CALGARY, April 17, 2020 /CNW/ - Tidewater Midstream and
Infrastructure Ltd. ("Tidewater" or the
"Corporation") (TSX: TWM) provides updated 2020 guidance,
operational update and impacts from the COVID-19 pandemic.
As the situation with the COVID-19 pandemic continues to evolve,
Tidewater is taking proactive and preventative measures to protect
the health and safety of our workforce and do our part to limit the
spread of COVID-19 in the community. The Corporation remains
confident in our in-depth business continuity plans and our ability
to execute during these challenging times. Tidewater wishes to
thank all our employees, contractors and the communities where we
operate for their extraordinary efforts and commitment during this
unprecedented and difficult time.
OPERATIONAL UPDATE
Pioneer Disposition
As previously announced on March
12th, 2020 the sale of the Pioneer pipeline
continues to proceed on the previously disclosed terms and timeline
for cash proceeds of approximately $138
million which Tidewater will use to reduce indebtedness.
Pipestone Gas Plant
At Pipestone, all third-party
infrastructure is now in place and Tidewater is pleased to announce
throughput at the plant has reached design capacity and is
currently averaging 95mmcf/d. The Pipestone Gas Plant is fully
contracted with over 80% of the volume under take or pay
contracts.
Prince George Refinery ("PGR")
Crack spreads at PGR have remained above $50/bbl vs. Tidewater's previously disclosed
forecast of $44/bbl, however
Tidewater has seen demand on refined products at Prince George decrease by approx. 10% - 20%
for the last two weeks of March and the first two weeks of April.
Refining margins for the first quarter will be impacted as PGR
continues to process higher cost crude oil feedstock purchased
prior to the price decline. With refined product pricing forecast
to increase over the medium term, and the current price at which
Tidewater is acquiring crude oil feedstock for PGR, Tidewater
expects a positive impact to margins in the second quarter which
will partially offset the expected decline in demand. It is
anticipated that these factors resulting from the effects of the
COVID-19 pandemic will impact Tidewater's first and second quarter
earnings by approximately 10% - 20%.
Husky has issued a notice of force majeure under the
offtake agreement at PGR as a result of decreased refined product
demand related to COVID-19. Husky has indicated they remain
committed to working with Tidewater on the impact to volume
forecasts and the companies are actively exploring opportunities
for incremental demand and volumes through the second quarter.
Husky has committed to providing regular updated demand forecasts
as the COVID-19 situation evolves. Tidewater continues to evaluate
the merits of the force majeure. Tidewater is also actively
marketing product outside the Prince
George orbit as well as utilizing its large storage capacity
at the refinery.
Tidewater plans to move forward with previously disclosed
debottlenecking maintenance at Prince
George in April which will last approximately two weeks and
reduce throughput by approximately 40% for two weeks. The annual
spring debottlenecking will enable Tidewater to throughput record
volumes when refined product demand stabilizes.
Tidewater is encouraged by the resilience of the PGR asset in an
unprecedented time and has not seen the drastic narrowing of crack
spreads observed in other locations across North America. This further reinforces the
refinery's long-term value in servicing the markets where it
operates.
2020 Guidance
As a result of reduced refined product demand caused by the
COVID-19 pandemic, Tidewater expects first and second quarter
earnings to be impacted by 10% - 20%. Tidewater expects minimal
impact to second half 2020 guidance should demand return to
moderate levels post the COVID-19 pandemic and continues to monitor
market conditions closely. Tidewater expects to exit 2020 with
approximately 3.0x-3.5x net debt to Adjusted EBITDA proforma the
sale of the Pioneer Pipeline.
First Quarter 2020 Earnings Call
Tidewater intends to release its first quarter 2020 results
before market open on May 14, 2020.
In conjunction with the earnings release, investors will have the
opportunity to listen to Tidewater senior management review its
first quarter 2020 results via conference call on Thursday, May 14, 2020 at 11:00 am MDT (1:00 pm
EDT).
To access the conference call by telephone, dial 647-427-7451
(local / international participant dial in) or 1-888-231-8192
(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://produceredition.webcasts.com/starthere.jsp?ei=1307036&tp_key=ad57628744 and
will also be archived there for 90 days.
For those accessing the call via Cision's investor website, we
suggest logging in at least 15 minutes prior to the start of the
live event. For those dialing in, participants should ask to be
joined into the Tidewater Midstream and Infrastructure Ltd.
earnings call.
ABOUT TIDEWATER
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:
- Anticipated closing of the sale of the Pioneer pipeline on
previously disclosed terms and timeline and the anticipated use of
proceeds therefrom;
- Projections with respect to refining margins and product
demand at the Prince George Refinery and the anticipated resulting
impact therefrom;
- The estimated impact of the coronavirus disease (COVID-19)
pandemic on Tidewater's earnings forecasts;
- PGR volume forecasts anticipated from Husky and the
circumstances relating to the force majeure notice Husky has
provided to the Corporation;
- Maintenance plans at the Prince George Refinery, the
projected timeline and throughput and the projected impact on
throughput resulting from such maintenance; and
- Forecast guidance and projections regarding 2020 exit rate
net debt to Adjusted 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:
Tidewater's ability to execute on its business plan, the timely
receipt of all governmental and regulatory approvals; that any
third party projects relating to the Corporation's divestitures
will be sanctioned and completed as expected; that there are no
unforeseen events preventing the performance of contracts; that
there are no unforeseen material changes related to the
Corporation's planned divestitures and that counterparties will
comply with contracts in a timely manner; the availability and cost
of labour and other industry services; current industry conditions,
laws and regulations continuing in effect (or, where changes are
proposed, such changes being adopted as anticipated); Husky volume
demands from PGR, the realization of the anticipated benefits of
projects that Tidewater is developing; and, that formal agreements
with counterparties in circumstances where letters of intent or
similar agreements have been executed and announced by
Tidewater.
Actual results achieved will vary from the information
provided herein as a result of numerous known and unknown risks and
uncertainties and other factors. These known and unknown
risks and uncertainties include, but are not limited to:
risks and impacts related to widespread epidemic or pandemic
outbreaks, including COVID-19; demand for refined products related
thereto; the possibility that governmental policies or laws may
change or governmental approvals may be delayed or withheld;
failure to negotiate and conclude any required commercial
agreements; non-performance of agreements in accordance with their
terms; failure to execute formal agreements with counterparties in
circumstances where letter of intent or similar agreements have
been executed and announced by Tidewater; failure to close
transactions as contemplated and in accordance with negotiated
terms; non-performance or default by counterparties to agreements
which Tidewater has entered in respect of its business;
construction delays, labour and material shortages; technology and
cyber security risks; and certain other risks detailed from time to
time in Tidewater's public disclosure documents including, among
other things, those detailed under the heading "Risk Factors" in
Tidewater's management's discussion and analysis and annual
information form for the year ended December
31, 2019.
The above summary of assumptions and risks related to
forward-looking statements in this news 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 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 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.
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.