Tidewater to sell Pipestone Gas Plant cogeneration units to Kineticor for $85M

CPE Media News (3/25/2019) – Tidewater Midstream and Infrastructure Ltd. (TSX: TWM) has entered into an asset purchase and sale agreement to sell its Pipestone Gas Plant’s 32MW cogeneration units to Kineticor Resource Corp., a portfolio company of OPTrust, for $85 million in cash. Kineticor will assume ownership of the cogeneration units which are currently onsite.

Tidewater also entered into a long-term energy services agreement whereby Kineticor will supply power to Tidewater’s Pipestone Gas Plant once construction is complete in exchange for fixed energy fee payments.

Calgary based Kineticor is a power developer focused on thermal generation in Canada. The company develops, owns, and operates power generation facilities that deliver clean energy solutions to power consumers and utilities.

In February 2017, Kineticor Resource Corp., in partnership with OPTrust, acquired partially constructed 690 MW cogeneration plant located near Peace River, AB from Shell Canada. OPTrust committed a $125 million investment in Kineticor to support Kineticor’s future growth initiatives.

Birch Hill Equity Partners, owns 13% of Tidewater Midstream and Infrastructure. Birch Hill acquired the Tidwater stake as part of the acquisition of AltaGas Ltd. (TSX: ALA)’s certain natural gas midstream, power, and commercial and industrial marketing assets, now owned by Birch Hill formed Campus Energy Partners.

photo credit: Kineticor

News Release

Tidewater announces $85 million sale of cogeneration units at Pipestone Gas Plant

CALGARY, March 25, 2019 /CNW/ – Tidewater Midstream and Infrastructure Ltd. (“Tidewater” or the “Corporation”) is pleased to announce that it has entered into an asset purchase and sale agreement whereby the Corporation has divested of its Pipestone Gas Plant’s 32MW cogeneration units to Kineticor Resource Corp. (“Kineticor”), a privately held power developer focused on thermal generation in Canada. Under the terms of the sale, the Corporation received a cash payment of $85 million and Kineticor assumed ownership of the cogeneration units which are currently onsite. In conjunction with the divestiture, the Corporation entered into a long-term energy services agreement whereby Kineticor will supply power to Tidewater’s Pipestone Gas Plant once construction is complete in exchange for fixed energy fee payments. The Corporation also entered into an operating agreement, whereby Tidewater will manage the final construction of the cogeneration units and the day-to-day operations once in service. This will ensure that the cogeneration units, which will be highly integrated with the Pipestone Gas Plant, will be managed safely and efficiently for both Kineticor and Tidewater. The sale of the cogeneration units was contemplated in the original Pipestone Gas Plant economics and Tidewater’s previous guidance of $30 to $35 million of Adjusted EBITDA contribution from the project is unchanged given Tidewater’s progress in contracting volumes at the plant. Expected Adjusted EBITDA contribution is based on approximately 100 MMcf/day of contracted volume at market rates.

Tidewater has received significant customer interest for additional sour gas processing, natural gas storage and liquids handling capacity at Pipestone. As a result, Tidewater plans to utilize a portion of the proceeds from the sale of the cogeneration units to begin scoping these future expansions which are subject to final investment decision. The remaining proceeds from the sale will be used to fund Tidewater’s ongoing growth capital program through 2019. The Pipestone Gas Plant remains on budget and is expected to be commissioned in the third quarter of 2019.

The Corporation’s Business

Tidewater is traded on the TSX under the symbol “TWM”. Tidewater’s business objective is to build a diversified midstream and infrastructure company in the North American natural gas, natural gas liquids (“NGL”) and crude oil space. Its strategy is to profitably grow and create shareholder value through the acquisition and development of oil and gas infrastructure. Tidewater plans to achieve its business objective by providing customers with a full service, vertically integrated value chain through the acquisition and development of oil and gas infrastructure including: gas plants, pipelines, railcars, trucks, export terminals and storage facilities.

SOURCE Tidewater Midstream and Infrastructure Ltd.

For further information: Tidewater Midstream & Infrastructure Ltd., Joel MacLeod, Chairman, President and CEO, 587.475.0210, jmacleod@tidewatermidstream.com

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