Mr. Rob Colcleugh reports

TIDEWATER MIDSTREAM AND INFRASTRUCTURE LTD. ANNOUNCES FIRST QUARTER 2023 RESULTS AND OPERATIONAL UPDATE

Tidewater Midstream and Infrastructure Ltd. has filed its interim consolidated financial statements and management's discussion and analysis (MD&A) for the period ended March 31, 2023.

First-quarter 2023 highlights:

• Total mid-stream throughput volumes of 390 million cubic feet per day (MMcf/day) represent a 6-per-cent increase over the previous quarter. The corporation's Pipestone natural gas plant processed record volumes for the quarter benefitting from planned turnaround work that took place in the fourth quarter of 2022.
• Mid-stream operations contributed approximately 50 per cent of Tidewater's first quarter 2023 consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $48.9-million and a net loss attributable to shareholders of $24.8-million for the quarter.
• With the support of its syndicate of lenders, Tidewater extended the term of its senior secured credit facility from August, 2024, to February, 2026.
• Tidewater has completed approximately 90 per cent of its first scheduled four-year turn around at the Prince George refinery (PGR), which represents the majority of the corporation's 2023 budgeted maintenance capital.
• In April, 2023, Tidewater Renewables Ltd. received incremental government support of $43-million and the corporation subsequently received support to increase its borrowing capacity by a total of $50-million to complete and commission the renewable diesel and renewable hydrogen complex (HDRD complex).
• Construction of Tidewater Renewables' HDRD complex is scheduled for completion in June, 2023, at which point commercial operations will commence and increase into the third quarter of 2023. Tidewater Renewables is forecasting an average utilization rate of 75 per cent to 80 per cent of its design capacity during the second half of 2023.

"Our mid-stream assets continue to perform at or above forecast levels and while crack spreads have weakened from the very high levels seen last year, we expect improved Prince George refinery results coming out of our turn around and heading into the summer driving season. I want to thank our dedicated field staff and contractors who have performed exceptionally well through a very challenging environment at Prince George with HDRD construction and refinery turn around projects occurring concurrently," stated interim chief executive officer Rob Colcleugh.

Update on Alberta wildfires

On May 4, 2023, Tidewater activated its emergency response program due to the wildfires in Brazeau county. Facilities within the affected area were shut down safely and the Brazeau River complex (BRC) remains under the mandatory evacuation order for the area. Tidewater's first priority is the safety of its employees and their families, contractors, the surrounding communities, and emergency responders.

The corporation received temporary access to the BRC on May 8, 2023, and no visible damage was observed. Tidewater continues to monitor the situation and is prepared to resume operations at the BRC once the site can be safely occupied and power is restored to the facility.

Downstream

Total first quarter throughput at the corporation's Prince George refinery was consistent with previous quarters at approximately 11,700 barrels per day (bbl/day). Financial results at PGR were impacted by reduced diesel margins, slightly offset by stronger gasoline pricing, with first quarter realized crack spreads of approximately $90 per bbl, representing a 10-per-cent decrease from the previous quarter. Increased carbon compliance costs and third party pipeline maintenance costs further impacted financial results, with the downstream business contributing 50 per cent of total gross margin for the quarter.

Early in the second quarter, Tidewater commenced its scheduled four-year turnaround at PGR, which will impact operating results during the second quarter of 2023. The turnaround remains on budget and is expected to be completed on schedule, with refinery operations scheduled to begin ramping back up in the second half of May.

Mid-stream

During the first quarter of 2023, total throughput volumes at the corporation's mid-stream facilities were approximately 390 MMcf/day, an increase of 6 per cent over the previous quarter. The increase is primarily due to higher utilization and throughput volumes at the Pipestone natural gas plant during the first quarter of 2023. First quarter 2023 mid-stream gross margin increased by approximately 31 per cent compared with the fourth quarter of 2022, contributing to approximately 50 per cent of the total gross margin for first quarter of 2023.

Pipestone natural gas plant

The Pipestone natural gas plant benefitted from consistent run time during the quarter. Pipestone's average daily throughput of 104 MMcf/day increased 17 per cent from the previous quarter and 7 per cent from the first quarter of 2022. First quarter 2023 facility availability was 97 per cent, an increase of 12 per cent over the previous quarter.

Brazeau River complex and fractionation facility

The BRC natural gas processing facility averaged throughput of 158 MMcf/day during the first quarter of 2023, which is consistent with the previous quarter and a 30-per-cent increase from the first quarter of 2022. Tidewater Midstream continues to look for opportunities to increase third party throughput by working with upstream partners to improve netbacks that would increase the utilization of the BRC's facilities.

The BRC fractionation facility was able to maintain steady operations during the first quarter of 2023 by maintaining stable plant production and truck in volumes. The fractionation facility utilization averaged 76 per cent which was in line with the previous quarter. The fractionation facility continues to serve as a key asset for Tidewater's natural gas liquids marketing business.

Ram River gas plant

The Ram River natural gas processing facility averaged throughput of 112 MMcf/day during the first quarter of 2023, which is an 8-per-cent increase over the previous quarter and a 10-per-cent increase over the first quarter of 2022. Tidewater is actively working with local third parties to increase throughput volumes, enhance overall regional processing efficiencies and maximize contracted revenues with the plant's sulphur handling infrastructure.

Capital program

Tidewater's 2023 disciplined approach to growth is predominantly focused on Tidewater Renewable's HDRD facility, as the corporation focuses on maximizing free cash flow. Tidewater's 2023 growth capital includes minor spending on catalyst and tank upgrades at PGR and increased natural gas liquids storage capacity.

The corporation's 2023 maintenance capital activities are weighted to the first half of 2023, with the four-year scheduled turnaround at PGR nearing completion. The turnaround remains on schedule and on budget, as there was no significant additional maintenance required outside the scope of the turnaround. Operations at PGR are scheduled to resume in the middle of May, 2023, prior to the seasonal increase in refined product demand due to the summer driving season.

Outlook

Following the PGR turnaround and its return to run-rate operations, along with the commissioning of Tidewater Renewables' HDRD facility, the corporation expects to provide adjusted EBITDA guidance for the second half of 2023 along with second quarter 2023 results.

Tidewater's 2023 maintenance capital program is weighted to the first half of the year, focused primarily on the PGR turnaround with year to date capital invested consistent with Tidewater's previously announced annual deconsolidated maintenance capital guidance of $55-million to $65-million. Tidewater expects to generate free cash flow in the second half of 2023, due to the significantly lower second half of 2023 maintenance capital budget combined with PGR's expected return to run-rate operations.

Tidewater Renewables is expected to complete the construction of the HDRD complex in June, 2023, at which point commercial operations will commence and increase into the third quarter of 2023. As the HDRD complex ramps up in the second half of 2023, the project is expected to operate between 75 per cent to 80 per cent of its design capacity while processes are optimized. The facility will be Canada's first stand-alone renewable diesel facility.

The corporation continues to make progress on partnerships, joint venture and other financing alternatives to support its Pipestone expansion. Pipestone phase 2 would add 100 MMcf/day of sour natural gas processing to the facility, enlarging the corporation's footprint in the liquids-rich Montney region with its existing capacity and natural gas storage assets.

First quarter 2023 earnings call

In conjunction with the earnings release, Tidewater's executive will hold a call to review its first quarter 2023 results through conference call on Thursday, May 11, 2023, at 11 a.m. MDT/1 p.m. EDT.

To access the conference call by telephone, dial 416-764-8659 (local/international participant dial-in) or 1-888-664-6392 (North American toll-free participant dial-in). A question and answer session for analysts will follow management's presentation.

A live audio webcast of the conference call will be available on-line and will also be archived there for 90 days.

For those accessing the call through Cision's investor website, the company suggests logging in at least 15 minutes prior to the start of the live event. For those dialling in, participants should ask to be joined into the Tidewater Midstream and Infrastructure earnings call.

About Tidewater Midstream and Infrastructure Ltd.

Tidewater's business objective is to build a diversified mid-stream 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.

We seek Safe Harbor.