Tidewater Midstream and Infrastructure Ltd. Announces Fourth Quarter 2019 Results and Operational Update

Mar 12, 2020

CALGARY, March 12, 2020 /CNW/ - Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Corporation") (TSX: TWM) is pleased to announce that it has filed its annual consolidated financial statements and Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2019.

Recent Market Volatility

Tidewater takes the severe downturn in the energy industry very seriously and has been working extremely hard over the past three years to minimize its major risks with a clear focus on deleveraging after completing a successful 2019 capital program.  Low commodity prices, and more specifically, WTI crude oil prices below USD$40/bbl have been a key risk since inception. The Corporation has been focused on growing and acquiring defensive assets that perform well in low commodity price environments, while also focusing on materially improving customers and contracts. These defensive assets include its gas storage assets, which are contracted to six investment grade counterparties, the Pioneer Pipeline which allows producers access to an end-market for their natural gas, and more recently its Prince George Refinery which also has a five-year offtake agreement with an investment grade counterparty.  Approximately 50% of the Corporation's cashflow is now derived from investment grade counterparties which is critical in an extremely challenging energy environment.  The Prince George Refinery is now the Corporation's largest defensive asset and continues to deliver annual Adjusted EBITDA over $75 million even with WTI priced in the low thirties.  The announcement of the sale of the Pioneer Pipeline today reiterates the Corporation's focus on its top priority of deleveraging and Tidewater expects to achieve its forecasted Adjusted EBITDA range from $200 million - $220 million for 2020. Exit net debt to Adjusted EBITDA for 2020, assuming closing of the Pioneer Pipeline sale, is expected to be approximately 3.0x. Tidewater wishes to thank all its shareholders, employees, customers and stakeholders for their support in these challenging times.

Recent Highlights

• Tidewater exited 2019 with record Adjusted EBITDA of $40.0 million or $0.12 per share in the fourth quarter of 2019, compared to $20.9 million or $0.06 per share in the fourth quarter of 2018, resulting in over 90% Adjusted EBITDA per share growth in 2019. Adjusted EBITDA in the fourth quarter was positively impacted by new assets placed into service, including the Pipestone Gas Plant and the acquisition of the Prince George Refinery.
• On March 11, 2020, Tidewater and TransAlta Corporation entered into a Letter of Intent to sell the majority of the assets of Pioneer Pipeline LP ("Pioneer") to NOVA Gas Transmission Ltd. ("NGTL") for gross proceeds of $255 million.  Tidewater and TransAlta have also entered a separate Letter of Intent whereby TransAlta will pay Tidewater $10.5 million for certain assets that are not part of the NGTL transaction, resulting in approximately $138 million in total cash consideration net to Tidewater.  Proceeds from the transaction will be used to accelerate Tidewater's commitment to reduce debt in 2020. Tidewater expects to replace the Pioneer EBITDA through new commercial arrangements with NGTL with no additional capital.
• With record distributable cash flow expected for 2020, and assuming closing of the Pioneer sale, Tidewater expects to reduce net debt to Adjusted EBITDA to be approximately 3.0x by the end of 2020. Tidewater's top priorities for 2020 remain deleveraging and distributable cash flow generation. 
• On November 1, 2019, Tidewater completed its acquisition of the Prince George Refinery (the "Refinery") for total cash proceeds of $271.2 million, consisting of a $215.0 million base purchase price and inventory (primarily related to light oil feedstock, refined product and line fill). The Prince George Refinery is a 12.0 Mbbl/d light oil refinery that predominantly produces low sulfur diesel and gasoline, in addition to other products, to supply the greater Prince George region. The Prince George region is generally in short supply of refined products making the Refinery a critical piece of infrastructure. Since the close of the acquisition, the Prince George Refinery continues to exceed expectations.
• Net loss attributable to shareholders was $13.8 million or $0.04 per share for the fourth quarter of 2019, which includes approximately $14 million of one-time transaction costs primarily related to the acquisition of the Prince George Refinery.
• Net cash provided by operating activities totaled $68.2 million for the fourth quarter of 2019, with distributable cash flow of $17.5 million and a payout ratio of 19% for the quarter and 24% for the year ended December 31, 2019.
• Throughput at the Pipestone Gas Plant continues to increase. Tidewater expects to achieve throughput at or near full capacity by the end of the first quarter of 2020.
• Throughput on the Pioneer Pipeline continued to increase through the fourth quarter of 2019, with volumes reaching approximately 130 MMcf/day in the first week of November 2019.
• Tidewater continues to focus on environmental, social and governance initiatives in 2020. With Tidewater's integrated network of infrastructure assets, it is well positioned to be an important part of this evolution, including distributing clean natural gas to TransAlta's coal fired power generating stations that are converting to natural gas. Further, the Prince George Refinery is one of the only refineries in Western Canada that can utilize renewables. Canola oil, biodiesel and ethanol can be utilized at the Refinery to help reduce Tidewater's carbon footprint, along with several other green initiatives. Tidewater recently established an Environmental, Social and Governance ("ESG") committee comprised of Tidewater's Chief Executive Officer, Chief Financial Officer, Chief Legal Officer and Vice President, Health, Safety, Environment and Regulatory, among other Tidewater personnel (the "ESG Committee"), to guide Tidewater's efforts in measuring and reporting on the Corporation's ESG metrics and improving the Corporation's ESG performance.
• Tidewater reiterates 2020 guidance and its commitment to deleveraging, with forecasted Adjusted EBITDA expected to range from $200MM - $220MM for the full year. Year-end net debt to Adjusted EBITDA, assuming closing of the Pioneer Pipeline sale, is expected to be approximately 3.0x.  

Selected financial and operating information is outlined below and should be read with Tidewater's consolidated financial statements and related MD&A as at and for the year ended December 31, 2019 which are available at www.sedar.com and on our website at www.tidewatermidstream.com.

Financial Overview

Consolidated Financial Highlights

 

OUTLOOK AND CORPORATE UPDATE

Tidewater has significantly transformed its business over the past 24 months with the successful sanctioning, completion and commissioning of the Pipestone Gas Plant, Pipestone Gas Storage Facility and Pioneer Pipeline, and the acquisition of the Prince George Refinery. Tidewater continues to build an integrated and connected midstream infrastructure network from the well head to the end consumer in order to increase value for its customers and itself. Over the past two years, Tidewater has added over ten new take-or-pay contracts ranging in term from five to ten years and including six new investment-grade counterparties which now account for a significant portion of the Corporation's cash flows. Tidewater continues to offer premium service to its customers through multiple egress options at its facilities (including its Alliance, TC Energy and storage connections at Pipestone, and its Pioneer, TC Energy and storage connections at Brazeau) and exposure to premium markets through access to its rail infrastructure and refined product markets.

The completion of the Pipestone Gas Plant, Pipestone Gas Storage Facility, Pioneer Pipeline and the acquisition of the Prince George Refinery have further strengthened Tidewater's asset mix. With its diverse asset mix, Tidewater is able to generate cash flow in varying commodity price environments and provide its customers opportunities to capitalize on high and low commodity prices.

Tidewater reiterates its 2020 guidance and its commitment to deleveraging, with forecasted Adjusted EBITDA expected to range from $200MM - $220MM for the full year. Year-end net debt to Adjusted EBITDA, assuming closing of the Pioneer Pipeline sale, is expected to be approximately 3.0x.

Prince George Refinery

On November 1, 2019, Tidewater closed its acquisition of the Prince George Refinery from Husky Energy Inc. ("Husky"). The Prince George Refinery is a 12,000 bbl/day light oil refinery that predominantly produces low sulphur diesel and gasoline, in addition to other products, to supply the greater Prince George region. The Prince George Refinery has significant onsite storage capacity of greater than 1.0 MMbbl and flexible logistics, with pipeline, rail and truck connectivity in place. The Prince George region is generally in short supply of refined products and the Refinery's location within the region makes it a critical piece of infrastructure with a significant logistical advantage to address the domestic demand in northern British Columbia.

As part of the acquisition, in addition to infrastructure, Tidewater purchased hydrocarbon inventory in storage which included approximately 30 days of refined products valued at market prices resulting in minimal margins in November 2019. At December 31, 2019, all refined product inventory purchased from Husky had been fully depleted.

Tidewater entered into a 5-year offtake agreement with Husky for 90% of the nameplate capacity on diesel and gasoline volumes produced at the Prince George Refinery. The offtake agreement reflects committed volumes that Husky has agreed to purchase.

Refinery utilization refers to the percentage of crude oil throughput processed through the refinery divided by the Refinery's total capacity. During the fourth quarter of 2019, Tidewater achieved over 95% utilization at the Prince George Refinery, which is consistent with previous quarters except for the second quarter of 2019. During the second quarter of 2019, prior to Tidewater's ownership, the Prince George Refinery completed a successful turnaround. Turnarounds at the Refinery are currently scheduled to occur every three years.  Given the integrity upgrades and improved processes completed during the 2019 turnaround, Tidewater is assessing the possibility of extending the turnaround schedule to every four years.

As with any refinery, Tidewater's refining margins are largely driven by commodity prices, particularly cost of crude feedstock and other raw materials, along with market prices for refined products.  The Refinery achieved consistent operational run time during the fourth quarter and did not experience any unplanned maintenance or downtime. Throughput, production and sales to its offtake partner were in line with expectations during the fourth quarter of 2019. The Prince George Refinery typically sources its crude supply from local producers in northeastern British Columbia and transports its feedstock via the Pembina Western Pipeline system.

Another common performance metric used in downstream operations is the crack spread. The crack spread illustrates the gross margin realized per barrel of crude feedstock processed, before any refinery costs are considered. The crack spread is calculated by taking the difference between the average refined product sales price of gasoline and diesel and the price of crude feedstock. The crack spread is an indicator of Refinery economics, however does not reflect the true gross margin, as some crude is not converted to gasoline and diesel but to lower value products such as liquified petroleum gas (LPG) and fuel oil.  Product pricing in British Columbia also reflects the higher cost of regulatory compliance due to the provincial Renewable and Low Carbon Fuel Standards, the costs of which are born by the refiner.

A typical calculation of refinery crack spreads either uses a 3:2:1 ratio or a 2:1:1 ratio.  This is the ratio of pricing of crude supply to gasoline and diesel production.  The Prince George Refinery's closest ratio is a 2:1:1 crack, where approximately two bbls of crude feedstock convert to one bbl of gasoline and one bbl of diesel.

The refining margin in Prince George for gasoline and diesel typically follows the market in Edmonton as this is the alternate supply location for Central and Northern British Columbia, which sells at a premium to the NYMEX crack spread. The refined products sold by Tidewater are mainly priced off the Prince George rack prices posted by Suncor, Imperial and Shell.

Tidewater's refined product yields at the Prince George Refinery for the fourth quarter of 2019 were as follows:

Tidewater expects over 90% utilization during the first quarter of 2020. Early in the second quarter of 2020, Tidewater will complete scheduled online maintenance activities at the Prince George Refinery which will require crude throughput reductions of approximately 25% for a duration of two weeks.  This is the only scheduled maintenance at the Prince George Refinery during 2020.

Tidewater is currently constructing butane and natural gasoline blending infrastructure at the Prince George Refinery for approximately $2 million of capital with a forecasted payout of less than 18 months. 

The Corporation continues to evaluate opportunities to participate in future low-carbon fuel standard ("LCFS") agreements and continues to execute on the LCFS projects initiated by Husky prior to the acquisition.

Pipestone Gas Plant

The Pipestone Gas Plant is designed to process approximately 100 MMcf/day of natural gas. The project includes an acid gas injection well, saltwater disposal well, and pipelines directly connected to the Pipestone Gas Storage Facility, as well as connections to both Alliance and TC Energy pipelines.

Tidewater began processing raw natural gas and natural gas liquids in mid-September 2019. Throughput continues to increase, with December 2019 averaging over 50 MMcf/day and the first 45 days of 2020 averaging throughput of approximately 65 MMcf/day. The Pipestone Gas Plant experienced operational issues during fourth quarter commissioning and was restricted due to third party pipeline infrastructure which is expected to be fully completed at the end of the first quarter of 2020. Tidewater expects to increase throughput to near full capacity by the end of the first quarter of 2020. The Pipestone Gas Plant is fully contracted.

Pioneer Pipeline

The Pioneer Pipeline is a 120km natural gas pipeline connecting Tidewater's Brazeau River Complex ("BRC") to TransAlta's generating units at Keephills, and an 11km lateral connecting to Sundance. The Pioneer Pipeline has an initial capacity of 130 MMcf/day , which may be expanded to approximately 440 MMcf/day. The pipeline has allowed TransAlta to increase the amount of natural gas it co-fires at its Sundance and Keephills coal-fired units, resulting in lower carbon emissions and costs. TransAlta is a 50% working interest owner in the pipeline.

 The Pioneer Pipeline was fully commissioned in the second quarter of 2019. Tidewater has worked together with TransAlta to meet their volume requirements at Keephills and Sundance. 

On March 11, 2020, Tidewater and TransAlta Corporation entered a Letter of Intent to sell the majority of the assets of Pioneer Pipeline LP to NGTL for gross proceeds of $255 million.  Tidewater and TransAlta have also entered into a separate Letter of Intent whereby TransAlta will pay Tidewater $10.5 million for certain assets that are not part of the NGTL transaction, resulting in approximately $138 million in total cash consideration net to Tidewater.  Proceeds from the transaction will be used to accelerate Tidewater's commitment to achieve approximately 3.0x net debt to Adjusted EBITDA by year-end 2020. 

Tidewater and NGTL have agreed to terms and conditions to qualify Tidewater to receive interruptible storage services ("IT-S Service") at Tidewater's Brazeau River Complex storage facilities ("BRC Storage Facilities"). With the IT-S Service, Tidewater will be able to attract new, creditworthy storage customers at the BRC Storage Facilities, creating new future expansion opportunities to increase storage capacities at the BRC Storage Facilities.

Subject to regulatory approvals, Tidewater and NGTL have also agreed to terms and conditions to qualify Tidewater for NGTL services with respect to the natural gas currently transported on the Pioneer Pipeline and incremental natural gas from increased access to the NGTL system, which will lead to higher fractionation and processing utilization levels at the BRC. The terms and conditions of this arrangement would be for a similar term as TransAlta's current 15-year take-or-pay agreement on the Pioneer Pipeline, resulting in Tidewater's proforma Adjusted EBITDA remaining unchanged following the close of the transaction.

The parties are expected to enter the purchase and sale agreement prior to May 31, 2020, and the proposed transactions are expected to close concurrent with regulatory approval for the transaction.

Brazeau River Complex and Fractionation Facility

Throughput at the BRC for the fourth quarter of 2019 was in-line with the previous quarter. Tidewater is working diligently with producers to improve netbacks by fully utilizing the BRC's facilities, including its two NGL pipeline connections, condensate pipeline connection, truck loading and offloading facilities, fractionation, natural gas storage facilities and two natural gas sales pipeline connections.

 The Brazeau River Fractionation facility continued to perform well through the fourth quarter of 2019 and has maintained a near capacity throughput since the start of the NGL contract year.  The NGL Marketing business has grown the supply base with two investment-grade customers and developed strategic relationships with several other producers in central and northern Alberta.  Despite a number of headwinds that impacted the Western Canadian NGL market over the past 6-12 months, including Alberta EnviroFuels facility outage, the CN Rail strike, rail blockades, and fractionation constraints, Tidewater has successfully maintained flexibility and mitigated the majority of the burden for its customers through its network. 

The Brazeau River Complex remains a flagship asset for Tidewater, offering a full suite of services to producers, including C2, C3, C4 and C5 pipeline connections, NGL fractionation capacity, sweet and sour deep-cut gas processing capability, and two natural gas egress solutions given the BRC's connection to the NGTL system, and the Pioneer Pipeline. 

Natural Gas Storage

Tidewater operates three natural gas storage reservoirs at two different facilities; Dimsdale Paddy A (Pipestone Gas Storage Facility), Brazeau Nisku F, and Brazeau Nisku A (Brazeau River Gas Storage Facility). The Pipestone Gas Storage Facility and the Brazeau River Gas Storage Facility are owned through joint ventures with a private Canadian entity and accounted for as equity investments.

The fourth quarter of 2019 saw AECO natural gas price volatility return to more normal levels, after an extremely volatile summer period. 

The Pipestone Gas Storage Facility performed well in the fourth quarter of 2019 as it transitioned from injections in October to withdrawals in November and December. The facility also received volumes from the newly commissioned Pipestone Gas Plant during the quarter. Additionally, the Pipestone Gas Storage Facility successfully demonstrated its inherent optionality with its ability to inject or withdraw while delivering gas to both Alliance Pipeline at the Saskatoon Mountain meter station and to TC Energy's NGTL at Pipestone Creek.

The Pipestone Gas Storage Facility is fully contracted with take-or-pay contracts spanning as long as eight-years with multiple investment-grade counterparties. The facility represents a significant step forward in Tidewater's fee-for-service gas storage business and offers producers at the Pipestone Gas Plant significant optionality where the plant has three egress solutions including connections to the TC Energy and Alliance systems, and gas storage.

With the Pioneer Pipeline connection to BRC and both Nisku A and Nisku F Brazeau facilities, the storage pools successfully utilized their connectivity to meet supply commitments through the November and December 2019 periods. Withdrawals are scheduled to continue throughout the balance of the winter.

Overall, 2019 was a very successful year across all storage facilities.  Summer price volatility combined with robust winter withdrawal performance yielded strong 2019 results, and further demonstrated all three facilities should continue to meet or exceed deliverability specifications into 2020.

CAPITAL PROGRAM

Tidewater has completed its 2019 capital program with the commissioning of three of the largest capital projects in the Corporation's history related to the Pioneer Pipeline, Pipestone Gas Plant and Pipestone Gas Storage Facility. During the fourth quarter, Tidewater also completed work on the previously disclosed additional liquids handling and blending infrastructure at Pipestone, extended gathering lines at Pipestone to further bolster the plant's capture area, and completed the majority of cleanup for the related pipeline projects.

Tidewater also completed previously committed work at the Prince George Refinery related to the re-commissioning of storage capacity at the Refinery's tank farm. With almost one million barrels of crude oil and refined product storage capacity at the Refinery, Tidewater is well positioned to take advantage of continued market volatility.   

Tidewater's focus over the next 12 months is to employ the related cashflow from its large completed capital projects and the Prince George Refinery, as well as proceeds from the Pioneer Pipeline sale, towards deleveraging with a target net debt / EBITDA ratio of approximately 3.0x by the end of 2020. To date, Tidewater has not committed to a significant capital program in 2020, however continues to evaluate smaller capital projects with the potential to generate returns in excess of 50%.

BIRCH HILL TO JOIN TIDEWATER BOARD OF DIRECTORS

Tidewater is pleased to announce that it intends to expand its Board of Directors with the addition of Mr. Michael J. Salamon and Mr. Neil McCarron of Birch Hill Equity Partners Management Inc. ("Birch Hill").  Mr. Salamon and Mr. McCarron , acting as representatives of Birch Hill, and one additional new independent nominee to be mutually agreed on by Tidewater and Birch Hill, will be included as proposed directors in Tidewater's management slate of directors to be put forth for appointment at the Corporation's next annual general meeting of shareholders expected to be held on or around May 28, 2020. Birch Hill has been a strong supporter of Tidewater since 2018 and currently holds approximately 22% of Tidewater's issued and outstanding common shares ("Shares"). Birch Hill is a leading Canadian mid-market private equity firm with approximately $3 billion in capital under management, and a further $1.75 billion of committed capital in its latest Fund VI, with a 25-year history of driving growth and delivering returns to investors. Tidewater's agreement with Birch Hill, which includes other customary covenants by each of the parties, will be available under the Corporation's profile on SEDAR at www.sedar.com.

APPLICATION FOR NORMAL-COURSE ISSUER BID

The Corporation intends to make an application to implement a normal course issuer bid ("NCIB") ‎through the facilities of the Toronto Stock Exchange ("TSX") or alternative trading systems, if eligible, ‎for a portion of its common shares. The Corporation's NCIB will be made in accordance ‎with the requirements of the TSX and remains subject to TSX approval. Further details regarding the ‎NCIB will be provided following TSX approval.‎

FOURTH QUARTER 2019 EARNINGS CALL  

In conjunction with this earnings release, investors will have the opportunity to listen to Tidewater senior management review its fourth quarter and full year results of fiscal 2019 via conference call on Thursday, March 12, 2020 at 11:00 am MDT (1:00 pm EDT).

To access the conference call by telephone, dial 647-427-7450 (local / international participant dial in) or 1-888-231-8191 (North American toll free participant dial in). A question and answer session for analysts will follow management's presentation.

A live audio webcast of the conference call will be available by following this link: https://event.on24.com/wcc/r/2219762/C2950EE968DA2CCA2B3DE056C327A9C5 and will also be archived there for 90 days.

For those accessing the call via Cision's investor website, we suggest logging in at least 15 minutes prior to the start of the live event. For those dialing in, participants should ask to be joined into the Tidewater Midstream and Infrastructure Ltd. earnings call.

FIRST QUARTER 2020 DIVIDEND ANNOUNCEMENT

Tidewater is pleased to announce that its Board of Directors has declared a dividend for the first quarter 2020 of $0.01 per common share payable on or about April 30, 2020 to shareholders of record on March 31, 2020. The ex-dividend date is March 30, 2020. This dividend is an eligible dividend for the purpose of the Income Tax Act (Canada).

ABOUT TIDEWATER

Tidewater is traded on the TSX under the symbol "TWM". Tidewater's business objective is to build a diversified midstream and infrastructure company in the North American natural gas, natural gas liquids ("NGL"), crude oil and refined product space. Its strategy is to profitably grow and create shareholder value through the acquisition and development of oil and gas infrastructure. Tidewater plans to achieve its business objective by providing customers with a full service, vertically integrated value chain through the acquisition and development of oil and gas infrastructure including: gas plants, pipelines, railcars, trucks, export terminals storage facilities and downstream facilities.

Additional information relating to Tidewater is available on SEDAR at www.sedar.com and at www.tidewatermidstream.com. 

Advisory Regarding Forward-Looking Statements

FORWARD-LOOKING INFORMATION

Certain statements contained in this news release constitute forward-looking statements and forward-looking information (collectively, "forward-looking statements"). Such forward-looking statements relate to possible events, conditions or financial performance of the Corporation based on future economic conditions and courses of action. All statements other than statements of historical fact are forward-looking statements. The use of any words or phrases such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "will likely result", "are expected to", "will continue", "is anticipated", "believes", "estimated", "intends", "plans", "projection", "outlook" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, assumptions, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Corporation believes there is a reasonable basis for the expectations reflected in the forward-looking statements, however no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon by investors.

Specifically, this press release contains forward-looking statements relating to but not limited to:

• projections regarding attainment of throughput at or near capacity by the end of the first quarter of 2020 at the Pipestone Gas Plant;
• anticipated increase to cash flows in a variety of commodity price environments and projected use of such cash flow to reduce the Corporation's leverage ratios;
• anticipated closing of a transaction to sell the majority of the assets of Pioneer Pipeline LP to NGTL, the sale of certain ancillary assets to TransAlta Corporation, and Tidewater's expectations to replace EBITDA generated by the Pioneer Pipeline with no additional capital;
• projected use of proceeds from the sale of the majority of the assets of Pioneer Pipeline LP;
• expectations to reduce net debt to Adjusted EBITDA to approximately 3.0x by the end of 2020;
• anticipated focus on environmental, social and governance initiatives in 2020 and expectations to improve ESG disclosure with the introduction of ESG metrics on the Tidewater website;
• projections regarding 2020 guidance and a commitment by Tidewater to deleveraging, projections regarding forecasted EBITDA and net debt to Adjusted EBITDA;
• projected turnaround and maintenance schedules at the PGR with corresponding crude throughput reductions;
• expectations regarding utilization at the PGR; and
• expectations that net cash provided by operating activities, cash flow generated from growth projects and cash available from Tidewater's Senior Credit Facility and other sources of financing will be sufficient to meet its obligations and financial commitments and will provide sufficient funding for anticipated capital expenditures.

Such forward-looking statements of information are based on a number of assumptions which may prove to be incorrect.  In addition to other assumptions identified in this document, assumptions have been made regarding, among other things:

• general economic and industry trends;
• oil and gas industry expectation and development activity levels and the geographic region of such activity;
• the success of the Corporation's operations;
• anticipated timelines and budgets being met in respect of the Corporation's projects and operations;
• future natural gas, crude oil and NGL prices;
• the Corporation's ability to obtain and retain qualified staff and equipment in a timely and cost-effective manner;
• assumptions regarding amount of operating costs to be incurred;
• that proposed transactions will close as expected;
• that counterparties will comply with contracts in a timely manner;
• that there are no unforeseen material costs relating to the facilities which are not recoverable from customers;
• distributable cash flow and net cash provided by operating activities are consistent with expectations;
• the ability to obtain additional financing on satisfactory terms;
• the availability of capital to fund future capital requirements relating to existing assets and projects;
• the ability of Tidewater to successfully market its products;
• the Corporation's future debt levels and the ability of the Corporation to repay its debt when due;
• foreign currency, exchange and interest rates;
• that any third-party projects relating to the Corporation's growth projects will be sanctioned and completed as expected;
• the amount of future liabilities relating to lawsuits and environmental incidents and the availability of coverage under the Corporation's insurance policies;
• the ability of the Corporation to obtain equipment, services, supplies and personnel in a timely manner and at an acceptable cost to carry out its evaluations and activities; and
• that all required regulatory and environmental approvals for capital projects can be obtained on the necessary terms and in a timely manner.

Actual results achieved will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors including but not limited to:

• general economic, political, market and business conditions, including fluctuations in interest rates, foreign exchange rates and stock market volatility;
• activities of producers and customers and overall industry activity levels;
• the regulatory environment and decisions and First Nations and landowner consultation requirements;
• that receipt of third party, regulatory, environmental and governmental approvals and consents relating to Tidewater's capital projects can be obtained on the necessary terms and in a timely manner;
• the ability to secure land and water, including obtaining and maintaining land access rights;
• operational matters, including potential hazards inherent in the Corporation's operations and the effectiveness of health, safety, environmental and integrity programs;
• fluctuations in commodity prices, inventory levels and supply/demand trends;
• actions by governmental authorities, including changes in government regulation, tariffs and taxation;
• changes in operating and capital costs, including fluctuations in input costs;
• changes in environmental and other regulations;
• activities of other facility owners, including access to third-party facilities;
• competition for, among other things, business, capital, acquisition opportunities, requests for proposals, materials, equipment, labour and skilled personnel;
• environmental risks and hazards, including risks inherent in the transportation of NGLs which may create liabilities to the Corporation in excess of the Corporation's insurance coverage, if any;
• failure of third parties' reviews, reports and projections to be accurate;
• the possibility that the Corporation fails to formalize agreements with counterparties;
• non-performance or default by counterparties to agreements which the Corporation or one or more of its subsidiaries has entered into in respect of its business;
• actions by joint venture partners or other partners which hold interests in certain of the Corporation's assets;
• construction and engineering variables associated with capital projects, including the availability of contractors, engineering and construction services, accuracy of estimates and schedules, and the performance of contractors;
• the availability of capital on acceptable terms;
• changes in the credit-worthiness of counterparties;
• adverse claims made in respect of the Corporation's properties or assets;
• changes in the political environment and public opinion;
• risks associated with epidemics, pandemics, public health emergencies, quarantines and any communicable disease outbreaks (including COVID-19);
• risks and liabilities associated with the transportation of dangerous goods;
• risks and liabilities resulting from derailments;
• competitive action by other companies;
• effects of weather conditions;
• reputational risks;
• reliance on key personnel;
• technology and security risks, including cybersecurity;
• potential losses which would stem from any disruptions in production, including work stoppages or other labour difficulties, or disruptions in the transportation network on which the Corporation is reliant;
• technical and processing problems, including the availability of equipment and access to properties;
• changes in gas composition; and
• failure to realize the anticipated benefits of recently completed acquisitions.

The foregoing lists are not exhaustive.  Additional information on these and other factors which could affect the Corporation's operations or financial results are included in the Corporation's most recent AIF and in other documents on file with the Canadian Securities regulatory authorities.

The above summary of assumptions and risks related to forward-looking statements in this press release is intended to provide shareholders and potential investors with a more complete perspective on Tidewater's current and future operations and such information may not be appropriate for other purposes. There is no representation by Tidewater that actual results achieved will be the same in whole or in part as those referenced in the forward-looking statements and Tidewater does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities law.

Any financial outlook or future-oriented financial information, as defined by applicable securities legislation, has been approved by management of Tidewater as of May 13, 2019. A financial outlook or future-oriented financial information is provided for the purpose of providing information about management's current expectations and goals relating to the future of Tidewater. Readers are cautioned that reliance on such information may not be appropriate for other purposes. The purpose of the future-oriented financial information contained herein including but not limited to future periods of net income and Adjusted EBITDA is to assist investors, shareholders, and others in understanding certain financial metrics relating to expected future financial results for the purpose of evaluating the performance of Tidewater's business for future periods. This information may not be appropriate for other purposes. The results and conclusions of these assessments, along with the known and unknown risks, uncertainties and other factors referred to above, could impact Tidewater's estimates and the information related to such future periods contained herein and any such impact could be material.

Non-GAAP Measures

This news release refers to "Adjusted EBITDA" which do not have any standardized meaning prescribed by generally accepted accounting principles in Canada ("GAAP").  Adjusted EBITDA is calculated as income or loss before interest, taxes, depreciation, share-based compensation, unrealized gains/losses, non-cash items, transaction costs and items that are considered non-recurring in nature.

Tidewater Management believes that Adjusted EBITDA provide useful information to investors as they provide an indication of results generated from the Corporation's operating activities prior to financing, taxation and non-recurring/non-cash impairment charges occurring outside the normal course of business.  Management utilizes Adjusted EBITDA to set objectives and as a key performance indicator of the Corporation's success.  In addition to its use by Management, Tidewater also believes Adjusted EBITDA is a measure widely used by security analysts, investors and others to evaluate the financial performance of the Corporation and other companies in the midstream industry.  Investors should be cautioned that Adjusted EBITDA should not be construed as alternatives to earnings, cash flow from operating activities or other measures of financial results determined in accordance with GAAP as an indicator of the Corporation's performance and may not be comparable to companies with similar calculations.

"Distributable cash flow" is a non-GAAP financial measure and is calculated as net cash used in operating activities before changes in non-cash working capital plus transaction costs, non-recurring expenses and after any expenditures that use cash from operations. Changes in non-cash working capital are excluded from the determination of distributable cash flow because they are primarily the result of seasonal fluctuations or other temporary changes and are generally funded with short term debt or cash flows from operating activities. Deducted from distributable cash flow are maintenance capital expenditures, including turnarounds as they are ongoing recurring expenditures. Transaction costs are added back as they vary significantly quarter to quarter based on the Corporation's acquisition and disposition activity. It also excludes non-recurring transactions that do not reflect Tidewater's ongoing operations. Distributable cash flow also excludes cash outflows related to the purchase of linefill on pipelines and tank bottoms for storage tanks, whereby Tidewater transports oil on third-party pipelines for which it is required to supply linefill or tank bottoms for storage. As these pipelines/storage tanks are owned by third parties, the linefill is not considered to be a component of the Corporation's property and equipment. The linefill is classified as a non-current inventory asset and an operating cash outflow, however linefill is not a principal revenue-producing activity and therefore is considered an investment to gain access as a shipper on the pipeline.

Management of the Corporation believes distributable cash flow is a useful metric for investors when assessing the amount of cash flow generated from normal operations and to evaluate the adequacy of internally generated cash flow to fund dividends.

For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the closest comparable GAAP measure, see the "Non-GAAP Measures" section of Tidewater's most recent MD&A which is available on SEDAR.

SOURCE Tidewater Midstream and Infrastructure Ltd.