TWM Tidewater Midstream and Infrastructure Ltd

(TSX: TWM)

CALGARY, AB, March 27, 2025 /CNW/ - Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Corporation") (TSX: TWM) has filed its consolidated financial statements and Management Discussion and Analysis ("MD&A") for the year ended December 31, 2024.

Fourth Quarter 2024 Highlights

• Consolidated net loss attributable to shareholders was $3.3 million during the fourth quarter of 2024, compared to a net loss attributable to shareholders of $331.8 million during the fourth quarter of 2023. The decrease in net loss attributable to shareholders is largely due to the reversal of certain non-cash impairment charges previously taken in 2023, offset in part by the gain on sale of the Pipestone natural gas plant, expansion project at the Pipestone natural gas plant, the Dimsdale natural gas storage assets, and associated gathering and other infrastructure to AltaGas Ltd. in the fourth quarter of 2023 (the "Pipestone Transaction").
• Consolidated adjusted EBITDA⁽¹⁾ was $20.0 million during the fourth quarter of 2024, compared to $21.4 million during the fourth quarter of 2023. The decrease was primarily due to higher adjusted EBITDA from equity investments and lower realized losses on derivative contracts in the comparative period, offset in part by lower general and administrative costs in the current quarter.
• During the quarter, the Corporation's offtake agreement with Cenovus Energy Inc. (the "Offtake Agreement") expired and the Corporation successfully transitioned to marketing its refined products in-house. However, refining margins for the company's products have been negatively impacted by the dumping of subsidized U.S. renewable diesel into the BC market causing the market to become oversupplied. On December 30, 2024, Tidewater Renewables Ltd. ("Tidewater Renewables") filed a trade complaint (the "Complaint") with the Canada Border Services Agency ("CBSA") which management of the Corporation believes will result in duties being imposed that will remedy and offset the significant impact of U.S. subsidies, which enable U.S. producers to export renewable diesel to Canada at artificially low prices.
• During the quarter, the Corporation recorded $24.3 million of net reversals of previously recorded impairment charges on its midstream assets in the Deep Basin cash generating unit. The increase in the net estimated recoverable amount was primarily due to the elimination of the take-or-pay fees paid to Tidewater Renewables as a result of the Transaction (as defined below), and the review of the recoverable amount of the Brazeau River Complex roadway network (the "BRC Roadway Network") which, subsequent to the period, Tidewater Midstream sold to Canadian Roadways LP ("CRR"), for total proceeds of $24 million.

Full-Year 2024 

• Full year 2024 consolidated net loss attributable to shareholders was $26.6 million compared to net loss attributable to shareholders of $385.9 million during the year ended December 31, 2023. The improvement is largely due to the reversal of non-cash impairment charges previously taken in 2023 and higher operating income, offset in part by the gain on sale on the Pipestone Transaction in 2023 and lower deferred income tax recoveries in the current year.
• Full year 2024 consolidated adjusted EBITDA⁽¹⁾ was $134.3 million, compared to $162.9 million during 2023. The decrease was largely due to losses on the settlement of vegetable oil derivative contracts and lower adjusted EBITDA from equity investments in the current year, partially offset by higher operating income and lower general and administrative costs in 2024.
• In early May 2024, Tidewater successfully completed the three-week turnaround at the Brazeau River Complex and Fractionation Facility (the "BRC") safely, on time and approximately $5.0 million below initial cost expectations.
• During the third quarter of 2024, Tidewater Midstream completed the issuance of $100 million of convertible unsecured subordinated debentures (the "Convertible Debentures") at a price of $1,000 per debenture. The Convertible Debentures mature on June 30, 2029, and accrue interest at 8% per annum, payable semi-annually, on the last day of June and December, commencing December 31, 2024. Proceeds from the issuance were used to satisfy and discharge Tidewater Midstream's $75 million convertible debentures due September 30, 2024, with the remaining proceeds used for general corporate purposes.
• During the third quarter of 2024, Tidewater Midstream completed the Transaction, in which Tidewater Midstream acquired various assets from Tidewater Renewables, including the canola co-processing and fluid catalytic cracking co-processing infrastructure, working interests in various other Prince George Refinery ("PGR") units, a natural gas storage facility located at the BRC (collectively, the "Acquired Assets"), for cash consideration of $122.0 million, plus the assumption of certain liabilities related to the Acquired Assets. Additionally, as part of the consideration, Tidewater Midstream assigned the right to receive certain British Columbia Low Carbon Fuel Standard emission credits ("BC LCFS Credits") with a minimum value of $7.7 million to Tidewater Renewables.
• Tidewater Midstream and Tidewater Renewables also entered into an agreement for the purchase and sale of BC LCFS credits (the "BC LCFS Credit Purchase Agreement"), under which Tidewater Midstream agreed to purchase BC LCFS Credits from Tidewater Renewables for an aggregate purchase price of $7.2 million, and agreed to purchase additional BC LCFS Credits (subject to certain monthly average limits) from Tidewater Renewables until March 31, 2025, for cash proceeds of approximately $77.5 million (assuming the HDRD Complex continues to operate at over 90% utilization).
• Concurrent with the close of the Transaction, the Corporation successfully amended and restated its senior credit facility, increasing the aggregate revolving capacity by $25 million, from $150 million to $175 million, and extending the maturity date from February 10, 2026 to September 12, 2026. The Corporation also added a three-year delayed draw term loan tranche of $150 million to finance the Acquired Assets and the portion of the BC LCFS Credits mentioned above.
• On September 12, 2024, Tidewater Renewables closed the sale of its used cooking oil feedstock assets, generating total proceeds of $10.6 million. The proceeds from this transaction were used to reduce outstanding debt on Tidewater Renewables' senior credit facility.
• Throughout 2024, Tidewater Midstream implemented general and administrative cost cutting initiatives that resulted in over $5 million in cost savings.

Subsequent Events

• On January 10, 2025, Tidewater Renewables completed the sale of its interest in the Rimrock Renewables Partnership ("RNG LP") to Biocirc Canada Holdings Inc., an affiliate of Biocirc Group ApS for total proceeds of $7.8 million, of which $4.7 million was received on close and a further $3.1 million could be received upon the satisfaction of certain post-closing conditions on or before December 30, 2025. The net proceeds of this transaction were used to repay outstanding indebtedness.
• On February 27, 2025, the Government of British Columbia announced changes to the Low Carbon Fuels Act (the "Amendments"), specifically to increase to the renewable fuel requirement for diesel from 4% to 8% for the 2025 compliance period, together with, effective April 1, 2025, requiring such renewable fuel content to be produced in Canada. Management believes that the Amendments represent a good first step in levelling the unfair trade environment and supporting the economic viability of Tidewater Renewables and the broader Canadian biofuels industry.
• On March 6, 2025 Tidewater Midstream announced it had entered into a definitive agreement with CRR, for the sale of its BRC Roadway Network for total proceeds of $24 million. The BRC Roadway Network is a non-core asset of Tidewater Midstream and the disposition of the BRC Roadway Network is expected to have an immaterial impact to Tidewater Midstream's 2025 operating results. The sale closed on March 24, 2025. Of the $24 million in total proceeds, $22.5 million was received upon closing, with the balance expected to be received on or before December 31, 2025.
• In early March 2025, the CBSA formally initiated a countervailing (anti-subsidy) and anti-dumping duty investigation into imports of renewable diesel from the United States (the "Investigation"). In initiating the Investigation, the CBSA confirms that Tidewater Renewables provided satisfactory evidence to support its allegations that U.S. renewable diesel imports were subsidized and dumped, causing harm to Tidewater Renewables. A decision by the CBSA regarding whether provisional duties will be imposed at the Canada-U.S. border is anticipated by June 2025. Final duties, which would be in place for five years and can be renewed every five years thereafter, could be imposed by September 2025 following a ruling by the Canadian International Trade Tribunal. If final duties are imposed at the levels expected by management, valued between $0.50 and $0.80 per litre of renewable diesel imported from the United States, these duties would support long-term market stability for Tidewater Renewables' renewable diesel production and its related emission credits.
• On March 26, 2025, with the support of its lenders, Tidewater Midstream amended the financial covenant requirements within the Fifth Amended and Restated Credit Agreement effective January 1, 2025 until March 31, 2026, to increase the first lien senior debt to adjusted EBITDA covenant up to 4.50:1 (from 3.50:1) , and decrease the adjusted EBITDA to interest coverage ratio to 1.50:1 (from 2.50:1) during the period. These amendments will assist in providing financial flexibility as Tidewater navigates current market conditions.
• On March 26, 2025, Tidewater Renewables, with the support of its lenders, successfully amended its senior credit facility and second lien credit facility. The amendments provide over $15.0 million of additional capacity to the Tidewater Renewables credit facilities and extends the maturity date of the second lien tranche B and tranche C facilities from February 28, 2026, to October 24, 2027. The amendments also waive the requirements to comply with the quarterly financial covenants until March 31, 2026, previously waived until September 30, 2025, at which time the Tidewater Renewables will be required to maintain certain financial covenants on an annualized basis.

CEO Quote:

2024 was a busy year for Tidewater,

Before I enumerate our accomplishments over the year, I wanted to take a step back to when I joined in January 2024.  At that time, the Company had just completed a strategic review which culminated in the sale of the Pipestone natural gas plant, Pipestone expansion project and the Dimsdale natural gas storage facility and associated gathering and other infrastructure assets in December 2023. 

Since that time, we have continued making progress towards improving our operations and optimizing our asset portfolio.  Our strategy is supported by three key initiatives: maintaining safe and reliable operations, driving ongoing operational efficiencies, and optimizing our asset portfolio to ensure we have the right mix of assets that are generating appropriate returns.

In 2024, Tidewater Midstream achieved several key milestones as we continue to progress on our strategy. 

• Completed the refinancing of our convertible debentures
• Implemented significant operational and administrative costs savings
• Completed the Transaction with Tidewater Renewables and simplified our business and our reporting
• Finalized the sale of the BRC Roadway Network and repaid $22.5 million of debt
• Completed a major turnaround at the BRC below our initial cost estimates
• Built an in-house marketing organization following the expiration of the Offtake Agreement

At Tidewater Renewables we:

• Commissioned HDRD and got it running reliably
• Completed several non-core asset sales, including Eco Dine in September 2024 and Rimrock Renewable Ltd. Partnership in January 2025
• Made significant progress on required regulatory policy changes
• Strengthened Tidewater Renewables' balance sheet by completing the Transaction with Tidewater Midstream, which reduced debt and lowered financing costs. In addition, the forward sale of BC LCFS Credits to Tidewater Midstream until March 2025 provided Tidewater Renewables with a reliable source of cash flow, allowing the Company to continue to focus on its renewable fuels business
• Completed refinancing

I'm very proud of our Tidewater team and am very confident in our ability to continue to progress on our plan and achieve our goal of delivering sustainable free cash flow and growth."

-Stated CEO Jeremy Baines

CONSOLIDATED AND DECONSOLIDATED FINANCIAL HIGHLIGHTS

CAPITAL EXPENDITURES

2025 CAPITAL PROGRAM:

Tidewater's consolidated full-year 2025 capital program is focused on maintaining safe and reliable operations and is expected to range between $15 million - $20 million.

DOWNSTREAM

PGR

During the fourth quarter of 2024, total throughput at the PGR was 10,963 bbl/day, 6% lower than the third quarter of 2024 primarily due to both internally scheduled and third-party maintenance work. Total throughput was 10% lower than the fourth quarter of 2023 largely due to third-party pipeline maintenance that decreased the volume of crude feedstock coming into the facility and limited availability of intermediate feedstocks. The PGR is currently on a four-year turnaround cycle, with the next scheduled turnaround in the second quarter of 2027.

As previously disclosed, the Offtake Agreement expired on November 1, 2024. The Offtake Agreement provided for the sale of the majority of the nameplate capacity on diesel and gasoline volumes produced at the PGR. The Corporation is now marketing diesel and gasoline volumes from the PGR and HDRD Complex directly to its customers. Following the expiry of the Offtake Agreement, Tidewater successfully entered into agreements to replace the vast majority of the nameplate capacity on diesel and gasoline volumes produced at the PGR and the HDRD Complex for 2024 and is in the process of marketing the nameplate capacity on diesel and gasoline volumes produced at the PGR and the HDRD Complex for the remainder of 2025. Current wholesale discounts are wider than those at the time the Offtake Agreement was entered into, largely stemming from the oversupply of imported diesel in Western Canada as well as North American supply and demand fundamentals. Wider wholesale discounts are expected to yield lower margins until the outcome of the Complaint is determined and the unbalanced trade environment and high volume of diesel imports inundating the BC market is addressed. Tidewater is working to optimize its netbacks on its diesel and gasoline. While Tidewater is focused on Western Canadian markets, in the event the Corporation is unable to place all its products in Western Canada, it may be required to export the balance to potentially lower margin markets.

PGR Historical Performance:

HDRD Complex

During the three months and year ended December 31, 2024, the HDRD Complex averaged daily throughput of approximately 2,677 bbl/d and 2,643 bbl/d, respectively. The HDRD Complex full year utilization exceeded the previously announced target of 2,550 bbl/d by 4%.

During winter operations, the HDRD Complex produces a high-quality, low cloud point renewable diesel that meets the cold temperature specifications for diesel fuel in Canada. This operating mode requires minor reductions to throughput rates in order to optimize hydrogen production for the enhanced severity operation.

MIDSTREAM

During the fourth quarter of 2024, total throughput volumes at the midstream facilities were approximately 218 MMcf/day, compared to 308 MMcf/day in the same period of 2023, excluding the throughput volumes from the Pipestone natural gas plant, which was divested in the fourth quarter of 2023. The lower throughput was largely a result of lower producer volumes caused by producer shut-ins due to weak natural gas prices.

Midstream Gas Plant Volumes

Brazeau River Complex and Fractionation Facility

The BRC gas processing facility had throughput of 132 MMcf/day in the fourth quarter of 2024, 8 MMcf/day higher than the third quarter of 2024 during which lower producer volumes flowed into the facility due to decreased natural gas prices, and was relatively consistent with the fourth quarter of 2023.

The BRC fractionation facility utilization averaged 94% in the fourth quarter of 2024, compared to 82% in the third quarter of 2024 and 87% in the fourth quarter of 2023. Utilization was higher compared to the third quarter of 2024 primarily due to higher volumes coming into the facility. Fractionation facility utilization was higher than the fourth quarter of 2023 largely due an increase in trucked-in volumes and higher recoveries of C3+ at the BRC gas plant in the fourth quarter of 2024. Utilization of the BRC fractionation facility may vary as NGL recoveries are dependent on the gas composition coming into facility.

Ram River Gas Plant

Tidewater Midstream has a 95% operated working interest in the Ram River Gas Plant, a rail-connected sour natural gas processing facility with sulfur handling facilities located in the Strachan region in west central Alberta.

The Ram River Gas Plant had throughput of 15 MMcf/d in the fourth quarter of 2024, however, no gas was processed at the facility during the quarter as gas processing activities have been temporarily shut-in due to a decline in producer volume resulting from depressed natural gas prices. Natural gas prices are forecasted to recover during 2025, and gas processing operations are expected to resume when producer activity restarts. Sulfur handling activities were operational during the fourth quarter of 2024.

Subsequent to the end of the year, on January 7, 2025, management made the decision to temporarily lay-up the Ram River Gas Plant, including sulfur handling activities, in order to manage ongoing operating costs and to allow for gas prices to recover and gas flow from producers to resume. Management's intent is to restart the facility when commodity prices strengthen and gas flow from producers commences.

FOURTH QUARTER 2024 EARNINGS CALL

In conjunction with the earnings release, Tidewater Midstream's executives will hold a call to review its fourth quarter 2024 results via conference call on Thursday, March 27, 2025 at 11:00 am MDT (1:00 pm EDT).

To access the conference call by telephone, dial 1-437-900-0527 (local / international participant dial in) or 1-888-510-2154 (North American toll-free participant dial in). A question and answer session for analysts will follow the management's presentation.

A live audio webcast of the conference call will be available by following this link: https://app.webinar.net/B4Eoae5aYJb 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 join the Tidewater Midstream and Infrastructure Ltd. earnings call.

ABOUT TIDEWATER MIDSTREAM

Tidewater Midstream is traded on the TSX under the symbol "TWM". Tidewater Midstream's business objective is to build a diversified midstream and infrastructure company in the North American natural gas, natural gas liquids, crude oil, refined product and renewable energy value chain. Its strategy is to profitably grow and create shareholder value through the acquisition and development of conventional and renewable energy infrastructure.

To achieve its business objective, Tidewater Midstream is focused on providing customers with a full service, vertically integrated value chain through the acquisition and development of energy infrastructure, including downstream facilities, natural gas processing facilities, natural gas liquids infrastructure, pipelines, railcars, export terminals, storage, and various renewable initiatives. To complement its infrastructure asset base, the Corporation also markets crude, refined products, natural gas, natural gas liquids and renewable products and services to customers across North America.

Tidewater Midstream is a majority shareholder in Tidewater Renewables, a multi-faceted energy transition company focusing on the production of low carbon fuels. Tidewater Renewables' common shares are publicly traded on the TSX under the symbol "LCFS".

NON-GAAP MEASURES

Throughout this news release and in other materials disclosed by the Corporation, Tidewater Midstream uses a number of non-GAAP financial measures, non-GAAP financial ratios, capital management measures, and supplemental financial measures when assessing its results and measuring overall performance. The intent of these non-GAAP measures and ratios is to provide additional useful information to investors and analysts. Certain of these financial measures and ratios do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures and ratios presented by other entities. As such, these non-GAAP measures and ratios should not be considered in isolation or used as a substitute for measures and ratios of performance prepared in accordance with GAAP. Except as otherwise indicated, these financial measures will be calculated and disclosed on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods. The following are the Corporation's non-GAAP financial measures, non-GAAP ratios, capital management measures, and supplementary measures.

Non-GAAP Financial Measures

Consolidated and deconsolidated adjusted EBITDA

Consolidated adjusted EBITDA is calculated as net (loss) income before finance costs, taxes, depreciation, share-based compensation, unrealized gains and losses on derivative contracts, transaction costs, gains and losses on the sale of assets, and other items considered non-recurring in nature plus the Corporation's proportionate share of EBITDA in its equity investments. Deconsolidated adjusted EBITDA is calculated as consolidated adjusted EBITDA less the portion of consolidated adjusted EBITDA attributable to Tidewater Renewables.

In accordance with IFRS, Tidewater Midstream's jointly controlled investments are accounted for using equity accounting. Under equity accounting, net earnings from investments in equity accounted investees are recognized in a single line item in the consolidated statement of net (loss) income and comprehensive (loss) income. The adjustments made to net (loss) income, as described above, are also made to share of profit from investments in equity accounted investees.

Consolidated adjusted EBITDA is used by management to set objectives, make operating and capital investment decisions, monitor debt covenants and assess performance. In addition to its use by management, Tidewater Midstream also believes consolidated adjusted EBITDA is a measure widely used by securities analysts, investors, lending institutions, and others to evaluate the financial performance of the Corporation and other companies in the midstream industry. From time to time, the Corporation issues guidance on this key measure. As a result, consolidated adjusted EBITDA is presented as a relevant measure in this news release and the MD&A to assist analysts and readers in assessing the performance of the Corporation as seen from management's perspective. In addition to reviewing consolidated adjusted EBITDA, management reviews deconsolidated adjusted EBITDA to highlight the Corporation's performance, excluding the portion of consolidated adjusted EBITDA attributable to Tidewater Renewables. Investors should be cautioned that consolidated adjusted EBITDA and deconsolidated adjusted EBITDA should not be construed as alternatives to net (loss) income, net cash provided by 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.

The following table reconciles net (loss) income, the nearest GAAP measure, to adjusted EBITDA:

Distributable cash flow and deconsolidated distributable cash flow attributable to shareholders

Distributable cash flow is calculated as net cash provided by (used in) operating activities before changes in non-cash working capital, plus cash distributions from investments, transaction costs, non-recurring transactions, and less other expenditures that use cash from operations. Also deducted is the distributable cash flow of Tidewater Renewables that is attributed to non-controlling interest shareholders. Management believes distributable cash flow is a useful metric for investors when assessing the amount of cash flow generated from normal operations.

Changes in non-cash working capital are excluded from the determination of distributable cash flow because they are primarily the result of seasonal fluctuations or other temporary changes and are generally funded with short-term debt or cash flows from operating activities. Transaction costs are added back as they can vary significantly based on the Corporation's acquisition and disposition activity. Non-recurring transactions that do not reflect Tidewater Midstream's ongoing operations are also excluded. Lease payments, interest and financing charges, and maintenance capital expenditures, including turnarounds, are deducted as they are ongoing recurring expenditures which are funded from operating cash flows.

Deconsolidated distributable cash flow is calculated by subtracting the portion of Tidewater Renewables' distributable cash flow that is attributed to shareholders of Tidewater Midstream from distributable cash flow attributable to shareholders.

The following table reconciles net cash provided by (used in) operating activities, the nearest GAAP measure, to distributable cash flow and deconsolidated distributable cash flow:

Growth capital expenditures are generally funded from retained operating cash flow and additional debt or equity, as required.

Non-GAAP Financial Ratios

Tidewater uses non-GAAP financial ratios to present aspects of its financial performance or financial position, primarily distributable cash flow per share.

Distributable cash flow and deconsolidated distributable cash flow per share

Distributable cash flow per share is calculated as distributable cash flow attributable to shareholders divided by the basic or diluted weighted average number of common shares outstanding for the period.

Deconsolidated distributable cash flow per share is calculated as deconsolidated distributable cash flow attributable to shareholders divided by the basic or diluted weighted average number of common shares outstanding for the period. Management believes that these measures provide investors an indicator of funds generated from the business that could be allocated to each shareholder's equity position.

Capital Management Measures

Consolidated and deconsolidated net debt

Consolidated net debt is defined as bank debt, second lien debt, and convertible debentures, less cash. Consolidated net debt is used by the Corporation to monitor its capital structure and financing requirements. It is also used as a measure of the Corporation's overall financial strength.

In addition to reviewing consolidated net debt, management reviews deconsolidated net debt to highlight Tidewater Midstream's financial flexibility, balance sheet strength and leverage. Deconsolidated net debt is calculated as consolidated net debt less the portion attributable to Tidewater Renewables.

Consolidated and deconsolidated net debt exclude working capital, lease liabilities and derivative contracts as the Corporation monitors its capital structure based on deconsolidated net debt to deconsolidated adjusted EBITDA, consistent with its credit facility covenants as described in the LIQUIDITY AND CAPITAL RESOURCES section.

The following table reconciles consolidated and deconsolidated net debt:

Supplementary Financial Measures 

"Growth capital" expenditures are generally defined as expenditures which are recoverable or incrementally increase cash flow or earnings potential of assets, expand the capacity of current operations or significantly extend the life of existing assets. This measure is used by the investment community to assess the extent of discretionary capital spending.

"Maintenance capital" expenditures are generally defined as expenditures which support and/or maintain the current capacity, cash flow or earnings potential of existing assets without the associated benefits characteristic of growth capital expenditures. These expenditures include major inspections and overhaul costs that are required on a periodic basis. This measure is used by the investment community to assess the extent of non-discretionary capital spending. Maintenance capital is included in the calculation of distributable cash flow.

Deconsolidated "net (loss) income attributable to shareholders" is comprised of net income or loss attributable to shareholders, as determined in accordance with IFRS, less the net income or loss of Tidewater Renewables attributed to the shareholders of Tidewater Midstream.

Deconsolidated "net (loss) income attributable to shareholders – per share" is calculated by dividing deconsolidated "net income or loss attributable to shareholders" by the basic weighted average number of Tidewater Midstream common shares outstanding for the period.

Deconsolidated "Total capital expenditures" is comprised of consolidated capital expenditures, as disclosed in Tidewater Midstream's statement of cash flows, less the capital expenditures of Tidewater Renewables.

OPERATIONAL DEFINITIONS

"bbl/d" means barrels per day; "MMcf/d" means million cubic feet per day.

"BC LCFS" means, collectively, prior to January 1, 2024, BC's Greenhouse Gas Reduction (Renewable & Low Carbon Fuel Requirements) Act and the Renewable & Low Carbon Fuel Requirements Regulation, introduced to reduce the CI of fuels used in the province, and on and after January 1, 2024, BC's Low Carbon Fuels Act, the Low Carbon Fuels (General) Regulation and the Low Carbon Fuels (Technical) Regulation;

"BC LCFS Credits" means the credits awarded to BC Part 3 Fuel Suppliers by either (i) supplying a fuel with a CI below the prescribed CI limit, or (ii) taking actions that would have a reasonable possibility of reducing greenhouse gas emissions through the use of Part 3 fuels sooner than would occur without the agreed-upon action, which credits may be transferred upon validation. BC LCFS Credits are tradable certificates and can be bought and sold in a market to help companies meet their regulatory obligations. The purpose of these credits is to incentivize the use of cleaner, low-carbon fuels and to help reduce the overall greenhouse gas emissions in the transportation sector.

"BC Part 3 Fuel Suppliers" means, prior to January 1, 2024, a "part 3 fuel supplier" under the BC LCFS, and on and after January 1, 2024, a person who markets fuel in BC under Part 2 of the Low Carbon Fuels Act.

"Refinery yield" (expressed as a percentage) represents the percentage of finished product produced from inputs of crude oil and renewable feedstock as well as intermediates. Refinery yields are an important measure of refinery performance indicating the outputs that running a particular feedstock and intermediates through a refinery configuration will produce.

"Throughput" with respect to a natural gas plant, means inlet volumes processed (including any off-load or reprocessed volumes); with respect to a pipeline, the estimated natural gas or liquid volume transported therein; and with respect to NGL processing facilities, means the volume of inlet NGLs processed.

"U.S." meaning the United States of America, its territories and possessions, any state of the United States and the District of Columbia

Advisory Regarding Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking statements and forward-looking information (collectively referred to herein as, "forward-looking statements") within the meaning of applicable Canadian securities laws. Such forward-looking statements relate to future events, conditions or future financial performance of Tidewater Midstream based on future economic conditions and courses of action. All statements other than statements of historical fact may be forward-looking statements. Such forward-looking statements are often, but not always, identified by the use of any words such as "seek", "anticipate", "budget", "plan", "continue", "forecast", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "will likely result", "are expected to", "will continue", "is anticipated", "believes", "estimated", "intends", "plans", "projection", "outlook" and similar expressions. These statements involve known and unknown risks, assumptions, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Corporation believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon.

In particular, this news release contains forward-looking statements pertaining to but not limited to the following:

• expectations regarding the timing and effect of the Complaint and Investigation, including the imposition of duties on U.S. renewable diesel imports;
• purchases of BC LCFS Credits under the BC LCFS Credit Purchase Agreement;
• the receipt of the balance of the total proceeds from the sale of Tidewater Renewables' interest in RNG LP;
• the expected effect of the Amendments on the emissions credit markets and the broader Canadian biofuels industry;
• the sale of the BRC Roadway Network, including the receipt of the balance of the total proceeds from the sale, the expected timing of closing and the use of proceeds from the sale;
• the PGR turnaround cycle and the next scheduled outage;
• marketing efforts regarding the Corporation's products;
• pricing expectations for the Corporation's products;
• supply and demand for products and services;
• the effect of selling additional gasoline and diesel volumes on the spot gasoline and diesel markets and geographic markets other than Western Canada;
• operations and performance at the HDRD Complex
• expected throughput and utilization, including causes of variances thereof;
• natural gas pricing expectations;
• expectations regarding producer activity;
• the resumption of operations at the Ram River Gas Plant;
• the Corporation's view of the BC LCFS emission credit market; and
• Tidewater Midstream's business strategy

Although the forward-looking statements contained in this news release are based upon assumptions which management of the Corporation believes to be reasonable, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. With respect to forward-looking statements contained in this news release, the Corporation has assumptions regarding, but not limited to:

• the Corporation's ability to execute on its business plan;
• the effect of Tidewater Renewables' business operations on Tidewater Midstream;
• the timely receipt of all governmental and regulatory approvals sought by the Corporation;
• future commodity prices, including natural gas, crude oil, NGL and renewable energy prices;
• the market for BC LCFS Credits, including that such market will improve and the timing thereof;
• general economic and industry trends;
• impacts of commodity prices and demand on the Corporation's working capital requirements; ‎
• continuing government support for existing policy initiatives;
• processing and marketing margins;
• impacts of seasonality and climate disruptions;
• future capital expenditures to be made by the Corporation;
• foreign currency, exchange and interest rates, and expectations relating to inflation;
• that there are no unforeseen events preventing the performance of contracts;
• the availability of equipment and personnel required for Tidewater Midstream to execute its business plan;
• the amount of future liabilities relating to lawsuits and environmental incidents and the availability of coverage under the Corporation's insurance policies;
• volume demands from the PGR and HDRD Complex are consistent with forecasts;
• successful negotiation and execution of agreements with counterparties;
• oil and gas industry exploration and development activity and the geographic region of such activity;
• the Corporation's ability to obtain and retain qualified staff and equipment in a timely and cost-effective manner;
• the amount of operating costs to be incurred;
• that there are no unforeseen costs relating to the facilities, not recoverable from customers;
• distributable cash flow and net cash provided by operating activities are consistent with expectations;
• the ability to obtain additional financing on satisfactory terms;
• the availability of capital to fund operations and future capital requirements relating to existing assets and projects;
• the ability of Tidewater Midstream to successfully market its products;
• the successful integration of acquisitions and projects into the Corporation's existing business; and
• the Corporation's future debt levels and the ability of the Corporation to repay its debt when due.

The Corporation's actual results could differ materially from those anticipated in the forward-looking statements, as a result of numerous known and unknown risks and uncertainties and other factors including but not limited to:

• changes in demand for refined and renewable products;
• general economic, political, market and business conditions, including fluctuations in interest rates, foreign exchange rates, stock market volatility, BC LCFS Credit market volatility; supply/demand trends, armed hostilities, acts of war, terrorism, cyberattacks, trade disruptions, diplomatic developments and inflationary pressures;
• Tidewater Renewables' ability to continue as a going concern;
• activities of producers and customers and overall industry activity levels;
• failure to negotiate and conclude any required commercial agreements;
• non-performance of agreements in accordance with their terms;
• failure to execute formal agreements with counterparties in circumstances where letters of intent or similar agreements have been executed and announced by Tidewater Midstream;
• the imposition of tariffs and the corresponding impact on producer activity and the supply and demand for the Corporation's products;
• failure to close transactions as contemplated and in accordance with negotiated terms;
• the conflict in Ukraine and the Middle East and the corresponding impact on supply chains and the global economy;
• risks of health epidemics, pandemics, public health emergencies, quarantines, and similar outbreaks, including COVID-19, which may have sustained material adverse effects on the Corporation's business financial position results of operations and/or cash flows;
• changes in environmental and other laws and regulations or the interpretations of such laws or ‎‎‎regulations‎;
• ‎cost of compliance with applicable regulatory regimes, including, but not limited to, environmental laws and regulations, including greenhouse gas emissions;
• Indigenous and landowner consultation requirements;
• climate change initiatives or policies or increased environmental regulation;
• that receipt of third party, regulatory, environmental and governmental approvals and consents relating to Tidewater Midstream's capital projects can be obtained on the necessary terms and in a timely manner;
• that the resolution of any particular legal proceedings could have an adverse effect on the Corporation's operating results or financial performance;
• competition for, among other things, business capital, acquisition opportunities, requests for proposals, materials, equipment, labour and skilled personnel;
• the ability to secure land and water, including obtaining and maintaining land access rights;
• operational matters, including potential hazards inherent in the Corporation's operations and the effectiveness of health, safety, environmental and integrity programs;
• actions by governmental authorities, including changes in regulation, tariffs and taxation;
• changes in operating and capital costs, including fluctuations in input costs;
• legal risks and environmental risks and hazards, including risks inherent in the transportation of NGLs and refining of light crude oils which may create liabilities to the Corporation in excess of the Corporation's insurance coverage, if any;
• actions by joint venture partners or other partners which hold interests in certain of the Corporation's assets;
• reliance on key relationships and agreements;
• losses of key customers;
• 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;
• the availability of capital on acceptable terms;
• changes in the credit-worthiness of counterparties;
• adverse claims made in respect of the Corporation's properties or assets;
• risks and liabilities associated with the transportation of dangerous goods and derailments;
• effects of weather conditions (such severe weather or catastrophic events including, but not limited to, fires, floods, lightning, earthquakes, extreme cold weather, storms or explosions);
• reputational risks;
• reliance on key personnel;
• technology and security risks, including cybersecurity;
• potential losses which would stem from any disruptions in production, including work stoppages or other labour difficulties, or disruptions in the transportation network on which the Corporation is reliant;
• technical and processing problems, including the availability of equipment and access to properties;
• changes in gas composition; and
• failure to realize the anticipated benefits of acquisitions.

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 AIF and in other documents on file with the Canadian securities regulatory authorities. Additionally, the Corporation faces certain risks as the majority shareholder of Tidewater Renewables including, without limitation, liquidity risk, commodity price risk (including in respect of the markets for BC LCFS Credits, CFR emission credits and other carbon credits, rebates, tax credits, grants and other incentives), equity risk, credit risk and risks related to changes in environmental regulations, economic, political or market conditions and the regulatory environment.

Management of the Corporation has included the above summary of assumptions and risks related to forward-looking statements provided in this news release in order to provide holders of common shares in the capital of the Corporation with a more complete perspective on the Corporation's current and future operations and such information may not be appropriate for other purposes.

The Corporation's actual results performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any off them do occur, what benefits the Corporation will derive therefrom. Readers are therefore cautioned that the foregoing list of important factors is not exhaustive, and they should not unduly rely on the forward-looking statements included in this news release. Tidewater Midstream 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, other than as required by applicable securities law. All forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Further information about factors affecting forward-looking statements and management's assumptions and analysis thereof is available in filings made by the Corporation with Canadian provincial securities commissions available on the System for Electronic Document Analysis and Retrieval ("SEDAR+") at www.sedarplus.ca.  

SOURCE Tidewater Midstream and Infrastructure Ltd.