Nov 04, 2021
CALGARY, AB, Nov. 4, 2021 /CNW/ - Tidewater Midstream and Infrastructure Ltd. ("Tidewater Midstream" 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 periods ended September 30, 2021.
THIRD-QUARTER 2021 FINANCIAL PERFORMANCE
Highlights
Selected financial and operating information is outlined below and should be read with Tidewater's condensed interim consolidated financial statements and related MD&A as at and for the three and nine month periods ended September 30, 2021 which are available at www.sedar.com and on our website at www.tidewatermidstream.com.
Financial Overview
Consolidated Financial Highlights
(in thousands of Canadian dollars | Three months ended | Nine months ended | ||||||||
2021 | 2020 | 2021 | 2020 | |||||||
Revenue | $ | 433,961 | $ | 273,461 | $ | 1,163,781 | $ | 704,493 | ||
Net income (loss) attributable to | $ | 1,797 | $ | (3,820) | $ | 74,473 | $ | (40,846) | ||
Basic net income (loss) attributable to | $ | 0.01 | $ | (0.01) | $ | 0.22 | $ | (0.12) | ||
Diluted net income (loss) attributable to | $ | 0.01 | $ | (0.01) | 0.19 | $ | (0.12) | |||
Consolidated Adjusted EBITDA (2) | $ | 53,076 | $ | 47,602 | $ | 156,483 | $ | 130,981 | ||
Net cash provided by operating activities | $ | (3,827) | $ | 63,990 | $ | 94,030 | $ | 150,965 | ||
Distributable cash flow attributable to | $ | 15,834 | $ | 10,578 | $ | 50,023 | $ | 33,626 | ||
Distributable cash flow per common share | $ | 0.05 | $ | 0.03 | $ | 0.15 | $ | 0.10 | ||
Distributable cash flow per common share | $ | 0.04 | $ | 0.03 | $ | 0.12 | $ | 0.10 | ||
Dividends declared | $ | 3,403 | $ | 3,386 | $ | 10,188 | $ | 10,147 | ||
Dividends declared per common share | $ | 0.01 | $ | 0.01 | $ | 0.03 | $ | 0.03 | ||
Total common shares outstanding (000s) | 340,314 | 338,609 | 340,314 | 338,609 | ||||||
Payout ratio (4) | 21% | 32% | 20% | 30% | ||||||
Total consolidated assets (1) | $ | 1,925,201 | $ | 1,865,715 | $ | 1,925,201 | $ | 1,865,715 | ||
Consolidated net debt (5) | $ | 643,363 | $ | 854,870 | $ | 643,363 | $ | 854,870 | ||
Notes: | |
1 | Amounts for the three and nine months ended September 30, 2020 have been restated. Refer to the "Voluntary Change in Accounting Policy" |
2 | Adjusted EBITDA is calculated as net income before interest, taxes, depreciation, share-based compensation, unrealized gains/losses, non-cash |
3 | Distributable cash flow attributable to shareholders is calculated as net cash used in operating activities before changes in non-cash working |
4 | Payout Ratio is calculated by expressing dividends declared to shareholders for the period as a percentage of distributable cash flow attributable |
5 | Consolidated net debt is defined as bank debt, convertible debentures and notes payable, less cash. Consolidated net debt is not a standard |
DECONSOLIDATED FINANCIAL HIGHLIGHTS
This press release presents the financial information of Tidewater Midstream on a consolidated basis, unless otherwise noted. In addition to reviewing fully consolidated results, management reviews Adjusted EBITDA and net debt on a deconsolidated basis to highlight Tidewater Midstream's financial results, financial position, leverage and debt covenants, excluding the impact of the Corporation's ownership in Tidewater Renewables. Tidewater Midstream's distributable cash flow excludes Tidewater Renewables' distributable cash flow to non-controlling interest shareholders. These metrics are not defined under IFRS and may not be comparable to those used by other entities. See the "Non-GAAP" Measures section of this press release for further details.
(in thousands of Canadian dollars | Three months ended | Nine months ended | ||||||||
2021 | 2020 | 2021 | 2020 | |||||||
Deconsolidated Adjusted EBITDA | $ | 47,746 | $ | 47,602 | $ | 151,153 | $ | 130,981 | ||
Deconsolidated net debt | $ | 609,436 | $ | 854,870 | $ | 609,436 | $ | 854,870 | ||
Distributable cash flow attributable to | $ | 15,834 | $ | 10,578 | $ | 50,023 | $ | 33,626 | ||
Ownership in Tidewater Renewables | 69% | N/A | 69% | N/A |
OUTLOOK AND CORPORATE UPDATE
Tidewater Midstream is pleased to deliver a record quarter of consolidated Adjusted EBITDA generation in the third quarter of 2021 as the PGR and Pipestone Gas Plant continue to run at high utilization rates. Continued consolidation and new investment in the energy sector, as well as a material recovery in commodity prices, have had an overall positive impact on producer balance sheets and Tidewater Midstream continues to work with its customers on ways to improve margins and related service offerings. Tidewater Midstream remains positive about the outlook for commodity prices, energy transition and renewable sectors, where Tidewater Midstream is uniquely positioned to play a key role in the continued development of renewable fuels, carbon capture, renewable natural gas, and renewable hydrogen through its subsidiary Tidewater Renewables.
Prince George Refinery
PGR is a 12,000 bbl/day light oil refinery that predominantly produces low sulphur diesel and gasoline 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 2021, total throughput was approximately 12,200 bbl/day, an increase of 7% from the previous quarter and consistent with the third quarter of 2020. In August 2021, Tidewater Renewables commissioned it's canola co-processing project and began processing canola feedstock which yields both renewable gasoline and renewable diesel.
Tidewater Midstream's daily throughput and refined product yields at PGR were as follows:
Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | |
Daily throughput (bbl) | 12,209 | 11,459 | 12,095 | 12,187 | 12,180 | 10,569 | 11,576 |
Refinery Yield (1) | |||||||
Gasoline yield | 45% | 45% | 39% | 39% | 44% | 42% | 42% |
Diesel yield | 42% | 43% | 49% | 49% | 43% | 43% | 46% |
Other (2) | 13% | 12% | 12% | 12% | 13% | 15% | 12% |
(1) Refinery yield includes crude, canola and intermediates. | |||||||
(2) Other refers to heavy fuel oil (HFO), LPG and feedstock consumed to fuel the refinery. |
Tidewater Midstream'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. Prince George crack spreads remained strong averaging just over $60/bbl during the quarter, consistent with the first and second quarter of 2021. The Corporation realized increased diesel demand during the third quarter, as compared to the second quarter of 2021, due to the end of spring breakup and continuation of the local industrial activity. Gasoline demand remained consistent quarter over quarter. The strong Prince George crack spread continues to demonstrate the strength of the regional refining market.
Tidewater Midstream continues to pursue numerous low capital and high rate of return debottleneck and optimization opportunities within its downstream business unit.
Pipestone Gas Plant
The Pipestone Gas Plant has a designed capacity of 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 the Alliance and NGTL pipeline systems. The facility is also pipeline connected to Pembina's liquid gathering systems for the C2+ and C5+ liquid streams. In 2021 the Corporation applied for and received an increase to the plant's licensed capacity to 110 MMcf/day.
The Pipestone Gas Plant processed its highest average volume of 97 MMcf/day in the third quarter of 2021, a 35% increase from the third quarter of 2020 and an increase of 5% from the second quarter of 2021. Facility availability for the third quarter of 2021 averaged 93%, an increase of 19% from the third quarter of 2020. During the month of September 2021, there was a six-day planned maintenance outage which resulted in a small decrease in facility availability as compared to the second quarter of 2021. Overall, the Pipestone Gas Plant continued to perform well during the quarter, with August averaging a record daily throughput of approximately 102 MMcf/d combined with 97% facility availability. The Montney area continues to remain very active, and the plant remains fully contracted with over 85% committed capacity on take-or-pay arrangements.
Brazeau River Complex and Fractionation Facility
The BRC is a core asset for Tidewater Midstream, 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 including the NGTL system and gas storage.
The Brazeau River fractionation facility performed well during the third quarter of 2021, despite third-party turnarounds, maintenance activities and significant disruptions in third-party distribution infrastructure. Through multiple egress options, Tidewater Midstream maintained throughput levels at the facilities and provided optionality for producers who were constrained by third-party force majeures.
Throughput at the BRC gas processing facility for the third quarter of 2021 increased by 8% compared to the second quarter of 2021. Strong AECO gas prices in the past six months have increased producer activity near the BRC. Tidewater Midstream continues to look for opportunities to increase third-party plant throughput by working diligently with producers to improve netbacks by utilizing the BRC's facilities.
Natural Gas Storage
Tidewater Midstream operates three natural gas storage reservoirs: 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 was notable in terms of natural gas price volatility at AECO, with cash prices ranging from $1.18 CAD/GJ to $4.80 CAD/GJ largely due to maintenance on the NGTL system. Operationally, all storage facilities performed well through the quarter and successfully met all delivery obligations. The Pipestone Gas Storage Facilities deliverability rates increased over the quarter as the facility was optimized for current reservoir pressures. Similarly, the deliverability at the Brazeau Nisku A and Brazeau Nisku F storage pools matched expectations throughout the quarter, helping meet Pioneer Pipeline's demand and realizing both storage and liquids extraction value.
The Pipestone Gas Storage Facility is largely contracted with take-or-pay contracts spanning through 2029 with multiple investment grade counterparties. The facility represents a significant contribution to Tidewater Midstream's fee-for-service gas storage business and offers producers at the Pipestone Gas Plant significant optionality via three egress solutions including connections to the TC Energy and Alliance systems and gas storage.
CAPITAL PROGRAM
Tidewater Midstream's 2021 capital program focuses on small-scale optimization projects along with its renewable initiatives. Tidewater Midstream continues to evaluate and execute smaller capital projects in the $5 million to $25 million capital cost range with strong short-term returns on investment.
During the third quarter of 2021, Tidewater Renewables announced its final investment decision on the 3,000 bbl/day renewable diesel and renewable hydrogen complex, which is expected to be in service the first quarter of 2023. The canola co-processing project achieved successful commissioning and start-up, slightly ahead of its planned schedule and first production of renewable diesel has commenced.
THIRD QUARTER 2021 EARNINGS CALL
In conjunction with the earnings release, investors will have the opportunity to listen to Tidewater Midstream's senior management review its third quarter 2021 results via conference call on Thursday, November 4, 2021 at 11:00 am MDT (1:00 pm EDT).
To access the conference call by telephone, dial 416-764-8659 (local / international participant dial in) or 1-888-664-6392 (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=1506446&tp_key=27428dd9e8
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 MIDSTREAM
Tidewater Midstream is traded on the TSX under the symbol "TWM". Tidewater Midstream's business objective is to build a diversified midstream and infrastructure company in the North American natural gas, natural gas liquids, crude oil, refined product and renewable space. Its strategy is to profitably grow and create shareholder value through the acquisition and development of oil and gas infrastructure. Tidewater Midstream 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, downstream facilities and various renewable initiatives.
Tidewater Midstream is a majority shareholder in Tidewater Renewables Ltd. ("Tidewater Renewables"), a multi-faceted, energy transition company focusing on the production of low carbon fuels. Tidewater Renewables' common shares are publicly traded on the TSX under the symbol "LCFS".
Additional information relating to Tidewater Midstream is available on SEDAR at www.sedar.com and at www.tidewatermidstream.com.
Advisory Regarding Forward-Looking Statements
Certain statements contained in this press release constitute forward-looking statements and forward-looking information (collectively referred to herein as, "forward-looking statements") within the meaning of applicable Canadian securities laws. Such forward-looking statements relate to future events, conditions or future financial performance of Tidewater Midstream based on future economic conditions and courses of action. All statements other than statements of historical fact may be forward-looking statements. Such forward-looking statements are often, but not always, identified by the use of any words such as "seek", "anticipate", "budget", "plan", "continue", "forecast", "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. 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 the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon.
In particular, this press release contains forward-looking statements pertaining to but not limited to the following:
Although the forward-looking statements contained in this press release are based upon assumptions which management of the Corporation believes to be reasonable, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. With respect to forward-looking statements contained in this press release, the Corporation has assumptions regarding, but not limited to:
The Corporation's actual results could differ materially from those anticipated in the forward-looking statements, as a result of numerous known and unknown risks and uncertainties and other factors including but not limited to:
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.
Management of the Corporation has included the above summary of assumptions and risks related to forward-looking statements provided in this press release in order to provide holders of common shares in the capital of the Corporation with a more complete perspective on the Corporation's current and future operations, and such information may not be appropriate for other purposes. The Corporation's actual results' performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Corporation will derive therefrom. Readers are therefore cautioned that the foregoing list of important factors is not exhaustive, and they should not unduly rely on the forward-looking statements included in this press release. Tidewater Midstream 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, other than as required by applicable securities law. All forward-looking statements contained in this press release are expressly qualified by this cautionary statement. Further information about factors affecting forward-looking statements and management's assumptions and analysis thereof is available in filings made by the Corporation with Canadian provincial securities commissions available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com.
Non-GAAP Measures
This press 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, 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.
In addition to reviewing Adjusted EBITDA on a consolidated basis, management reviews Adjusted EBITDA on a deconsolidated basis to highlight the Corporation's performance, excluding the portion of Adjusted EBITDA attributable to Tidewater Renewables. Investors should be cautioned that Adjusted EBITDA and Deconsolidated Adjusted EBITDA should not be construed as alternatives to net income (loss), net cash provided by (used in) 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 to attributable to shareholders" 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. Distributable cash flow attributable to shareholders also deducts distributable cash flow to non-controlling interest shareholders associated with Tidewater Renewables.
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.