CALGARY, March 25, 2019 /CNW/ - Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Corporation") is pleased to announce that it has entered into an asset purchase and sale agreement whereby the Corporation has divested of its Pipestone Gas Plant's 32MW cogeneration units to Kineticor Resource Corp. ("Kineticor"), a privately held power developer focused on thermal generation in Canada. Under the terms of the sale, the Corporation received a cash payment of $85 million and Kineticor assumed ownership of the cogeneration units which are currently onsite. In conjunction with the divestiture, the Corporation entered into a long-term energy services agreement whereby Kineticor will supply power to Tidewater's Pipestone Gas Plant once construction is complete in exchange for fixed energy fee payments. The Corporation also entered into an operating agreement, whereby Tidewater will manage the final construction of the cogeneration units and the day-to-day operations once in service. This will ensure that the cogeneration units, which will be highly integrated with the Pipestone Gas Plant, will be managed safely and efficiently for both Kineticor and Tidewater. The sale of the cogeneration units was contemplated in the original Pipestone Gas Plant economics and Tidewater's previous guidance of $30 to $35 million of Adjusted EBITDA contribution from the project is unchanged given Tidewater's progress in contracting volumes at the plant. Expected Adjusted EBITDA contribution is based on approximately 100 MMcf/day of contracted volume at market rates.
Tidewater has received significant customer interest for additional sour gas processing, natural gas storage and liquids handling capacity at Pipestone. As a result, Tidewater plans to utilize a portion of the proceeds from the sale of the cogeneration units to begin scoping these future expansions which are subject to final investment decision. The remaining proceeds from the sale will be used to fund Tidewater's ongoing growth capital program through 2019. The Pipestone Gas Plant remains on budget and is expected to be commissioned in the third quarter of 2019.
The Corporation's Business
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") and crude oil 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 and storage facilities.
Advisory Regarding Forward-Looking Statements
In the interest of providing Tidewater's shareholders and potential investors with information regarding Tidewater, including management's assessment of Tidewater's future plans and operations, certain statements in this press release are "forward-looking information" within the meaning of applicable Canadian securities legislation ("forward-looking statements"). In some cases, forward-looking statements can be identified by terminology such as "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "intend", "may", "objective", "ongoing", "outlook", "potential", "project", "plan", "should", "target", "would", "will" or similar words suggesting future outcomes, events or performance. The forward-looking statements contained in this press release speak only as of the date thereof and are expressly qualified by this cautionary statement.
Specifically, this news release contains forward-looking statements relating to but not limited to: anticipated completion of construction of the cogeneration unit at the Pipestone Gas Plant and future operation of the cogeneration unit; management's plans with respect to Tidewater's use of the proceeds from the cogeneration unit sale; future supply of power at the Pipestone Gas Plant; construction and operation of the Pipestone Gas Plant; potential expansion of the Pipestone Gas Plant; and projected Adjusted EBITDA from the Pipestone Gas Plant.
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; the Corporation's ability to secure natural gas supplies; anticipated timelines and budgets being met in respect of the Corporation's projects and operations, including specifically with respect to the Pipestone Gas Plant; receipt of regulatory approvals for the Corporation's capital projects; 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; customer demand for processing at the Pipestone Gas Plant; future capital expenditures to be made by the Corporation; the ability to obtain additional financing on satisfactory terms; 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; that any third-party projects relating to the Corporation's growth projects will be sanctioned and completed as expected; and, the Corporation's ability to obtain and retain qualified staff and equipment in a timely and cost-effective 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; regulatory approvals of the Corporation's capital projects; activities of producers and customers, procurement of natural gas supplies; the regulatory environment and decisions and First Nations and landowner consultation requirements; operational matters, including potential hazards inherent in the Corporation's operations and the effectiveness of health, safety, environmental and integrity programs; transportation of hazardous materials; fluctuations in commodity prices, inventory levels and supply/demand trends; actions by governmental authorities, including changes in government regulation including environmental, tariffs and taxation; changes in operating and capital costs, including fluctuations in input costs; 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; non-performance or default by counterparties to agreements which the Corporation has entered into in respect of its business; 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; effects of weather conditions; reliance on key personnel; technology and security risks; technical and processing problems; 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 Annual Information Form 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 news 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.
This news release refers to "Adjusted EBITDA" which does 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 provides useful information to investors as it provides 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.
For further information: Tidewater Midstream & Infrastructure Ltd., Joel MacLeod, Chairman, President and CEO, 587.475.0210, [email protected]