Tidewater Midstream and Infrastructure (TWM) Q2 2024 earnings summary

Executive summary

• Announced a related party transaction: Tidewater Midstream will acquire assets from Tidewater Renewables for $129.7 million upfront and a commitment to purchase 80.7 million BC LCFS credits over nine months.

• The transaction aims to address liquidity challenges at Tidewater Renewables due to depressed BC LCFS credit prices, which have significantly impacted revenue and cash flow.

• The HDRD complex operated at a 98% utilization rate in Q2 2024, averaging 2,925 barrels per day, exceeding the full-year utilization target.

• Major operational milestones included a successful, under-budget turnaround at the Brazeau River Complex and high utilization at the HDRD Complex.

• Net loss attributable to shareholders improved to $4.7 million in Q2 2024 from $6.4 million in Q2 2023, driven by higher operating income but offset by unfavorable derivative contract changes and no deferred tax recovery.

Financial highlights

• Q2 2024 consolidated adjusted EBITDA was $45.3 million, up from $44 million in Q2 2023, with $29.6 million contributed by Renewables (vs. $8.1 million last year).

• Year-to-date consolidated EBITDA reached $85.1 million, with $55 million from Renewables.

• Q2 2024 distributable cash flow attributable to shareholders was $4.0 million, up from negative $31.8 million in Q2 2023.

• Net debt at June 30, 2024 was $505.9 million consolidated and $189.4 million deconsolidated.

• Total capital expenditures in Q2 2024 were $21.7 million, down from $96.0 million in Q2 2023.

Outlook and guidance

• 2024 consolidated adjusted EBITDA guidance lowered to $130–150 million due to BC LCFS market uncertainty.

• Guidance assumes PG crack spreads in the $80–90 per barrel range and completion of the asset transaction in Q3.

• Full-year 2024 maintenance capital expected at $35–$40 million, unchanged from prior guidance.

• Expectation that regulatory changes and market corrections will restore BC LCFS credit prices to sustainable levels.

• Proposed asset transaction expected to close in Q3 2024, subject to regulatory and financing approvals.