Tidewater Midstream and Infrastructure Ltd.

Good afternoon, ladies and gentlemen, and welcome to the Tidewater Midstream and Infrastructure Limited Q1 Financial Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded today, Thursday, May the 11th, 2023. I would now like to turn the conference over to Scott Bowman, Director of Capital Markets. Please go ahead, sir.

Thank you, Operator, and welcome everyone to Tidewater Midstream's first quarter 2023 results conference call. I'm Scott Bowman, Tidewater's Director of Capital Markets, and speaking with me on the call today are Rob Colclough, Tidewater's Interim CEO, Brian Newmarsh, Tidewater's Chief Financial Officer, and we're joined by other members of Tidewater's management team. Before passing off the call to Rob to review some highlights, I want to just quickly remind everyone that some of the comments made today may be forward-looking in nature and are based off Tidewater's current expectations, estimates, judgments, and projections. Forward-looking statements we may express or imply today are subject to risk and uncertainties, which can cause actual results to differ from expectations. Further, Some of the information provided refers to non-GAAP measures. To know more about these forward-looking statements and non-GAAP measures, please see the Tidewater Midstream Financial Reports, which are available at tidewatermidstream.com and on CDAR. And with that, I'll pass it off to Rob to discuss some highlights from the quarter.

Thanks, Scott. Good morning, and thank you for joining our Q1 2023 conference call. Just before I get into the business review, I want to acknowledge the Alberta wildfire situation. As many of you are aware, Alberta is currently battling a number of wildfires across the province, and the safety of our employees and their families is our top priority. We safely shut down our Brezzo River complex on Friday, and the facility remains under the mandatory evacuation order for the area. We have since visually inspected the BRC, and our initial assessment is that there has not been any damage to the facility. However, power to the area has been suspended as crews work to reconnect the local power grid. Upon power restoration, we expect to be up and running again at the BRC. We also had a temporary outage at one of our D-High units at our Ram River plant. That has since been brought back online. Our operations team's preparedness, coordination, and communication have been very impressive throughout the situation as we continue to prioritize the safety of our staff, our contractors, their families, and the local communities that we manage through this. Continuing with the recognition for our operations team, I also want to thank our downstream operations team for all the work that's being done on the scheduled four-year turnaround at the Prince George Refinery. Within a week remaining on this project, we continue to have zero lost time incidents, which is an excellent safety result. Our Prince George team is being supported by a team of turnaround specialists who have assisted with the planning, procurement, and execution of the turnaround. Our team has a strong track record of safety and successfully executing large-scale maintenance projects, and the project currently remains on time and on budget with the operations expected to resume next week. Turning to the quarter, first quarter 2023 results were led by strong processing volumes at Tidewater's midstream facilities in which our Pipestone natural gas plant delivered a record average throughput of 104 million cubic feet a day. The strong midstream results partially offset the lower refining margins during the quarter as crack spreads came off their historical highs in 2022 with the PG crack spreads averaging approximately $90 a barrel during the quarter. We've seen weaker diesel cracks slightly offset by higher gasoline cracks throughout the quarter, with refining margins additionally impacted by the higher compliance costs in the first quarter of the year. As we progress through the second quarter, we're seeing the typical moderation in cracks as we move into the spring breakup period that temporarily reduces industrial diesel demand before we move into the higher demand summer driving seasons. This drop in seasonal demand ties to our turnaround timing and our refinery is scheduled to be back online to capture the uptick in local demand. On the midstream side of the business, we continue to see strong producer activity in both the mountain and deep basin regions. Led by our core natural gas processing facilities at Pipestone, Ram River and the BRC, we saw 6% increase in throughput volumes during the quarter compared to the fourth quarter of 2022. In addition, The current ACO natural gas price environment presents very interesting opportunities for Tidewater's natural gas storage assets as we enter injection season and witness widening storage spreads and volatile physical natural gas markets. Within the Tidewater renewables business, we are pleased with the progress that we've made on our HDRD project, which will deliver Canada's first renewable diesel facility into operation towards the end of Q2. Costs continue to track in line with our last gross estimate of $142 million, and the funding gap that we identified in Q1 as a result of the project cost overrun has been eliminated. Our renewables finance team did a tremendous job in securing over $93 million in additional debt and credit grants, resulting in ample liquidity cushion through the startup without any dilution to equity shareholders. At this point, the HDRD is 95% complete, and construction is expected to be complete in June of 2023, at which point commercial operations will begin to ramp up. The HDRD economics continue to remain attractive, ramping up production volumes to the second half of the year. We should see the project generate $35 to $45 million worth of adjusted EBITDA in the second half of 2023, And we anticipate run rate annualized corporate EBITDA to range from $130 to $155 million. Maximizing value for our shareholders remains a top priority for our team. In our Q4 2022 report in March, we announced that we were conducting a strategic review of our Tidewater midstream asset base. We are active in that process and expect to be able to announce the results of our review in the coming months. In the meantime, we continue to focus on cost reduction and a highly disciplined capital allocation strategy, which we believe will positively impact your company's cash flow. Now I'll turn the call over to Tidewater Midstream's Chief Financial Officer, Brian Newmarsh, to walk through our financial results.