The
Prince George region is generally
in short supply of refined products making the Refinery a critical
piece of infrastructure. Since the close of the acquisition, the
Prince George Refinery continues to exceed expectations.
- Net loss attributable to shareholders was $13.8 million or $0.04 per share for the fourth quarter of 2019,
which includes approximately $14
million of one-time transaction costs primarily related to
the acquisition of the Prince George Refinery.
- Net cash provided by operating activities totaled $68.2 million for the fourth quarter of 2019,
with distributable cash flow of $17.5
million and a payout ratio of 19% for the quarter and 24%
for the year ended December 31,
2019.
- Throughput at the Pipestone Gas Plant continues to increase.
Tidewater expects to achieve throughput at or near full capacity by
the end of the first quarter of 2020.
- Throughput on the Pioneer Pipeline continued to increase
through the fourth quarter of 2019, with volumes reaching
approximately 130 MMcf/day in the first week of November 2019.
- Tidewater continues to focus on environmental, social and
governance initiatives in 2020. With Tidewater's integrated network
of infrastructure assets, it is well positioned to be an important
part of this evolution, including distributing clean natural gas to
TransAlta's coal fired power generating stations that are
converting to natural gas. Further, the Prince George Refinery is
one of the only refineries in Western
Canada that can utilize renewables. Canola oil, biodiesel
and ethanol can be utilized at the Refinery to help reduce
Tidewater's carbon footprint, along with several other green
initiatives. Tidewater recently established an Environmental,
Social and Governance ("ESG") committee comprised of Tidewater's
Chief Executive Officer, Chief Financial Officer, Chief Legal
Officer and Vice President, Health, Safety, Environment and
Regulatory, among other Tidewater personnel (the "ESG Committee"),
to guide Tidewater's efforts in measuring and reporting on the
Corporation's ESG metrics and improving the Corporation's ESG
performance.
- Tidewater reiterates 2020 guidance and its commitment to
deleveraging, with forecasted Adjusted EBITDA expected to range
from $200MM - $220MM for the full year. Year-end net debt to
Adjusted EBITDA, assuming closing of the Pioneer Pipeline sale, is
expected to be approximately 3.0x.
Selected financial and operating information is outlined below
and should be read with Tidewater's consolidated financial
statements and related MD&A as at and for the year ended
December 31, 2019 which are available
at www.sedar.com and on our website at
www.tidewatermidstream.com.
Financial Overview
Consolidated Financial Highlights
|
Three
months
ended
December
31,
|
Year
ended
December
31,
|
(in thousands of
Canadian dollars except per share
information)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue
|
$
|
266,247
|
$
|
90,740
|
$
|
692,268
|
$
|
324,290
|
Net income (loss)
attributable to
shareholders
|
$
|
(13,817)
|
$
|
13,285
|
$
|
(13,993)
|
$
|
20,318
|
Basic and diluted net
income (loss)
attributable to
shareholders per share
|
$
|
(0.04)
|
$
|
0.04
|
$
|
(0.04)
|
$
|
0.06
|
Adjusted EBITDA
(1)
|
$
|
39,987
|
$
|
20,924
|
$
|
109,673
|
$
|
77,423
|
Adjusted EBITDA per
common share -
basic
(1)
|
$
|
0.12
|
$
|
0.06
|
$
|
0.33
|
$
|
0.24
|
Net cash provided by
operating activities
|
$
|
68,219
|
$
|
26,672
|
$
|
91,520
|
$
|
25,655
|
Distributable cash
flow (2)
|
$
|
17,483
|
$
|
16,260
|
$
|
56,370
|
$
|
56,507
|
Distributable cash
flow per common share
– basic
(2)
|
$
|
0.05
|
$
|
0.05
|
$
|
0.17
|
$
|
0.17
|
Dividends
declared
|
$
|
3,374
|
$
|
3,308
|
$
|
13,343
|
$
|
13,184
|
Dividends declared
per common share
|
$
|
0.01
|
$
|
0.01
|
$
|
0.04
|
$
|
0.04
|
Total common shares
outstanding (000s)
|
|
337,376
|
|
330,797
|
|
337,376
|
|
330,797
|
Payout
ratio (3)
|
|
19%
|
|
20%
|
|
24%
|
|
23%
|
Total
assets
|
$
|
2,029,647
|
$
|
1,233,543
|
$
|
2,029,647
|
$
|
1,233,543
|
Net
debt (4)
|
$
|
842,046
|
$
|
392,660
|
$
|
842,046
|
$
|
392,660
|
|
Notes:
|
|
1
|
Adjusted EBITDA is
calculated as net income before interest, taxes, depreciation,
share-based 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, 2019. Adjusted EBITDA
and Adjusted EBITDA per common share are not standard measures
under GAAP. See "Non-GAAP 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.
|
2
|
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,
2019. Distributable cash flow and distributable cash flow per
common share are not standard measures under GAAP. See "Non-GAAP
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.
|
3
|
Payout Ratio is
calculated by expressing dividends declared to shareholders for the
period as a percentage of distributable cash flow attributable to
shareholders. This measure, in combination with other measures, is
used by the investment community to assess the sustainability of
the current dividends. Payout Ratio is not a standard measure under
GAAP. See "Non-GAAP Financial Measures" in the Corporation's
MD&A for a reconciliation of Payout Ratio to its most closely
related GAAP measure.
|
4
|
Net debt is defined
as bank debt, convertible debentures and notes payable, less cash.
Net Debt is not a standard measure under GAAP. See "Non-GAAP
Measures" in the Corporation's MD&A for a reconciliation of Net
Debt to its most closely related GAAP measure.
|
OUTLOOK AND CORPORATE UPDATE
Tidewater has significantly transformed its business over the
past 24 months with the successful sanctioning, completion and
commissioning of the Pipestone Gas Plant, Pipestone Gas Storage
Facility and Pioneer Pipeline, and the acquisition of the Prince
George Refinery. Tidewater continues to build an integrated and
connected midstream infrastructure network from the well head to
the end consumer in order to increase value for its customers and
itself. Over the past two years, Tidewater has added over ten new
take-or-pay contracts ranging in term from five to ten years and
including six new investment-grade counterparties which now account
for a significant portion of the Corporation's cash flows.
Tidewater continues to offer premium service to its customers
through multiple egress options at its facilities (including its
Alliance, TC Energy and storage connections at Pipestone, and its Pioneer, TC Energy and
storage connections at Brazeau) and exposure to premium markets
through access to its rail infrastructure and refined product
markets.
The completion of the Pipestone Gas Plant, Pipestone Gas Storage
Facility, Pioneer Pipeline and the acquisition of the Prince George
Refinery have further strengthened Tidewater's asset mix. With its
diverse asset mix, Tidewater is able to generate cash flow in
varying commodity price environments and provide its customers
opportunities to capitalize on high and low commodity prices.
Tidewater reiterates its 2020 guidance and its commitment to
deleveraging, with forecasted Adjusted EBITDA expected to range
from $200MM - $220MM for the full year. Year-end net debt to
Adjusted EBITDA, assuming closing of the Pioneer Pipeline sale, is
expected to be approximately 3.0x.
Prince George Refinery
On November 1, 2019, Tidewater
closed its acquisition of the Prince George Refinery from Husky
Energy Inc. ("Husky"). The Prince George Refinery is a 12,000
bbl/day light oil refinery that predominantly produces low sulphur
diesel and gasoline, in addition to other products, to supply the
greater Prince George region. The
Prince George Refinery has significant onsite storage capacity of
greater than 1.0 MMbbl and flexible logistics, with pipeline, rail
and truck connectivity in place. The Prince George region is generally in short
supply of refined products and the Refinery's location within the
region makes it a critical piece of infrastructure with a
significant logistical advantage to address the domestic demand in
northern British Columbia.
As part of the acquisition, in addition to infrastructure,
Tidewater purchased hydrocarbon inventory in storage which included
approximately 30 days of refined products valued at market prices
resulting in minimal margins in November
2019. At December 31, 2019,
all refined product inventory purchased from Husky had been fully
depleted.
Tidewater entered into a 5-year offtake agreement with Husky for
90% of the nameplate capacity on diesel and gasoline volumes
produced at the Prince George Refinery. The offtake agreement
reflects committed volumes that Husky has agreed to purchase.
Refinery utilization refers to the percentage of crude oil
throughput processed through the refinery divided by the Refinery's
total capacity. During the fourth quarter of 2019, Tidewater
achieved over 95% utilization at the Prince George Refinery, which
is consistent with previous quarters except for the second quarter
of 2019. During the second quarter of 2019, prior to Tidewater's
ownership, the Prince George Refinery completed a successful
turnaround. Turnarounds at the Refinery are currently scheduled to
occur every three years. Given the integrity upgrades and
improved processes completed during the 2019 turnaround, Tidewater
is assessing the possibility of extending the turnaround schedule
to every four years.
As with any refinery, Tidewater's refining margins are largely
driven by commodity prices, particularly cost of crude feedstock
and other raw materials, along with market prices for refined
products. The Refinery achieved consistent operational run
time during the fourth quarter and did not experience any unplanned
maintenance or downtime. Throughput, production and sales to its
offtake partner were in line with expectations during the fourth
quarter of 2019. The Prince George Refinery typically sources its
crude supply from local producers in northeastern British Columbia and transports its feedstock
via the Pembina Western Pipeline system.
Another common performance metric used in downstream operations
is the crack spread. The crack spread illustrates the gross margin
realized per barrel of crude feedstock processed, before any
refinery costs are considered. The crack spread is calculated by
taking the difference between the average refined product sales
price of gasoline and diesel and the price of crude feedstock. The
crack spread is an indicator of Refinery economics, however does
not reflect the true gross margin, as some crude is not converted
to gasoline and diesel but to lower value products such as
liquified petroleum gas (LPG) and fuel oil. Product pricing
in British Columbia also reflects
the higher cost of regulatory compliance due to the provincial
Renewable and Low Carbon Fuel Standards, the costs of which are
born by the refiner.
A typical calculation of refinery crack spreads either uses a
3:2:1 ratio or a 2:1:1 ratio. This is the ratio of pricing of
crude supply to gasoline and diesel production. The Prince
George Refinery's closest ratio is a 2:1:1 crack, where
approximately two bbls of crude feedstock convert to one bbl of
gasoline and one bbl of diesel.
The refining margin in Prince
George for gasoline and diesel typically follows the market
in Edmonton as this is the
alternate supply location for Central and Northern British Columbia, which sells at a
premium to the NYMEX crack spread. The refined products sold by
Tidewater are mainly priced off the Prince George rack prices posted by Suncor,
Imperial and Shell.
Tidewater's refined product yields at the Prince George Refinery
for the fourth quarter of 2019 were as follows:
Throughput
|
11,560
bbl/day
|
Gasoline
yield
|
42%
|
Diesel
yield
|
46%
|
Other
(1)
|
12%
|
(1)
Other refers to heavy fuel oil (HFO), LPG
and feedstock consumed to fuel the refinery.
|
Tidewater expects over 90% utilization during the first quarter
of 2020. Early in the second quarter of 2020, Tidewater will
complete scheduled online maintenance activities at the Prince
George Refinery which will require crude throughput reductions of
approximately 25% for a duration of two weeks. This is the
only scheduled maintenance at the Prince George Refinery during
2020.
Tidewater is currently constructing butane and natural gasoline
blending infrastructure at the Prince George Refinery for
approximately $2 million of capital
with a forecasted payout of less than 18 months.
The Corporation continues to evaluate opportunities to
participate in future low-carbon fuel standard ("LCFS") agreements
and continues to execute on the LCFS projects initiated by Husky
prior to the acquisition.
Pipestone Gas Plant
The Pipestone Gas Plant is designed to process approximately 100
MMcf/day of natural gas. The project includes an acid gas injection
well, saltwater disposal well, and pipelines directly connected to
the Pipestone Gas Storage Facility, as well as connections to both
Alliance and TC Energy pipelines.
Tidewater began processing raw natural gas and natural gas
liquids in mid-September 2019.
Throughput continues to increase, with December 2019 averaging over 50 MMcf/day and the
first 45 days of 2020 averaging throughput of approximately 65
MMcf/day. The Pipestone Gas Plant experienced operational issues
during fourth quarter commissioning and was restricted due to third
party pipeline infrastructure which is expected to be fully
completed at the end of the first quarter of 2020. Tidewater
expects to increase throughput to near full capacity by the end of
the first quarter of 2020. The Pipestone Gas Plant is fully
contracted.
Pioneer Pipeline
The Pioneer Pipeline is a 120km natural gas pipeline connecting
Tidewater's Brazeau River Complex ("BRC") to TransAlta's generating
units at Keephills, and an 11km
lateral connecting to Sundance.
The Pioneer Pipeline has an initial capacity of 130 MMcf/day ,
which may be expanded to approximately 440 MMcf/day. The pipeline
has allowed TransAlta to increase the amount of natural gas it
co-fires at its Sundance and
Keephills coal-fired units,
resulting in lower carbon emissions and costs. TransAlta is a 50%
working interest owner in the pipeline.
The Pioneer Pipeline was fully commissioned in the second
quarter of 2019. Tidewater has worked together with TransAlta to
meet their volume requirements at Keephills and Sundance.
On March 11, 2020, Tidewater and
TransAlta Corporation entered a Letter of Intent to sell the
majority of the assets of Pioneer Pipeline LP to NGTL for gross
proceeds of $255 million.
Tidewater and TransAlta have also entered into a separate Letter of
Intent whereby TransAlta will pay Tidewater $10.5 million for certain assets that are not
part of the NGTL transaction, resulting in approximately
$138 million in total cash
consideration net to Tidewater. Proceeds from the transaction
will be used to accelerate Tidewater's commitment to achieve
approximately 3.0x net debt to Adjusted EBITDA by year-end
2020.
Tidewater and NGTL have agreed to terms and conditions to
qualify Tidewater to receive interruptible storage services ("IT-S
Service") at Tidewater's Brazeau River Complex storage facilities
("BRC Storage Facilities"). With the IT-S Service, Tidewater will
be able to attract new, creditworthy storage customers at the BRC
Storage Facilities, creating new future expansion opportunities to
increase storage capacities at the BRC Storage Facilities.
Subject to regulatory approvals, Tidewater and NGTL have also
agreed to terms and conditions to qualify Tidewater for NGTL
services with respect to the natural gas currently transported on
the Pioneer Pipeline and incremental natural gas from increased
access to the NGTL system, which will lead to higher fractionation
and processing utilization levels at the BRC. The terms and
conditions of this arrangement would be for a similar term as
TransAlta's current 15-year take-or-pay agreement on the Pioneer
Pipeline, resulting in Tidewater's proforma Adjusted EBITDA
remaining unchanged following the close of the transaction.
The parties are expected to enter the purchase and sale
agreement prior to May 31, 2020, and
the proposed transactions are expected to close concurrent with
regulatory approval for the transaction.
Brazeau River Complex and Fractionation Facility
Throughput at the BRC for the fourth quarter of 2019 was in-line
with the previous quarter. Tidewater is working diligently with
producers to improve netbacks by fully utilizing the BRC's
facilities, including its two NGL pipeline connections, condensate
pipeline connection, truck loading and offloading facilities,
fractionation, natural gas storage facilities and two natural gas
sales pipeline connections.
The Brazeau River Fractionation facility continued to
perform well through the fourth quarter of 2019 and has maintained
a near capacity throughput since the start of the NGL contract
year. The NGL Marketing business has grown the supply base
with two investment-grade customers and developed strategic
relationships with several other producers in central and northern
Alberta. Despite a number of headwinds that impacted the
Western Canadian NGL market over the past 6-12 months, including
Alberta EnviroFuels facility outage, the CN Rail strike, rail
blockades, and fractionation constraints, Tidewater has
successfully maintained flexibility and mitigated the majority of
the burden for its customers through its network.
The Brazeau River Complex remains a flagship asset for
Tidewater, offering a full suite of services to producers,
including C2, C3, C4 and C5 pipeline connections, NGL fractionation
capacity, sweet and sour deep-cut gas processing capability, and
two natural gas egress solutions given the BRC's connection to the
NGTL system, and the Pioneer Pipeline.
Natural Gas Storage
Tidewater operates three natural gas storage reservoirs at two
different facilities; Dimsdale Paddy A (Pipestone Gas Storage
Facility), Brazeau Nisku F, and Brazeau Nisku A (Brazeau River Gas
Storage Facility). The Pipestone Gas Storage Facility and the
Brazeau River Gas Storage Facility are owned through joint ventures
with a private Canadian entity and accounted for as equity
investments.
The fourth quarter of 2019 saw AECO natural gas price volatility
return to more normal levels, after an extremely volatile summer
period.
The Pipestone Gas Storage Facility performed well in the fourth
quarter of 2019 as it transitioned from injections in October to
withdrawals in November and December. The facility also received
volumes from the newly commissioned Pipestone Gas Plant during the
quarter. Additionally, the Pipestone Gas Storage Facility
successfully demonstrated its inherent optionality with its ability
to inject or withdraw while delivering gas to both Alliance
Pipeline at the Saskatoon Mountain meter station and to TC Energy's
NGTL at Pipestone Creek.
The Pipestone Gas Storage Facility is fully contracted with
take-or-pay contracts spanning as long as eight-years with multiple
investment-grade counterparties. The facility represents a
significant step forward in Tidewater's fee-for-service gas storage
business and offers producers at the Pipestone Gas Plant
significant optionality where the plant has three egress solutions
including connections to the TC Energy and Alliance systems, and
gas storage.
With the Pioneer Pipeline connection to BRC and both Nisku A and
Nisku F Brazeau facilities, the storage pools successfully utilized
their connectivity to meet supply commitments through the November
and December 2019 periods.
Withdrawals are scheduled to continue throughout the balance of the
winter.
Overall, 2019 was a very successful year across all storage
facilities. Summer price volatility combined with robust
winter withdrawal performance yielded strong 2019 results, and
further demonstrated all three facilities should continue to meet
or exceed deliverability specifications into 2020.
CAPITAL PROGRAM
Tidewater has completed its 2019 capital program with the
commissioning of three of the largest capital projects in the
Corporation's history related to the Pioneer Pipeline, Pipestone
Gas Plant and Pipestone Gas Storage Facility. During the fourth
quarter, Tidewater also completed work on the previously disclosed
additional liquids handling and blending infrastructure at
Pipestone, extended gathering
lines at Pipestone to further
bolster the plant's capture area, and completed the majority of
cleanup for the related pipeline projects.
Tidewater also completed previously committed work at the Prince
George Refinery related to the re-commissioning of storage capacity
at the Refinery's tank farm. With almost one million barrels of
crude oil and refined product storage capacity at the Refinery,
Tidewater is well positioned to take advantage of continued market
volatility.
Tidewater's focus over the next 12 months is to employ the
related cashflow from its large completed capital projects and the
Prince George Refinery, as well as proceeds from the Pioneer
Pipeline sale, towards deleveraging with a target net debt / EBITDA
ratio of approximately 3.0x by the end of 2020. To date, Tidewater
has not committed to a significant capital program in 2020, however
continues to evaluate smaller capital projects with the potential
to generate returns in excess of 50%.
BIRCH HILL TO JOIN TIDEWATER
BOARD OF DIRECTORS
Tidewater is pleased to announce that it intends to expand its
Board of Directors with the addition of Mr. Michael J. Salamon and Mr. Neil McCarron of Birch Hill Equity Partners
Management Inc. ("Birch
Hill"). Mr. Salamon and Mr. McCarron , acting as
representatives of Birch Hill, and
one additional new independent nominee to be mutually agreed on by
Tidewater and Birch Hill, will be
included as proposed directors in Tidewater's management slate of
directors to be put forth for appointment at the Corporation's next
annual general meeting of shareholders expected to be held on or
around May 28, 2020. Birch Hill has been a strong supporter of
Tidewater since 2018 and currently holds approximately 22% of
Tidewater's issued and outstanding common shares ("Shares").
Birch Hill is a leading Canadian
mid-market private equity firm with approximately $3 billion in capital under management, and a
further $1.75 billion of committed
capital in its latest Fund VI, with a 25-year history of driving
growth and delivering returns to investors. Tidewater's agreement
with Birch Hill, which includes
other customary covenants by each of the parties, will be available
under the Corporation's profile on SEDAR at www.sedar.com.
APPLICATION FOR NORMAL-COURSE ISSUER BID
The Corporation intends to make an application to implement a
normal course issuer bid ("NCIB") through the facilities of the
Toronto Stock Exchange ("TSX") or alternative trading systems, if
eligible, for a portion of its common shares. The Corporation's
NCIB will be made in accordance with the requirements of the TSX
and remains subject to TSX approval. Further details regarding the
NCIB will be provided following TSX approval.
FOURTH QUARTER 2019 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 2019 via conference
call on Thursday, March 12, 2020 at
11:00 am MDT (1:00 pm EDT).
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:
https://event.on24.com/wcc/r/2219762/C2950EE968DA2CCA2B3DE056C327A9C5 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.
FIRST QUARTER 2020 DIVIDEND ANNOUNCEMENT
Tidewater is pleased to announce that its Board of Directors has
declared a dividend for the first quarter 2020 of $0.01 per common share payable on or about
April 30, 2020 to shareholders of
record on March 31, 2020. The
ex-dividend date is March 30, 2020.
This dividend is an eligible dividend for the purpose of the Income
Tax Act (Canada).
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,
natural gas liquids ("NGL"), crude oil and refined product
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 storage facilities and downstream facilities.
Additional information relating to Tidewater is available on
SEDAR at www.sedar.com and at www.tidewatermidstream.com.
Advisory Regarding Forward-Looking Statements
FORWARD-LOOKING INFORMATION
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 press release contains forward-looking
statements relating to but not limited to:
- projections regarding attainment of throughput at or near
capacity by the end of the first quarter of 2020 at the Pipestone
Gas Plant;
- anticipated increase to cash flows in a variety of commodity
price environments and projected use of such cash flow to reduce
the Corporation's leverage ratios;
- anticipated closing of a transaction to sell the majority of
the assets of Pioneer Pipeline LP to NGTL, the sale of certain
ancillary assets to TransAlta Corporation, and Tidewater's
expectations to replace EBITDA generated by the Pioneer Pipeline
with no additional capital;
- projected use of proceeds from the sale of the majority of
the assets of Pioneer Pipeline LP;
- expectations to reduce net debt to Adjusted EBITDA to
approximately 3.0x by the end of 2020;
- anticipated focus on environmental, social and governance
initiatives in 2020 and expectations to improve ESG disclosure with
the introduction of ESG metrics on the Tidewater website;
- projections regarding 2020 guidance and a commitment by
Tidewater to deleveraging, projections regarding forecasted EBITDA
and net debt to Adjusted EBITDA;
- projected turnaround and maintenance schedules at the PGR
with corresponding crude throughput reductions;
- expectations regarding utilization at the PGR; and
- expectations that net cash provided by operating activities,
cash flow generated from growth projects and cash available from
Tidewater's Senior Credit Facility and other sources of financing
will be sufficient to meet its obligations and financial
commitments and will provide sufficient funding for anticipated
capital expenditures.
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 and the geographic region of such activity;
- the success of the Corporation's operations;
- anticipated timelines and budgets being met in respect of
the Corporation's projects and 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;
- assumptions regarding amount of operating costs to be
incurred;
- that proposed transactions will close as expected;
- 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;
- 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;
- 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;
- 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;
and
- that all required regulatory and environmental approvals for
capital projects can be obtained on the necessary terms and in a
timely manner.
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 and overall industry
activity levels;
- the regulatory environment and decisions and First Nations
and landowner consultation requirements;
- 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;
- 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;
- 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;
- activities of other facility owners, including access to
third-party facilities;
- 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;
- failure of third parties' reviews, reports and projections
to be accurate;
- the possibility that the Corporation fails to formalize
agreements with counterparties;
- 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;
- actions by joint venture partners or other partners which
hold interests in certain of the Corporation's assets;
- 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;
- adverse claims made in respect of the Corporation's
properties or assets;
- changes in the political environment and public
opinion;
- risks associated with epidemics, pandemics, public health
emergencies, quarantines and any communicable disease outbreaks
(including COVID-19);
- risks and liabilities associated with the transportation of
dangerous goods;
- risks and liabilities resulting from derailments;
- competitive action by other companies;
- effects of weather conditions;
- 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 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 AIF 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 press 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.
Any financial outlook or future-oriented financial
information, as defined by applicable securities legislation, has
been approved by management of Tidewater as of May 13, 2019. A financial outlook or
future-oriented financial information is provided for the purpose
of providing information about management's current expectations
and goals relating to the future of Tidewater. Readers are
cautioned that reliance on such information may not be appropriate
for other purposes. The purpose of the future-oriented financial
information contained herein including but not limited to future
periods of net income and Adjusted EBITDA is to assist investors,
shareholders, and others in understanding certain financial metrics
relating to expected future financial results for the purpose of
evaluating the performance of Tidewater's business for future
periods. This information may not be appropriate for other
purposes. The results and conclusions of these assessments, along
with the known and unknown risks, uncertainties and other factors
referred to above, could impact Tidewater's estimates and the
information related to such future periods contained herein and any
such impact could be material.
Non-GAAP Measures
This news release refers to "Adjusted EBITDA" which do not
have any standardized meaning prescribed by generally accepted
accounting principles in Canada
("GAAP"). Adjusted EBITDA is calculated as income or loss
before interest, taxes, depreciation, share-based compensation,
unrealized gains/losses, non-cash items, transaction costs and
items that are considered non-recurring in nature.
Tidewater Management believes that 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 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.
"Distributable cash flow" is a non-GAAP financial measure and
is calculated as net cash used in operating activities before
changes in non-cash working capital plus transaction costs,
non-recurring expenses and after any expenditures that use cash
from operations. 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. Deducted from distributable cash flow
are maintenance capital expenditures, including turnarounds as they
are ongoing recurring expenditures. Transaction costs are added
back as they vary significantly quarter to quarter based on the
Corporation's acquisition and disposition activity. It also
excludes non-recurring transactions that do not reflect Tidewater's
ongoing operations. Distributable cash flow also excludes
cash outflows related to the purchase of linefill on pipelines and
tank bottoms for storage tanks, whereby Tidewater transports oil on
third-party pipelines for which it is required to supply linefill
or tank bottoms for storage. As these pipelines/storage tanks are
owned by third parties, the linefill is not considered to be a
component of the Corporation's property and equipment. The linefill
is classified as a non-current inventory asset and an operating
cash outflow, however linefill is not a principal revenue-producing
activity and therefore is considered an investment to gain access
as a shipper on the pipeline.
Management of the Corporation 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.
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 Measures"
section of Tidewater's most recent MD&A which is available on
SEDAR.
SOURCE Tidewater Midstream and Infrastructure Ltd.