CALGARY, AB, Aug. 13, 2020 /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 and six-month
period ended June 30, 2020.
SECOND-QUARTER 2020 FINANCIAL PERFORMANCE
Highlights
- Adjusted EBITDA increased by $20.1
million to $41.9 million in
the second quarter of 2020 as compared to $21.8 million in the second quarter of 2019,
resulting in over 92% EBITDA growth as a result of the acquisition
of the Prince George Refinery ("PGR") and the commissioning of the
Pipestone Gas Plant. Net loss attributable to shareholders was
$0.3 million for the second quarter
of 2020 as compared to $4.1 million
in the second quarter of 2019.
- Net cash provided by operating activities totaled $59.0 million for the second quarter of 2020,
with distributable cash flow of $10.6
million and a payout ratio of 32%.
- On June 18, 2020, the Corporation
entered into a definitive purchase and sale agreement for its 50%
interest in the Pioneer Pipeline LP to NOVA Gas Transmission Ltd.
("NGTL") for gross proceeds of $255
million (the "Pioneer Transaction"). In addition, Tidewater
and TransAlta Corporation ("TransAlta") have agreed to terms
whereby, upon closing of the Pioneer Transaction, TransAlta will
pay Tidewater $10.5 million for
certain ancillary assets not included in the Pioneer Transaction,
and for completion of budgeted restoration work, resulting in
approximately $138 million in total
cash consideration net to Tidewater. Tidewater expects to close the
transaction by year-end 2020, however delays in obtaining
regulatory approvals could impact the expected closing date.
- The Corporation's top priority remains free cash flow
generation and debt reduction. The Corporation remains committed to
reducing leverage throughout 2020 with a target of 3.0x to 3.5x Net
Debt to Adjusted EBITDA, with the closing of the Pioneer
Transaction.
- Tidewater expects results in the second half of 2020 to improve
as demand at its facilities, including PGR, recovers to
pre-pandemic levels. Guidance of forecasted Adjusted EBITDA remains
at $175 million to $185 million for the full year 2020. Tidewater
debottlenecked various processing units at PGR. As a result, PGR is
seeing record throughput at over 12,000 bbls/day and combined
gasoline and diesel production of over 10,500 bbls/day. The
Pipestone Gas Plant had its strongest run times and cashflow
generation to date in the second quarter and Tidewater expects this
to continue throughout the remainder of 2020. The facility remains
fully contracted.
- The Corporation continues to be committed to its Environmental,
Social and Governance ("ESG") performance by investing in
infrastructure to increase energy and natural resource efficiency,
reduce emissions, and enhance environmental performance.
Tidewater's ESG Management Committee continues to meet weekly and
has developed an interface on its website for the investment
community to view as part of its transparency to communicate key
environmental, safety and other sustainability metrics. Tidewater
is evaluating certain small and medium-scale green capital projects
in conjunction with government funding programs at many of its
assets, including PGR.
- The Corporation is pleased to welcome Mr. Michael Salamon and Mr. Neil McCarron, both of Birch Hill Equity
Partners Management Inc., and Ms. Gail Yester to its Board of
Directors.
COVID-19 UPDATE
- Tidewater continues to monitor the developments related to the
novel coronavirus ("COVID-19"). Safeguarding the well-being of
Tidewater's personnel is its principal concern and it remains
focused on operating safely and responsibly and providing the
essential services that its communities and customers rely on
during the COVID-19 pandemic. The Board of Directors, executive
team and division leaders continue to meet regularly to align
response strategies and efforts within all areas of the
Corporation. The Corporation commends its employees for continuing
to operate safely and responsibly and providing extra customer
service in this challenging environment.
- Second-quarter results were interrupted by the effects of the
pandemic, including reduced demand for refined products and a sharp
decrease in crude oil prices at the start of the quarter. After
leveling off in May, volume trends across the Corporation's
operating areas have increased with the recent stability in
commodity prices and increased demand in refined products providing
positive momentum as the Corporation enters the second half of
2020. Tidewater is encouraged by the resilience of its operations
and continues to deliver value to its investors through its
strategic and integrated assets. These assets are supported by a
strong, stable customer base and growing demand for its
products.
- While volume trends are improving, financial markets and
commodity prices continue to remain volatile impacting overall
economic activity. Tidewater's defensive assets perform well in low
commodity price environments. These defensive assets include its
gas storage assets, which are contracted to six investment grade
counterparties; the Brazeau River Complex ("BRC") which allows
producers access to three natural gas egress solutions; the
Pipestone Gas Plant which has over 80% of its volumes under take or
pay contracts; and PGR which has a five-year offtake agreement with
an investment grade counterparty. Approximately 50% of the
Corporation's cashflow is derived from investment grade
counterparties.
- The Corporation remains focused on creating value for its
stakeholders and remains committed to deleveraging throughout 2020.
The timing and extent of the economic recovery, especially as
COVID-19 cases continue to rise, could impact these forecasts.
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 three and
six-month period ended June 30, 2020
which are available at www.sedar.com and on our website at
www.tidewatermidstream.com.
Financial Overview
Consolidated Financial Highlights
|
|
Three months
ended
June 30,
|
Six months
ended
June 30,
|
(in thousands of
Canadian dollars except per share information)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue
|
$
|
178,568
|
$
|
155,311
|
$
|
431,032
|
$
|
278,976
|
Net income (loss)
attributable to shareholders
|
$
|
(311)
|
$
|
(4,086)
|
$
|
(39,942)
|
$
|
(11,221)
|
Basic and diluted net
income (loss) attributable to shareholders per share
|
$
|
(0.00)
|
$
|
(0.01)
|
$
|
(0.12)
|
$
|
(0.03)
|
Adjusted EBITDA
(1)
|
$
|
41,873
|
$
|
21,786
|
$
|
83,379
|
$
|
44,190
|
Adjusted EBITDA per
common share - basic (1)
|
$
|
0.12
|
$
|
0.07
|
$
|
0.25
|
$
|
0.13
|
Net cash provided by
(used in) operating activities
|
$
|
58,985
|
$
|
29,015
|
$
|
86,975
|
$
|
25,705
|
Distributable cash
flow (2)
|
$
|
10,559
|
$
|
11,295
|
$
|
23,048
|
$
|
27,605
|
Distributable cash
flow per common share – basic (2)
|
$
|
0.03
|
$
|
0.03
|
$
|
0.07
|
$
|
0.08
|
Dividends
declared
|
$
|
3,384
|
$
|
3,311
|
$
|
6,761
|
$
|
6,620
|
Dividends declared
per common share
|
$
|
0.01
|
$
|
0.01
|
$
|
0.02
|
$
|
0.02
|
Total common shares
outstanding (000s)
|
|
338,413
|
|
331,054
|
|
338,413
|
|
331,054
|
Payout
ratio (3)
|
|
32%
|
|
29%
|
|
29%
|
|
24%
|
Total
assets
|
$
|
2,023,884
|
$
|
1,577,732
|
$
|
2,023,884
|
$
|
1,577,732
|
Net
debt (4)
|
$
|
862,493
|
$
|
437,457
|
$
|
862,493
|
$
|
437,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
|
|
1
|
Adjusted EBITDA is
calculated as net income before interest, taxes, depreciation,
share-based compensation, unrealized gains/losses, non-cash items,
transaction costs, items that are considered non-recurring in
nature and the Corporation's proportionate share of EBITDA in their
equity investments. Adjusted EBITDA per common share is calculated
as Adjusted EBITDA divided by the weighted average number of common
shares outstanding for the three and six-month period June 30,
2020. 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 three and six-month
period ended June 30, 2020. 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 is well positioned to weather the current economic
environment and remains focused on cash flow generation, increasing
liquidity and reducing leverage. The Corporation does not plan to
spend significant capital in 2020 with its large 2019 capital
program now complete. Tidewater's forecasted payout ratio is
expected to range from 20% to 30% with the remainder of
Distributable Cash Flow used to reduce leverage. The proceeds from
the Pioneer Transaction will significantly reduce leverage with net
proceeds of approximately $138
million. A large portion of Tidewater's cashflow is
generated from take-or-pay contracts and long-term agreements with
over 50% generated from investment grade counterparties. Tidewater
expects net debt to adjusted EBITDA of approximately 3.0x – 3.5x
subsequent to the completion of the Pioneer Transaction.
Prince George Refinery
PGR 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. PGR 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 demand in northern
British Columbia.
During the second quarter of 2020, PGR achieved over 85%
utilization. Utilization declined during the second quarter as
compared to the first quarter by approximately 5% due to the
planned two-week maintenance program at the refinery during
April 2020. Tidewater has
debottlenecked various processing units at PGR resulting in PGR
seeing record throughput of over 12,000 bbls/day and combined
gasoline and diesel production of over 10,500 bbls/day.
Tidewater's refined product yields at PGR for the second quarter
of 2020 were as follows:
Throughput
|
10,500
bbl/day
|
Gasoline
yield
|
42%
|
Diesel
yield
|
43%
|
Other
(1)
|
15%
|
(1) Other
refers to heavy fuel oil (HFO), LPG and feedstock consumed to fuel
the refinery.
|
Tidewater's refining margins are largely driven by commodity
prices, particularly the cost of crude feedstock and other raw
materials, along with market prices for refined products. During
the first half of the second quarter, as a result of the developing
COVID-19 pandemic, refined product demand decreased and realized
margins on refined product sales contracted due to declining
commodity prices and a higher weighted average cost of inventory
carried over from the first quarter of 2020. However, this is
partially offset by a portion of the realized gain on derivative
contracts.
As a result of reduced social quarantine restrictions by
provincial and federal governments during the latter half of the
second quarter, refined product demand has steadily increased.
Tidewater achieved improved margins due to a recovery in refined
product pricing and a lower weighted average cost of inventory from
less expensive crude feedstock purchased during the first half of
the quarter, while throughput remained consistent.
Tidewater is encouraged by the resilience of the PGR asset in an
unprecedented time with crack spreads holding steady at
approximately $50/BBL. This
demonstrates the refinery's long-term value in servicing the
markets where in which it operates.
The Corporation also continues to evaluate opportunities to
participate in future low-carbon fuel standard ("LCFS") agreements
at the PGR.
Tidewater is also pursuing numerous low capital and high rate of
return debottlenecks and optimization opportunities within its
downstream business unit.
Pipestone Gas Plant
The Pipestone Gas Plant is designed to process approximately 100
MMcf/day of sour natural gas. This asset includes two acid gas
injection wells, a saltwater disposal well, and sales gas pipelines
directly connected to the Pipestone Gas Storage Facility, as well
as Alliance and TC Energy pipelines. The facility is also pipeline
connected to Pembina for C2+ and C5+ liquid streams.
Tidewater processed an average volume of 72 MMcf/day in the
second quarter of 2020, an increase of 10% over the first quarter.
Liquids production also increased by 65% with the commissioning of
the Pembina C2+ pipeline and the deep cut processing
unit. Facility uptime and availability for the quarter
averaged 96% and 92% respectively. The Pipestone Gas Plant is fully
contracted with over 80% committed on take or pay arrangements.
Pioneer Pipeline
On June 18, 2020, Tidewater and
TransAlta entered into a definitive Purchase and Sale Agreement 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 ancillary 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 – 3.5x net debt to Adjusted EBITDA.
Tidewater remains committed to closing the transaction by year-end
2020, with potential for closing to occur in 2021 subject to timing
of regulatory approvals.
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 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, and it is expected that the EBITDA generated from the new
service will partially offset the reduction in EBITDA from the
Pioneer Pipeline sale.
Through the first twelve months of operation, the Pioneer
Pipeline has run steadily with minimal interruptions and Tidewater
has met its take or pay obligations. The Pioneer Pipeline has
performed to expectation, delivering forecasted EBITDA, largely
backed by TransAlta's take-or-pay commitment.
Brazeau River Complex and Fractionation Facility
Throughput at the BRC for the second quarter of 2020 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 performed well through
the second quarter of 2020, despite a challenging pricing
environment, and has maintained near capacity throughput since the
start of the NGL contract year with several investment grade
counterparties. The marketing business found new ways to
enhance producer netbacks and create operational flexibility by
utilizing Tidewater facilities and maintaining disciplined risk
management processes to mitigate frac spread and commodity
exposure.
The Brazeau River Complex remains a core 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 natural gas storage reservoirs at three
different facilities: Dimsdale Paddy A (Pipestone Gas Storage
Facility), Brazeau Nisku F, and Brazeau Nisku A. The Pipestone Gas
Storage Facility and Brazeau Nisku A are owned through joint
ventures with a private Canadian entity and are accounted for as
equity investments.
The second quarter of 2020 saw AECO natural gas price volatility
continue to experience normal levels, with spot prices generally
rangebound between $1.70 and
$2.00 aside from a short burst of
strength in the first week of May.
The Pipestone Gas Storage Facility performed well in the quarter
as it entered its first injection season following the 2019
expansion. The facility successfully met customer
park-and-loan commitments while pressuring up with a rapid
inventory build in anticipation of next winter's expanded
withdrawal obligations. The Facility complex demonstrated its
inherent optionality in the period by 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.
Similarly, both Brazeau Nisku A and Brazeau Nisku F storage
pools have also been building inventories through the first part of
the injection season while continuing to meet the Pioneer Pipeline
delivery obligations as well as realizing liquids value benefit
through cycling.
CAPITAL PROGRAM
During 2019, Tidewater commissioned three of the largest capital
projects in the Corporation's history related to the Pioneer
Pipeline, Pipestone Gas Plant and Pipestone Gas Storage Facility.
The Corporation's focus in 2020 is on small-scale optimization and
commissioning projects.
Tidewater's focus over the next 12 months is to employ the
related cashflow from its 2019 large completed capital projects and
PGR, as well as proceeds from the Pioneer Transaction, towards
deleveraging with a target net debt to Adjusted EBITDA ratio of
approximately 3.0x – 3.5x 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%.
APPOINTMENT OF NEW DIRECTOR
The Corporation is pleased to announce that Ms. Gail Yester has
been appointed to the Board of Directors of the Corporation. Ms.
Yester will add significant legal, land, acquisition and
divestiture experience to the Board. The Board and Management look
forward to working with Ms. Yester.
SECOND QUARTER 2020 EARNINGS CALL
In conjunction with the earnings release, investors will have
the opportunity to listen to Tidewater senior management review its
second quarter 2020 results via conference call on Thursday, August 13, 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://produceredition.webcasts.com/starthere.jsp?ei=1349898&tp_key=ff20a30bf5 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, 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,
including gas plants, pipelines, railcars, trucks, export
terminals, storage 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 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, the Corporation's
expectations regarding timing to close such transactions, the
Corporation's expectations regarding receipt of regulatory approval
for such transactions, 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;
- the Corporation's expectations to receive IT-S service at
the BRC that will attract new, creditworthy storage customers that
will create new expansion opportunities to increase storage
capacity;
- anticipated qualification of Tidewater for NGTL services
with respect to natural gas currently transported on the Pioneer
Pipeline and the benefits to be derived therefrom;
- Tidewater's evaluation of certain smaller capital projects
and predictions with respect to the potential return of such
projects;
- the Corporation's focus on generating cash flow, increasing
liquidity and reducing leverage;
- the Corporation's intention to not spend significant capital
in 2020;
- anticipated focus on environmental, social and governance
initiatives in 2020 including the Corporation investing in
infrastructure to increase energy and natural resource efficiency,
emission reductions and enhancing environmental
performance;
- the Corporation's reiteration of guidance of forecasted
Adjusted EBITDA for the full year 2020;
- expectations regarding utilization at the PGR;
- forecasts with respect to future environmental and climate
change compliance obligation costs;
- Tidewater's expectations to pay dividends from distributable
cash flow; 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:
- Tidewater's ability to execute on its business
plan;
- the timely receipt of all governmental and regulatory
approvals sought by the Corporation including with respect to the
anticipated sale of the Pioneer Pipeline;
- 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;
- Husky volume demands from the PGR are consistent with
forecasts;
- that formal agreements with counterparties will be executed
in circumstances where letters of intent or similar agreements have
been executed and announced by Tidewater and that such transactions
will close as expected;
- the amount of future liabilities relating to lawsuits and
environmental incidents;
- oil and gas industry expectation and development activity
levels and the geographic region of such activity;
- 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 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; and
- the amount of future liabilities relating to lawsuits and
environmental incidents and the availability of coverage under the
Corporation's insurance policies.
Actual results achieved will vary from the information
provided herein as a result of numerous known and unknown risks and
uncertainties and other factors including but not limited
to:
- risks and impacts related to widespread epidemic or pandemic
outbreaks, including COVID-19;
- changes in demand for refined products;
- general economic, political, market and business conditions,
including fluctuations in interest rates, foreign exchange rates
stock market volatility and supply/demand trends;
- activities of producers and customers and overall industry
activity levels;
- 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 letters of intent or similar agreements have
been executed and announced by Tidewater;
- failure to close transactions as contemplated and in
accordance with negotiated terms;
- the regulatory environment and decisions and First Nations
and landowner consultation requirements;
- risks and impacts related to widespread epidemic or pandemic
outbreaks, including COVID-19;
- climate change initiatives or policies or increased
environmental regulation;
- 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;
- that the resolution of any particular legal proceedings
could have an adverse effect on the Corporation's operating results
or financial performance;
- 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;
- actions by governmental authorities, including changes in
government regulation, tariffs and taxation;
- changes in operating and capital costs, including
fluctuations in input costs;
- 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;
- actions by joint venture partners or other partners which
hold interests in certain of the Corporation's assets;
- reliance on key relationships and agreements;
- 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;
- risks and liabilities associated with the transportation of
dangerous goods;
- risks and liabilities resulting from derailments;
- effects of weather conditions;
- 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.
Actual results achieved will vary from the information
provided herein as a result of numerous known and unknown risks and
uncertainties and other factors related to COVID-19. 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 for the three and
six-months ended June 30, 2020 and
annual information form for the year ended December 31, 2019.
Any financial outlook or future-oriented financial
information, as defined by applicable securities legislation, has
been approved by management of Tidewater as of August 12, 2020. 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, items
that are considered non-recurring in nature and the Corporation's
proportionate share of EBITDA in their equity investments.
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.
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.