Tidewater Midstream & Infrastructure Ltd. Tidewater Midstream & Infrastructure Ltd. Investor Presentation

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  • Tidewater Midstream & Infrastructure Ltd.Investor Presentation

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    TWM Brazeau River Complex October 2017

    April 2018

    TSX: TWM

  • Disclaimer

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    Forward Looking Information

    In the interests of providing Tidewater Midstream and Infrastructure Ltd. (Tidewater or the Corporation) shareholders and potential investors with information regarding Tidewater, including managementsassessment of future plans and operations relating to the Corporation, this document contains certain statements and information that are forward-looking statements or information within the meaning of applicablesecurities legislation, and which are collectively referred to herein as forward-looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should","believe", "plan", "intend" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are often, but not always, identified by such words. Forward-looking statements inthis document include, but are not limited to statements and tables (collectively statements) with respect to: plans to construct a natural gas pipeline from the BRC to TransAltas Sundance and Keephills power plants,expected cost of such project and associated take or pay agreement; potential egress and demand options including for petrochemical, technology, industrial and power use; infrastructure plans with respect to theproposed Pipestone Montney Sour Deep Cut Gas Plant including its potential expansion; plans with respect to natural gas storage infrastructure; the potential to connect newly acquired infrastructure to BRC andprovide customers with a new large scale egress solution; projections to increase long term contracts and diversify to customers with strong balance sheets; plans to connect Tidewaters Montney assets to its Edmontoninfrastructure/egress hub; benefits generated from an integrated processing and infrastructure network; the increasing relevance of Tidewaters Deep Basin network, driving utilization and EBITDA growth upward;anticipated margin improvements for Tidewaters Edmonton assets resulted from the reduction of certain fees, costs and tariffs; Tidewaters plans to build out its Edmonton Energy Hub over the next two to three yearsand the potential to add propylene, polypropylene and iso-octane production; anticipation of significant improvement in margins by eliminating third party rail transloading fees, eliminating trucking costs and reducedpipeline tariffs at the Acheson facility; target annual EBITDA/share growth over the next 24 months and target EBITDA levels; subsequent acquisitions and strategies for acquisitions, capital projects and expenditures;strategic initiatives; anticipated producer activity and industry trends; and anticipated performance. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance thatthe plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, as well as known and unknown risks and uncertainties, bothgeneral and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur and which may cause Tidewaters actual performance and financialresults in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by the forward-looking statements. These assumptions, risks and uncertaintiesinclude, among other things: receipt of third party, regulatory and governmental approvals and consents; Tidewaters ability to successfully implement strategic initiatives and whether such initiatives yield the expectedbenefits; failure to consummate definitive agreements related to contemplated projects; future operating results; fluctuations in the supply and demand for natural gas, natural gas liquids (NGLs), and iso-octane;assumptions regarding commodity prices; demand for potential egress options; activities of producers, competitors and others; the weather; assumptions around construction schedules and costs, including theavailability and cost of materials and service providers; fluctuations in currency and interest rates; credit risks; marketing margins; potential disruption or unexpected technical difficulties in developing new facilities orprojects; unexpected cost increases or technical difficulties in constructing or modifying processing facilities; Tidewaters ability to generate sufficient cash flow from operations to meet its current and futureobligations; its ability to access external sources of debt and equity capital; changes in laws or regulations or the interpretations of such laws or regulations; political and economic conditions; that any requiredcommercial agreements can be negotiated and completed; and other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by Tidewater.

    Readers are cautioned that the foregoing list of important factors is not exhaustive. The forward-looking statements contained in this document are made as of the date of this document or the dates specificallyreferenced herein. For additional information please refer to Tidewaters public filings available on SEDAR at www.sedar.com. All forward-looking statements contained in this document are expressly qualified by thiscautionary statement.

    Any financial outlook or future-oriented financial information, as defined by applicable securities legislation, has been approved by management of Tidewater as of March 28, 2018. Such financial outlook or future-oriented financial information is provided for the purpose of providing information about management's current expectations and goals relating to the future of Tidewater. Readers are cautioned that reliance on suchinformation may not be appropriate for other purposes.

    TransAlta Agreement

    Tidewater and TransAlta have entered into a letter of intent (LOI) for Tidewater to construct a 120 km natural gas pipeline from the BRC to TransAltas power generating units at Sundance and Keephills and adefinitive agreement with respect to the procurement of long-lead items such as the steel and valves for the pipeline. The pipeline will be supported by a 15 year take-or-pay agreement with TransAlta. The completionof this project and execution by Tidewater of the take-or-pay agreement with TransAlta will be subject to negotiation of additional definitive agreements between Tidewater and TransAlta.

    Non-GAAP Financial Measures

    This presentation refers to EBITDA and Adjusted EBITDA, which do not have any standardized meaning prescribed by generally accepted accounting principles in Canada (GAAP). EBITDA is calculated as income orloss before interest, taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA adjusted for incentive compensation, unrealized gains/losses, non-cash items, transaction costs and other itemsconsidered non-recurring in nature.

    Tidewater Management believes that EBITDA and Adjusted EBITDA provide useful information to investors as they provide an indication of results generated from the Corporations operating activities prior tofinancing, 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 theCorporations success. In addition to its use by Management, Tidewater also believes Adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate the financial performance of theCorporation and other companies in the midstream industry. Investors should be cautioned that EBITDA and Adjusted EBITDA should not be construed as alternatives to earnings, cash flow from operating activities orother measures of financial results determined in accordance with GAAP as an indicator of the Corporations 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 sectionof Tidewaters most recent MD&A which is available on SEDAR.

  • Tidewater Summary

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    High Growth, Pure Play NGL Infrastructure Business

    Pursuing Canadian natural gas liquids (NGLs) and natural gas market opportunities through the acquisition and build out of strategic midstream, pipeline, processing, storage, rail, downstream, and export assets. NGL prices are currently near 36 month highs which is very positive for Tidewaters business plan

    Announced the first definitive agreement in connection with the letter of intent for a 15 year take-or-pay agreement (130 Mmcf/day) with TransAlta on a new pipeline build from Tidewaters largest natural gas processing facility (Brazeau River Complex (BRC)) direct to an end market in TransAltas large power plants in the Edmonton area. Key final step in a complete Inter-Alberta pipeline system where producers in Western Canada can flow on Tidewater infrastructure from wellhead all the way to a large end market*

    Recently announced sanctioning of 100 MMcf/day Pipestone Montney Sour Deep Cut Natural Gas Gathering and Natural Gas Liquids Processing Complex with two anchor five year take-or-pay contracts. Signed a third customer to a reserve dedication where majority of plant is contracted and ongoing discussions with multiple customers

    EV/EBITDA 2019E multiple of 6.7x vs. peer average of 12.0x

    Capitalizing on Managements strong producer and downstream market access relationships, Tidewater can provide producers improved pricing for their NGL