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Tidewater Midstream and Infrastructure Ltd. Announces Second Quarter 2020 Results and Operational Update

CNW Group - Thu Aug 13, 6:00AM CDT

Tidewater Midstream and Infrastructure Ltd. Announces Second Quarter 2020 Results and Operational Update

Canada NewsWire

CALGARY, AB , Aug. 13, 2020 /CNW/ - Tidewater Midstream and Infrastructure Ltd. (" Tidewater " or the " Corporation ") (TSX:TWM.TO) is pleased to announce that it has filed its condensed interim consolidated financial statements and Management's Discussion and Analysis ( " MD&A " ) for the three and six-month period ended June 30, 2020 .

SECOND-QUARTER 2020 FINANCIAL PERFORMANCE

Highlights

  • Adjusted EBITDA increased by $20.1 million to $41.9 million in the second quarter of 2020 as compared to $21.8 million in the second quarter of 2019, resulting in over 92% EBITDA growth as a result of the acquisition of the Prince George Refinery ("PGR") and the commissioning of the Pipestone Gas Plant. Net loss attributable to shareholders was $0.3 million for the second quarter of 2020 as compared to $4.1 million in the second quarter of 2019.
  • Net cash provided by operating activities totaled $59.0 million for the second quarter of 2020, with distributable cash flow of $10.6 million and a payout ratio of 32%.
  • On June 18, 2020 , the Corporation entered into a definitive purchase and sale agreement for its 50% interest in the Pioneer Pipeline LP to NOVA Gas Transmission Ltd. ("NGTL") for gross proceeds of $255 million (the "Pioneer Transaction"). In addition, Tidewater and TransAlta Corporation ("TransAlta") have agreed to terms whereby, upon closing of the Pioneer Transaction, TransAlta will pay Tidewater $10.5 million for certain ancillary assets not included in the Pioneer Transaction, and for completion of budgeted restoration work, resulting in approximately $138 million in total cash consideration net to Tidewater. Tidewater expects to close the transaction by year-end 2020, however delays in obtaining regulatory approvals could impact the expected closing date.
  • The Corporation's top priority remains free cash flow generation and debt reduction. The Corporation remains committed to reducing leverage throughout 2020 with a target of 3.0x to 3.5x Net Debt to Adjusted EBITDA, with the closing of the Pioneer Transaction.
  • Tidewater expects results in the second half of 2020 to improve as demand at its facilities, including PGR, recovers to pre-pandemic levels. Guidance of forecasted Adjusted EBITDA remains at $175 million to $185 million for the full year 2020. Tidewater debottlenecked various processing units at PGR. As a result, PGR is seeing record throughput at over 12,000 bbls/day and combined gasoline and diesel production of over 10,500 bbls/day. The Pipestone Gas Plant had its strongest run times and cashflow generation to date in the second quarter and Tidewater expects this to continue throughout the remainder of 2020. The facility remains fully contracted.
  • The Corporation continues to be committed to its Environmental, Social and Governance ("ESG") performance by investing in infrastructure to increase energy and natural resource efficiency, reduce emissions, and enhance environmental performance. Tidewater's ESG Management Committee continues to meet weekly and has developed an interface on its website for the investment community to view as part of its transparency to communicate key environmental, safety and other sustainability metrics. Tidewater is evaluating certain small and medium-scale green capital projects in conjunction with government funding programs at many of its assets, including PGR.
  • The Corporation is pleased to welcome Mr. Michael Salamon and Mr. Neil McCarron , both of Birch Hill Equity Partners Management Inc., and Ms. Gail Yester to its Board of Directors.

COVID-19 UPDATE

  • Tidewater continues to monitor the developments related to the novel coronavirus ("COVID-19"). Safeguarding the well-being of Tidewater's personnel is its principal concern and it remains focused on operating safely and responsibly and providing the essential services that its communities and customers rely on during the COVID-19 pandemic. The Board of Directors, executive team and division leaders continue to meet regularly to align response strategies and efforts within all areas of the Corporation. The Corporation commends its employees for continuing to operate safely and responsibly and providing extra customer service in this challenging environment.
  • Second-quarter results were interrupted by the effects of the pandemic, including reduced demand for refined products and a sharp decrease in crude oil prices at the start of the quarter. After leveling off in May, volume trends across the Corporation's operating areas have increased with the recent stability in commodity prices and increased demand in refined products providing positive momentum as the Corporation enters the second half of 2020. Tidewater is encouraged by the resilience of its operations and continues to deliver value to its investors through its strategic and integrated assets. These assets are supported by a strong, stable customer base and growing demand for its products.
  • While volume trends are improving, financial markets and commodity prices continue to remain volatile impacting overall economic activity. Tidewater's defensive assets perform well in low commodity price environments. These defensive assets include its gas storage assets, which are contracted to six investment grade counterparties; the Brazeau River Complex ("BRC") which allows producers access to three natural gas egress solutions; the Pipestone Gas Plant which has over 80% of its volumes under take or pay contracts; and PGR which has a five-year offtake agreement with an investment grade counterparty. Approximately 50% of the Corporation's cashflow is derived from investment grade counterparties.
  • The Corporation remains focused on creating value for its stakeholders and remains committed to deleveraging throughout 2020. The timing and extent of the economic recovery, especially as COVID-19 cases continue to rise, could impact these forecasts.

Selected financial and operating information is outlined below and should be read with Tidewater's consolidated financial statements and related MD&A as at and for the three and six-month period ended June 30, 2020 which are available at www.sedar.com and on our website at www.tidewatermidstream.com .

Financial Overview

Consolidated Financial Highlights



 

Three months ended
June 30,

Six months ended
June 30,

(in thousands of Canadian dollars except per share information)


2020


2019


2020


2019

Revenue

$

178,568

$

155,311

$

431,032

$

278,976

Net income (loss) attributable to shareholders

$

(311)

$

(4,086)

$

(39,942)

$

(11,221)

Basic and diluted net income (loss) attributable to shareholders per share

$

(0.00)

$

(0.01)

$

(0.12)

$

(0.03)

Adjusted EBITDA (1)

$

41,873

$

21,786

$

83,379

$

44,190

Adjusted EBITDA per common share - basic (1)

$

0.12

$

0.07

$

0.25

$

0.13

Net cash provided by (used in) operating activities

$

58,985

$

29,015

$

86,975

$

25,705

Distributable cash flow  (2)

$

10,559

$

11,295

$

23,048

$

27,605

Distributable cash flow per common share – basic (2)

$

0.03

$

0.03

$

0.07

$

0.08

Dividends declared

$

3,384

$

3,311

$

6,761

$

6,620

Dividends declared per common share

$

0.01

$

0.01

$

0.02

$

0.02

Total common shares outstanding (000s)


338,413


331,054


338,413


331,054

Payout ratio  (3)


32%


29%


29%


24%

Total assets

$

2,023,884

$

1,577,732

$

2,023,884

$

1,577,732

Net debt  (4)

$

862,493

$

437,457

$

862,493

$

437,457














Notes:



1

Adjusted EBITDA is calculated as net income before interest, taxes, depreciation, share-based compensation, unrealized gains/losses, non-cash items, transaction costs, items that are considered non-recurring in nature and the Corporation's proportionate share of EBITDA in their equity investments. Adjusted EBITDA per common share is calculated as Adjusted EBITDA divided by the weighted average number of common shares outstanding for the three and six-month period June 30, 2020. Adjusted EBITDA and Adjusted EBITDA per common share are not standard measures under GAAP. See "Non-GAAP Measures" in the Corporation's MD&A for a reconciliation of Adjusted EBITDA and Adjusted EBITDA per common share to their most closely related GAAP measures.

2

Distributable cash flow is calculated as net cash used in operating activities before changes in non-cash working capital and after any expenditures that use cash from operations. Distributable cash flow per common share is calculated as distributable cash flow over the weighted average number of common shares outstanding for the three and six-month period ended June 30, 2020. Distributable cash flow and distributable cash flow per common share are not standard measures under GAAP. See "Non-GAAP Measures" in the Corporation's MD&A for a reconciliation of distributable cash flow and distributable cash flow per common share to their most closely related GAAP measures.

3

Payout Ratio is calculated by expressing dividends declared to shareholders for the period as a percentage of distributable cash flow attributable to shareholders. This measure, in combination with other measures, is used by the investment community to assess the sustainability of the current dividends. Payout Ratio is not a standard measure under GAAP. See "Non-GAAP Financial Measures" in the Corporation's MD&A for a reconciliation of Payout Ratio to its most closely related GAAP measure.

4

Net debt is defined as bank debt, convertible debentures and notes payable, less cash. Net Debt is not a standard measure under GAAP. See "Non-GAAP Measures" in the Corporation's MD&A for a reconciliation of Net Debt to its most closely related GAAP measure.

OUTLOOK AND CORPORATE UPDATE

Tidewater is well positioned to weather the current economic environment and remains focused on cash flow generation, increasing liquidity and reducing leverage. The Corporation does not plan to spend significant capital in 2020 with its large 2019 capital program now complete. Tidewater's forecasted payout ratio is expected to range from 20% to 30% with the remainder of Distributable Cash Flow used to reduce leverage. The proceeds from the Pioneer Transaction will significantly reduce leverage with net proceeds of approximately $138 million . A large portion of Tidewater's cashflow is generated from take-or-pay contracts and long-term agreements with over 50% generated from investment grade counterparties. Tidewater expects net debt to adjusted EBITDA of approximately 3.0x – 3.5x subsequent to the completion of the Pioneer Transaction.

Prince George Refinery

PGR is a 12,000 bbl/day light oil refinery that predominantly produces low sulphur diesel and gasoline, in addition to other products, to supply the greater Prince George region. PGR has significant onsite storage capacity of greater than 1.0 MMbbl and flexible logistics, with pipeline, rail and truck connectivity in place. The Prince George region is generally in short supply of refined products and the refinery's location within the region makes it a critical piece of infrastructure with a significant logistical advantage to address demand in northern British Columbia .

During the second quarter of 2020, PGR achieved over 85% utilization. Utilization declined during the second quarter as compared to the first quarter by approximately 5% due to the planned two-week maintenance program at the refinery during April 2020 . Tidewater has debottlenecked various processing units at PGR resulting in PGR seeing record throughput of over 12,000 bbls/day and combined gasoline and diesel production of over 10,500 bbls/day.

Tidewater's refined product yields at PGR for the second quarter of 2020 were as follows:

Throughput

10,500 bbl/day

Gasoline yield

42%

Diesel yield

43%

Other (1)

15%

(1) Other refers to heavy fuel oil (HFO), LPG and feedstock consumed to fuel the refinery. 

Tidewater's refining margins are largely driven by commodity prices, particularly the cost of crude feedstock and other raw materials, along with market prices for refined products. During the first half of the second quarter, as a result of the developing COVID-19 pandemic, refined product demand decreased and realized margins on refined product sales contracted due to declining commodity prices and a higher weighted average cost of inventory carried over from the first quarter of 2020.  However, this is partially offset by a portion of the realized gain on derivative contracts. 

As a result of reduced social quarantine restrictions by provincial and federal governments during the latter half of the second quarter, refined product demand has steadily increased. Tidewater achieved improved margins due to a recovery in refined product pricing and a lower weighted average cost of inventory from less expensive crude feedstock purchased during the first half of the quarter, while throughput remained consistent. 

Tidewater is encouraged by the resilience of the PGR asset in an unprecedented time with crack spreads holding steady at approximately $50 /BBL. This demonstrates the refinery's long-term value in servicing the markets where in which it operates.

The Corporation also continues to evaluate opportunities to participate in future low-carbon fuel standard ("LCFS") agreements at the PGR.

Tidewater is also pursuing numerous low capital and high rate of return debottlenecks and optimization opportunities within its downstream business unit.

Pipestone Gas Plant

The Pipestone Gas Plant is designed to process approximately 100 MMcf/day of sour natural gas. This asset includes two acid gas injection wells, a saltwater disposal well, and sales gas pipelines directly connected to the Pipestone Gas Storage Facility, as well as Alliance and TC Energy pipelines. The facility is also pipeline connected to Pembina for C2+ and C5+ liquid streams.

Tidewater processed an average volume of 72 MMcf/day in the second quarter of 2020, an increase of 10% over the first quarter. Liquids production also increased by 65% with the commissioning of the Pembina C2+ pipeline and the deep cut processing unit. Facility uptime and availability for the quarter averaged 96% and 92% respectively. The Pipestone Gas Plant is fully contracted with over 80% committed on take or pay arrangements.

Pioneer Pipeline

On June 18, 2020 , Tidewater and TransAlta entered into a definitive Purchase and Sale Agreement to sell the majority of the assets of Pioneer Pipeline LP to NGTL for gross proceeds of $255 million .  Tidewater and TransAlta have also entered into a separate letter of intent whereby TransAlta will pay Tidewater $10.5 million for certain ancillary assets that are not part of the NGTL transaction, resulting in approximately $138 million in total cash consideration net to Tidewater.  Proceeds from the transaction will be used to accelerate Tidewater's commitment to achieve approximately 3.0x – 3.5x net debt to Adjusted EBITDA.  Tidewater remains committed to closing the transaction by year-end 2020, with potential for closing to occur in 2021 subject to timing of regulatory approvals.

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

Subject to regulatory approvals, Tidewater and NGTL have also agreed to terms and conditions to qualify Tidewater for NGTL services with respect to the natural gas currently transported on the Pioneer Pipeline and incremental natural gas from increased access to the NGTL system, which will lead to higher fractionation and processing utilization levels at the BRC. The terms and conditions of this arrangement would be for a similar term as TransAlta's current 15-year take-or-pay agreement on the Pioneer Pipeline, and it is expected that the EBITDA generated from the new service will partially offset the reduction in EBITDA from the Pioneer Pipeline sale.

Through the first twelve months of operation, the Pioneer Pipeline has run steadily with minimal interruptions and Tidewater has met its take or pay obligations.  The Pioneer Pipeline has performed to expectation, delivering forecasted EBITDA, largely backed by TransAlta's take-or-pay commitment.

Brazeau River Complex and Fractionation Facility

Throughput at the BRC for the second quarter of 2020 was in-line with the previous quarter. Tidewater is working diligently with producers to improve netbacks by fully utilizing the BRC's facilities, including its two NGL pipeline connections, condensate pipeline connection, truck loading and offloading facilities, fractionation, natural gas storage facilities and two natural gas sales pipeline connections.

The Brazeau River fractionation facility performed well through the second quarter of 2020, despite a challenging pricing environment, and has maintained near capacity throughput since the start of the NGL contract year with several investment grade counterparties.  The marketing business found new ways to enhance producer netbacks and create operational flexibility by utilizing Tidewater facilities and maintaining disciplined risk management processes to mitigate frac spread and commodity exposure. 

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

Natural Gas Storage

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

The second quarter of 2020 saw AECO natural gas price volatility continue to experience normal levels, with spot prices generally rangebound between $1.70 and $2.00 aside from a short burst of strength in the first week of May. 

The Pipestone Gas Storage Facility performed well in the quarter as it entered its first injection season following the 2019 expansion.  The facility successfully met customer park-and-loan commitments while pressuring up with a rapid inventory build in anticipation of next winter's expanded withdrawal obligations. The Facility complex demonstrated its inherent optionality in the period by delivering gas to both Alliance Pipeline at the Saskatoon Mountain meter station and to TC Energy's NGTL at Pipestone Creek.    

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

Similarly, both Brazeau Nisku A and Brazeau Nisku F storage pools have also been building inventories through the first part of the injection season while continuing to meet the Pioneer Pipeline delivery obligations as well as realizing liquids value benefit through cycling. 

CAPITAL PROGRAM

During 2019, Tidewater commissioned three of the largest capital projects in the Corporation's history related to the Pioneer Pipeline, Pipestone Gas Plant and Pipestone Gas Storage Facility. The Corporation's focus in 2020 is on small-scale optimization and commissioning projects.

Tidewater's focus over the next 12 months is to employ the related cashflow from its 2019 large completed capital projects and PGR, as well as proceeds from the Pioneer Transaction, towards deleveraging with a target net debt to Adjusted EBITDA ratio of approximately 3.0x – 3.5x by the end of 2020. To date, Tidewater has not committed to a significant capital program in 2020, however continues to evaluate smaller capital projects with the potential to generate returns in excess of 50%.

APPOINTMENT OF NEW DIRECTOR

The Corporation is pleased to announce that Ms. Gail Yester has been appointed to the Board of Directors of the Corporation. Ms. Yester will add significant legal, land, acquisition and divestiture experience to the Board. The Board and Management look forward to working with Ms. Yester.

SECOND QUARTER 2020 EARNINGS CALL  

In conjunction with the earnings release, investors will have the opportunity to listen to Tidewater senior management review its second quarter 2020 results via conference call on Thursday, August 13, 2020 at 11:00 am MDT ( 1:00 pm EDT ).

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

A live audio webcast of the conference call will be available by following this link: https://produceredition.webcasts.com/starthere.jsp?ei=1349898&tp_key=ff20a30bf5  and will also be archived there for 90 days.

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

ABOUT TIDEWATER

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

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

Advisory Regarding Forward-Looking Statements

FORWARD-LOOKING INFORMATION

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

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

  • anticipated increase to cash flows in a variety of commodity price environments and projected use of such cash flow to reduce the Corporation's leverage ratios;
  • anticipated closing of a transaction to sell the majority of the assets of Pioneer Pipeline LP to NGTL, the sale of certain ancillary assets to TransAlta Corporation, the Corporation's expectations regarding timing to close such transactions, the Corporation's expectations regarding receipt of regulatory approval for such transactions, and Tidewater's expectations to replace EBITDA generated by the Pioneer Pipeline with no additional capital;
  • projected use of proceeds from the sale of the majority of the assets of Pioneer Pipeline LP;
  • the Corporation's expectations to receive IT-S service at the BRC that will attract new, creditworthy storage customers that will create new expansion opportunities to increase storage capacity;
  • anticipated qualification of Tidewater for NGTL services with respect to natural gas currently transported on the Pioneer Pipeline and the benefits to be derived therefrom;
  • Tidewater's evaluation of certain smaller capital projects and predictions with respect to the potential return of such projects;
  • the Corporation's focus on generating cash flow, increasing liquidity and reducing leverage;
  • the Corporation's intention to not spend significant capital in 2020;
  • anticipated focus on environmental, social and governance initiatives in 2020 including the Corporation investing in infrastructure to increase energy and natural resource efficiency, emission reductions and enhancing environmental performance;
  • the Corporation's reiteration of guidance of forecasted Adjusted EBITDA for the full year 2020;
  • expectations regarding utilization at the PGR;
  • forecasts with respect to future environmental and climate change compliance obligation costs;
  • Tidewater's expectations to pay dividends from distributable cash flow; and
  • expectations that net cash provided by operating activities, cash flow generated from growth projects and cash available from Tidewater's Senior Credit Facility and other sources of financing will be sufficient to meet its obligations and financial commitments and will provide sufficient funding for anticipated capital expenditures.

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

  • Tidewater's ability to execute on its business plan;
  • the timely receipt of all governmental and regulatory approvals sought by the Corporation including with respect to the anticipated sale of the Pioneer Pipeline;
  • that any third-party projects relating to the Corporation's divestitures will be sanctioned and completed as expected;
  • that there are no unforeseen events preventing the performance of contracts;
  • that there are no unforeseen material changes related to the Corporation's planned divestitures and that counterparties will comply with contracts in a timely manner;
  • Husky volume demands from the PGR are consistent with forecasts;
  • that formal agreements with counterparties will be executed in circumstances where letters of intent or similar agreements have been executed and announced by Tidewater and that such transactions will close as expected;
  • the amount of future liabilities relating to lawsuits and environmental incidents;
  • oil and gas industry expectation and development activity levels and the geographic region of such activity;
  • the Corporation's ability to obtain and retain qualified staff and equipment in a timely and cost-effective manner;
  • assumptions regarding amount of operating costs to be incurred;
  • that there are no unforeseen material costs relating to the facilities which are not recoverable from customers;
  • distributable cash flow and net cash provided by operating activities are consistent with expectations;
  • the ability to obtain additional financing on satisfactory terms;
  • the availability of capital to fund future capital requirements relating to existing assets and projects;
  • the ability of Tidewater to successfully market its products;
  • the Corporation's future debt levels and the ability of the Corporation to repay its debt when due; and
  • the amount of future liabilities relating to lawsuits and environmental incidents and the availability of coverage under the Corporation's insurance policies.

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

  • risks and impacts related to widespread epidemic or pandemic outbreaks, including COVID-19;
  • changes in demand for refined products;
  • general economic, political, market and business conditions, including fluctuations in interest rates, foreign exchange rates stock market volatility and supply/demand trends;
  • activities of producers and customers and overall industry activity levels;
  • failure to negotiate and conclude any required commercial agreements;
  • non-performance of agreements in accordance with their terms;
  • failure to execute formal agreements with counterparties in circumstances where letters of intent or similar agreements have been executed and announced by Tidewater;
  • failure to close transactions as contemplated and in accordance with negotiated terms;
  • the regulatory environment and decisions and First Nations and landowner consultation requirements;
  • risks and impacts related to widespread epidemic or pandemic outbreaks, including COVID-19;
  • climate change initiatives or policies or increased environmental regulation;
  • that receipt of third party, regulatory, environmental and governmental approvals and consents relating to Tidewater's capital projects can be obtained on the necessary terms and in a timely manner;
  • that the resolution of any particular legal proceedings could have an adverse effect on the Corporation's operating results or financial performance;
  • the ability to secure land and water, including obtaining and maintaining land access rights;
  • operational matters, including potential hazards inherent in the Corporation's operations and the effectiveness of health, safety, environmental and integrity programs;
  • actions by governmental authorities, including changes in government regulation, tariffs and taxation;
  • changes in operating and capital costs, including fluctuations in input costs;
  • environmental risks and hazards, including risks inherent in the transportation of NGLs which may create liabilities to the Corporation in excess of the Corporation's insurance coverage, if any;
  • actions by joint venture partners or other partners which hold interests in certain of the Corporation's assets;
  • reliance on key relationships and agreements;
  • construction and engineering variables associated with capital projects, including the availability of contractors, engineering and construction services, accuracy of estimates and schedules, and the performance of contractors;
  • the availability of capital on acceptable terms;
  • changes in the credit-worthiness of counterparties;
  • adverse claims made in respect of the Corporation's properties or assets;
  • risks and liabilities associated with the transportation of dangerous goods;
  • risks and liabilities resulting from derailments;
  • effects of weather conditions;
  • technology and security risks, including cybersecurity;
  • potential losses which would stem from any disruptions in production, including work stoppages or other labour difficulties, or disruptions in the transportation network on which the Corporation is reliant;
  • technical and processing problems, including the availability of equipment and access to properties;
  • changes in gas composition; and
  • failure to realize the anticipated benefits of recently completed acquisitions.

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

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

Actual results achieved will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors related to COVID-19.  These known and unknown risks and uncertainties include, but are not limited to:  risks and impacts related to widespread epidemic or pandemic outbreaks, including COVID-19; demand for refined products related thereto; ‎the possibility that governmental policies or laws may change or governmental approvals may be delayed or withheld; failure to negotiate and conclude any required commercial agreements; non-performance of agreements in accordance with their terms; failure to execute formal agreements with counterparties in circumstances where letter of intent or similar agreements have been executed and announced by Tidewater; failure to close transactions as contemplated and in accordance with negotiated terms; non-performance or default by counterparties to agreements which Tidewater has entered in respect of its business; construction delays, labour and material shortages; technology and cyber security risks; and certain other risks detailed from time to time in Tidewater's public disclosure documents including, among other things, those detailed under the heading "Risk Factors" in Tidewater's management's discussion and analysis for the three and six-months ended June 30, 2020 and annual information form for the year ended December 31, 2019 .

Any financial outlook or future-oriented financial information, as defined by applicable securities legislation, has been approved by management of Tidewater as of August 12, 2020 . A financial outlook or future-oriented financial information is provided for the purpose of providing information about management's current expectations and goals relating to the future of Tidewater. Readers are cautioned that reliance on such information may not be appropriate for other purposes. The purpose of the future-oriented financial information contained herein including but not limited to future periods of net income and Adjusted EBITDA is to assist investors, shareholders, and others in understanding certain financial metrics relating to expected future financial results for the purpose of evaluating the performance of Tidewater's business for future periods. This information may not be appropriate for other purposes. The results and conclusions of these assessments, along with the known and unknown risks, uncertainties and other factors referred to above, could impact Tidewater's estimates and the information related to such future periods contained herein and any such impact could be material.

Non-GAAP Measures

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

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

"Distributable cash flow" is a non-GAAP financial measure and is calculated as net cash used in operating activities before changes in non-cash working capital plus transaction costs, non-recurring expenses and after any expenditures that use cash from operations. Changes in non-cash working capital are excluded from the determination of distributable cash flow because they are primarily the result of seasonal fluctuations or other temporary changes and are generally funded with short term debt or cash flows from operating activities. Deducted from distributable cash flow are maintenance capital expenditures, including turnarounds as they are ongoing recurring expenditures. Transaction costs are added back as they vary significantly quarter to quarter based on the Corporation's acquisition and disposition activity. It also excludes non-recurring transactions that do not reflect Tidewater's ongoing operations.

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

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

SOURCE Tidewater Midstream and Infrastructure Ltd.

Cision View original content to download multimedia: http://www.newswire.ca/en/releases/archive/August2020/13/c5528.html

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