CALGARY, AB–(Marketwired – January 04, 2016) – Tidewater Midstream and Infrastructure Ltd. (“Tidewater” or the “Corporation“) (
Additionally, the acquisition is consistent with Tidewater’s strategy of providing producers with better pricing for their NGLs through its owned infrastructure and established market access. Tidewater continues to focus on high IRR projects through the evaluation of numerous organic-growth, as well as acquisition-based opportunities. Tidewater also continues to move forward on multiple potential export terminal opportunities.
Tidewater will continue to maintain a strong balance sheet and financial flexibility with a Debt-to-annualized EBITDA multiple of less than 1x post-closing of the Acquisition.
Key transaction highlights include:
Enhances Tidewater’s Infrastructure Network
: significant infrastructure network including three 100% owned deep cut/extraction facilities with 142 Mmcf/day of processing capability, 250km of pipelines and land with rail access at Fort Saskatchewan. This Acquisition can be integrated with Tidewater’s existing asset base to provide producers greater processing and takeaway options.
Significant Growth Opportunities
: Tidewater maintains the ability to implement small-scale optimization investment opportunities on the Acquisition that can increase EBITDA with modest or no capital. This includes marketing of NGLs, including related spec propane and butane. With additional investment capital, Tidewater has the potential to create its own large-scale natural gas and NGL network offering producers immediate egress/takeaway.
The Acquisition consists of one 100% owned 40 Mmcf/day NGL extraction plant in the Edmonton area with three year historical annualized EBITDA of approximately $3.5 million.
A second 100% owned 37 Mmcf/day NGL extraction plant at Fort Saskatchewan is also included. The plant has been shut in since September 2014 and has an annual cost of $100,000 to maintain. The plant includes several key right of ways and 5.64 acres of heavy industrial land within Fort Saskatchewan including access to CN rail. The network has key pipelines and right of ways connecting several large natural gas consumers and fractionation facilities. Tidewater is currently evaluating recommissioning the plant in 2016 for a cost of approximately $2 million and marketing the related NGLs.
A third 100% owned 65 Mmcf/day deep-cut gas processing facility is included and located south west of Edmonton and is connected by pipeline infrastructure to the 40 Mmcf/day NGL extraction plant. The plant has been shut in since June 2013 and has an annual cost of $100,000 to maintain. Substantial gas egress is available at the site which creates significant opportunity for Tidewater to expand its natural gas network. Further, Tidewater is considering relocating the turbo expander and other components to other core areas as the replacement value of the turbo expander and other components is greater than $20 million.
A 250km pipeline network interconnecting two of the gas processing facilities, including key pipelines to large natural gas consumers, strategic right of ways around Edmonton, and significant natural gas pipelines and right of ways heading toward Tidewater’s largest gas plant at the Brazeau River Complex and other areas of the Deep Basin. The pipelines provide the potential for immediate takeaway and egress for natural gas producers and will form the backbone of Tidewater’s natural gas and NGL network.
Due to existing NGL marketing contracts associated with the assets, Tidewater will begin to market the related NGLs and spec product on April 1, 2016 and expects the Acquisition to generate negative EBITDA of $1 million in the first quarter of 2016. Tidewater expects the Acquisition to generate minimal incremental annualized EBITDA in 2016. With additional capital investment opportunities related to the Acquisition, Tidewater expects significant upside for the assets, including 100 Mmcf/day of deep-cut processing capacity that is currently not utilized and significant natural gas takeaway/egress transportation opportunities that are currently available and not utilized. Furthermore, significant cost synergies exist including lowering the spec propane supply cost for its newly acquired propane retail division upon Tidewater assuming the NGL marketing from these facilities on April 1, 2016.