TSE:TWM Tidewater Midstream and Infrastructure Q4 2023 Earnings Report C$0.30 +0.03 (+10.91%) As of 05/2/2025 04:00 PM Eastern Earnings HistoryForecast Tidewater Midstream and Infrastructure EPS ResultsActual EPS-C$0.04Consensus EPS -C$0.01Beat/MissMissed by -C$0.03One Year Ago EPSN/ATidewater Midstream and Infrastructure Revenue ResultsActual Revenue$503.00 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ATidewater Midstream and Infrastructure Announcement DetailsQuarterQ4 2023Date3/14/2024TimeN/AConference Call DateThursday, March 14, 2024Conference Call Time1:00PM ETConference Call ResourcesConference Call AudioConference Call TranscriptPress ReleaseAnnual ReportEarnings HistoryCompany ProfilePowered by Tidewater Midstream and Infrastructure Q4 2023 Earnings Call TranscriptProvided by QuartrMarch 14, 2024 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen, and welcome to the Tidewater Midstream 4th Quarter 2023 Financial Results Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, March 14, 2024. And I would now like to turn the conference over to Mr. Operator00:00:31Scott Bowman. Thank you. Please go ahead. Speaker 100:00:35Thank you, operator. Welcome everyone to Tidewater Midstream's 4th quarter and full year 2023 results conference call. I'm Scott Hallman, Tidewater's Director of Capital Markets and joining me today are Jeremy Baines, CEO and Aaron Ames, our Interim CFO. Also with us and available during the question and answer session is Sean Heaney, EVP, Planning and Strategy. Before we begin, please note that matters discussed on this call include forward looking statements under applicable securities laws with respect to Tidewater Midstream and Infrastructure Limited, including but not limited to statements regarding investments and acquisitions by the company, commercial arrangements of the company, the business strategies and operational activities of the company, the markets and industries in which the company operates, cost and expense management, company's leverage and plans for debt and leverage reduction, refinancing of company's indebtedness, the value of the company's assets and the future growth objectives, targets and financial and operating performance of the company and its business. Speaker 100:01:42Such statements are based on factors and assumptions that management believes are reasonable at the time they were made and information currently available. Forward looking statements we may express or apply today are subject to risks 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 on our website at www.tidewatermidstream.com and on SEDAR Plus. Speaker 200:02:19Thanks, Scott, and thanks to everyone for joining us today. As I approach my 2 month anniversary with Tidewater, I'll start with discussing the Q4 year end results, and then I'll explain why I'm excited about our future. First and foremost, thank you to all our team members for all the hard work and support as I have tried to accelerate my learning so that I can contribute effectively. We have a strong team of very capable people who have done a lot to get the company to where it is today. When I became CEO on January 22, the business had a much improved balance sheet resulting from the sale of Pipestone and Dimmesdale. Speaker 200:02:55The Pipestone sale has reset the balance sheet and allowed me to devote my energy to working with the team to enhance our focus, urgency and accountability across the organization to optimize costs, better direct capital investment and maximize our return on assets. Speaker 100:03:12As will Speaker 200:03:13be explained further by Aaron, the consolidated results for the year ended December 31, 2023 were impacted by lower gasoline and diesel sales volumes, primarily from the PGR turnaround during Q2 and weaker commodity prices, as well as higher maintenance costs at PGR. Following the successful turnaround at PGR, the facility reached record throughput levels in the second half of twenty twenty three. With lower sales during the Q4, we built inventories at PGR. Diesel demand improved into 2024 and we have drawn down these inventories in Q1, 2024 as we secured new customers. Speaker 300:03:52Turning to Speaker 200:03:53the midstream business. Our results were impacted by maintenance work completed at Pipe and we also saw reduced throughput at some of our straddle facilities. Our midstream operations are now focused within the Deep Basin and present opportunities to consolidate volumes at our core facilities and capitalize on increased producer activity. In 2024, we expect to see throughput volumes at the BRC in the range of 100 120,000,000 cubic feet per day and 80,000,000 to 90,000,000 cubic feet per day at Ram River. In addition, after the sale of Pipestone and Dimmesdale, we reevaluated the carrying values of our assets under IFRS standards and took a non cash impairment charge. Speaker 200:04:34Primary drivers for the impairment are higher interest rates and the idling of certain individual asset components due to current market prices for certain commodities. We retain the option to turn these assets back on should the economic conditions change. A key area of my focus and mandate will be to optimize our base asset by capitalizing on opportunities from owning these assets and working to improve the long term cash flow profile of our core facilities. To date, our profitability hasn't lived up to the potential for these assets. We can do better, particularly on managing the cost side. Speaker 200:05:08We are taking action to enhance utilization, remove excess costs and make better capital decisions. Over the last months, I've been working with my executive team as we work to map out our future with a focus on managing our assets in a way that will provide great services and products for our customers, a good return for our shareholders, while always ensuring this is done in a safe and environmentally responsible manner. A large part of this planning is focused on enhancing our cash flow generation in 2024. We have identified many potential ways to enhance our cash flows with opportunities to reduce G and A expenditures and operating and maintenance program costs by $15,000,000 to $20,000,000 Executing on these opportunities will be a large part of our focus in 2024. Based on the actions we are taking, assuming crack spreads remain at current levels and adjusted pro form a for the recent asset sales, we expect that consolidated cash flow and EBITDA in 2024 will materially exceed 2023 levels. Speaker 200:06:11On the renewables fuel front, our HGRD complex in Prince George is operating at its design capacity after reaching commercial production in the Q4 of 2023. In January February, our teams worked through normal startup challenges and the facility has been reliably operating at its design capacity for almost a month now. We expect the facility to operate at approximately 65% of its design capacity during the Q1 of 2024 with expected operations at design capacity thereafter. As I look to the future, we are well positioned to participate in the energy transition that is underway. I am excited about the opportunities we have from the growing demand for natural gas and renewable fuels. Speaker 200:06:57As Canada is about to become an exporter of LNG, we see continued development of the great natural gas resource we have in Western Canada. I expect a long and bright future for our midstream assets. With the HDRD facility operating at its nameplate capacity, we are looking ahead to the next opportunity on the renewable fuels front. We recently entered into an agreement with the BC government to provide support for front end engineering and design work to provide us with a plan and capital cost estimate for a sustainable aviation fuel refinery. We have kicked off the study with a major global engineering firm and hope to have a bankable FEED study completed in the first half of twenty twenty five. Speaker 200:07:37In parallel, there is significant work underway on the commercial aspects of the project, including some significant interest in offtake from major airlines. This is an exciting opportunity we are pursuing with the opportunity to leverage our learnings and skills from our conventional and HDRD refineries. I'm pleased with the progress we are making. We play an important part in the energy transition, ensuring the world benefits from cleaner energy. We are on the way. Speaker 200:08:04There is a lot of work to do, but you can undoubtedly see why I'm excited about our future. I will now turn the call over to Aaron to go through the financial results. Speaker 400:08:14Thank you, Jeremy. During FY2023, consolidated adjusted EBITDA was $162,900,000 of which $45,900,000 was contributed by Tidewater Renewables compared to last year's adjusted EBITDA of $249,800,000 of which $62,400,000 was from Tidewater Renewables. Tidewater Midstream consolidates the results from Tidewater Renewables due to our 69% ownership stake. The 2023 results were impacted by the scheduled PGR turnaround, lower crack spreads, particularly in Q4 2023 and scheduled and unscheduled downtime at Pipestone and Dimmsdale. Consolidated results were also impacted by lower realized gains on derivative contracts. Speaker 400:08:574th quarter consolidated adjusted EBITDA was $21,400,000 of which $10,700,000 was contributed by Tidewater Renewables, compared to $60,400,000 in the Q4 of 2022, of which $16,700,000 was contributed by Tidewater Renewables. Our 4th quarter was challenged by significantly lower demand for refined products due to much warmer weather, with many parts of BC and Alberta experiencing the warmest December on record and the slowdown in forestry activity driving down demand for diesel and resulting in lower sales volumes during the Q4 compared to the prior year. In addition, 2023 crack spreads moderated after reaching all time highs in 2022. I also wanted to take a moment to discuss the use of proceeds from the AltaGas transaction. The cash proceeds from the AltaGas transaction of $328,200,000 and the proceeds from the new term loan facility of $225,000,000 secured by the shares were used to repay our $550,000,000 credit facility as well as $53,300,000 of working capital liabilities. Speaker 400:10:02Subsequent to December 31, 2023, on January 9, 2024, Tidewater monetized the AltaGas shares for proceeds of $341,600,000 and fully repaid the $225,000,000 term facility plus $67,000,000 on the revolving credit facility for total debt repayment of $293,000,000 in Q1 2024. The remaining proceeds were used to repay $49,000,000 of working capital liabilities. The Pipestone transaction has allowed us to reduce our bank debt by over $500,000,000 As a result, going forward, we have lower cash interest costs, greater financial flexibility and less exposure to interest rate risk in this high interest rate environment. Speaking of leverage, we are currently down the path on the available options with respect to our convertible debentures, which come due in the Q3 of 2023. I will now turn the call back over to Jeremy for closing remarks. Speaker 200:10:59Thanks, Aaron. We are excited for 2024 and our current range of opportunities within our business. The HDRD complex is well poised to generate significant cash flow in 2024 and our balance sheet is in much better condition. We are focused on managing our controllable costs, optimizing our asset base and maximizing shareholder returns. We have a motivated and engaged team and we look forward to making progress over the course of the year. Speaker 200:11:26I'll now ask the operator to open the call up for questions. Operator00:11:31Thank Your first question comes from the line of Cole Pereira from Stifel. Please go ahead. Speaker 500:12:03Hi, good morning all. Wondering if you can just lay out how you're thinking about capital allocation between your different levers, namely buybacks, growth CapEx, M and A, debt reduction, etcetera? Speaker 200:12:18Sure. As Aaron mentioned, we do have the convertible refinancing coming up in September. So our first focus on that front is ensuring we get that off with a good financing and a reasonable cost of capital. After that, we are looking at all opportunities and we'll determine where our best risk adjusted returns can be obtained for the capital that we generate. Speaker 500:12:49Got it. Then obviously, it's kind of early days from your seat, but how are you thinking about the corporate structure at this point? I mean, you could maybe make the case that it's overly complicated and thus far you haven't seen the benefit of that. So any color on how you're thinking about that? Speaker 200:13:11So obviously, I think what you're referring to are we are the majority shareholder in Tidewater Midstream. We have 2 public companies being midstream and their ownership in renewables. At this point, we operate through shared services agreements and get efficiencies through that. We expect we will realize more of those as we go forward. And that's really all I can say on that front. Speaker 500:13:40Got it. Fair enough. That's all for me. Thanks. I'll turn it back. Operator00:13:46Thank you. And your next question comes from the line of Rob Hope from Scotiabank. Please go ahead. Speaker 600:13:55Afternoon, everyone. Realizing you've been on seat now for 2 months, maybe can you add a little bit of color just in terms of kind of the genesis of the management transition and what you could do different in the seat? Speaker 200:14:13Could you repeat that? I'm having a hard time hearing you, maybe get a little closer to your mic's Speaker 600:14:18phone. Sorry about that. I'm just wondering if you could speak to kind of what caused the management transition and as you're in the CEO seat, what you could potentially do different than your predecessor? Speaker 400:14:33Sure. Speaker 200:14:34I can't really speak to the cause of the transition that would be deliberations of the Board prior to me joining. But what we're going to do different, as we mentioned, we've already got a significant amount of improved capital allocation decisions and cost structure decisions that we've outlined in the announcements. That is the initiatives that we are pretty much feel are in the bag, have extremely high probabilities of capturing. With that, we have a whole another bucket of initiatives that were have been identified that we're evaluating the probability of improving our optimization and cash flow from the assets. And a big part of it is going to be focusing the team go forward. Speaker 200:15:24We're focused on really 2 key fundamentals. 1, natural gas midstream business and providing great handling and services there. And 2, being able to participate in the growing demand for renewable fuels with through our renewables investment as well as being a great energy provider through our PGR refinery. We have a huge focus on generating cash flow and reducing costs. It's a different mindset than the previous management team did. Speaker 200:15:59They focused on headline EBITDA, which has caused them some problems frankly and that won't be happening with this team. Speaker 600:16:09Thanks for that. And then maybe just moving back to capital allocation, the shares have underperformed year to date. When you take a look at the opportunities in front of you, you do have the NCIB available. What could cause you to lean heavier on that versus the other opportunities in front of you? Speaker 200:16:29I mean, it's really a rate of the risk return opportunity provided. And when we feel like the shares, we have the excess capital and the share price is not reflecting fair value and we don't have other opportunities to deploy it into higher returning opportunities. At that point, we will consider it. Again, I'll reiterate, we do have a major financing coming up this year with the converts and we need to get through that first before we look at those opportunities to potentially use the NCIB. Speaker 600:17:04Thank you. Operator00:17:08Thank you. And your next question comes from the line of Patrick Kenny from National Bank Financial. Please go ahead. Speaker 700:17:16Hey, good morning. I appreciate the guidance on the operational front. But just from a financial perspective, now that the HTRD is fully up and running, any thoughts on what a range for consolidated adjusted EBITDA should look like for the year or at least an annualized run rate basis similar to what the old management team used to provide? Or is that something that you guys have decided to stay away from at least for now? Speaker 200:17:47Yes. 1, I would say the old management team rarely or probably never gave guidance this early. So 1.2, at this point we're staying away from that. We've provided the operational parameters and you can pick your crack spread and you're good modelers. I think you can come pretty close to where it should be. Speaker 200:18:06So at this point, that's what we plan to do. We're obviously constantly evaluating that and considering how we handle that go forward with the Board. Speaker 700:18:17Okay. And guess just with the quarter being impacted by the timing of refined product sales at PGR, wondering if you could help us maybe quantify that impact on EBITDA in the quarter and confirm whether or not you expect to get that full amount back here in Q1 just through higher sales volumes relative to production levels? Speaker 400:18:43Yes. So what I would say is we built inventory in Q4 because of the weather and there was some weak demand, but that's going to be a positive for us going into Q1. So yes, it will be an improvement for us going into Q1 having that extra inventory and having that ability to sell. Speaker 100:19:05Okay. Thank you. Speaker 700:19:08Last one for me, just coming back to the liquidity picture here. So you paid off the term facility with the proceeds from the AltaGas shares. Is the remaining $150,000,000 of revolving credit capacity, is that the right amount of total credit capacity we should be thinking about here at the midstream level going forward? And then if so, I guess go ahead. Speaker 400:19:36Yes. I would say like really we're using it to manage working capital. So it's the right amount. We've got a number of initiatives that Jeremy discussed in his comments, which was actions to improve our optimize our operations and lower our cost base. And so that along with our availability on the revolver is enough liquidity to manage the business going forward. Speaker 400:20:07Absolutely. Speaker 700:20:11Okay. And maybe you can just confirm Aaron too because you talked about the refinancing on the converts coming due. I know in the prospectus anyway you have the option to pay back the principal amount in the form of common shares. But just looking at the share price and where it sits today, I mean, you confirm whether or not that's a realistic option? Speaker 400:20:34It's an option under the agreement, but we're far down the path on much better alternatives than that. So, yes, it's that's absolutely not the preferred option and we're down the path on other alternatives. Speaker 700:20:50Okay. That's great. I'll turn it back. Thanks. Operator00:20:53Thank you. And your next question comes from the line of Robert Catellier from CIBC Capital Markets. Please go ahead. Speaker 800:21:05Yes. Hi. I just want to take another shot at the EBITDA question. I believe I heard in your opening comments that you expect EBITDA to be materially higher than 2023 levels after adjusting for the Pipestone sale. Can you confirm if that's on a deconsolidated basis and what amount we should be adjusting with respect to Pipestone? Speaker 800:21:29I think at the time of sale, you indicated $55,000,000 to $60,000,000 EBITDA from those assets, but you had the outage in Q4. So we're just looking for the appropriate amount to adjust the 23 numbers by. Speaker 300:21:47Yes. Thanks, Robert. It's Sean here. Yes, I would say you're pretty much in line there. When Jeremy made that comment, we're talking on the consolidated basis. Speaker 300:21:56So I think the way we kind of look at it is on a consolidated basis when you look at the assets that we've recently sold and then heading into this year moving into call it I'll call it H. E. R. D. 1st year of full operations although I think as we mentioned there's just some utilization in Q1 down with as we work through some of the operational which we move through now. Speaker 300:22:16So the 160 numbers were consolidated. And as mentioned, we do think we can kind of exceed where we were this year. Speaker 800:22:26Yes. I'm curious on given the magnitude of the impairment, what we can expect on the remainder of the midstream assets in terms of EBITDA generation is pretty significant impairment. Speaker 300:22:45Yes. And I would just to maybe kind of continue with that. I mean, I would just say it's obviously the accounting requirement we follow kind of IFRS standards working through that, including where the current carrying value was. And then I'd say a conservative estimate on what the outlook is. That being said, I think we're excited about a number of the opportunities in front of us and where those assets can go. Speaker 300:23:08So we really do look at it as a non cash impairment and it's purely based on the accounting standards. But in no way does that reflect what we think we can Speaker 200:23:15do with those assets going forward. And just to add to Sean, it is a turnaround year at BRC. We have spent a lot of time optimizing that turnaround. We've removed a significant amount of capital and how we are going to do that turnaround as well as in a way that's going to significantly enhance cash flow at that facility. Speaker 400:23:36Yes. And just to add to what they said is also interest rates had an impact on that too. So it's more of an accounting treatment. Speaker 800:23:51Yes. I understood understand the impact of the rates Speaker 400:23:54there. You're sort of, Speaker 800:23:57I guess, silent on the growth capital. Obviously, you're focused on reducing your cost and the upcoming renewal on the converts, but can you give us any thoughts with respect to what you might be spending on capital? Speaker 200:24:16We gave guidance on maintenance capital. So I'll refer you to the release there. On the growth side, we have some very small amounts for really high return kind of debottlenecks. We will opportunistically evaluate that as we go through the year and see where opportunities might warrant spending. The main focus right now is a little bit more deleveraging, obviously getting ensuring HPRD is up and going. Speaker 200:24:47And then we do have a significant amount of spend across the company on the FEED study, although fully funded through capital emissions credits. But that is the main focus, getting that cash flow up and optimizing the existing assets. I will reiterate again, we gave guidance around some of the opportunities we've identified in the 1st 50 days that we have extremely high probability line of sight on executing on. There is a second list of opportunities that we're flushing out and pursuing. Speaker 800:25:27Okay. Last point for me. I just wanted to confirm that none of the impairment was related to PGR. Is that correct? Speaker 200:25:33None. Speaker 800:25:34Okay. Thanks. Operator00:25:37Thank you. And your next question comes from the line of Robert Kwan from RBC Capital Markets. Please go ahead. Speaker 300:25:45Hey, good morning. If I can just come back to some of the answers around what you plan to do different strategically. Definitely, you comment a lot on operations and costs and that was clear in the press release, the original press release. But you also talked about a prior focus on headline EBITDA and I'm just wondering if you could give a little bit more color around that just given operations and costs do feed into that number? Yes. Speaker 300:26:19I mean, I think the best way to look at it, Robert and Sean here is, it's much more of a holistic approach on how we're kind of evaluate our business. Not to say headline EBITDA is not important and not that we don't want to kind of add where there's abilities to add EBITDA and cash flow to the business. But we also want to be cognizant around capital structure and optimizing both our assets and corporate integration and a stronger return on assets, making sure we're kind of if there's ability to add EBITDA with the various projects, we'll look to do that. But we also want to be cognizant of the cost and how it boils down to the corporate free cash flow. Speaker 200:26:58Yes, just building on that, it's really ensuring the things we're doing are operationally effective in generating free cash flow, but also ensuring that as we allocate capital to new investments that they have the proper risk return profile and will generate a very strong return on investment in the long term. Speaker 300:27:25Got it. That's helpful. And then there was a comment just around financial flexibility to optimize the existing asset base just with the pay down of debt causing that statement. Can you just explain what you a little bit more detail what you meant by that? Speaker 200:27:44If I'm hearing you the question right, I think you're referring to with the Pipestone transaction that clearly did a significant amount of deleveraging, used interest expense, moved up availability on our operating line, just put us in a much sounder position from a leverage position, if that's what you're referring to? Speaker 300:28:07Yes. So the statement was just with that debt pay down, it gives you financial flexibility to optimize the existing asset base, but then you're also talking about focusing on free cash flow. So I'm just wondering what the lower leverage, like how that helps you optimize the existing asset base if you're also not looking to spend a lot of growth CapEx? Speaker 200:28:32I think it gives us some dry powder to take advantage of good returning opportunities that come up, smaller tuck ins, optimizations around our facilities without having to raise outside capital. Speaker 300:28:47Got it. Okay. And then just if I can come back to the impairment, so it's clear the interest rate impact on the present value. But there was also a focus in the audit letter that it was the BRC. So I'm just wondering if you can give some more color as to what is materially worse at the BRC and if you can just frame that as well, what the forecast for that is, what the delta versus say what it did in 20222023? Speaker 300:29:23Yes, for sure. I would say, there was some related to the BRC as long as our broader, call it, Deep Basin business unit as well. In terms of it, I think one, we kind of evaluated where the carrying value was and what the long term outlook at conservative estimate looks like. As you probably know, the BRC is a pretty unique asset. It's a really kind of a broader complex with a number of individual components. Speaker 300:29:52I'd say there's some maybe more ancillary components that we're not looking to utilize at this time as well. Some of them were actually maybe tied in with some other parts of our business. We have options to look at these and utilize these down the road. But where we are today in the forecast, we kind of used as part of the accounting exercise is just where we landed. But obviously as market conditions adjust, we can look to reevaluate this. Speaker 300:30:19So, yes, I think that let me know if that kind of answers your question, if there's anything else you wanted to jump in. Operator00:30:42And your next question comes from the line of Trevor Reynolds from Acumen Capital. Please go ahead. Speaker 600:30:51Hey, guys. Actually just a question on the HDRD. And just curious, you guys are up to nameplates capacity now. I'm just curious kind of if the operating costs rate at this point are in line with expectations or if you have a bunch of work now that you're up to nameplate capacity to get down to where you kind of hope to be? Speaker 200:31:14No, everything is running at the economic levels that we had identified. Obviously, feedstock is fluctuating. We've actually seen a move down in the cost of soybean oil, which really drives the cost of feedstock for the facility. So everything is on track from an operating cost point of view. We did note there is a little bit of a lingering derivative contract for purchasing soybean oil that was put in place that is working off over this year and next year. Speaker 600:31:52Okay. And then was there any major cost overruns with or additional costs that we should be factoring in with some of the issues with the startup? Speaker 200:32:06No. The main challenge was around the hydrogen compressors and that's all being done under warranty. There's a very tiny amount of final things that need to be done around some insulation and that couldn't be finished with the cold weather, but will be done shortly. But otherwise, the project is closed from all material capital respects. Speaker 600:32:37Okay. And then last one, just on the feedstock, what is the feedstock mix today that you're putting into the system? And what how do you guys look at, I guess, the outlook in terms of testing new supplies and maybe just your thoughts on that? Speaker 200:33:00So the main feedstock we've been using today is kind of oil. We have also tested a number of other feedstocks, used cooking oil, various callows, etcetera. We have the plant set up to have optionality on feed stocks and we continuously evaluate the economics of running those feed stocks. And right now the focus has been over the last month to get past that final hurdle and get to 3,000 barrels a day. We've been doing that for almost a month now. Speaker 200:33:31And so now as we look forward, we're evaluating supply costs and the economics of adding feedstocks into the facility. We have already tested a number of them. So, the operating team feels quite confident, that we can add them without tripping up the operations. Speaker 100:33:53Perfect. Thanks for taking my questions. Operator00:33:57Thank you. There are no further questions at this time. Mr. Baumann, please proceed. Speaker 100:34:04Thanks everyone for joining the call today. The team is available to address any outstanding items with their contact information at the bottom of this morning's press release. Thank you very much for joining us today. Operator00:34:16Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallTidewater Midstream and Infrastructure Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress ReleaseAnnual report Tidewater Midstream and Infrastructure Earnings HeadlinesAnalysts Set Tidewater Midstream and Infrastructure Ltd. (TSE:TWM) Target Price at C$0.53April 29, 2025 | americanbankingnews.comCIBC Keeps Their Hold Rating on Tidewater Midstream and Infrastructure (TWM)March 30, 2025 | markets.businessinsider.comMost traders are panicking. We’re cashing inMost traders are panicking right now. Bitcoin’s dropping. Altcoins are bleeding. The stock market’s a mess. The news is screaming fear. But while most traders watch their portfolios tank…May 4, 2025 | Crypto Swap Profits (Ad)Tidewater Midstream and Infrastructure Full Year 2024 Earnings: EPS Beats Expectations, Revenues LagMarch 28, 2025 | finance.yahoo.comTIDEWATER MIDSTREAM AND INFRASTRUCTURE LTD. ANNOUNCES THE CLOSING OF ITS SALE OF THE BRAZEAU RIVER ROADWAY NETWORK TO CRRMarch 25, 2025 | finance.yahoo.comTidewater Midstream to Sell Roadway Network in Alberta for C$24MMarch 6, 2025 | marketwatch.comSee More Tidewater Midstream and Infrastructure Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Tidewater Midstream and Infrastructure? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Tidewater Midstream and Infrastructure and other key companies, straight to your email. Email Address About Tidewater Midstream and InfrastructureTidewater Midstream and Infrastructure (TSE:TWM) Ltd is a Canadian company that is engaged in providing midstream infrastructure and a natural gas storage facility. It mainly focuses on the purchase, sale, and transportation of Natural Gas Liquids (NGLs) such as propane and natural gasoline throughout North America and export to premium markets. The business activities of the company include gathering, processing, and transportation relates to raw gas gathering systems, processing plants and pipelines, NGL marketing and Extraction, refined products, and other activities. Its business segments consist of Midstream; Downstream; Marketing and extraction and others. The company generates maximum revenue from the Marketing and extraction segment.View Tidewater Midstream and Infrastructure ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Amazon Earnings: 2 Reasons to Love It, 1 Reason to Be CautiousMeta Takes A Bow With Q1 Earnings - Watch For Tariff Impact in Q2Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernVisa Q2 Earnings Top Forecasts, Adds $30B Buyback PlanMicrosoft Crushes Earnings, What’s Next for MSFT Stock?Qualcomm's Earnings: 2 Reasons to Buy, 1 to Stay AwayAMD Stock Signals Strong Buy Ahead of Earnings Upcoming Earnings Palantir Technologies (5/5/2025)Vertex Pharmaceuticals (5/5/2025)Realty Income (5/5/2025)Williams Companies (5/5/2025)CRH (5/5/2025)Advanced Micro Devices (5/6/2025)American Electric Power (5/6/2025)Constellation Energy (5/6/2025)Marriott International (5/6/2025)Energy Transfer (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 9 speakers on the call. Operator00:00:00Good afternoon, ladies and gentlemen, and welcome to the Tidewater Midstream 4th Quarter 2023 Financial Results Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, March 14, 2024. And I would now like to turn the conference over to Mr. Operator00:00:31Scott Bowman. Thank you. Please go ahead. Speaker 100:00:35Thank you, operator. Welcome everyone to Tidewater Midstream's 4th quarter and full year 2023 results conference call. I'm Scott Hallman, Tidewater's Director of Capital Markets and joining me today are Jeremy Baines, CEO and Aaron Ames, our Interim CFO. Also with us and available during the question and answer session is Sean Heaney, EVP, Planning and Strategy. Before we begin, please note that matters discussed on this call include forward looking statements under applicable securities laws with respect to Tidewater Midstream and Infrastructure Limited, including but not limited to statements regarding investments and acquisitions by the company, commercial arrangements of the company, the business strategies and operational activities of the company, the markets and industries in which the company operates, cost and expense management, company's leverage and plans for debt and leverage reduction, refinancing of company's indebtedness, the value of the company's assets and the future growth objectives, targets and financial and operating performance of the company and its business. Speaker 100:01:42Such statements are based on factors and assumptions that management believes are reasonable at the time they were made and information currently available. Forward looking statements we may express or apply today are subject to risks 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 on our website at www.tidewatermidstream.com and on SEDAR Plus. Speaker 200:02:19Thanks, Scott, and thanks to everyone for joining us today. As I approach my 2 month anniversary with Tidewater, I'll start with discussing the Q4 year end results, and then I'll explain why I'm excited about our future. First and foremost, thank you to all our team members for all the hard work and support as I have tried to accelerate my learning so that I can contribute effectively. We have a strong team of very capable people who have done a lot to get the company to where it is today. When I became CEO on January 22, the business had a much improved balance sheet resulting from the sale of Pipestone and Dimmesdale. Speaker 200:02:55The Pipestone sale has reset the balance sheet and allowed me to devote my energy to working with the team to enhance our focus, urgency and accountability across the organization to optimize costs, better direct capital investment and maximize our return on assets. Speaker 100:03:12As will Speaker 200:03:13be explained further by Aaron, the consolidated results for the year ended December 31, 2023 were impacted by lower gasoline and diesel sales volumes, primarily from the PGR turnaround during Q2 and weaker commodity prices, as well as higher maintenance costs at PGR. Following the successful turnaround at PGR, the facility reached record throughput levels in the second half of twenty twenty three. With lower sales during the Q4, we built inventories at PGR. Diesel demand improved into 2024 and we have drawn down these inventories in Q1, 2024 as we secured new customers. Speaker 300:03:52Turning to Speaker 200:03:53the midstream business. Our results were impacted by maintenance work completed at Pipe and we also saw reduced throughput at some of our straddle facilities. Our midstream operations are now focused within the Deep Basin and present opportunities to consolidate volumes at our core facilities and capitalize on increased producer activity. In 2024, we expect to see throughput volumes at the BRC in the range of 100 120,000,000 cubic feet per day and 80,000,000 to 90,000,000 cubic feet per day at Ram River. In addition, after the sale of Pipestone and Dimmesdale, we reevaluated the carrying values of our assets under IFRS standards and took a non cash impairment charge. Speaker 200:04:34Primary drivers for the impairment are higher interest rates and the idling of certain individual asset components due to current market prices for certain commodities. We retain the option to turn these assets back on should the economic conditions change. A key area of my focus and mandate will be to optimize our base asset by capitalizing on opportunities from owning these assets and working to improve the long term cash flow profile of our core facilities. To date, our profitability hasn't lived up to the potential for these assets. We can do better, particularly on managing the cost side. Speaker 200:05:08We are taking action to enhance utilization, remove excess costs and make better capital decisions. Over the last months, I've been working with my executive team as we work to map out our future with a focus on managing our assets in a way that will provide great services and products for our customers, a good return for our shareholders, while always ensuring this is done in a safe and environmentally responsible manner. A large part of this planning is focused on enhancing our cash flow generation in 2024. We have identified many potential ways to enhance our cash flows with opportunities to reduce G and A expenditures and operating and maintenance program costs by $15,000,000 to $20,000,000 Executing on these opportunities will be a large part of our focus in 2024. Based on the actions we are taking, assuming crack spreads remain at current levels and adjusted pro form a for the recent asset sales, we expect that consolidated cash flow and EBITDA in 2024 will materially exceed 2023 levels. Speaker 200:06:11On the renewables fuel front, our HGRD complex in Prince George is operating at its design capacity after reaching commercial production in the Q4 of 2023. In January February, our teams worked through normal startup challenges and the facility has been reliably operating at its design capacity for almost a month now. We expect the facility to operate at approximately 65% of its design capacity during the Q1 of 2024 with expected operations at design capacity thereafter. As I look to the future, we are well positioned to participate in the energy transition that is underway. I am excited about the opportunities we have from the growing demand for natural gas and renewable fuels. Speaker 200:06:57As Canada is about to become an exporter of LNG, we see continued development of the great natural gas resource we have in Western Canada. I expect a long and bright future for our midstream assets. With the HDRD facility operating at its nameplate capacity, we are looking ahead to the next opportunity on the renewable fuels front. We recently entered into an agreement with the BC government to provide support for front end engineering and design work to provide us with a plan and capital cost estimate for a sustainable aviation fuel refinery. We have kicked off the study with a major global engineering firm and hope to have a bankable FEED study completed in the first half of twenty twenty five. Speaker 200:07:37In parallel, there is significant work underway on the commercial aspects of the project, including some significant interest in offtake from major airlines. This is an exciting opportunity we are pursuing with the opportunity to leverage our learnings and skills from our conventional and HDRD refineries. I'm pleased with the progress we are making. We play an important part in the energy transition, ensuring the world benefits from cleaner energy. We are on the way. Speaker 200:08:04There is a lot of work to do, but you can undoubtedly see why I'm excited about our future. I will now turn the call over to Aaron to go through the financial results. Speaker 400:08:14Thank you, Jeremy. During FY2023, consolidated adjusted EBITDA was $162,900,000 of which $45,900,000 was contributed by Tidewater Renewables compared to last year's adjusted EBITDA of $249,800,000 of which $62,400,000 was from Tidewater Renewables. Tidewater Midstream consolidates the results from Tidewater Renewables due to our 69% ownership stake. The 2023 results were impacted by the scheduled PGR turnaround, lower crack spreads, particularly in Q4 2023 and scheduled and unscheduled downtime at Pipestone and Dimmsdale. Consolidated results were also impacted by lower realized gains on derivative contracts. Speaker 400:08:574th quarter consolidated adjusted EBITDA was $21,400,000 of which $10,700,000 was contributed by Tidewater Renewables, compared to $60,400,000 in the Q4 of 2022, of which $16,700,000 was contributed by Tidewater Renewables. Our 4th quarter was challenged by significantly lower demand for refined products due to much warmer weather, with many parts of BC and Alberta experiencing the warmest December on record and the slowdown in forestry activity driving down demand for diesel and resulting in lower sales volumes during the Q4 compared to the prior year. In addition, 2023 crack spreads moderated after reaching all time highs in 2022. I also wanted to take a moment to discuss the use of proceeds from the AltaGas transaction. The cash proceeds from the AltaGas transaction of $328,200,000 and the proceeds from the new term loan facility of $225,000,000 secured by the shares were used to repay our $550,000,000 credit facility as well as $53,300,000 of working capital liabilities. Speaker 400:10:02Subsequent to December 31, 2023, on January 9, 2024, Tidewater monetized the AltaGas shares for proceeds of $341,600,000 and fully repaid the $225,000,000 term facility plus $67,000,000 on the revolving credit facility for total debt repayment of $293,000,000 in Q1 2024. The remaining proceeds were used to repay $49,000,000 of working capital liabilities. The Pipestone transaction has allowed us to reduce our bank debt by over $500,000,000 As a result, going forward, we have lower cash interest costs, greater financial flexibility and less exposure to interest rate risk in this high interest rate environment. Speaking of leverage, we are currently down the path on the available options with respect to our convertible debentures, which come due in the Q3 of 2023. I will now turn the call back over to Jeremy for closing remarks. Speaker 200:10:59Thanks, Aaron. We are excited for 2024 and our current range of opportunities within our business. The HDRD complex is well poised to generate significant cash flow in 2024 and our balance sheet is in much better condition. We are focused on managing our controllable costs, optimizing our asset base and maximizing shareholder returns. We have a motivated and engaged team and we look forward to making progress over the course of the year. Speaker 200:11:26I'll now ask the operator to open the call up for questions. Operator00:11:31Thank Your first question comes from the line of Cole Pereira from Stifel. Please go ahead. Speaker 500:12:03Hi, good morning all. Wondering if you can just lay out how you're thinking about capital allocation between your different levers, namely buybacks, growth CapEx, M and A, debt reduction, etcetera? Speaker 200:12:18Sure. As Aaron mentioned, we do have the convertible refinancing coming up in September. So our first focus on that front is ensuring we get that off with a good financing and a reasonable cost of capital. After that, we are looking at all opportunities and we'll determine where our best risk adjusted returns can be obtained for the capital that we generate. Speaker 500:12:49Got it. Then obviously, it's kind of early days from your seat, but how are you thinking about the corporate structure at this point? I mean, you could maybe make the case that it's overly complicated and thus far you haven't seen the benefit of that. So any color on how you're thinking about that? Speaker 200:13:11So obviously, I think what you're referring to are we are the majority shareholder in Tidewater Midstream. We have 2 public companies being midstream and their ownership in renewables. At this point, we operate through shared services agreements and get efficiencies through that. We expect we will realize more of those as we go forward. And that's really all I can say on that front. Speaker 500:13:40Got it. Fair enough. That's all for me. Thanks. I'll turn it back. Operator00:13:46Thank you. And your next question comes from the line of Rob Hope from Scotiabank. Please go ahead. Speaker 600:13:55Afternoon, everyone. Realizing you've been on seat now for 2 months, maybe can you add a little bit of color just in terms of kind of the genesis of the management transition and what you could do different in the seat? Speaker 200:14:13Could you repeat that? I'm having a hard time hearing you, maybe get a little closer to your mic's Speaker 600:14:18phone. Sorry about that. I'm just wondering if you could speak to kind of what caused the management transition and as you're in the CEO seat, what you could potentially do different than your predecessor? Speaker 400:14:33Sure. Speaker 200:14:34I can't really speak to the cause of the transition that would be deliberations of the Board prior to me joining. But what we're going to do different, as we mentioned, we've already got a significant amount of improved capital allocation decisions and cost structure decisions that we've outlined in the announcements. That is the initiatives that we are pretty much feel are in the bag, have extremely high probabilities of capturing. With that, we have a whole another bucket of initiatives that were have been identified that we're evaluating the probability of improving our optimization and cash flow from the assets. And a big part of it is going to be focusing the team go forward. Speaker 200:15:24We're focused on really 2 key fundamentals. 1, natural gas midstream business and providing great handling and services there. And 2, being able to participate in the growing demand for renewable fuels with through our renewables investment as well as being a great energy provider through our PGR refinery. We have a huge focus on generating cash flow and reducing costs. It's a different mindset than the previous management team did. Speaker 200:15:59They focused on headline EBITDA, which has caused them some problems frankly and that won't be happening with this team. Speaker 600:16:09Thanks for that. And then maybe just moving back to capital allocation, the shares have underperformed year to date. When you take a look at the opportunities in front of you, you do have the NCIB available. What could cause you to lean heavier on that versus the other opportunities in front of you? Speaker 200:16:29I mean, it's really a rate of the risk return opportunity provided. And when we feel like the shares, we have the excess capital and the share price is not reflecting fair value and we don't have other opportunities to deploy it into higher returning opportunities. At that point, we will consider it. Again, I'll reiterate, we do have a major financing coming up this year with the converts and we need to get through that first before we look at those opportunities to potentially use the NCIB. Speaker 600:17:04Thank you. Operator00:17:08Thank you. And your next question comes from the line of Patrick Kenny from National Bank Financial. Please go ahead. Speaker 700:17:16Hey, good morning. I appreciate the guidance on the operational front. But just from a financial perspective, now that the HTRD is fully up and running, any thoughts on what a range for consolidated adjusted EBITDA should look like for the year or at least an annualized run rate basis similar to what the old management team used to provide? Or is that something that you guys have decided to stay away from at least for now? Speaker 200:17:47Yes. 1, I would say the old management team rarely or probably never gave guidance this early. So 1.2, at this point we're staying away from that. We've provided the operational parameters and you can pick your crack spread and you're good modelers. I think you can come pretty close to where it should be. Speaker 200:18:06So at this point, that's what we plan to do. We're obviously constantly evaluating that and considering how we handle that go forward with the Board. Speaker 700:18:17Okay. And guess just with the quarter being impacted by the timing of refined product sales at PGR, wondering if you could help us maybe quantify that impact on EBITDA in the quarter and confirm whether or not you expect to get that full amount back here in Q1 just through higher sales volumes relative to production levels? Speaker 400:18:43Yes. So what I would say is we built inventory in Q4 because of the weather and there was some weak demand, but that's going to be a positive for us going into Q1. So yes, it will be an improvement for us going into Q1 having that extra inventory and having that ability to sell. Speaker 100:19:05Okay. Thank you. Speaker 700:19:08Last one for me, just coming back to the liquidity picture here. So you paid off the term facility with the proceeds from the AltaGas shares. Is the remaining $150,000,000 of revolving credit capacity, is that the right amount of total credit capacity we should be thinking about here at the midstream level going forward? And then if so, I guess go ahead. Speaker 400:19:36Yes. I would say like really we're using it to manage working capital. So it's the right amount. We've got a number of initiatives that Jeremy discussed in his comments, which was actions to improve our optimize our operations and lower our cost base. And so that along with our availability on the revolver is enough liquidity to manage the business going forward. Speaker 400:20:07Absolutely. Speaker 700:20:11Okay. And maybe you can just confirm Aaron too because you talked about the refinancing on the converts coming due. I know in the prospectus anyway you have the option to pay back the principal amount in the form of common shares. But just looking at the share price and where it sits today, I mean, you confirm whether or not that's a realistic option? Speaker 400:20:34It's an option under the agreement, but we're far down the path on much better alternatives than that. So, yes, it's that's absolutely not the preferred option and we're down the path on other alternatives. Speaker 700:20:50Okay. That's great. I'll turn it back. Thanks. Operator00:20:53Thank you. And your next question comes from the line of Robert Catellier from CIBC Capital Markets. Please go ahead. Speaker 800:21:05Yes. Hi. I just want to take another shot at the EBITDA question. I believe I heard in your opening comments that you expect EBITDA to be materially higher than 2023 levels after adjusting for the Pipestone sale. Can you confirm if that's on a deconsolidated basis and what amount we should be adjusting with respect to Pipestone? Speaker 800:21:29I think at the time of sale, you indicated $55,000,000 to $60,000,000 EBITDA from those assets, but you had the outage in Q4. So we're just looking for the appropriate amount to adjust the 23 numbers by. Speaker 300:21:47Yes. Thanks, Robert. It's Sean here. Yes, I would say you're pretty much in line there. When Jeremy made that comment, we're talking on the consolidated basis. Speaker 300:21:56So I think the way we kind of look at it is on a consolidated basis when you look at the assets that we've recently sold and then heading into this year moving into call it I'll call it H. E. R. D. 1st year of full operations although I think as we mentioned there's just some utilization in Q1 down with as we work through some of the operational which we move through now. Speaker 300:22:16So the 160 numbers were consolidated. And as mentioned, we do think we can kind of exceed where we were this year. Speaker 800:22:26Yes. I'm curious on given the magnitude of the impairment, what we can expect on the remainder of the midstream assets in terms of EBITDA generation is pretty significant impairment. Speaker 300:22:45Yes. And I would just to maybe kind of continue with that. I mean, I would just say it's obviously the accounting requirement we follow kind of IFRS standards working through that, including where the current carrying value was. And then I'd say a conservative estimate on what the outlook is. That being said, I think we're excited about a number of the opportunities in front of us and where those assets can go. Speaker 300:23:08So we really do look at it as a non cash impairment and it's purely based on the accounting standards. But in no way does that reflect what we think we can Speaker 200:23:15do with those assets going forward. And just to add to Sean, it is a turnaround year at BRC. We have spent a lot of time optimizing that turnaround. We've removed a significant amount of capital and how we are going to do that turnaround as well as in a way that's going to significantly enhance cash flow at that facility. Speaker 400:23:36Yes. And just to add to what they said is also interest rates had an impact on that too. So it's more of an accounting treatment. Speaker 800:23:51Yes. I understood understand the impact of the rates Speaker 400:23:54there. You're sort of, Speaker 800:23:57I guess, silent on the growth capital. Obviously, you're focused on reducing your cost and the upcoming renewal on the converts, but can you give us any thoughts with respect to what you might be spending on capital? Speaker 200:24:16We gave guidance on maintenance capital. So I'll refer you to the release there. On the growth side, we have some very small amounts for really high return kind of debottlenecks. We will opportunistically evaluate that as we go through the year and see where opportunities might warrant spending. The main focus right now is a little bit more deleveraging, obviously getting ensuring HPRD is up and going. Speaker 200:24:47And then we do have a significant amount of spend across the company on the FEED study, although fully funded through capital emissions credits. But that is the main focus, getting that cash flow up and optimizing the existing assets. I will reiterate again, we gave guidance around some of the opportunities we've identified in the 1st 50 days that we have extremely high probability line of sight on executing on. There is a second list of opportunities that we're flushing out and pursuing. Speaker 800:25:27Okay. Last point for me. I just wanted to confirm that none of the impairment was related to PGR. Is that correct? Speaker 200:25:33None. Speaker 800:25:34Okay. Thanks. Operator00:25:37Thank you. And your next question comes from the line of Robert Kwan from RBC Capital Markets. Please go ahead. Speaker 300:25:45Hey, good morning. If I can just come back to some of the answers around what you plan to do different strategically. Definitely, you comment a lot on operations and costs and that was clear in the press release, the original press release. But you also talked about a prior focus on headline EBITDA and I'm just wondering if you could give a little bit more color around that just given operations and costs do feed into that number? Yes. Speaker 300:26:19I mean, I think the best way to look at it, Robert and Sean here is, it's much more of a holistic approach on how we're kind of evaluate our business. Not to say headline EBITDA is not important and not that we don't want to kind of add where there's abilities to add EBITDA and cash flow to the business. But we also want to be cognizant around capital structure and optimizing both our assets and corporate integration and a stronger return on assets, making sure we're kind of if there's ability to add EBITDA with the various projects, we'll look to do that. But we also want to be cognizant of the cost and how it boils down to the corporate free cash flow. Speaker 200:26:58Yes, just building on that, it's really ensuring the things we're doing are operationally effective in generating free cash flow, but also ensuring that as we allocate capital to new investments that they have the proper risk return profile and will generate a very strong return on investment in the long term. Speaker 300:27:25Got it. That's helpful. And then there was a comment just around financial flexibility to optimize the existing asset base just with the pay down of debt causing that statement. Can you just explain what you a little bit more detail what you meant by that? Speaker 200:27:44If I'm hearing you the question right, I think you're referring to with the Pipestone transaction that clearly did a significant amount of deleveraging, used interest expense, moved up availability on our operating line, just put us in a much sounder position from a leverage position, if that's what you're referring to? Speaker 300:28:07Yes. So the statement was just with that debt pay down, it gives you financial flexibility to optimize the existing asset base, but then you're also talking about focusing on free cash flow. So I'm just wondering what the lower leverage, like how that helps you optimize the existing asset base if you're also not looking to spend a lot of growth CapEx? Speaker 200:28:32I think it gives us some dry powder to take advantage of good returning opportunities that come up, smaller tuck ins, optimizations around our facilities without having to raise outside capital. Speaker 300:28:47Got it. Okay. And then just if I can come back to the impairment, so it's clear the interest rate impact on the present value. But there was also a focus in the audit letter that it was the BRC. So I'm just wondering if you can give some more color as to what is materially worse at the BRC and if you can just frame that as well, what the forecast for that is, what the delta versus say what it did in 20222023? Speaker 300:29:23Yes, for sure. I would say, there was some related to the BRC as long as our broader, call it, Deep Basin business unit as well. In terms of it, I think one, we kind of evaluated where the carrying value was and what the long term outlook at conservative estimate looks like. As you probably know, the BRC is a pretty unique asset. It's a really kind of a broader complex with a number of individual components. Speaker 300:29:52I'd say there's some maybe more ancillary components that we're not looking to utilize at this time as well. Some of them were actually maybe tied in with some other parts of our business. We have options to look at these and utilize these down the road. But where we are today in the forecast, we kind of used as part of the accounting exercise is just where we landed. But obviously as market conditions adjust, we can look to reevaluate this. Speaker 300:30:19So, yes, I think that let me know if that kind of answers your question, if there's anything else you wanted to jump in. Operator00:30:42And your next question comes from the line of Trevor Reynolds from Acumen Capital. Please go ahead. Speaker 600:30:51Hey, guys. Actually just a question on the HDRD. And just curious, you guys are up to nameplates capacity now. I'm just curious kind of if the operating costs rate at this point are in line with expectations or if you have a bunch of work now that you're up to nameplate capacity to get down to where you kind of hope to be? Speaker 200:31:14No, everything is running at the economic levels that we had identified. Obviously, feedstock is fluctuating. We've actually seen a move down in the cost of soybean oil, which really drives the cost of feedstock for the facility. So everything is on track from an operating cost point of view. We did note there is a little bit of a lingering derivative contract for purchasing soybean oil that was put in place that is working off over this year and next year. Speaker 600:31:52Okay. And then was there any major cost overruns with or additional costs that we should be factoring in with some of the issues with the startup? Speaker 200:32:06No. The main challenge was around the hydrogen compressors and that's all being done under warranty. There's a very tiny amount of final things that need to be done around some insulation and that couldn't be finished with the cold weather, but will be done shortly. But otherwise, the project is closed from all material capital respects. Speaker 600:32:37Okay. And then last one, just on the feedstock, what is the feedstock mix today that you're putting into the system? And what how do you guys look at, I guess, the outlook in terms of testing new supplies and maybe just your thoughts on that? Speaker 200:33:00So the main feedstock we've been using today is kind of oil. We have also tested a number of other feedstocks, used cooking oil, various callows, etcetera. We have the plant set up to have optionality on feed stocks and we continuously evaluate the economics of running those feed stocks. And right now the focus has been over the last month to get past that final hurdle and get to 3,000 barrels a day. We've been doing that for almost a month now. Speaker 200:33:31And so now as we look forward, we're evaluating supply costs and the economics of adding feedstocks into the facility. We have already tested a number of them. So, the operating team feels quite confident, that we can add them without tripping up the operations. Speaker 100:33:53Perfect. Thanks for taking my questions. Operator00:33:57Thank you. There are no further questions at this time. Mr. Baumann, please proceed. Speaker 100:34:04Thanks everyone for joining the call today. The team is available to address any outstanding items with their contact information at the bottom of this morning's press release. Thank you very much for joining us today. Operator00:34:16Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.Read morePowered by