Good afternoon, ladies and gentlemen, welcome to the Tidewater Midstream Annual General and Special Meeting conference call. At this time, all lines in a listen-only mode. Following the presentation, we'll 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 on Wednesday, May 31st, 2023. I would now like to turn the conference over to Tidewater Chair, Thomas Dea. Please go ahead.
Thank you, and good afternoon, ladies and gentlemen. As it is now 2:30 P.M., I will ask that the meeting come to order. Welcome to the Annual, General, and Special Meeting of the Shareholders of Tidewater Midstream and Infrastructure. My name is Tom Dea. I'm the chairman of the board of directors of Tidewater, and accordingly, I will be the chairman for this meeting. On behalf of Tidewater, I welcome you to today's meeting, and I would also like to welcome those shareholders and others listening via the live audio webcast. Before we proceed with the formal business of today's meeting, I'd like to introduce those Directors and officers of Tidewater who are either present today or attending by webcast. Directors in attendance are Rob Colcleugh, Doug Fraser, Bretta Raymond, Michael Salamon, Neil McCarron, and Gail Yester. Management in attendance are Brian...
Maybe you guys wanna wave if you're here. Sorry, I didn't see that. Key management in attendance are Brian Newmarch, CFO, Jarvis Williams, President, Downstream, Terrence Dumont, COO, Jeff Ketch, EVP, Field Operations, Brent Booth, EVP, Marketing and Commercial Business Development, and Kent Chicilo, EVP, Shared Services, Chief Legal Officer, and Corporate Secretary. In accordance with our bylaws, Kent Chicilo, EVP, Shared Services, Chief Legal Officer, and Corporate Secretary, will act as secretary of the meeting, and I appoint the representatives of TSX Trust Company to act as scrutineers of the meeting. The notice calling this meeting, the management information circular, and a form of proxy were mailed to all registered shareholders on April 28, 2023. The declaration of mailing is available for inspection by any shareholder, and I would ask that the secretary file a copy of such with the minutes.
Our bylaws provide that a quorum of shareholders is present at a meeting of the shareholders. If at least two holders of not less than 25% of the shares entitled to vote at a meeting of the shareholders are present in person or by proxy. I've been advised by the scrutineers that quorum has been met for this meeting. Scrutineers report is available for inspection by any shareholder. I would ask that the secretary file a copy of the scrutineers report with the minutes. I now declare that this meeting is regularly called and properly constituted for the transaction of business. In terms of our agenda today, we will deal first with the formal business of the annual general and special meeting, as described in the management information circular that was sent to shareholders.
Corporate update will follow the formal business of the meeting and is available on our website. If you are on the phone line, you can take this time to access it now. Following the corporate update, I will open the floor and the phone line and be pleased to answer any questions you may have. To facilitate the timely completion of the formal business, arrangements have been made with certain shareholders to move and second the resolutions to be considered. I'd like to take a moment to discuss voting procedures. Voting will not occur over the phone line. Voting will be in person in the meeting room or by proxy duly submitted. Unless a ballot is requested in respect of any particular matter, voting will be conducted on a show of hands. We will have a ballot on certain matters to properly document the voting at the meeting.
If you are a registered shareholder and have not received a ballot, please put your hand up, and the scrutineer will provide you with a ballot for completion. Any shareholder or proxy holder wishing to speak is requested to identify himself or herself, and when recognized by the chairman, provide his or her name before addressing the meeting. Any shareholder who is on the phone line, please hold your questions until the end of the meeting when we will open the phone line for questions. Okay, the first item of business is the presentation of the audited financial statements of the corporation for the year ended December 31, 2022, and the report of the auditor thereon. The financial statements and the report of the auditor thereon are available on SEDAR and have been sent to those shareholders who have requested copies.
The next item of business is to fix the number of directors of the corporation to be elected at this meeting. May I please have a motion in this regard?
I move that the number of directors of the corporation to be elected at this meeting be fixed at seven.
I second the motion.
All those in favor of the motion, please signify in the usual manner by raising your right hand. Any opposed? Declare the motion carried. We will now proceed to elect the directors of the corporation. Tidewater has nominated 7 directors and did not receive any nominations from shareholders in accordance with our bylaws. Accordingly, I will now receive the corporation's director nominees.
I nominate the following individuals as directors of the corporation: Thomas Dea, Robert Colcleugh, Doug Fraser, Bretta Raymond, Michael Salamon, Neil McCarron, Gail Yester.
May I please have a motion to elect those individuals nominated as directors?
I move that the corporation's director nominees be elected as directors of the corporation to hold office until the close of the next annual meeting of shareholders or until their successors are elected or appointed.
I second the motion.
All those in favor of the motion, please signify in the usual manner by raising your right hand. Any opposed? Declare the motion carried. Next item of business is to appoint the auditor of the corporation. May I please have a motion in that regard?
I move that Deloitte LLP be reappointed as auditors of the corporation to hold office until the close of the next annual meeting of shareholders or until their successor is elected or appointed, and that Deloitte LLP's remuneration be fixed by the board.
I second the motion.
All those in favor of the motion, please signify in the usual manner by raising your right hand. Any opposed? Declare the motion carried. Next item of business is to approve the amended and restated stock option plan of the corporation and the unallocated options thereunder. May I please have a motion in this regard?
I move that the resolutions as set forth in the management information circular to approve the amended and restated stock option plan for the corporation and the unallocated stock options thereunder be approved.
I second the motion.
In order to accurately record the voting results of this resolution, it is necessary to conduct a vote on this resolution by ballot. If you have not received a ballot, please identify yourself to the scrutineers. Okay, I have received the report on the ballot from the scrutineer and declare the motion carried. Final item of business is to approve on an advisory non-binding basis, the corporation's approach to executive compensation. May I please have a motion in that regard?
I move that the resolution as set forth in the management information circular to accept on an advisory, non-binding basis, the corporation's approach to executive compensation be approved.
I second the motion.
All those in favor of the motion, please signify in the usual manner by raising your right hand. Any opposed? Declare the motion carried. That now concludes the formal business of the meeting. I declare the meeting terminated. Now that the formal business of the meeting has concluded, I will ask Rob Colcleugh to provide a corporate update on Tidewater. A question period will occur after the presentation.
Good afternoon. This will just be a brief update, and then we can take some questions at the end. As you, most of you, I think, know, our business is generally divided into three general areas: midstream and downstream, and then our renewables business. We'll speak about that at the end a little bit, but the renewables business is a separate, publicly traded company. We actually had our AGM yesterday. It's Tidewater Renewables. We, as Tidewater Midstream, own 69% of that company, and that's why you see a lot of our consolidated versus deconsolidated terminology in our financial statements. This is where we stand right now. As you can see, the EBITDA has been growing fairly materially for a number of years, pretty much since the company IPOd.
Debt has also been increasing as we've been going, what we're really very focused on right now is, I've made a few public comments about, is being very focused on our cash flow. EBITDA as a measure of cash flow is great, but actually having that cash flow is what we're gonna be focusing on, and that's had us really looking at how we spend our maintenance and growth capital. Yeah, I don't think that there's anything else, as you know, from a 2022 perspective, CAD 250 million is a significant amount of EBITDA. We did achieve that last year. We had very good results, especially in the Downstream group.
Crack spreads were very much in our favor. All areas of the business have performed decently in 2022. These are a few of the things that we're focusing on. I know it says 2022 highlights. They're really some of the things we're focusing on in 2023. Deleveraging. I've made several comments talking about a process that is currently underway to potentially monetize one or more assets. As I say, we will make those results public once they are in hand or close to being in hand. That will drive some of that delevering. Our renewables business has a pretty exciting project in the mix right now. It's our HDRD, which is a renewable diesel plant. That's going to be the very first renewable diesel facility in Canada. We're quite excited about that.
It was a source of a little bit of consternation earlier, just as a result of some cost overruns that we experienced. Again, inflationary environment that we're in. We've solved that, fortunately, with the help of our capital providers, both debt and we've got very good support from the government, and got that gap quite quickly closed. We are looking at an end of June construction period. We're very closely coming up on what will be a very big driver for both companies in the near future. On the growth side, again, that is the largest growth project is our HDRD in both companies, because we own 69% of it. It does drive a significant amount of our results in Midstream as well.
Again, the capital discipline, we are going to be extremely focused on what dollars go out. Really, I think you'll see a generally a reduction in our growth capital going forward. Just to touch on a couple of our three silos, if you will. Our midstream assets are, you know, the largest number of our facilities are clearly in the midstream side. We've got a variety of assets from some smaller ones. In fact, a number of ones that are even, not even on the map, to larger, growthy assets. In particular, I guess I'd point to... I think I used to know there was a pointer on this, but anyway.
The Pipestone gas plant, which is one where we're considering a doubling of our processing capacity from 100 million to 200 million, and that's something that we're working on right now. Again, we'll be making those kinds of announcements whether we're proceeding and at what pace in the very near future. On the downstream side, it's principally the Prince George Refinery. I think this is our 3rd year owning that, Jarv? Third? Yeah. As I say, it's been performing very well from a volume perspective, especially considering this is, you know, potentially, well, not potentially, it's a 55-year-old asset. It's been performing at or above capacity shortly after we took it over. We are shortly going to be announcing the results of our turnaround.
I can say that things are generally on budget and on time, and the team did an exceptional job to get this, which is our first major turnaround, done, complete on time, with a tremendous number of people on staff. Remember, we're also building the renewable diesel plant at the same facility at the same time. We got that done with no lost time incidences, which is a phenomenal result, very safe build, and I think we can all be very proud of that fact, and proud of the fact that we're on time and on budget in our first turnaround. That is a big relief on the Prince George side, and in a month's time, we expect to be announcing that we're finished construction on the HDRD. Lots going on at Prince George.
We are looking at a number of, I wouldn't call them growth, as much as, ways to save costs. One of which, as you can see, most of our crude comes from Taylor into Prince George. We're investigating some alternatives to some pipelining that we've been sending most of our product down, which has tended to be quite expensive. We're looking at some rail and truck opportunities to feed our Prince George Refinery. Anyway, those are some of the, I guess you'd call them growth initiatives, that we're looking at, which I'd more consider optimization.
This is our current. We'll talk about it in a second, but this is a few of the shots of the construction project that's going on up at Prince George, most of which is the renewable diesel. I don't know if we've got any of these are turnaround, but these are all, I think, renewable diesel ones. They will be driving our cash flow growth coming forward, well, in the second half of this year. Again, we're expecting. I'll move right to it. We're expecting run rate coming out of the HDRD of around CAD 100 million of EBITDA, and that's really cash flow. That's a significant amount for renewables. Obviously, renewables currently has about CAD 50 million of EBITDA, and these results again, are consolidated into the Tidewater Midstream results.
That's why you'll see, both debt obviously, as well as our cash flow, once they get consolidated. If you look at renewables as a standalone business, it trades on the TSX as well, you know, it's a, these renewables companies have tend to trade in the 10 times multiple range. This is not guidance or anything. This is just where things are tending to trade in the renewable space. We're gonna have about CAD 150 million of EBITDA there. That should be a considerable bump over the, what? CAD 650 million EV enterprise value that it currently trades at.
We're looking for to demonstrate that the facility works, to demonstrate that the economics are as we model them, and we are hoping to see that gets revalued. Again, only 69% of it should have a dramatic impact on Tidewater Midstream stock price. That is the big project that is now underway, and we will have results, as I say, in a month on the construction and commercial operations will be shortly after that. ESG is a big part of what we do, and there aren't a lot of companies that have their own specific renewables company. That's the way we've done it. TransAlta did the same thing.
Companies our size, it sort of gives you an idea of where we, how we value our ESG commitments, and not just in our ownership of our renewables company, but also in the way we conduct our own business. That goes from safety right through to our environmental initiatives and the way we're trying to reduce CO2 emissions coming out of all of our facilities. That's largely all I wanted to get through today. I'm happy to take some questions, and Tom is as well. Are there any questions either in the room or on the line?
Ladies and gentlemen, for people over the phone, if you'd like to ask a question, you may do so by pressing star one on your telephone keypad. There are no questions over the phone at this time.
Okay. Any questions in the room? Excellent. We can wrap it up, Mr. Chairman.
Okay.
Please.
All right. I will thank you everyone for attending, I will now terminate the meeting. Thank you very much.
Ladies and gentlemen, this concludes your conference call for today. We thank you for joining and ask that you may disconnect your lines. Thank you.