CALGARY, AB, Nov. 12, 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 nine month
period ended September 30, 2020.
THIRD-QUARTER 2020 FINANCIAL PERFORMANCE
Highlights
- The Corporation delivered a record quarter and its year-to-date
performance continues to highlight the value and resiliency of its
integrated business model. Adjusted EBITDA increased to
$47.6 million in the third quarter of
2020 as compared to $25.5 million in
the third quarter of 2019, resulting in 86% Adjusted EBITDA growth
as a result of the continuing strong performance of the Prince
George Refinery ("PGR") and the Pipestone Gas Plant. Adjusted
EBITDA also increased by $5.7 million
as compared to the second quarter of 2020 resulting in 14% Adjusted
EBITDA growth. Net loss attributable to shareholders was
$2.0 million for the third quarter of
2020 as compared to net income of $11.0
million in the third quarter of 2019. The decrease is a
result of a non-cash loss on disposition of certain non-core
assets.
- Net cash provided by operating activities totaled $64.0 million for the third quarter of 2020, with
distributable cash flow of $10.6
million and a payout ratio of 32%.
- On October 1, 2020, the
Corporation, together with its partner TransAlta Corporation
("TransAlta"), entered into an updated purchase and sale agreement
with ATCO Gas and Pipelines Ltd. ("ATCO") to sell the Pioneer
Pipeline to ATCO for gross proceeds of $255
million under substantially similar terms to the previously
announced transaction with NOVA Gas Transmission Ltd. ("NGTL") (the
"Pioneer Transaction"). ATCO acquired the right to purchase the
Pioneer Pipeline through an option agreement with NGTL. Net cash
proceeds to Tidewater will be approximately $138 million which includes certain ancillary
assets and completion of budgeted restoration work to be paid for
by TransAlta. The transaction is subject to customary conditions in
a transaction of this nature including regulatory approvals by the
Alberta Utilities Commission and the Alberta Energy Regulator.
Regulatory approval is anticipated in the first quarter of 2021 and
Tidewater remains proactive in its efforts to accelerate this
timeline.
- Tidewater's top priorities remain free cash flow generation and
debt reduction. Tidewater remains committed to reducing leverage
throughout 2020 and 2021 with a target of 3.0x to 3.5x Net Debt to
annualized Adjusted EBITDA, upon closing of the Pioneer
Transaction.
- While the Corporation's volumes across its operations have
returned to pre-pandemic levels, financial markets and commodity
prices continue to remain volatile and are expected to remain
volatile into 2021. Tidewater continues to see increased demand at
PGR as a result of large infrastructure projects in central and
northern British Columbia
resulting in a stronger market for refined products. PGR continues
to see record throughput, at times exceeding 12,000 bbls/day and
combined gasoline and diesel production from PGR of over 10,500
bbls/day.
- The Corporation remains encouraged by recent third party merger
and acquisition activities in the Western Canadian Sedimentary
Basin ("WCSB") that is generally strengthening counterparty balance
sheets. The recent announcement of the merger between Husky Energy
and Cenovus Energy is expected to strengthen the Corporation's
credit profile.
- This momentum at the Corporation's facilities is expected to
continue during the fourth quarter and into 2021. Guidance of
forecasted Adjusted EBITDA remains at $175
million to $185 million for
the full year 2020. The timing and extent of the economic recovery,
especially as COVID-19 cases continue to rise globally, could
impact these forecasts.
Environmental, Social and Governance
- 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. The
Corporation has a vital role to play in the long-term renewable
energy transition in Canada and is
taking initiative in clean fuels through its existing hydrogen and
carbon capture assets, its ability to blend ethanol and biodiesel
and its current canola co-processing project. Tidewater continues
to evaluate certain small and large-scale green capital projects,
in conjunction with government funding programs, at many of its
facilities, including expanding current hydrogen production, carbon
capture and both canola co-processing and renewable diesel at
PGR.
- Earlier this year Tidewater introduced a website interface for
all stakeholders to view ESG performance metrics. Tidewater remains
committed to enhancing its disclosures and in November published a
significant increase in ESG metrics and corporate policies which
highlight several improving trends. This information is available
at www.tidewatermidstream.com/esg/.
- In line with Tidewaters commitment to actively improve the
quality of the communities in which we work and live, Tidewater is
pleased to be recognized as the First and Founding partner of
Project Forest. This initiative is a non-profit that is focused on
rewilding local landscapes to capture carbon naturally by bringing
likeminded, environmentally conscious organizations together to
plant trees and create forests. For more information related to
Project Forest please visit www.projectforest.ca.
COVID-19 Update
- Tidewater continues to monitor the developments related to
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.
- Operating conditions have greatly improved from the second
quarter, but there are still uncertainties around the pandemic and
the economic recovery. The Corporation continues to operate safely
and reliably, following COVID-19 protocols in both the field and in
offices, social distancing, and working remotely as conditions
warrant. The Corporation's facilities continue to remain fully
operational and capable of meeting customer needs.
- Tidewater continues to prioritize the health and safety of its
personnel during COVID-19. The Corporation's offices and facilities
operate with stringent hygiene protocols to protect its employees
and to ensure delivery of critical services. The Corporation has
begun returning its workforce to its business offices and continues
to assess its pace of re-entry depending on guidance from health
and government officials.
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 nine
month period ended September 30, 2020
which are available at www.sedar.com and on our website at
www.tidewatermidstream.com.
Consolidated Financial Highlights
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
(in thousands of
Canadian dollars except per share
information)
|
2020
|
2019
|
2020
|
2019
|
Revenue
|
$
|
273,461
|
$
|
147,045
|
$
|
704,493
|
$
|
426,021
|
Net income (loss)
attributable to
shareholders
|
$
|
(1,982)
|
$
|
11,045
|
$
|
(41,924)
|
$
|
(176)
|
Basic and diluted net
income (loss)
attributable to shareholders per share
|
$
|
(0.01)
|
$
|
0.03
|
$
|
(0.12)
|
$
|
(0.00)
|
Adjusted EBITDA
(1)
|
$
|
47,602
|
$
|
25,496
|
$
|
130,981
|
$
|
69,686
|
Net cash provided by
(used in) operating
activities
|
$
|
63,990
|
$
|
(2,404)
|
$
|
150,965
|
$
|
23,301
|
Distributable cash
flow (2)
|
$
|
10,578
|
$
|
12,141
|
$
|
33,626
|
$
|
39,329
|
Distributable cash
flow per common share
– basic (2)
|
$
|
0.03
|
$
|
0.04
|
$
|
0.10
|
$
|
0.12
|
Dividends
declared
|
$
|
3,386
|
$
|
3,349
|
$
|
10,147
|
$
|
9,969
|
Dividends declared
per common share
|
$
|
0.01
|
$
|
0.01
|
$
|
0.03
|
$
|
0.03
|
Total common shares
outstanding (000s)
|
|
338,609
|
|
334,866
|
|
338,609
|
|
334,866
|
Payout
ratio (3)
|
|
32%
|
|
28%
|
|
30%
|
|
25%
|
Total
assets
|
$
|
2,048,534
|
$
|
1,585,551
|
$
|
2,048,534
|
$
|
1,585,551
|
Net
debt (4)
|
$
|
854,870
|
$
|
526,174
|
$
|
854,870
|
$
|
526,174
|
|
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 is not a standard measure under
GAAP. See "Non-GAAP Measures" in the Corporation's MD&A for a
reconciliation of Adjusted EBITDA to its most closely related GAAP
measure.
|
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 nine month
period ended September 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. Tidewater's forecasted payout
ratio is expected to range from 25% 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 annualized 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.
PGR has significant advantages given its location as the
Prince George market faces
logistical and economic challenges given transport costs and the
lack of offloading facilities in the area. Additionally, the
refinery supplies the majority of the regional demand, which is
comprised of major local industries such as forestry, mining and
oil and gas.
During the third quarter of 2020, PGR achieved over 95%
utilization. Utilization increased during the third quarter as
compared to the second quarter by approximately 12.6% due to the
planned maintenance program at the refinery during the second
quarter of 2020 and increased demand for refined products.
Tidewater's refined product yields at PGR were as follows:
|
Q3
2020
|
Q2
2020
|
Q1
2020
|
Crude
Throughput
|
11,825
bbl/day
|
10,500
bbl/day
|
11,124
bbl/day
|
Refinery Yield
(1)
|
|
|
|
Gasoline
yield
|
44%
|
42%
|
42%
|
Diesel
yield
|
43%
|
43%
|
46%
|
Other
(2)
|
13%
|
15%
|
12%
|
(1)
Refinery yield includes crude and intermediates.
|
(2) 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 third quarter, Tidewater realized improved margins as a result
of increased refined product pricing and had an increase in refined
product demand, as compared to the second quarter of 2020, due to
the reduced social quarantine restrictions by the provincial and
federal government. The Corporation was able to optimize its
gasoline production at the refinery to meet increased demand and
improved pricing. Butane blending has also enabled Tidewater to
blend low value butane into the PGR gasoline pool.
The first offtake contract year with Husky Energy ("Husky")
ended on November 1, 2020 with Husky
meeting its offtake obligations to Tidewater. The Corporation has
received confirmation from Husky that the force majeure
notice under the offtake agreement, that was initiated by Husky in
April, 2020, has been withdrawn.
During the first week of October
2020, the refinery saw a 10% reduction of throughput due to
planned maintenance which will have a minimal affect to fourth
quarter results as it will enable the refinery to increase
throughput for the remainder of the fourth quarter and into
2021.
Tidewater is encouraged by the resilience of the PGR asset in an
unprecedented time with crack spreads holding steady around
$50/bbl. This demonstrates the
refinery's long-term value in servicing the markets in which it
operates. Demand for diesel continues to exceed diesel production
as a result of large infrastructure projects including Coastal
GasLink, Site C Dam, LNG Canada and the TransMountain pipeline
expansion.
The Corporation continues to evaluate opportunities to develop
future low-carbon fuel and renewable energy projects at PGR and
expansion. These include expanding existing hydrogen assets and
continuing to expand canola co-processing and the potential for a
large scale renewable diesel project with potential support from
the provincial government. Additionally, Tidewater is also pursuing
numerous low capital and high rate of return debottleneck 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
third quarter of 2020. Facility availability for the quarter
averaged 78% due to a constraint in early July. This was offset by
record throughput in September of 86 MMcf/day and over 90%
availability. The Pipestone Gas Plant is fully contracted with over
80% committed on take or pay arrangements.
Pioneer Pipeline
The Pioneer Pipeline is currently jointly owned and operated by
Tidewater and TransAlta. The asset is held for sale and subject to
closing of the Pioneer Transaction and is subject to customary
conditions in a transaction of this nature including regulatory
approvals by the Alberta Utilities Commission and the Alberta
Energy Regulator. Following the execution of the purchase and sale
agreement, the parties filed applications for regulatory approval.
Regulatory approval is anticipated in the first quarter of 2021 and
Tidewater remains proactive in its efforts to accelerate this
timeline. Closing of the transaction will occur within ten
days of receipt of regulatory approval.
Upon the closing of the Pioneer Transaction, the Pioneer
Pipeline will be integrated into NGTL's and ATCO's Alberta integrated natural gas transmission
systems to provide reliable natural gas supply to TransAlta's power
generating units at Sundance and
Keephills.
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.
Brazeau River Complex and Fractionation Facility
The BRC 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, truck loading and offloading
facilities, natural gas storage facilities and two natural gas
egress solutions given the BRC's connection to the NGTL system and
the Pioneer Pipeline.
Throughput at the BRC gas processing facility for the third
quarter of 2020 was in-line with the previous quarter. Overall
supply volumes at the fractionation facility increased
approximately 1,000 bbl/day in the third quarter of 2020 relative
to the prior quarter largely driven by increased truck-in supply
and stronger NGL pricing.
Due to the recent improvement in AECO gas prices, the
Corporation continues to see increased activity in the Deep Basin
area near the BRC, which has led to the tie-in of additional raw
gas volumes to the BRC from a mid-sized producer which came online
in the fourth quarter of 2020. Tidewater continues to work
diligently with producers to improve netbacks by fully utilizing
the BRC's facilities.
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 third quarter of 2020 demonstrated fair levels of market
volatility which allowed the assets to perform well. July was
characterized by stable and low pricing, mostly in the $1.70/Mcf to $2.10/Mcf range, allowing for consistent maximum
injections. August was characterized by increasing price levels,
combined with more pronounced backwardation in the forward curve
allowing for structuring of paid injection deferrals to future
periods. September generally saw spot prices decline over the
month, starting in the $2.67/Mcf
range and returning to sub $2.10/Mcf
levels as the Corporation maintained maximum injections.
Operationally, all facilities performed well, with Pipestone Gas
Storage facilities once again demonstrating daily injection rates
in excess of forecasts in its first injection season following the
2019 expansion.
The Pipestone Gas Storage Facility is fully contracted with
take-or-pay contracts spanning up to 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 continued to build inventories through the latter half
of the injection season while continuing to meet the Pioneer
Pipeline delivery obligations and 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 generated 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 following the closing of the
Pioneer Transaction. To date, Tidewater has not committed to a
significant capital program in 2021, however continues to evaluate
smaller capital projects with the potential to generate returns in
excess of 50%.
THIRD QUARTER 2020 EARNINGS CALL
In conjunction with the earnings release, investors will have
the opportunity to listen to Tidewater senior management review its
third quarter 2020 results via conference call on Thursday, November 12, 2020 at 11:00 am MST (1:00 pm
EST).
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=1392960&tp_key=3b4cb63002 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:
- targeted Net Debt to Adjusted EBITDA of 3.0x to 3.5x with
the closing of the Pioneer Transaction;
- expected volatility of financial markets and commodity
prices into 2021;
- guidance with respect to forecasted Adjusted
EBITDA;
- continued consistent performance of the Corporation's
facilities into 2021;
- the pace of reintegration of the Corporation's workforce to
its business offices;
- forecasted payout ratio and the projected use of
Distributable Cash Flow to reduce leverage;
- projections with respect to net debt to Adjusted EBITDA
subsequent to the completion of the Pioneer Transaction;
- the Corporation's continuing evaluation of opportunities to
develop future low-carbon fuel and renewable energy projects at the
PGR and expansion and optimization opportunities at the
PGR;
- anticipated closing of a transaction to sell the Pioneer
Pipeline to ATCO, 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;
- anticipated integration of the Pioneer Pipeline into NGTL's
and ATCO's Alberta integrated
natural gas transmission systems;
- projected use of proceeds from the sale of the Pioneer
Pipeline;
- projections with respect to the returns on proposed small
capital projects;
- 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;
- the Corporation's focus on generating cash flow, increasing
liquidity and reducing leverage;
- the Corporation's reiteration of guidance of forecasted
Adjusted EBITDA for the full year 2020;
- 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;
- the amount of future liabilities relating to lawsuits and
environmental incidents and the availability of coverage under the
Corporation's insurance policies;
- 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; and
- the Corporation's future debt levels and the ability of the
Corporation to repay its debt when due.
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:
- 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
nine months ended September 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 November 11, 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 does 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, lease
payments under IFRS 16 Leases, items that are
considered non-recurring in nature and the Corporation's
proportionate share of EBITDA in their equity investments.
Tidewater's management believes that Adjusted EBITDA provides
useful information to investors as it provides an indication of
results generated from the Corporation's operating activities prior
to financing, taxation and non-recurring/non-cash impairment
charges occurring outside the normal course of business.
Adjusted EBITDA is used by management to set objectives, make
operating and capital investment decisions, monitor debt covenants
and assess performance. 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 cash distributions from
investments, 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.