Mr. Rob Colcleugh reports

TIDEWATER MIDSTREAM AND INFRASTRUCTURE LTD. ANNOUNCES THIRD 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 Sept. 30, 2023.

Third quarter 2023 highlights:

• On Aug. 31, 2023, Tidewater announced the sale of its Pipestone natural gas plant (Pipestone phase I), Pipestone expansion project (Pipestone phase II, collectively Pipestone), Dimsdale natural gas storage facility, and associated gathering and other infrastructure to AltaGas Ltd. for $650-million. The form of consideration will be $325-million in cash and 12,466,437 AltaGas common shares, representing approximately $325-million using an AltaGas common share price of $26.07. The transaction is expected to be completed in the fourth quarter of 2023, subject to certain closing conditions.
• Third quarter consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 10 per cent to $48.6-million compared with the second quarter of 2023. Consolidated net loss attributable to shareholders for the quarter was $22.9-million.
• Tidewater's downstream financial results benefitted from record throughput at the Prince George refinery (PGR) during the third quarter of 2023, as a result of capital investments during the planned second quarter 2023 turnaround.
• Strong throughput and facility availability at Tidewater's mid-stream and downstream facilities, combined with strong financial performance from Tidewater's natural gas storage assets, contributed to third quarter deconsolidated adjusted EBITDA of $34.1-million. Deconsolidated net loss attributable to shareholders for the quarter was $18.8-million.
• Tidewater Renewables Ltd.'s renewable diesel and renewable hydrogen complex (HDRD complex) produced its first renewable diesel on Oct. 22, 2023, and as of Nov. 7, 2023, has progressed to commercial operations. The HDRD complex is currently producing approximately 1,500 barrels/day (bbl/d) of on-spec cold weather diesel and Tidewater Renewables is actively working on safely increasing production rates toward the facility's 3,000 bbl/d design capacity. The HDRD complex makes Tidewater Renewables the first stand-alone producer of renewable diesel in Canada.
• In July of 2023, Tidewater Renewables' co-processing projects located at the PGR were approved for credit generation under the Canadian Clean Fuel Regulations (CFR). Through its co-processing projects and the HDRD complex, Tidewater Renewables expects to maintain its position as one of Canada's largest generators of emissions credits.
• On Nov. 8, 2023, Robert Colcleugh was appointed chief executive officer of both Tidewater and Tidewater Renewables. Mr. Colcleugh joined Tidewater's board of directors in 2017 and has served as interim chief executive officer since Nov. 28, 2022.

"The launching of the HDRD complex's commercial operations and the closing of the Pipestone sale with AltaGas will be transformative to our business. The Pipestone transaction highlights the underlying value of our asset base and unlocks significant value for our shareholders. The closing of the transaction will significantly enhance our financial position, profitability and ability to maximize free cash flow generation while providing the means to invest in profitable growth opportunities within our portfolio of core assets. With the HDRD complex producing cold weather diesel on-spec, we see an ability to generate significant cash flow to support growing shareholder value," stated CEO Mr. Colcleugh.

Pipestone and Dimsdale transaction

On Aug. 31, 2023, Tidewater announced that it has entered into an agreement with AltaGas to sell the Pipestone phase I, Pipestone phase II and the Pipestone partnership, which owns the Dimsdale natural gas storage facility and associated gathering and other infrastructure, for total consideration of approximately $650-million.

Subject to completion of customary conditions, AltaGas will acquire Pipestone and Dimsdale for total consideration of $650-million plus the assumption of certain leases at Pipestone. The form of consideration will be $325-million in cash and 12,466,437 AltaGas common shares, representing approximately $325-million using an AltaGas common share price of $26.07. Assets disposed of as part of the transaction represent $55-million to $60-million of Tidewater's normalized 2023 adjusted EBITDA.

The transaction is subject to closing adjustments and conditions customary for a transaction of this nature and is not subject to any financing condition. The transaction is also subject to a positive final investment decision (FID) on the Pipestone phase II project. To facilitate reaching FID, AltaGas and Tidewater have entered into an agreement to create a new joint venture to advance the final steps required to develop and construct the project. The terms of the Pipestone joint venture will permit the parties to continue to collaborate on the Pipestone phase II project, even if the transaction does not proceed.

The transaction has been unanimously approved by the boards of directors of both Tidewater and AltaGas, and all material regulatory approvals have been obtained subsequent to the announcement of the transaction. Closing is expected to occur in the fourth quarter of 2023, subject to satisfaction of all customary closing conditions.

Downstream

Tidewater achieved record throughput at the PGR during the third quarter, averaging approximately 12,756 bbl/day. The increased throughput is driven by catalyst and unifer upgrades that were completed during the second quarter planned turnaround.

Financial results improved during the third quarter of 2023 compared with the previous quarter, due to the completion of the scheduled turnaround and higher diesel and gasoline sales volumes during the summer driving season. Higher diesel rack pricing contributed to a 2-per-cent increase in the Prince George crack spread from the second quarter of 2023, which averaged $87/bbl during the third quarter.

Mid-stream

With improved facility availability at the Brazeau River complex (BRC), third quarter 2023 mid-stream gross margin of $28.6-million represents approximately 50 per cent of Tidewater's total gross margin for the quarter.

Pipestone natural gas plant

Pipestone phase I continues to produce consistent returns, with throughput volumes and facility availability moderately impacted by high ambient temperatures during the third quarter.

Brazeau River complex and fractionation facility

During the third quarter the BRC facility throughput increased to 155 million cubic feet/day (MMcf/d), a 58-per-cent increase from the previous quarter, which was impacted by the Alberta wildfires. The BRC's fractionation facility benefited from approximately 87-per-cent availability during the quarter.

The BRC remains one of Tidewater's core assets and is well positioned in the Deep basin, by offering producers multiple natural gas liquids egress options through its fractionation facility, truck loading and offloading facilities, natural gas liquids pipeline connections, along with two natural gas transportation connections. The BRC's fractionation facility serves as a key asset for Tidewater's natural gas liquids marketing business.

Ram River gas plant

The Ram River natural gas processing facility average throughput decreased to 88 MMcf/day during the third quarter of 2023, due to unplanned maintenance. 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 natural gas and sulphur handling infrastructure.

Capital program

Tidewater's 2023 growth initiatives have been primarily focused on the completion of Tidewater Renewables' HDRD complex located at PGR. Investments during the second quarter scheduled turnaround at PGR led to increased unifiner capacity and upgraded catalyst that contributed to record throughput volumes during the quarter. Tidewater's capital allocation strategy will remain disciplined moving forward, with growth initiatives focused on the successful commissioning of the HDRD complex and accretive small-scale optimization projects. With Tidewater's 2023 maintenance capital program being weighted to the first half of 2023, consolidated maintenance capital was $5.7-million during the quarter.

Outlook

The fourth quarter of 2023 will be impacted by the closing of the transaction as well as the average HDRD production volumes as it ramps up through the quarter. These two initiatives represent transformational milestones for Tidewater that are expected to significantly enhance consolidated run rate EBITDA and cash flow, while deleveraging the corporation. As of Sept. 30, 2023, year-to-date consolidated adjusted EBITDA was $141.5-million. Incorporating the HDRD complex and transaction closing timelines into fourth quarter forecasts, the corporation now expects consolidated full-year adjusted EBITDA to be in the range of $180-million to $200-million.

Tidewater's 2023 maintenance capital program is weighted to the first half of 2023, resulting in third quarter maintenance focused on routine activities with limited impact to facility availability. Tidewater continues to expect full-year 2023 maintenance capital to be at the higher end of the previously announced annual deconsolidated maintenance capital guidance of $55-million to $65-million.

Third quarter 2023 earnings call

In conjunction with the earnings release, Tidewater's executive will hold a call to review its third quarter 2023 results via conference call on Thursday, Nov. 9, 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 for 90 days.

For those accessing the call via 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 is traded on the Toronto Stock Exchange under the symbol TWM. 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.

To achieve its business objective, Tidewater 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 product, natural gas, natural gas liquids, and renewable products and services to customers across North America.

Tidewater is a majority shareholder in Tidewater Renewables, a multifaceted, 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.

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