Good day, and thank you for standing by. Welcome to the Tidewater Midstream and Infrastructure Ltd. Annual General Meeting conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your speaker today, Joel MacLeod. Please go ahead.
Thank you. Good afternoon, ladies and gentlemen. Welcome to the annual general and special meeting of the shareholders of Tidewater Midstream and Infrastructure Ltd. My name is Joel MacLeod, and I am the Chief Executive Officer and Chairman of the corporation, and I will be the Chairman for this meeting. In terms of our agenda today, we will deal first with the formal business of our AGM, as described in the proxy materials that were sent to shareholders. Following the formal part of our meeting, I will open the floor and the phone line, and I will be pleased to answer any questions you may have. The presentation I will review following the formal business of the meeting is contained on our website. If you are on the phone line, you can take the time to access it now.
The meeting will now come to order. I ask David Barva, Chief Legal Officer and Executive Vice President, Shared Services of the corporation, to act as secretary of the meeting and Patricia Selby of TSX Trust Company to act as scrutineer of the meeting. I now request the secretary to table proof of delivery of the notice of meeting, instrument of proxy, management information circular, and accompanying documents to the registered shareholders of the corporation. Proof of mailing of the notice calling the meeting and accompanying documents has been duly filed. I direct a copy of the notice with proof of delivery to be kept by the secretary with the records of this meeting. I would 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 to you a ballot for completion. Any shareholder or proxy holder wishing to speak is requested to identify themselves and, when recognized by the chair, 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 open the phone line for questions.
The bylaws of the corporation provide that a quorum of shareholders is present at a meeting of shareholders if at least two holders or not less than 25% of the shares entitled to vote at a meeting of shareholders are present in person or by proxy. I have received the scrutineer's report showing that there are in attendance at this meeting in person or by proxy 115 shareholders holding 211,591,775 common shares. Accordingly, the total representation at this meeting by shareholders present in person and by proxy is 62.3% of the common shares of the corporation. Therefore, I declare that there is a quorum present at this meeting. I now declare that the meeting is regularly called and properly constituted for the transaction of business.
The first item of business of this meeting is to receive and consider the audited financial statements of the corporation for the year ended December 31st, 2020, and the report of the auditor thereon. I ask the secretary of the meeting to present these financial statements to the meeting. Copies of the financial statements and the report of the auditor thereon have been mailed to each registered shareholder, and they have an opportunity to review these documents. I request a resolution dispensing with the reading of the auditor's report.
I move that the reading of the report of the auditor and the financial statements be dispensed with.
I second the motion.
All those in favor, please signify in the usual manner by raising your right hand. Any opposed? Motion is carried. The next item of business is the fixing of the size of the board of directors to be elected at the meeting for the forthcoming year. It is proposed that the board of directors to be elected at the meeting shall consist of seven members. I now request a motion to fix the board of directors at seven members.
I move that the board of directors of the corporation to be elected at the meeting be fixed at seven members.
I second the motion.
All those in favor? Opposed? The motion is carried. Thank you. We will now proceed with the election of directors. Seven directors will be elected at this time to hold office until the next annual meeting or until their successors are elected or appointed.
I nominate the following individuals as directors of the corporation to hold office until the next annual election of directors and thereafter until their successors are elected or appointed, subject to the provisions of the Business Corporations Act and the bylaws of the corporation. Namely, Joel MacLeod, Gail Yester, Doug Fraser, Greta Raymond, Robert Colcleugh, Michael Salamon, and Neil McCarron.
I'll second the motion.
Are there any further nominations? Nope. I now declare the nominations closed. All in favor of the election of those nominated, please signify in the usual manner by raising your right hand. Opposed? Thank you. I now declare those nominated to be duly elected directors of the corporation to hold office until the next annual election of directors, until their office is vacated or a successor is appointed in accordance with the bylaws of the corporation. The next item of business is the appointment of the auditor of the corporation. The information circular and the instrument of proxy prepared for the purposes of this meeting contemplated the reappointment of Deloitte LLP Chartered Accountants as auditor. Could we have a motion with regard to the reappointment of the auditor until the next annual meeting, and could this motion provide that the auditor's remuneration be fixed by the board of directors?
I move that Deloitte LLP Chartered Accountants be reappointed as auditor of the corporation until the next annual meeting, or until a successor is appointed, and that Deloitte's remuneration be fixed by the board of directors.
I second the motion.
All of those in favor? Any opposed? Thank you. The next item of business is to approve and adopt the ordinary resolution in relation to the approval of the unallocated equity-based deferred share units under the corporation's DSU plan.
I move that the resolution, as more particularly set forth in the information circular prepared for the purpose of the meeting, relating to the approval of the unallocated equity-based deferred share units under the corporation's DSU plan, be approved and adopted.
I second the motion.
In order to record accurately the voting results of this resolution, it is necessary to conduct a vote on this resolution by ballot. I have received the report on the ballot from the scrutineer, and I declare that the ordinary resolution of shareholders regarding the approval of the unallocated equity-based deferred share units under the corporation's DSU plan has been duly passed. If any shareholder is interested in the exact number of votes cast in favor of and against any resolution, particulars may be obtained from the secretary of the meeting. The next item of business is the advisory non-binding shareholder vote of the corporation's approach to executive compensation.
I move on an advisory basis only that the shareholders of the corporation accept the corporation's approach to executive compensation as disclosed in the information circular.
I second the motion.
All those in favor? Opposed? The motion is carried. Thank you. If there is no further business to be brought forward before the meeting, I would ask for a motion to terminate the meeting.
I move to terminate the meeting.
I'll second that motion.
All those in favor? Opposed? The motion is carried. Thank you, everyone. I declare the meeting terminated. I think with that, everyone, we will Trevor, should we open it up for questions first or just jump right into the presentation and then open it up for questions post-presentation?
I think whatever you prefer, Chairman.
Okay. I think we'll just jump into the presentation. Those of you that have questions, as always, maybe wait. I think most of you are well up to speed with Tidewater Midstream. We'll keep the presentation fairly brief here, aim for 15 to 20 minutes and walk you through. Those of you that are at home, please feel free to pull the presentation up at home. You'll see it's our June 2021 presentation and is on our website. We'll plan for a 15 to 20-minute presentation here and then open it up for questions. Tom, if you could just maybe skip in where we're just going to probably skip to the first slide. I don't think we need to walk through the legal component on those first two slides. To start, obviously, and for us, important to start with a map.
Location of our assets has been critical from our IPO. Our six-year history has been absolutely critical to strategy. We want to be in areas where economic drilling production resides and control and help those producers with their netbacks, but have control of infrastructure through to gas storage, fractionation, and now even into refinery operations with our main goal being helping producers with the netbacks. Gas, ethane, propane, butane, condensate, and crude, great for us to have levers that can enable our customers to improve their netbacks. Maybe just quickly on the map there on slide four, those of you that are looking at the slide, probably some areas of interest. How's activity going within the industry? What type of activity? In general, how are our assets performing?
We've been very fortunate through COVID to deliver eight record consecutive quarters of Adjusted EBITDA per share. I think that's just a huge checkmark showing the resiliency of our assets, our contract profile. I think most of you are more probably interested in what's going on in our backyard of late, especially with WTI marching up to $72. AECO even this morning on a spot basis, we saw in the CAD 4 a GJ range. Definitely at Pipestone, our team has done an incredible job. We are fully contracted. Up at Pipestone there in the north part of the map, we're in the heart of the Montney within Pipestone, connected to our gas storage facility. Our operations team has done an incredible job to be able to run at 95, even 100-plus million cubic feet a day.
You'll see we've revised our license up to 110 million cubic feet a day. Activity continues to pick up. I would say a potential for an expansion over the next 12, 24 months. Quite exciting Pipestone activity. I guess a negative would be that we are fully contracted. There isn't today a big upside as far as unutilized capacity given we're fully contracted and the plant is full on a day like today. If we march down into Brazeau River, where we are planning to close our Pioneer Pipeline at the end of the quarter, which is obviously, I think we only have one more day in the quarter, remain confident we will close the transaction in Q2 as we previously guided. We have definitely seen a pickup activity down in Brazeau as well. We've seen record third-party volumes, probably since 2018, 2019.
Again, team's done a great job, asset performing well, and now we are pipe connected to one of the largest power plants in Western Canada with our partner in TransAlta and great partners there. Great to see volumes picking up, activity picking up. At Brazeau, we would have a small amount of underutilized capacity, but great to see activity picking up and our customers generating more and more cash flow from their netbacks. I think as we step over to Prince George, maybe just briefly, we'll get into more detail. You'll see it is directly connected to the BC Montney, where we have seen quite a bit of activity. An entity like Tourmaline has done an incredible job at consolidating the Montney, especially on the BC side of the border.
In the bottom of COVID, we saw Conoco, one of the first U.S. companies we've seen in a long time, step in with a CAD 500+ million investment into Canada. To have Conoco, after purchasing the Kelt, Inga/Fireweed Montney assets, be the largest supply source of crude condensate into the refinery. We are seeing counterparties strengthen, you'll see there that 50% of our Adjusted EBITDA is from investment-grade counterparties. The consolidation is positive from a credit perspective. Being supporters of small and medium-sized producers would admit it is a little sad to see less and less small and medium-sized producers, it's definitely helping our contract profile, our credit profile, and are excited to see some of our large customers and counterparties grow and us be a key part of that in helping them improve their netbacks.
Key piece on slide four, other key piece that you'll see us reiterate is leverage. Most of you are well aware we had two very large capital projects, Pipestone gas plant, Pioneer Pipeline build. We acquired the Prince George Refinery, all with debt at a cost of 5%-7%, which was quite attractive to us. At the same time, our leverage was up in that 4-4.5 time range. With the closing of the Pioneer pipe, we'll be at 3.5 x debt to EBITDA here instantaneously here in a week or so, and continue to focus on that long-term leverage target of roughly 3 x debt to adjusted EBITDA.
Team's done a heck of a job on executing, getting our leverage down to 3.5 x here in the next week or so, then really pushing towards that 3 x. Maybe, Tom, we'll get into the renewable initiatives as well, which are quite exciting as far as support from the BC government. Alberta government's also trying to be very helpful, which is appreciated, and the federal government as well. We'll get into some of our renewable initiatives. Slide five, we won't spend a lot of time. Just want to continue to strengthen our customers and contracts. 75% of our cash flow from long-term contracts. We'll do our best to continue to strengthen those customers contracts. As I mentioned earlier, 50% of our EBITDA from investment-grade customers. Tom, keep going. Maybe flip the page.
This, as I mentioned, eight consecutive quarters of EBITDA per share growth. This goes back further to onset, but you'll see for us to have 27% six-year Adjusted EBITDA per share CAGR. I'm pretty proud of what we've been able to do through COVID to show growth from outset to today, and we don't see that stopping. We aren't deploying large capital today, but we do still feel we can continue to grow our Adjusted EBITDA per share as a result of having a deep inventory of high rate of return, low capital projects. Probably not 27% type growth profile if we were to just plan on our existing capital program, which is fairly small in that CAD 30 million-CAD 40 million range a year.
We also have our renewable diesel project, whereby we need to have a financing plan, and we would see similar growth to what we're showing over the last four, three to six years should we move forward on some of our other high-growth projects. Today, our focus is bringing leverage down. It's great to see the market react. Would say we're likely outperforming our peers here over the last three, six, 12 months. Again, great job by the team and great to see the market recognizing our performance. The real focus is that bottom half of that slide six, which is bringing our leverage down. Will be great to be down at 3.5 x here in the next week or so. Tom, keep moving. Renewable initiatives, a lot of questions from investors around our renewable initiatives.
I do feel it's also brought new pools of capital to meetings and having interest in Tidewater Midstream, which I think is relevant to all of you on the line or here in person. Quite exciting for Tidewater Midstream to be as involved as we are on the renewable side. Some would say luck in having one of two refineries in BC. To have CAD 100 million of government support on a CAD 225 million project, we're not aware of a project globally with that type of government support and generating roughly a two-year payout on net capital of CAD 125 million. Definitely exciting times for Tidewater to have high rate of return projects with government support, it does feel as though that government support will continue. Both in BC, even the Alberta government to see how they also do see us as a leader in clean fuels.
Our team has operated hydrogen at the refinery for 30+ years, and for us to be seen as a leader in hydrogen and renewable diesel, and also, we're definitely getting up to speed in renewable natural gas. We have large storage assets. We have our six investment-grade customers that are very interested in moving RNG and/or having us potentially produce RNG at some of our large sour plants where we have unit train rail at a few of those facilities. Definitely interesting times. We want to focus on projects that have true cash flow and true economics and significant returns. Definitely still some work to do, definitely on the hydrogen front as far as an offtake, and what projects are economic, but definitely exciting for Tidewater as a whole.
We can speak a little bit about carbon capture as well. I think in the interest of time, we'll keep moving here. Tom, next slide, please. Some macro pieces I don't think today, in the interest of time, we'll walk through. I think most of you are aware of the demand profile of renewable diesel, hydrogen, RNG. I think for today, we'll jump into the next slide, Tom. Graph. I think this map's also helpful. I know it's very helpful for our U.S. investors. For the first time, we've had some real interest and appetite from European investors. To lay out a map, most of you on the line, though, I know will know geographically where we sit. It is important to be aware of other industries that can impact our renewable initiatives. The lumber industry would be one.
Most of you are likely aware, Canfor, one of the largest public lumber players, is a neighbor at Prince George, is a great partner, have a great partnership there on a future FCC co-processing project with wood-based material. The lumber industry is also right on top of Ram River, which is number three, and also right on top of Brazeau, which is number two. To have wood-based feedstock for future projects right on top of us. Alberta beef, all of you would be well aware, beef-based tallow would reside in Alberta, Saskatchewan, a little bit into B.C. To have those feedstocks for our renewable diesel project and potentially other renewable projects is obviously very helpful.
We don't have to source our renewable feedstock from another country or across the water, where we are even being contacted by some of our refiner friends on the U.S. side of the border, if we can help them with renewable feedstock into some of their projects. I think at a high level, maybe carbon capture just quickly, those of you that aren't aware, I think Pipestone is a great example. The Pipestone plant that we built roughly three to four years ago, one of the biggest risks the market felt was our acid gas injection wells. We had to drill two horizontal wells, which some, most would argue, were exploratory. Our reservoir team, drilling completion team, even one of our board members, Steve Holyoake, was heavily involved there, the team knocked it out of the park.
To have two acid gas injection wells that have been running now for two years, have exceeded our expectation, but do want the market, and those of you are likely aware, but we also inject carbon dioxide, H2S, and greenhouse gases downhole in those two acid gas injection wells. We are set up well to be one of the lowest carbon intensity gas processors, but also to have carbon capture. At Acheson, just outside of Edmonton, we also have acid gas injection for carbon capture. At Ram River, we inject water into the Wabamun reservoir, where we're confident we could also move towards carbon capture. Our gas storage assets are large, significant, and could definitely look at related carbon capture options around some of those smaller pools.
Great to be set up well to continue to move forward carbon capture and also have big infrastructure and sour plants with amines that are built to do that, to strip CO2 out of natural gas, but to strip CO2 out of other products as well. We do look forward to those discussions over the next two to three years. We're starting to see inbounds on low carbon intensity chemicals to low carbon intensity fertilizer, and just great to have large sour plants with carbon capture capability. Ram and Acheson would also have unit train rail capability. I think quite exciting over the next two, three, five years with some of our existing assets. Let's keep moving, Tom. HDRD project, just quickly, CAD 225 million in gross CapEx, CAD 100 million in government support, net capital of CAD 125 million, generating CAD 75 million-CAD 90-ish million of EBITDA. BCLCFS.
British Columbia is the only province in Canada with low carbon fuel standard credits, and it is a big driver of our economics. We also have the Canadian Clean Fuel Standard Credit program, which rolls out in 2022 into 2023. Great to be positioned incredibly well with one of two refineries in BC and also with the BC government's support, which has been incredible and very thankful for all their support. We do think the potential for future support is there. Also supporting our canola coprocessing project, which comes online here in two to three months. Also a small FCC coprocessing project. Again, a big thanks to the BC government. Slide 12, I don't think we have to spend a ton of time. It's just walking through even the carbon intensity.
Want our shareholders to be aware, carbon intensity of the related fuel is a big driver as to how many credits you generate and is a big driver of the economics with the BC government support. I believe we have now been awarded the largest grant by the BC government as far as LCFS. Carbon intensity is critical and great to have the BC government support on our carbon intensities and the reduction of CO2 and greenhouse gases. Keep moving, Tom. Core business. I think we can spend a little time. Natural gas, NGLs, crude commodities. We kind of talked about this at the outset and our real focus on improving customers' net backs. I think we do a great job on that through our gas storage, our gas plants on the NGL side with our rail fleet as well on propane butane.
Some will recall, how did we IPO Tidewater Midstream? I think it was off the back of five to 10 railcars, and essentially started with sub CAD 5 million of capital. Great to see those railcars still helping producers improve their net backs and great to work with the AltaGas of the world, with their export terminal in BC and now Pembina as well. Definitely work close with our large peers and big supporters of our peers and helping improve net backs for all the producers and all of Canada. Tom, I think we can keep moving. Prince George, I think an important one to touch on. Obviously 40%-ish of our EBITDA cash flow through COVID. You'll see there on slide 16, the asset performed incredibly well.
When we closed the acquisition in November 2019, we messaged, in our view, worst case margins or crack spreads of CAD 43-CAD 45 a barrel and was incredible to see crack spreads through COVID after closing the acquisition and then, getting hit with probably the best stress test we could have on the asset, was great to see the asset perform as well as it did. Our margins held and even increased above that CAD 43-CAD 45. I think it's a key driver of why we've had eight record quarters through COVID. Again, our team has done an incredible job. We've been debottlenecking process units. You'll see there, we had, I think, record throughput and sold a record amount of refined product even through COVID. What's driving that?
Large capital projects, Site C Dam, CAD 10+ billion project, Coastal GasLink, CAD 10+ billion project, LNG Canada, CAD 20+ billion project. Very fortunate to have 3+ Trans Mountain expansion, large projects in our backyard. We haven't been able to keep up with diesel demand. Just an incredible opportunity. Team's done a great job of executing, continuing to debottleneck, high rate of return capital projects, lower capital, but still great to deliver eight record quarters through COVID and a function of our assets performing well. I think we're getting close to wrapping up, Tom, just in the interest of time, and we can open it up for questions, but let's just make sure we don't miss any key slides. I think Montney, if we go here to Pipestone, I think that's a great slide to touch on quickly. Activity continues to pick up.
We wouldn't say it's getting out of control, but activity is definitely picking up. We're seeing our customers generating significant free cash flow, their debt levels moving down. We are full at Pipestone and operationally, our team has done an incredible job over the last three to six months where we're averaging north of 90 million cubic feet a day of throughput, have been fully contracted, but even in May, we're in that 100 million a day average, which I would never dream we'd be able to achieve to build a plant at 100 million, but actually process on average 99 to 100 million cubic feet a day in the month of May. Just a huge accomplishment and a big thanks to our team, but also all our customers for supporting us through.
Startup of any facility is a little choppy, but great to show today that we're definitely leaders, on operations within the Montney and I think sets us up quite well over the next 12 to 24 months. Keep going, Tom. Deep Basin can spend just quickly, we talked about at the outset, activity is picking up. Group like Spartan Delta is coming in, drilling wells, economics continue to improve, even groups like Baytex, public data would show that they're drilling in our backyard and really appreciate the support of our customers. Gas prices, AECO and CAD 4, propane values moving up due to export, due to even IPL's PDH polypropylene facility coming online. To see all commodities moving up is extremely helpful to our customers and is resulting in more volumes through our facilities. I think, Tom, we can probably wrap up.
Maybe let's just go to the last slide that lays out where we are today. ESG, definitely important. Won't spend a lot of time there. Real focus on clean fuels, also on governance, diversity, social side, supporting our communities, supporting our First Nations friends. We have some great partners, especially in Saskatchewan and Manitoba, definitely in Alberta, B.C. as well, want to continue to improve those relationships. I think just to give everyone a sense of enterprise value, market cap, we've definitely seen a significant move up. As Pioneer closes here in the next few days, enterprise value CAD 1.2 billion, where we're delivering north of CAD 200 million of EBITDA. It's now pretty easy to do the math. We've had a lot of questions. I think most of you know it's been a year waiting for Pioneer to close. Now it's here.
We're going to be at 3.5 times debt to EBITDA instantaneously, but we're clearly at a 6-time multiple. There doesn't need to be any assumptions. CAD 200 million of EBITDA on CAD 1.2 billion of EV, 6-time multiple, and then have some growth projects that are definitely quite exciting for us, including that renewable diesel project, CAD 225 million of gross capital, CAD 125 million net, generating CAD 75 million-CAD 90 million of EBITDA. Quite interesting and exciting, and it's driving quite a bit of interest from the capital markets, from institutional investors, and even global investors. Great to have the support of everyone on the line, everyone in the room today. Really appreciate everyone's support. With that, want to thank our board as well, our customers, our credit syndicate through the bottom of COVID, who has been incredible and incredibly supportive.
Maybe I'll pause there, and I'll open it up for any questions. No worries. If there aren't any questions, that's all right. At all our AGMs, we like to answer a few questions, and happy to stay here as long as need be if there's multiple questions.
As a reminder, to ask a question, you'll need to press star, number one on your cellphone. To withdraw your question, press the pound key. Please stand by while I compile the Q&A roster. Again, to ask a question, you'll need to press star one on your telephone. And there are no questions at this time.
Well, thank you. Thank you everyone for your time today, and more importantly, all your support, and please don't hesitate to reach out if we can help with anything. Thanks, everybody. Have a great day.
This concludes today's conference call. Thank you for participating. You may now disconnect.