Good morning and afternoon, ladies and gentlemen. Welcome to the Tidewater second quarter 2021 financial results conference call. At this time, note that all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. Also note that the call is being recorded today, Thursday, August the 5th, 2021. I would like to turn the conference over to Joel Vorra. Please go ahead, sir.
Thank you. Good morning and good afternoon, everybody. On the call with me today is Joel MacLeod, Tidewater's President and CEO. As usual, before passing the call over to Joel for a review of the quarterly highlights, I'd just like to remind everyone that some comments made today may be forward-looking in nature and are based on our current expectations, estimates, and judgments. Forward-looking statements we express or imply today are subject to risks and uncertainties, which can cause actual results to differ from expectations. Some of the information provided today will use non-GAAP measures. To know more about the company's forward-looking statements and non-GAAP measures, please see our various financial reports, which are available at tidewatermidstream.com or on SEDAR. I'll pass it over to Joel MacLeod for a review of the quarter.
Thanks, Joel. Good morning. Thank you for joining our Q2 2021 conference call. We are proud to have delivered nine consecutive quarters of record per share Adjusted EBITDA growth and delivered CAD 52 million of adjusted EBITDA in Q2 2021. This represents a 25% increase in per share adjusted EBITDA year-over-year. We continue to see growth into 2021, with booster activity continuing to pick up, increased volumes, increased refined product demand, crack spreads, and our canola coprocessing project coming online here ahead of schedule in Q3. We continue to execute and grow a significant inventory of high rate of return capital projects with two to three-year payouts. On July 21st, 2021, Tidewater announced the creation of Tidewater Renewables as a wholly owned subsidiary of Tidewater. Tidewater Renewables was formed to become a multifaceted energy transition company focusing on the production of low carbon fuels.
The creation of and the initial public offering of Tidewater Renewables is a result of a thorough evaluation of financing alternatives with the goal of funding Tidewater Renewables' portfolio of clean fuel projects while allowing Tidewater to continue to deleverage through 2021. We have seen significant institutional support and expect to close the IPO in August with the formation of Tidewater Renewables. CAD 40 million of EBITDA will be dropped down into Tidewater Renewables from Tidewater Midstream. The Tidewater Renewables IPO will enable the FID, the final investment decision, of our renewable diesel and renewable hydrogen complex, which, accompanied with our two coprocessing projects, do provide a view to roughly CAD 150 million of EBITDA within Tidewater Renewables in 2023. The current plan is for Tidewater Midstream to retain approximately 70% ownership of Tidewater Renewables, and Tidewater Renewables will be our high-growth renewables business unit within Tidewater Midstream.
On June 30th, we also closed the sale of our Pioneer Pipeline and the related CAD 130 million of proceeds, taking us to approximately 3.5x net debt to EBITDA. With the closing of the IPO of Tidewater Renewables, we expect to further reduce our leverage and achieve our targeted 3x- 3.5x debt to EBITDA. We remain focused on high rate of return capital projects and continue to evaluate multiple projects in the CAD 5 million- CAD 25 million capital cost range with payouts of under three years. We do remain committed to our leverage target of 3x- 3.5x net debt to annualized adjusted EBITDA. During the second quarter of 2021, at Prince George, total throughput was approximately 95% of the refinery's nameplate capacity at approximately 11,460 bpd .
As a result of planned annual maintenance, second quarter throughput was down approximately 5% from the first quarter of 2021. Throughput during the second quarter of 2021 was approximately 8% higher compared to the same quarter of 2021. Today, we're back up to strong rates, starting to track around 12,000 bpd . Refinery performing incredibly well. Demand has picked up, and expect to see the Prince George Refinery continue to perform extremely well for the remainder of 2021. The other project out at our Prince George Refinery would be our canola coprocessing project. Great to see that project tracking ahead of schedule and coming online here in the third quarter.
Excited to have our first renewable diesel product with 80%-90% reduction in carbon intensity online here in Q3, and wish to thank the B.C. government for all their support on our canola coprocessing project, but also on our renewable diesel and FCC coprocessing projects. Over to Pipestone, our Pipestone gas plant had a record quarter, average volume throughput of 92 million cubic feet a day in the second quarter, a 19% increase from Q2 2020 and an increase of 11% from Q1 2021. Facility availability for the quarter averaged 94%, an increase of 9% from Q1 2021. During the month of May, the Pipestone Gas Plant achieved a significant milestone by averaging a daily throughput of 100 million cu ft a day, combined with 100% facility availability.
The Montney area continues to remain active, and our Pipestone plant remains fully contracted with over 85% committed capacity on take-or-pay arrangements. Over to Brazeau River, where we dispose of the Pioneer Pipeline. Brazeau performed well in the quarter, and more recently, we have seen near record throughput highs and do expect that to continue into the end of the year. Overall, assets performing incredibly well and expect it to continue into the end of 2021. I do want to thank our staff, our board, shareholders, credit syndicate partners, and all stakeholders for all of your support. We look forward to continuing to delivering strong results for the remainder of 2021. I'll pass it back over to Mr. Vorra, and he'll walk you through our financial highlights of our Q2.
Thanks, Joel. I'll spend a little bit of time highlighting some of the key financial metrics for the quarter. A strong quarter on all fronts. Commodity prices getting back to more reasonable levels. Throughput at our facilities near, in some cases, all-time highs. Revenue for the quarter was approximately CAD 370 million, which was about a 1% increase from the prior quarter and over 100% increase from the same period last year. That would be primarily driven by commodity prices, but even midstream revenue was up year-over-year as well. gross operating margin, adjusted for hedges, was approximately CAD 57 million, which was a record and a 2% increase from the prior quarter and approximately 25% increase from the same period in the prior year. Operating margin percentage was approximately 14.5% versus 15% in the prior quarter, which year-over-year on a weighted average basis had come down.
That's what we would expect when commodity prices increase and you have consistent midstream margins around 50%. When you see increasing commodity prices at, say, an asset like the refinery, crack spreads remain the same and EBITDA contribution remains relatively the same. The weighted average operating margin would come down just based on the increase in not only the refined product side, but also feedstock. We would expect those margins to come down when commodity prices move up, although the EBITDA contribution remains consistent. Adjusted EBITDA, again, a record for Q2 was CAD 52.3 million and slightly ahead of Q1 of CAD 51 million and about a 25% increase from the same period in 2020. As Joel mentioned, the Pipestone Gas Plant was near nameplate capacity. The refinery, again, 5% or so down on throughput, but crack spreads did remain strong.
Despite what is typically a slower spring season with spring breakup, the refinery continued to perform well. Again, Joel mentioned we closed the Pioneer disposition at Brazeau in Q2, which brought down leverage, but also enabled us to pull gas. That was at the end of the quarter, enables us to straddle gas off the NGTL system through the plant, which also brings throughput at the plant up. All across the board, Pipestone area, Brazeau refinery plants continue to perform well at near nameplate capacity. Our distributable cash flow was approximately CAD 17.2 million, versus CAD 16.9 million in the prior quarter, resulting in a payout ratio of around 20%. Net debt was a decrease quarter-over-quarter, CAD 743 million versus CAD 857 million, a decrease of approximately CAD 115 million quarter-over-quarter, primarily as a result of disposition of the Pioneer Pipeline.
Again, bringing that total leverage around and slightly under 3.5x with a path to 3x with the Renewables transaction. I think with that, maybe we can open it up for questions.
Thank you, sir. Ladies and gentlemen, if you do have a question, please press star followed by one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to withdraw your question, simply press star followed by two. If you're using a speakerphone, we do ask that you please lift the handset before pressing any keys. Please go ahead and press star one now if you have any questions. Your first question will be from Robert Kwan at RBC. Please go ahead.
Great. Good morning. Just with the strong volumes that you're seeing through your facilities, can you just talk about what you're thinking or getting conversations with your customers around facility expansions? Specifically, is there any greater talk about an expansion at Pipestone?
Hi, Rob. Good morning. I would say definitely at Pipestone, the probability of an expansion continues to increase with WTI at CAD 68, AECO in that CAD 3, and obviously touched CAD 4 range. We do not have an expectation that AECO will continue to be this high, but it's great to see activities picking up even this morning to see Kelt expanding their capital. NuVista Energy had great results as well. Great to see our customers performing well at Pipestone. I would hate to say it's 100% probability and there's nothing that's 100% probability, but we'd be definitely probably above a 50% probability now of a Pipestone expansion. Definitely more work to be done understanding capital costs. Do we need a new gathering line, or do we just need capital at the plant? Definitely some work to be done.
Two, operationally, to see us running at 100,000,000 cu ft a day, great to be seen as operational leaders in the area as well, and our assets performing well. I would say probability's going up, and we're hopeful into the end of the year that becomes a real opportunity that we can move forward with. Still some work to do, especially on the capital side.
Got it. That's helpful. I guess just to finish a couple of questions here on the PGR. When you first bought it, there was some thought about running condy from your plants into the PGR. Is there any greater thought about how that could ramp up and the benefits?
I would say with the growth in the BC Montney, for us to be one of the only, and I guess the only direct pipe-connected refinery from the BC Montney right into our refinery, and obviously Pipestone being on the Alberta-BC border, to prove, to run different slates of condensate and crude around Montney production, Pipestone being one, to see how well the refinery runs or yields of 85%-90% low sulfur diesel, low sulfur gasoline. Long term, I think the Prince George Refinery is set up extremely well to take advantage of the Montney as feedstock. As LNG comes online, we expect to see continued growth in condensate and oil through the BC Montney, but also into Pipestone. I would say we are working through ways to potentially have more of a direct connection to Pipestone, but those obviously with the border, will likely take some time.
Overall, it's been great to see the likes of Conoco continuing to be active. Even Kelt with their Oak play, Tourmaline and others, ARC, continue to just see growth and continued more and more volumes in the B.C. Montney, which is great for our refinery long term and want to continue to evaluate debottlenecks of our process units.
Joel, by when you're saying take some time, are we talking about quarters or are we talking about years?
I think we'd probably message years, Rob, rather than quarters.
Okay.
Today we wouldn't have a defined plan, but there are options that aren't years. We just don't want to get ahead of ourselves.
Got it. Just to finish on the PGR, with the year-to-date performance and just what you're projecting here, does the contingent payment come into play?
I don't think it will, Rob, given canola coprocessing, our debottlenecks are not included in the contingent payment calculation. We will get close, but I don't think we will get into a position where the contingent payment will come into effect, mainly given our butane blending, our debottlenecks, our canola coprocessing are excluded from the contingent payment calculation.
Okay. That's great. Thank you very much.
Thank you, Rob.
Thank you. As a reminder, ladies and gentlemen, if you do have any questions, please slowly press star followed by one on your touch-tone phone. At this time, gentlemen, we have no other questions. Please proceed.
Well, thank you. Thank you everyone for your time today, and please don't hesitate to reach out if you have questions, concerns. Have a great day, everybody.
Thanks everyone.
Ladies and gentlemen, this does indeed conclude the conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.