Tidewater Midstream and Infrastructure Ltd T.TWM

RE:CIBC

[Flyfishing20155]

retiredcf wrote:

Tidewater Midstream &

Infrastructure Ltd.

Consolidation Of Ownership At BRC Provides Control

Good post, good to see analyst noticing the good decisions this company is making, as I said in my last post, hopefully they can execute flawlessly on their acquisitions.

What's The Event

Our View: The transaction combines two of our preferred acquisition
attributes, buying what you know and obtaining 100% control. We
view an increased interest in existing assets as a relatively lower-risk
strategy and, with sole ownership, the company obtains complete
control over the capital development plan. We view the 6.5x
multiple on the investment as a fair. While timing of this type of
transaction is typically seller-driven, it appears opportune for
Tidewater given the improving commodity price environment. We
reiterate our Outperformer rating, and we are raising our price
target to $2.30 (prior $2.20), based on 9.5x 2018 EBITDA (prior 10.0x
2017 exit rate EBITDA).

Pipestone: In addition to re-affirming guidance (Q4/16 EBITDA $11 million-$12 million) and its capital budget (on-time and on-schedule), the company indicated producer support for a 50-100 MMcf/d sour gas plant in the Pipestone area. This area has significant producer netbacks and is garnering attention, with Encana recently highlighting D&C costs of US$4.4 million/well and high associated gas yields for the area.

Financing: The company concurrently issued 44.2 million shares raising $69 million, in part to repay the $45 million spent on acquisitions in November ($15 million) and December ($30 million). We view the excess raised as a reflection that the company is growing quickly, with $60 million of its 2017 capex budget currently unsanctioned, and the greater efficiencies of a single financing. Moreover, as the company advances its spending the raise should prevent concerns around funding status – a factor that had been an overhang for some stocks in the sector through 2016.