CALGARY, April 17, 2020 /CNW/ - Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Corporation") (TSX: TWM) provides updated 2020 guidance, operational update and impacts from the COVID-19 pandemic.
As the situation with the COVID-19 pandemic continues to evolve, Tidewater is taking proactive and preventative measures to protect the health and safety of our workforce and do our part to limit the spread of COVID-19 in the community. The Corporation remains confident in our in-depth business continuity plans and our ability to execute during these challenging times. Tidewater wishes to thank all our employees, contractors and the communities where we operate for their extraordinary efforts and commitment during this unprecedented and difficult time.
OPERATIONAL UPDATE
Pioneer Disposition
As previously announced on March 12th, 2020 the sale of the Pioneer pipeline continues to proceed on the previously disclosed terms and timeline for cash proceeds of approximately $138 million which Tidewater will use to reduce indebtedness.
Pipestone Gas Plant
At Pipestone, all third-party infrastructure is now in place and Tidewater is pleased to announce throughput at the plant has reached design capacity and is currently averaging 95mmcf/d. The Pipestone Gas Plant is fully contracted with over 80% of the volume under take or pay contracts.
Prince George Refinery ("PGR")
Crack spreads at PGR have remained above $50/bbl vs. Tidewater's previously disclosed forecast of $44/bbl, however Tidewater has seen demand on refined products at Prince George decrease by approx. 10% - 20% for the last two weeks of March and the first two weeks of April. Refining margins for the first quarter will be impacted as PGR continues to process higher cost crude oil feedstock purchased prior to the price decline. With refined product pricing forecast to increase over the medium term, and the current price at which Tidewater is acquiring crude oil feedstock for PGR, Tidewater expects a positive impact to margins in the second quarter which will partially offset the expected decline in demand. It is anticipated that these factors resulting from the effects of the COVID-19 pandemic will impact Tidewater's first and second quarter earnings by approximately 10% - 20%.
Husky has issued a notice of force majeure under the offtake agreement at PGR as a result of decreased refined product demand related to COVID-19. Husky has indicated they remain committed to working with Tidewater on the impact to volume forecasts and the companies are actively exploring opportunities for incremental demand and volumes through the second quarter. Husky has committed to providing regular updated demand forecasts as the COVID-19 situation evolves. Tidewater continues to evaluate the merits of the force majeure. Tidewater is also actively marketing product outside the Prince George orbit as well as utilizing its large storage capacity at the refinery.
Tidewater plans to move forward with previously disclosed debottlenecking maintenance at Prince George in April which will last approximately two weeks and reduce throughput by approximately 40% for two weeks. The annual spring debottlenecking will enable Tidewater to throughput record volumes when refined product demand stabilizes.
Tidewater is encouraged by the resilience of the PGR asset in an unprecedented time and has not seen the drastic narrowing of crack spreads observed in other locations across North America. This further reinforces the refinery's long-term value in servicing the markets where it operates.
2020 Guidance
As a result of reduced refined product demand caused by the COVID-19 pandemic, Tidewater expects first and second quarter earnings to be impacted by 10% - 20%. Tidewater expects minimal impact to second half 2020 guidance should demand return to moderate levels post the COVID-19 pandemic and continues to monitor market conditions closely. Tidewater expects to exit 2020 with approximately 3.0x-3.5x net debt to Adjusted EBITDA proforma the sale of the Pioneer Pipeline.
First Quarter 2020 Earnings Call
Tidewater intends to release its first quarter 2020 results before market open on May 14, 2020. In conjunction with the earnings release, investors will have the opportunity to listen to Tidewater senior management review its first quarter 2020 results via conference call on Thursday, May 14, 2020 at 11:00 am MDT (1:00 pm EDT).
To access the conference call by telephone, dial 647-427-7451 (local / international participant dial in) or 1-888-231-8192 (North American toll free participant dial in). A question and answer session for analysts will follow management's presentation.
A live audio webcast of the conference call will be available by following this link: https://produceredition.webcasts.com/starthere.jsp?ei=1307036&tp_key=ad57628744 and will also be archived there for 90 days.
For those accessing the call via Cision's investor website, we suggest logging in at least 15 minutes prior to the start of the live event. For those dialing in, participants should ask to be joined into the Tidewater Midstream and Infrastructure Ltd. earnings call.
ABOUT TIDEWATER
Tidewater is traded on the TSX under the symbol "TWM". Tidewater's business objective is to build a diversified midstream and infrastructure company in the North American natural gas, natural gas liquids ("NGL"), crude oil and refined product space. Its strategy is to profitably grow and create shareholder value through the acquisition and development of oil and gas infrastructure. Tidewater plans to achieve its business objective by providing customers with a full service, vertically integrated value chain through the acquisition and development of oil and gas infrastructure including: gas plants, pipelines, railcars, trucks, export terminals storage facilities and downstream facilities.
Additional information relating to Tidewater is available on SEDAR at www.sedar.com and at www.tidewatermidstream.com.
Advisory Regarding Forward-Looking Statements
FORWARD-LOOKING INFORMATION
Certain statements contained in this news release constitute forward-looking statements and forward-looking information (collectively, "forward-looking statements"). Such forward-looking statements relate to possible events, conditions or financial performance of the Corporation based on future economic conditions and courses of action. All statements other than statements of historical fact are forward-looking statements. The use of any words or phrases such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "will likely result", "are expected to", "will continue", "is anticipated", "believes", "estimated", "intends", "plans", "projection", "outlook" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, assumptions, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Corporation believes there is a reasonable basis for the expectations reflected in the forward-looking statements, however no assurance can be given that these expectations will prove to be correct and the forward-looking statements included in this news release should not be unduly relied upon by investors.
Specifically, this press release contains forward-looking statements relating to but not limited to:
- Anticipated closing of the sale of the Pioneer pipeline on previously disclosed terms and timeline and the anticipated use of proceeds therefrom;
- Projections with respect to refining margins and product demand at the Prince George Refinery and the anticipated resulting impact therefrom;
- The estimated impact of the coronavirus disease (COVID-19) pandemic on Tidewater's earnings forecasts;
- PGR volume forecasts anticipated from Husky and the circumstances relating to the force majeure notice Husky has provided to the Corporation;
- Maintenance plans at the Prince George Refinery, the projected timeline and throughput and the projected impact on throughput resulting from such maintenance; and
- Forecast guidance and projections regarding 2020 exit rate net debt to Adjusted EBITDA.
Such forward-looking statements of information are based on a number of assumptions which may prove to be incorrect. In addition to other assumptions identified in this document, assumptions have been made regarding, among other things: Tidewater's ability to execute on its business plan, the timely receipt of all governmental and regulatory approvals; that any third party projects relating to the Corporation's divestitures will be sanctioned and completed as expected; that there are no unforeseen events preventing the performance of contracts; that there are no unforeseen material changes related to the Corporation's planned divestitures and that counterparties will comply with contracts in a timely manner; the availability and cost of labour and other industry services; current industry conditions, laws and regulations continuing in effect (or, where changes are proposed, such changes being adopted as anticipated); Husky volume demands from PGR, the realization of the anticipated benefits of projects that Tidewater is developing; and, that formal agreements with counterparties in circumstances where letters of intent or similar agreements have been executed and announced by Tidewater.
Actual results achieved will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. These known and unknown risks and uncertainties include, but are not limited to: risks and impacts related to widespread epidemic or pandemic outbreaks, including COVID-19; demand for refined products related thereto; the possibility that governmental policies or laws may change or governmental approvals may be delayed or withheld; failure to negotiate and conclude any required commercial agreements; non-performance of agreements in accordance with their terms; failure to execute formal agreements with counterparties in circumstances where letter of intent or similar agreements have been executed and announced by Tidewater; failure to close transactions as contemplated and in accordance with negotiated terms; non-performance or default by counterparties to agreements which Tidewater has entered in respect of its business; construction delays, labour and material shortages; technology and cyber security risks; and certain other risks detailed from time to time in Tidewater's public disclosure documents including, among other things, those detailed under the heading "Risk Factors" in Tidewater's management's discussion and analysis and annual information form for the year ended December 31, 2019.
The above summary of assumptions and risks related to forward-looking statements in this news release has been provided in order to provide shareholders and potential investors with a more complete perspective on Tidewater's current and future operations and such information may not be appropriate for other purposes. There is no representation by Tidewater that actual results achieved will be the same in whole or in part as those referenced in the forward-looking statements and Tidewater does not undertake any obligation to update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise except as may be required by applicable securities law.
Non-GAAP Measures
This news release refers to "Adjusted EBITDA" which do not have any standardized meaning prescribed by generally accepted accounting principles in Canada ("GAAP"). Adjusted EBITDA is calculated as income or loss before interest, taxes, depreciation, share-based compensation, unrealized gains/losses, non-cash items, transaction costs and items that are considered non-recurring in nature.
Tidewater Management believes that Adjusted EBITDA provide useful information to investors as they provide an indication of results generated from the Corporation's operating activities prior to financing, taxation and non-recurring/non-cash impairment charges occurring outside the normal course of business. Management utilizes Adjusted EBITDA to set objectives and as a key performance indicator of the Corporation's success. In addition to its use by Management, Tidewater also believes Adjusted EBITDA is a measure widely used by security analysts, investors and others to evaluate the financial performance of the Corporation and other companies in the midstream industry. Investors should be cautioned that Adjusted EBITDA should not be construed as alternatives to earnings, cash flow from operating activities or other measures of financial results determined in accordance with GAAP as an indicator of the Corporation's performance and may not be comparable to companies with similar calculations.
For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the closest comparable GAAP measure, see the "Non-GAAP Measures" section of Tidewater's most recent MD&A which is available on SEDAR.
SOURCE Tidewater Midstream and Infrastructure Ltd.
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Joel MacLeod, Chairman, President and CEO, Tidewater Midstream & Infrastructure Ltd., Phone: 587.475.0210, Email: jmacleod@tidewatermidstream.comCopyright CNW Group 2020
