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Tidewater Midstream and Infrastructure Ltd. announces first quarter 2020 results and operational update

CALGARY – Tidewater Midstream and Infrastructure Ltd. (“Tidewater” or the “Corporation“) (TSX: TWM) is pleased to announce that it has filed its condensed interim consolidated financial statements and Management’s Discussion and Analysis (MD&Afor the three-month period ended March 31, 2020.



  • Adjusted EBITDA increased by $19.1 million to $41.5 million in the first quarter of 2020 as compared to $22.4 million in the first quarter of 2019, resulting in over 85% 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 $39.6 million for the first quarter of 2020 as compared to $7.1 million in the first quarter of 2019, predominantly related to unrealized losses on derivative contracts of $46.3 million due to volatility in commodity prices, foreign exchange and interest rates in 2020.
  • Net cash provided by operating activities totaled $28.0 million for the first quarter of 2020, with distributable cash flow of $12.5 million and a payout ratio of 27%.
  • On March 12, 2020, Tidewater and TransAlta Corporation (“TransAlta”) entered into a Letter of Intent to sell the majority of the assets of Pioneer Pipeline LP (“Pioneer”) to NOVA Gas Transmission Ltd. (“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 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 reduce debt in 2020. Tidewater expects a purchase and sale agreement to be executed on or about May 31, 2020 with closing to occur during the fourth quarter of 2020 after regulatory approval from the Canada Energy Regulator (“CER”).
  • At the Pipestone Gas Plant, all third-party infrastructure is now in place with throughput averaging approximately 80 MMcf/day and over 95% run-time through the months of April and May.
  • 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 employees and contractors have embraced this commitment. Tidewater’s ESG Committee continues to meet weekly and is in the process of developing a website interface for the investment community to view as part of its transparency to communicate key environmental performance metrics.
  • On May 4, 2020 Birch Hill Equity Partners Management Inc. (“Birch Hill”), announced it had acquired 6,977,500 additional common shares of Tidewater. Following the completion of the acquisition, Birch Hill beneficially owns and controls an aggregate of 80,509,771 common shares, representing approximately 24% of the issued and outstanding common shares of Tidewater.


  • Tidewater has been closely monitoring 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 and remain focused on continuity plans at each of its facilities. The Corporation has encouraged all employees to work from home, to the extent possible, and has increased safety protocols for those critical employees continuing to work at facility sites. The Corporation’s facilities have not seen any downtime as a result of workforce disruptions.
  • The COVID-19 pandemic has led to an unprecedented global energy supply and demand imbalance. However, despite the challenging environment, 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 with over 80% of the volume 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 now derived from investment grade counterparties which is critical in an extremely challenging energy environment.
  • The full extent of the COVID-19 pandemic to the global economy remains unknown at this time and to date has resulted in extreme volatility in global financial markets and a slowdown in economic activity. The recent commodity price collapse and resulting pullback in crude oil production is greatly impacting the industry.
  • Specific to Tidewater, COVID-19 has resulted in a decrease in demand for refined products. With a network of integrated assets, as described above, the Corporation has the ability to take advantage of current market conditions. PGR is in a unique position to benefit from low crude oil prices with significant crude oil storage and its feedstock costs significantly reduced with the decline in WTI prices. Crack spreads remain over $50/bbl at PGR.  The Corporation also uses its pipeline connections, railcars, trucks and storage to access the best market possible. While the current impact to Tidewater’s gas processing facilities has been minimal, the Corporation continues to monitor oil and gas production around its facilities and related shut-in activity. Tidewater’s gas processing and fractionation facilities could see a decline in revenue as a result of shut-in production and reduced drilling activity, however the Corporation’s two largest facilities, Pipestone Gas Plant and BRC, are supported by take-or-pay arrangements which reduce this risk.
  • Acknowledging the uncertain market conditions and gradual economic recovery, the Corporation updated its forecasted Adjusted EBITDA to range from $175 million – $185 million for the full year 2020. This guidance highlights the benefits of the Corporation’s integrated business model as it can generate strong Adjusted EBITDA in volatile markets. Year-end net debt to Adjusted EBITDA, assuming closing of the Pioneer Pipeline sale, is expected to be approximately 3.0x to 3.5x.  The timing and extent of the economic recovery could impact these forecasts. Tidewater remains committed to deleveraging throughout 2020.

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-month period ended March 31, 2020 which are available at and on our website at

Financial Overview

Consolidated Financial Highlights

Three months ended
March 31,

(in thousands of Canadian dollars except per share information)








Net income (loss) attributable to shareholders





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





Adjusted EBITDA (1)





Adjusted EBITDA per common share –
basic (1)





Net cash provided by (used in) operating activities





Distributable cash flow (2)





Distributable cash flow per common share – basic (2)





Dividends declared





Dividends declared per common share





Total common shares outstanding (000s)



Payout ratio (3)



Total assets





Net debt (4)







Adjusted EBITDA is calculated as net income before interest, taxes, depreciation, share-based compensation, unrealized gains/losses, non-cash items, transaction costs and items that are considered non-recurring in nature. Adjusted EBITDA per common share is calculated as Adjusted EBITDA divided by the weighted average number of common shares outstanding for the three-month period March 31, 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.


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-month period ended March 31, 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.


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.


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.


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 payout ratio is expected to remain under 30% with the remainder of Distributable Cash Flow used to reduce leverage. The sale of the Pioneer Pipeline continues to progress on schedule with a definitive agreement expected to be signed on or about May 31, 2020. The Pioneer Pipeline sale will significantly reduce leverage with net proceeds of approximately $138 million. Tidewater has a large portion of its cashflow 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 by year end with the sale of the Pioneer Pipeline.

Prince George Refinery

On November 1, 2019, Tidewater closed its acquisition of the 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. The Prince George Refinery 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 the domestic demand in northern British Columbia.

During the first quarter of 2020, throughput and production at the Price George Refinery were in line with the Corporation’s expectations, achieving over 90% utilization. Tidewater’s refined product yields at PGR for the first quarter of 2020 were as follows:


11,124 bbl/day

Gasoline yield


Diesel yield


Other (1)


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

The refinery achieved consistent operational run time during the first quarter of 2020 and did not experience any unplanned maintenance or downtime. 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. Refined product sales were in line with expectations for the majority of the first quarter, however during the last two weeks of March, refined product demand and related sales, decreased by approximately 20% compared to the first half of the month. PGR’s reduced margins in March 2020 resulted from a higher carrying cost of crude oil feedstock purchased prior to the price decline combined with a significant decline in refined product pricing. As a result of the decreased demand in the last two weeks of the quarter, while maintaining consistent throughput, excess refined products produced were held in storage. As a result, PGR’s operating income was approximately 25% below the Corporation’s expectations.

With refined product pricing forecasted to increase over the medium term, and the current price at which Tidewater is acquiring crude oil feedstock for PGR, Tidewater expects a positive impact to margins in the second and third quarters which will partially offset the expected decline in demand.  It is anticipated that these factors resulting from the effects of the COVID-19 pandemic will impact Tidewater’s second quarter earnings by approximately 20%.

At the end of April, Tidewater completed its previously disclosed two-week maintenance program at the refinery, which resulted in reduced throughput of approximately 35% during that time.

Husky Energy Inc. (“Husky”) has issued a force majeure notice under the offtake agreement at PGR citing decreased refined product demand related to COVID-19. Husky has indicated it remains committed to work with Tidewater on the impact to refined product volume forecasts.  Tidewater and Husky are actively exploring opportunities for incremental demand and volumes through the second quarter, including increased product shipments by rail which began in the second quarter. Husky has committed to providing regular updated demand forecasts as the COVID-19 situation evolves.  While Tidewater is pleased to be working with Husky to manage this situation, Tidewater has advised Husky of its position that the force majeure notice is invalid.

Tidewater is encouraged by the resilience of the PGR asset in an unprecedented time and has not seen the drastic narrowing of crack spreads observed in other locations across North America. This further reinforces the refinery’s long-term value in servicing the markets where it operates.

The Corporation also continues to evaluate opportunities to participate in future low-carbon fuel standard (“LCFS”) agreements and continues to execute on the LCFS projects initiated by Husky prior to the acquisition.

Pipestone Gas Plant

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

Tidewater processed an average volume of approximately 65 MMcf/day in the first quarter on 2020. Throughput was impacted by third party pipeline infrastructure delays and operational issues resulting in Pipestone operating income for the first quarter of 2020 being approximately 30% below expectations. Throughput continues to increase with average throughput in April and May of approximately 80 MMcf/day and over 95% run-time.  In addition to throughput increasing, Tidewater has completed various performance tests that demonstrate the facility is capable of design flows of 100 MMcf/day.  The Pipestone facility is now fully connected to all third-party egress pipelines allowing for optimized operations and reduced trucking activities. The Pipestone Gas Plant is fully contracted with over 80% committed on take or pay.

Pioneer Pipeline

On March 12, 2020, Tidewater and TransAlta entered a Letter of Intent 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 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 by year-end 2020.

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 new future 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.

The parties are expected to enter into a purchase and sale agreement on or about May 31, 2020 and the proposed transactions are expected to close concurrent with regulatory approval.

Brazeau River Complex and Fractionation Facility

Throughput at the BRC for the first 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 continued to perform well through the first quarter of 2020 and has maintained a near capacity throughput since the start of the NGL contract year.  The NGL Marketing business has grown the supply base with two investment-grade customers and has developed strategic relationships with several other producers in central and northern Alberta. Despite a number of headwinds that impacted the Western Canadian NGL market over the past 6-12 months, including the Alberta EnviroFuels facility outage, the CN Rail strike, rail blockades, and fractionation constraints, Tidewater has successfully maintained flexibility and mitigated the majority of the burden for its customers through its network.

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

The first quarter of 2020 saw AECO natural gas price volatility continue to experience normal levels, compared to the previous summer, with prices generally following a downtrend after peaking in early January.

The Pipestone Gas Storage Facility performed well in the first quarter of 2020 as it maintained steady withdrawals to successfully meet customer park-and-loan obligations. The Pipestone Gas Storage Facility continued to demonstrate its inherent optionality by consistently 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. April 2020 marks the beginning of the first summer injection season where the Pipestone Gas Storage facility will have full injection capability after completion of the storage expansion in 2019. 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 Nisku A and Brazeau Nisku F storage pools successfully met their withdrawal targets to help meet Pioneer Pipeline supply commitments through the quarter.  The Nisku Pools were able to capitalize on spot price weakness on some days in February and March and concurrently inject and withdraw gas to realize increased cycling benefits.


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 the Prince George Refinery, as well as proceeds from the Pioneer Pipeline sale, 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%.


The Corporation intends to rely on the temporary blanket relief provided by the Canadian Securities Administrators (including the exemptive relief contained in Alberta Securities Commission Blanket Order 51-518 – Temporary Exemptions from Certain Requirements to File or Send Securityholder Materials) to postpone the filing of its executive compensation disclosure required under applicable securities laws until such time as it is filed and delivered to shareholders as part of the Corporation’s information circular relating to its 2020 annual general and special meeting of shareholders, currently scheduled for June 29, 2020.


In conjunction with the earnings release, investors will have the opportunity to listen to Tidewater senior management review its first quarter 2020 results via conference call on Thursday, May 14, 2020 at 11:00 am MDT (1:00 pm EDT).

To access the conference call by telephone, dial 647-427-7451 (local / international participant dial in) or 1-888-231-8192 (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: 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.


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 through the acquisition and development of oil and gas infrastructure including: gas plants, pipelines, railcars, trucks, export terminals storage facilities and downstream facilities.

Additional information relating to Tidewater is available on SEDAR at and at

Advisory Regarding Forward-Looking Statements

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