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Clean fuel production raises Tidewater Q1 revenues to $111M

Adjusted EBITDA of $25.3M marks record-high for company

The Tidewater Renewables Hydrogenation Derived Renewable Diesel (HDRD) facility in Prince George, B.C. (Courtesy Tidewater)
The Tidewater Renewables Hydrogenation Derived Renewable Diesel (HDRD) facility in Prince George, B.C. (Courtesy Tidewater)

Rising production at its renewable diesel and hydrogen facility raised revenue for Tidewater Renewables Ltd. (LCFS-T) to $111.2 million in Q1, almost tripling is results from the previous quarter.

The Calgary-based renewable fuels producer started commercial production at its Hydrogenation Derived Renewable Diesel (HDRD) facility in Prince George, B.C. in Q4 2023.

It is Canada’s first renewable diesel plant, and currently uses canola oil. In the future the company also plans to recycle used cooking oil, its former chairman and CEO Rob Colcleugh told Sustainable Biz Canada in a previous interview.

Throughput and reliability increased in Q1 2024, according to a release. There was “robust demand for renewable fuels” and record Canadian emissions credit pricing driving up the performance of HDRD.

Net income attributable to shareholders increased to $7.7 million in Q1 from a net loss of $21.5 million in Q4 2023.

“On our performance side, it wasn’t completely smooth, but it was successful. We overcome the operating challenges we discussed year-end, expanded our commercial reach and exceeded HDRD throughput guidance,” Jeremy Baines, the new chairman and CEO of Tidewater, said in a conference call with investors and analysts on Thursday.

Tidewater expects to boost production at HDRD and announced early steps made on its sustainable aviation fuel (SAF) project.

Boosting production at HDRD

Since starting commercial production at HDRD, Tidewater has maintained an average throughput of approximately 2,120 barrels per day in Q1, a 71 per cent utilization rate.

Emissions credits for reaching the milestone were received and sold to an investment-grade counterparty, the company added.

Tidewater anticipates the facility to surpass a utilization rate of 85 per cent in 2024, averaging out to 2,550 barrels per day.

Compared to Q4 2023, when Tidewater started commercial operations at HDRD, revenue rose from $40.4 million to $111.2 million in Q1. That exceeds its full-year results in 2023 ($97.7 million) and 2022 ($76 million).

Net cash from operating activities reached $40.5 million in Q1, and adjusted EBITDA reached Tidewater’s highest to date at $25.3 million.

Tidewater Renewables blended approximately 9.8 million litres of its renewable diesel into 23.6 million litres of conventional diesel from its parent company Tidewater Midstream and Infrastructure Ltd. in Q1, according to a release.

To optimize costs, Tidewater has taken steps to remove millions of dollars at the renewables level and eliminated a number of other expenses, Tidewater’s CFO Ray Kwan said on the call.

Asked by an analyst about Tidewater’s confidence in its credit facility renewal, Kwan said lenders are happy with the performance of HDRD and its debt reduction in Q1.

Exploring SAF production

Other than renewable diesel, Tidewater seeks to produce SAF. Clean aviation fuel is the “next significant growth project we are working on,” and “our main growth pillar focus,” Kwan said.

The SAF facility would repurpose an existing site with existing features such as water treatment and rail infrastructure, Baines said.

“Significant” progress on the front-end engineering design of its proposed 6,500 barrels-per-day SAF project was made in Q1, Tidewater revealed. Building its SAF team, going through regulatory approvals, commercialization steps and stakeholder consultation are ongoing.

Tidewater will evaluate offtake opportunities for the SAF project, for which the company expects to finalize an investment decision in 2025.

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