CALGARY, Oct. 1, 2018 /CNW/ -
Definitive Agreement with TransAlta Corporation for intra-Alberta
pipeline
Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Corporation") announces today that it and
TransAlta Corporation ("TransAlta") have executed definitive agreements (the "Definitive Agreements") for the
construction, operation and tolls payable with respect to the previously announced pipeline connecting Tidewater's Brazeau River
Complex to TransAlta's generating units at Sundance and Keephills. The Definitive
Agreements provide for Tidewater to construct and operate a 20-inch, 120 km natural gas pipeline with initial capacity of
130 MMcf/d which may be expanded to approximately 440 MMcf/d. The pipeline project is supported by a fifteen (15) year firm
take-or-pay shipping agreement with TransAlta. As design of the project progressed and to address demand, Tidewater and
TransAlta determined to increase maximum capacity of the pipeline to approximately 440 MMcf/d compared to the original design
capacity of 340 MMcf/d. As a result of the increased capacity of approximately 30%, the current budget for the project has
increased by approximately 5%-10% when compared to the previously announced budget estimate of $150
million. TransAlta has an option to participate in the pipeline by acquiring up to a 50% ownership interest in the
project and it is likely that TransAlta will exercise this option. The project remains on schedule, with a projected
in-service date in Q3/Q4 of 2019 and remains subject to customary conditions and regulatory approval.
Update on Pipestone Montney, Sour Deep-Cut Gas Processing Complex
Tidewater continues to progress its plans to construct and operate its previously announced Pipestone Montney, Sour Deep-Cut
Gas Processing Complex (the "Pipestone Plant") in the Pipestone area near Grande Prairie, Alberta. Tidewater is pleased to announce that a definitive agreement has been
executed with a large oil and gas producer with respect to the previously announced (September 11,
2018) memorandum of understanding regarding a 25 MMcf/d commitment at the Pipestone Plant over a five-year term. The
Pipestone Plant is designed to process approximately 100 MMcf/d of natural gas and is currently 80% contracted with firm
commitments of 80 MMcf/d with the remaining capacity of 15-20 MMcf/d subject to non-binding letters of intent that are
expected to be formalized by definitive agreements within 30 days. The additional agreements at the Pipestone Plant are expected
to increase total forecasted annualized EBITDA from the project by 10% – 20%.
Overall project costs remain in-line with previous guidance with a forecast total capital outlay to Tidewater of approximately
$210MM. This amount excludes the 32MW cogeneration units all or a portion of which Tidewater expects to monetize. The
cogeneration units would generate both heat and electricity from the same fuel input to the Pipestone Plant. The units
could be sold to a third party or to a subsidiary of Tidewater in connection with Tidewater's power supply business. The sale of
the cogeneration units was contemplated in the original Pipestone Plant project economics and is not expected to impact
forecasted EBITDA. The Pipestone Plant remains subject to regulatory approval which Tidewater hopes to receive
shortly.
Additional Tidewater applications remain before the Alberta Energy Regulator for infrastructure in the Pipestone area that would ultimately connect to the Pipestone Plant.
Crude oil storage, transportation and infrastructure agreements
Tidewater is pleased to announce that it has entered into crude oil storage and transportation agreements with various
counterparties, including an investment grade counterparty. Tidewater will provide crude oil terminalling services at three
existing Tidewater owned, operated and pipeline connected facilities in the Valhalla,
Brazeau River and Acheson areas of Alberta. In addition,
Tidewater will transport crude oil by rail to various markets in North America from its rail
facility located at Acheson, Alberta utilizing Tidewater's rail car fleet. The
aforementioned agreements are for terms of less than twelve months, however, Tidewater intends to grow this business and
negotiate longer term agreements with existing and new customers. Tidewater has currently invested minimal capital in new
infrastructure related to crude oil storage and transportation services while also utilizing its existing infrastructure.
Based on this minimal capital investment, Tidewater expects to generate approximately 5% - 10% of incremental annualized EBITDA
in 2019.
Tidewater began its crude oil operations subsequent to the expiration of a non-competition covenant made by certain members of
Tidewater's executive in relation to the sale of a company prior to the formation of Tidewater.
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 and natural gas liquids ("NGL") 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.
Cautionary Notes
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
statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking
information" within the meaning of applicable Canadian securities legislation (collectively, "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: expectations regarding
regulatory approval of Tidewater's planned intra-Alberta pipeline and Pipestone Plant; projected
commissioning in Q3/Q4 of 2019 of Tidewater's planned intra-Alberta pipeline to TransAlta's
Sundance and Keephills facilities; the likelihood of TransAlta
exercising its option to acquire an ownership interest in the pipeline project; plans to construct and operate the Pipestone
Plant as well as the related budget to do so; management's expectations to monetize all or a portion of the Pipestone Plant
cogeneration units; plans to transport crude oil by rail and plans to execute longer term agreements related thereto; and,
expectations and forecasts regarding EBITDA.
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; receipt of regulatory approvals for the Corporation's proposed intra-Alberta pipeline project and Pipestone Plant; that any remaining definitive agreements will be executed with
counterparties that contain terms and conditions consistent with executed letters of intent, term sheets and memorandums of
understanding; the Corporation's ability to execute on its business plan; and anticipated timelines and budgets being met in
respect of the Corporation's projects and operations.
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; a failure to conclude definitive
agreements with counterparties that contain terms and conditions consistent with executed letters of intent and term sheets;
activities of producers and customers; changes to the regulatory environment and decisions and First Nations and landowner
consultation requirements; actions by governmental authorities, including changes in government regulation including
environmental, tariffs and taxation; security threats; reliance on technology and related cybersecurity risk; transportation of
hazardous materials; various events which could disrupt operations including natural events such as severe weather, droughts,
fires, floods and earthquakes; risks and liabilities arising from derailments; 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; 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; and, the availability of capital on acceptable terms; and, reliance on key personnel.
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.
Non-GAAP Financial Measures
This news release refers to "EBITDA" which does not have any standardized meaning prescribed by generally accepted accounting
principles in Canada ("GAAP"). EBITDA is calculated as income or loss before interest,
taxes, depreciation and amortization.
Tidewater Management believes that 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. Investors should be cautioned that 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 and Additional Measures" section of Tidewater's most recent MD&A which is
available on SEDAR.
SOURCE Tidewater Midstream and Infrastructure Ltd.
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