Tidewater Midstream and Infrastructure Ltd. Announces First Quarter 2017 Results, Strategic Acquisition and Operational Update
Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Corporation") (TSX VENTURE: TWM) 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-month period ended March 31, 2017.
Selected financial and operating information is outlined below and should be read with Tidewater's audited consolidated financial statements and related MD&A which are available at www.sedar.com and on our website at www.tidewatermidstream.com.
Extraction Plant Acquisition
On May 11th, 2017, Tidewater closed an acquisition with an arms-length party and acquired a 100% working interest in a shut-in 70 MMcf/d deep cut extraction facility (the "Extraction Plant"), 90% operated working interest in 250 km of gas gathering pipelines and 70% operated working interest in 300 km of NGL pipelines, (collectively the "Assets") for cash consideration. The Assets are directly connected to Tidewater's existing Edmonton infrastructure with the Extraction Plant located approximately 130 km northwest of Edmonton with connectivity to both TCPL and Alliance pipelines. The transaction is still subject to waiver of all outstanding rights of first refusal.
The Assets are currently generating negative annualized EBITDA of approximately $3 million where Tidewater plans to reactivate the Extraction Plant and related gathering lines by January 2018 for capital of approximately $12 million. The Corporation anticipates the Assets will generate approximately $4 million of annualized EBITDA beginning in January 2018.
Corporate throughput is currently at all-time highs with some processing facilities operating at record levels through the first quarter of 2017. Drilling activity in Tidewater's core Deep Basin area has continued to accelerate, contributing to strong first quarter 2017 results. Tidewater plans to expand the BRC by roughly 50 MMcf/d for $10 million of capital with the incremental capacity expected to be online in December of 2017. Tidewater also continues to evaluate several egress solutions around the BRC including storage and pipeline options. The Corporation has also benefited from increased throughput at its Edmonton area assets with the reactivation of the Fort Saskatchewan Extraction Plant and continues to grow its NGL business while working with producers to increase netback pricing. Commissioning of Tidewater's 10,000 bbl/d fractionation facility will further integrate the Corporation's value chain and help achieve its goal of offering producers better pricing.
Tidewater continues to increase its exposure to the Montney resource play development with the move into North East BC and the ongoing development of the Montney Egress Hub in the Pipestone area. Tidewater has received significant interest from Montney producers for processing, fractionation, egress and marketing solutions.
Tidewater has approved capital projects of approximately $50 million to the end of 2017 and plans to exit 2017 with run-rate Adjusted EBITDA of approximately $70 million with net debt under 1x debt to Adjusted EBITDA on its $180 million credit facility. Tidewater is focused on delivering approximately 20% EBITDA per share growth over the next twelve months and overall 2017 EBITDA remains in-line with management's expectations.
Tidewater successfully commissioned its 10,000 bbl/d C2+ fractionation facility, and began producing HD2 spec propane, approximately 45 days ahead of schedule and on an industry leading time line of seven months while on-budget at approximately $25 million. Tidewater has also commissioned, with start-up operations currently in progress, its 40 MMcf/d of additional deep cut processing capacity at the BRC ahead of schedule and on-budget at a capital cost of approximately $15 million.
Tidewater commenced reservoir injections on Phase I of its Montney infrastructure/egress hub in the Pipestone area in the first quarter of 2017, which was completed on-time and on-budget. In light of the recent and continued volatility in AECO pricing as well as AECO summer and winter spreads, the Corporation continues to advance toward a final investment decision on Phase II of the project which will include connections to both Alliance and TCPL. Tidewater continues to receive interest from several investment grade counter parties to contract the available capacity on a five-year basis, which will further diversify Tidewater's customer base. It is expected the Corporation will make a final investment decision by the end of 2017.
Tidewater remains on-time and on-budget on its previously announced first half 2017 capital program and the EBITDA generated from these capital projects is expected to be in-line with the amount previously disclosed.
The Corporation continues to progress on its 50 - 100 MMcf/d sour gas plant (the "Pipestone Gas Plant") which would be backed by take or pay contracts and/or reserve dedications. Although no certainty can be provided, Tidewater is encouraged by the progress and support and expects a final investment decision in 2017. The Pipestone Gas Plant is expected to be directly connected to Tidewater's Montney infrastructure/egress hub in the Pipestone area.
Tidewater has commenced expansion plans at the BRC for roughly 50 MMcf/d of incremental processing capacity for approximately $10 million of capital which is expected to be online in December of 2017.
Tidewater also plans to reactivate the recently acquired deep cut Extraction Plant by January 2018 for capital of approximately $12 million and anticipates the asset will generate approximately $4 million of annualized EBITDA beginning in January 2018.
The Corporation remains fully capitalized to execute on its incremental $50 million of capital expenditures into the end of 2017 with debt to Adjusted EBITDA remaining under 1x into the end of the year. Tidewater continues to evaluate several capital projects which would generate returns consistent with previous projects and is fully funded to move these projects forward with its recent credit facility increase.
Tidewater was incorporated under the Alberta Business Corporations Act on February 4, 2015 to pursue the purchase, sale and transportation of natural gas liquids ("NGLs") throughout North America and export to overseas markets. Tidewater is engaged in the acquisition and development of oil and gas infrastructure, including gas plants, pipelines, NGLs by rail, export terminals and storage facilities. Tidewater continues to investigate opportunities with North American producers and mid-streamers for the acquisition and development of such infrastructure assets.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.