Tidewater Midstream and Infrastructure TSE: TWM raised its 2026 adjusted EBITDA outlook after reporting record second-quarter consolidated adjusted EBITDA, supported by strong refining and renewable diesel market conditions, higher facility utilization and debt reduction.
During a joint second-quarter call with Tidewater Renewables, CEO Jeremy Baines said the company’s Prince George Refinery and HDRD renewable diesel complex benefited from favorable fuel markets, while management continued to advance a sustainable aviation fuel project toward a potential final investment decision in the fourth quarter.
Record EBITDA and Higher Guidance
CFO Ian Quartly said Tidewater’s consolidated adjusted EBITDA reached a quarterly record of C$88.9 million in the second quarter, up C$39.2 million from the first quarter of 2026.
Tidewater Renewables generated record adjusted EBITDA of C$56 million. Quartly said the result reflected above-nameplate operation at the HDRD complex, improving market pricing and offtake contracts indexed to U.S. import-pricing benchmarks. The result included C$7.7 million of expected Biofuel Production Incentive proceeds recognized in the quarter and C$7.7 million of adjusted EBITDA from the company’s equity investment in a cattle company, primarily reflecting higher cattle prices.
Tidewater Midstream generated deconsolidated adjusted EBITDA of C$32.9 million, an increase of C$7.3 million from the first quarter. Quartly attributed the improvement primarily to stronger crack spreads at the Prince George Refinery, partly offset by realized losses on crack-spread hedges.
The company increased its 2026 consolidated adjusted EBITDA guidance to between C$230 million and C$250 million, representing a 20% increase at the midpoint from its prior outlook. Tidewater Renewables increased its guidance to C$130 million to C$140 million, while Tidewater Midstream raised its deconsolidated adjusted EBITDA guidance to C$100 million to C$110 million.
Management cited higher facility utilization, sustained strength in forward crack spreads, and improved renewable diesel and emissions-credit pricing as the main drivers of the higher outlook. Forecast capital expenditures remained unchanged at C$2 million to C$3 million for Tidewater Renewables and C$20 million to C$25 million for Tidewater Midstream on a consolidated basis.
Refining and Renewable Diesel Operations
The HDRD complex processed a record average of 3,315 barrels per day during the second quarter, or 111% utilization, Baines said. Low-cost debottlenecking work and facility reliability enabled the complex to operate above nameplate capacity. The company also realized record margins on renewable diesel sold at U.S. import-parity pricing and captured an additional C$0.16 per liter from the Biofuel Production Incentive.
Natural Resources Canada conditionally approved Tidewater Renewables for the Biofuel Production Incentive program during the first quarter. The contribution agreement was executed July 7, securing funding aligned with the HDRD complex’s full annual production capacity. Baines said the company expects to receive C$13.8 million in first- and second-quarter cash contributions during the third quarter, followed by quarterly payments in arrears.
At the Prince George Refinery, average throughput was 10,032 barrels per day because of a planned 17-day partial outage in April for equipment cleaning and maintenance. Excluding the outage, throughput averaged 12,060 barrels per day, or 101% of design capacity.
The Prince George crack spread averaged C$118 per barrel in the second quarter, up 16% from the first quarter. Baines said global supply disruptions, reduced refining capacity in the Middle East and Russia, and low refined-product inventories supported market conditions.
The company had hedged about 50% of crack-spread exposure between April and December 2026. In the second half of July, it added hedges covering roughly 40% of 2027 crack-spread exposure at fixed prices that Baines said were significantly above mid-cycle pricing and 2026 realized hedge pricing. He said the company views about 50% as an appropriate general hedging level, while retaining flexibility to go above that level opportunistically.
Debt Reduction and Midstream Utilization
Consolidated net debt declined C$44.4 million during the quarter, including a C$30.9 million reduction at Tidewater Midstream and a C$13.5 million reduction at Tidewater Renewables. Tidewater Renewables reported debt to adjusted EBITDA of 1.47 times at June 30, while Tidewater Midstream reported 2.3 times. Consolidated leverage was 1.7 times, within the company’s 1.2-times to 2.5-times target range.
At the Brazeau River Complex, gas processing throughput averaged 105 million cubic feet per day, down 8% from the prior quarter due primarily to NGTL curtailments. Fractionation utilization fell to 76% from 90% in the first quarter. Baines said the company remains in discussions with prospective and existing customers to increase utilization.
The Ram River Gas Plant remained temporarily curtailed, though sulfur-handling operations continued. Baines said current sulfur prices are highly economic for sour-gas producers and that Tidewater intends to restart the plant when area production resumes.
SAF Project and Asset Sales
Tidewater Renewables continued to target a fourth-quarter final investment decision for its sustainable aviation fuel project. The company executed a new initiative agreement with British Columbia on June 19 that is expected to provide additional BC LCFS credits for critical pre-FID work. The company expects to receive credits in the third and fourth quarters as milestones are achieved.
Baines said a final investment decision depends on regulatory support, including anticipated amendments related to sustainable aviation fuel under the Clean Fuel Regulations and other Canadian support programs. He put the project’s capital cost at about C$1.2 billion and said it has a Class 3 front-end engineering and design package.
If sanctioned, the project would have a three-year construction period and be online in 2030, according to Baines. He said Tidewater believes it could fund the project through Part Three agreements and operating cash flow, while also considering a potential First Nations equity partner and other partnership alternatives.
Management said it will continue to pursue non-core asset sales, focusing on assets that do not fit its strategy or do not generate appropriate returns. The company said free cash flow from its disciplined capital program will primarily be directed toward debt reduction.
About Tidewater Midstream and Infrastructure (TSE:TWM)
Tidewater Midstream and Infrastructure 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.
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