Tidewater Midstream and Infrastructure Announces Strategic Core-Area Acquisition

Tidewater Midstream and Infrastructure is pleased to announce that it has entered into an acquisition agreement with an arm's length vendor to acquire an approximate 50% working interest in 150 km of gas gathering pipelines which are directly connected to Tidewater's existing Brazeau River Complex, in addition to three proven natural gas storage reservoirs that are also directly connected to the BRC by means of the acquired pipelines (the "Acquisition") for a purchase price of $15 million in cash. The Acquisition provides increased access to industry activity and further enhances the value of the BRC and the recently announced fractionation facility.

The Acquisition is consistent with Tidewater's strategy to acquire, optimize and integrate infrastructure throughout the NGL and natural gas value chain while offering egress options for producers.

Acquisition Highlights

The Acquisition consists of an approximate 50% working interest in 150 km of gas gathering pipelines which are directly connected to the BRC. Drilling activity continues to increase around the acquired pipelines and several new and existing customers have expressed interest in accessing the BRC by way of the acquired pipelines. The Acquisition also includes three proven natural gas storage reservoirs that are directly connected to the Brazeau River Complex and will offer customers an egress option and help improve natural gas pricing for Tidewater's customers. With Phase I of Tidewater's dual-connected Alliance and TransCanada infrastructure coming online in the first quarter of 2017, these storage assets are expected to deliver significant optionality. Tidewater is in discussions with a number of investment grade counterparties to contract the storage assets. The Corporation does not plan to take any commodity risk associated with the storage assets. Also included in the Acquisition are pipelines and infrastructure in the Kaybob/Windfall area which complement Tidewater's existing operated Windfall plant. As a requirement by the Vendor to sell the BRC connected infrastructure and proven natural gas reservoirs, Tidewater is also acquiring certain minor upstream assets owned by the Vendor. The upstream assets generate minimal cash flow but do contain significant mineral rights around the Brazeau River Complex which Tidewater will look to divest in exchange for volume commitments at the BRC and/or Tidewater's fractionation facility. Tidewater does not plan to hold the upstream assets for an extended period of time and plans to divest of the upstream assets over the next 24 months depending on market conditions.

Tidewater anticipates the Acquisition will generate annualized EBITDA of approximately $3.5 million including related operational synergies. Based on an acquisition cost of $15 million, the Acquisition represents an attractive implied valuation of less than 4.5x EBITDA. The forecasted EBITDA does not take into account any synergies from Phase I of the Alliance/TransCanada connected infrastructure which could become significant.

The Acquisition is expected to close by the end of the calendar year and is subject to standard closing conditions customary for a transaction of this nature, including the approval of the TSX Venture Exchange ("TSX-V").

Given Tidewater's pro forma net debt position of approximately $10 million at close of the Acquisition and a $120 million credit facility, Tidewater remains fully capitalized to fund its current capital program and execute on its previously discussed organic growth opportunities while keeping leverage within a target range of 1.0-2.0x debt / EBITDA through both the execution and commissioning of its capital program.

Source: Tidewater Midstream and Infrastructure Ltd.
Date: Nov 16, 2016