CALGARY, AB, May 9, 2024 /CNW/ – Tidewater Midstream and Infrastructure Ltd. (“Tidewater” or the “Corporation”) (TSX: TWM) has filed its interim consolidated financial statements and Management Discussion and Analysis (“MD&A”) for the three month period ended March 31, 2024.
FIRST-QUARTER 2024 HIGHLIGHTS
- Net Income attributable to shareholders increased by $13.5 million to a net loss of $11.3 million in the first quarter 2024, from a net loss of $24.8 million in the same period of 2023. The improvement was primarily driven by favorable changes in the fair value of derivatives, the gain on sale of the AltaGas Ltd. (“AltaGas”) common shares, and higher operating income, offset in part by the sale of the Pipestone facilities.
- As disclosed at year end 2023, on January 9, 2024, Tidewater monetized its AltaGas common shares for net proceeds of $341.6 million. These proceeds were used to further reduce credit facility debt and working capital.
- Consolidated adjusted EBITDA(1) was $39.8 million for the first quarter of 2024, compared to $48.9 million during the first quarter of 2023. The decrease is primarily driven by the sale of the Pipestone and Dimsdale facilities to AltaGas.
- On March 31, 2024, the Tidewater Midstream Senior Credit Facility was elevated by approximately $26 million due to timing of accounts receivable settlements. As of May 3, 2024, the balance drawn on the facility was approximately $85 million.
- G&A cost cutting initiatives are expected to result in savings of $5 million for 2024, and $7 million on a run-rate basis.
- Subsequent to the quarter, in early May, Tidewater successfully completed a significant three week turnaround at the Brazeau River Complex and Fractionation Facility (the “BRC”) safely, on time and on budget. As part of the turnaround, the Corporation identified various operational savings of approximately $6 million annually, and capital savings of approximately $5 million.
- During the first quarter of 2024, the Renewable Diesel & Renewable Hydrogen Complex (the “HDRD Complex”) averaged daily throughput of approximately 2,120 bbl/d, representing a 71% utilization rate. Operating results for April 2024 show continued improvement, with a utilization rate of approximately 95%. The HDRD Complex is expected to exceed a full-year utilization rate of 85%, representing an average daily throughput of 2,550 bbl/d (previously 2,400-2,600 bbl/d).
- Tidewater Renewables Ltd. (“Tidewater Renewables”) made significant progress on the front-end engineering design (“FEED”) of the proposed 6,500 bbl/d sustainable aviation fuel (“SAF”) project. This included integrating lessons learned from the HDRD Complex into the SAF project’s design basis. During the first quarter of 2024, the Corporation received emissions credits for achieving its first milestone under an executed incentive agreement. These credits were sold under a previously announced purchase agreement. The Corporation continues to progress commercial arrangements and is evaluating potential offtake agreements for the SAF project. The SAF project remains subject to a final investment decision, which is expected in 2025.
“Our downstream and midstream assets performed well during the first quarter. The ramp up at the HDRD Complex and strong throughput performance at the Prince George Refinery (“PGR”), resulted in improved operating results in the quarter. We’ve started executing on our operation and administrative efficiency initiatives which we expect will save $13 million on an annual run-rate basis.” stated Jeremy Baines, CEO.
(1) |
Non-GAAP financial measure. See the “Non-GAAP Measures” section of this news release. |
CONSOLIDATED AND DECONSOLIDATED FINANCIAL HIGHLIGHTS
Three months ended March 31 |
||||||||
Tidewater Deconsolidated (2) |
Tidewater Consolidated |
|||||||
(in millions of Canadian dollars except per share information) |
2024 |
2023 |
2024 |
2023 |
||||
Net loss attributable to shareholders |
$ |
(20.0) |
$ |
(12.9) |
$ |
(11.3) |
$ |
(24.8) |
Net loss attributable to shareholders per share – basic |
$ |
(0.05) |
$ |
(0.03) |
$ |
(0.03) |
$ |
(0.06) |
Adjusted EBITDA (1) |
$ |
14.5 |
$ |
36.3 |
$ |
39.8 |
$ |
48.9 |
Distributable cash flow attributable to shareholders (1) |
$ |
(3.0) |
$ |
(2.1) |
$ |
5.8 |
$ |
1.5 |
Distributable cash flow per share – basic (1) |
$ |
(0.01) |
$ |
– |
$ |
0.01 |
$ |
– |
Net debt (3) |
$ |
194.2 |
$ |
563.8 |
$ |
501.1 |
$ |
842.4 |
Total capital expenditures |
$ |
2.3 |
$ |
21.9 |
$ |
8.1 |
$ |
106.1 |
(1) Non-GAAP financial measures. See the “Non-GAAP Measures” section of this news release. (2) Deconsolidated results exclude the results of Tidewater Renewables. See the “Non-GAAP Measures” section of this news release for information on deconsolidated measures. (3) Capital management measure. See the “Non-GAAP Measures” section of this news release. |
STRATEGIC UPDATE
Tidewater’s strategy is supported by three key operational initiatives: maintaining safe and reliable operations, generating return on assets through maximizing facility throughput and optimizing our existing asset base, and achieving synergies through corporate integration. The following progress was made on these initiatives in 2024 year to date:
Maintain safe and reliable operations |
|
Return on assets and |
|
Corporate integration and |
|
Three months ended |
||||
(in millions of Canadian dollars) |
2024 |
2023 |
||
Growth capital (1) |
$ |
5.9 |
$ |
92.1 |
Maintenance capital (1) |
2.2 |
14.0 |
||
Total capital expenditures |
$ |
8.1 |
$ |
106.1 |
Capital emissions credits awarded (2) |
$ |
(20.7) |
$ |
(2.0) |
(1) |
Supplementary financial measures. See the “Non-GAAP Measures” section of this news release. |
(2) |
During the three months ended March 31, 2024, $2.3 million of capital emission credits were monetized. |
DOWNSTREAM
PGR
During the first quarter of 2024, the PGR had strong operational performance with throughput of 12,399 bbl/day, 6% higher than first quarter of 2023, and relatively consistent with fourth quarter of 2023. PGR was impacted by lower crack spreads of approximately $88/bbl, compared to approximately $90/bbl in the comparative period, representing a 2% decrease from the same quarter in the prior year.
There were zero recordable incidents during the first quarter.
HDRD Complex
During the first quarter of 2024, the HDRD Complex averaged daily throughput of approximately 2,120 bbl/d, representing a 71% utilization rate. Initial operating results for April 2024 show continued improvement, with a utilization rate of approximately 95%. We expect the HDRD Complex to exceed a full-year utilization rate of 85%, representing an average daily throughput of 2,550 bbl/d (previously 2,400-2,600 bbl/d).
PGR Historical Performance:
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
|
Daily throughput (bbl) |
11,810 |
11,860 |
11,715 |
11,700 |
4,363 |
12,756 |
12,242 |
12,399 |
Refinery Yield (1) |
||||||||
Diesel |
44 % |
45 % |
47 % |
45 % |
46 % |
44 % |
48 % |
46 % |
Gasoline |
42 % |
41 % |
42 % |
42 % |
41 % |
42 % |
40 % |
41 % |
Other (2) |
14 % |
14 % |
11 % |
13 % |
13 % |
14 % |
12 % |
13 % |
(1) |
Refinery yield includes crude, canola and intermediates. |
(2) |
Other refers to heavy fuel oil (HFO), liquified petroleum gas and feedstock consumed to fuel the refinery. |
MIDSTREAM
During the first quarter of 2024, total throughput volumes at the midstream facilities were approximately 302 MMcf/day, compared to 357 MMcf/day in the same period of 2023, excluding the results of the Pipestone natural gas plant. The lower throughput was primarily driven by lower straddle volumes through the BRC and lower throughput at the Ram River Gas Plant as additional volume was temporarily routed through the plant in the first quarter of 2023 due to outages at third party facilities in the region.
Midstream Gas Plant Volumes:
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
|
Gross throughput (MMcf/d) |
424 |
413 |
436 |
461 |
387 |
407 |
398 |
302 |
Pipestone(1) |
101 |
69 |
89 |
104 |
97 |
95 |
90 |
N/A |
BRC(2) |
145 |
161 |
159 |
158 |
98 |
155 |
134 |
134 |
Ram River |
78 |
102 |
104 |
112 |
110 |
88 |
96 |
96 |
Other(3) |
100 |
81 |
84 |
87 |
82 |
69 |
78 |
72 |
(1) Pipestone inlet volumes included up to December 31, 2023. |
(2) BRC Inlet volumes include volumes at the BRC straddle plant. (3) Inlet volumes include throughput at Tidewater’s extraction facilities |
Brazeau River Complex and Fractionation Facility
The BRC gas processing facility had throughput of 134 MMcf/day in the first quarter of 2024, consistent with the fourth quarter of 2023, and 24 MMcf/d lower compared to 158 MMcf/day in the first quarter of 2023, primarily due to reduced straddle volumes coming through the facility. The BRC fractionation facility utilization averaged 83% in the first quarter of 2024, compared to 87% utilization in the fourth quarter of 2023, and 76% in the first quarter of 2023. Fractionation facility utilization varied over the periods largely due to the gas composition coming into facility which impacted the volume of liquids available for NGL recovery. Utilization in the current period compared to the first quarter of 2023 was also favorably impacted by higher trucked-in volume.
Subsequent to the quarter, Tidewater commenced the three-week scheduled turnaround at BRC, which will impact operating results during the second quarter of 2024. The turnaround was completed safely, on budget and on schedule, with operations ramping back up early in May.
Ram River Gas Plant
The Ram River Gas Plant had throughput of 96 MMcf/d in the first quarter of 2024, consistent with the fourth quarter of 2023, and 16 MMcf/d lower compared to 112 MMcf/d in the first quarter of 2023. During the first quarter of 2023, outages at third party facilities in the region brought additional volumes to the Ram River Gas Plant on a temporary basis.
Tidewater is actively working with local third parties to increase throughput volumes, enhance overall regional processing efficiencies and maximize contracted revenues with the plant’s sulphur handling infrastructure.
OUTLOOK AND CAPITAL PROGRAM
Following the BRC turnaround and its return to run rate operations, as well as continued consistent performance at the PGR and the HDRD Complex, assuming crack spreads average in the $80–$90 per barrel range, and BC LCFS credits are priced between $450 – $500, the Corporation expects 2024 consolidated adjusted EBITDA(1) to be in the range of $150-170 million.
The Corporation continues to optimize administrative costs as well as facility operating costs, advance the refinancings of both the Tidewater Renewables Senior Credit Facility and the Tidewater Midstream convertible debentures and progress the engineering design on its announced SAF project.
Tidewater’s 2024 maintenance capital program is weighted to the first half of the year, focused primarily on the BRC turnaround with full year expected consolidated maintenance capital to be $35-40 million. The BRC turnaround was completed safely, on budget and on schedule, and operations are ramping back up early in May.
(1) |
Non-GAAP financial measure. See the “Non-GAAP Measures” section of this news release. |
FIRST QUARTER 2024 EARNINGS CALL
In conjunction with the earnings release, Tidewater’s executives will hold a call to review its first quarter 2024 results via conference call on Thursday, May 9, 2024 at 11:00 am MDT (1:00 pm EDT).
To access the conference call by telephone, dial 416-764-8659 (local / international participant dial in) or 1-888-664-6392 (North American toll-free participant dial in). A question and answer session for analysts will follow the management’s presentation.
A live audio webcast of the conference call will be available by following this link: https://app.webinar.net/1jODNAxwA5V 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 join the Tidewater Midstream and Infrastructure Ltd. earnings call.
ABOUT TIDEWATER MIDSTREAM
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, refined product and renewable energy value chain. Its strategy is to profitably grow and create shareholder value through the acquisition and development of conventional and renewable energy infrastructure.
To achieve its business objective, Tidewater is focused on providing customers with a full service, vertically integrated value chain through the acquisition and development of energy infrastructure, including downstream facilities, natural gas processing facilities, natural gas liquids infrastructure, pipelines, railcars, export terminals, storage, and various renewable initiatives. To complement its infrastructure asset base, the Corporation also markets crude, refined products, natural gas, natural gas liquids and renewable products and services to customers across North America.
Tidewater is a majority shareholder in Tidewater Renewables, a multi-faceted energy transition company focusing on the production of low carbon fuels. Tidewater Renewables’ common shares are publicly traded on the TSX under the symbol “LCFS”.