CALGARY, Jan. 18, 2016 – Petrowest Corporation (“Petrowest” or the “Company”) (TSX: PRW) is pleased to announce that the BC Hydro Site C Clean Energy Project (“Site C”) main civil works contract is positioned to be underway before the end of January. As a reminder, the main civil works contract is the largest single contract for construction on the Site C project, valued at approximately $1.75 billion. It includes the construction of an earthfill dam, two diversion tunnels, and a concrete foundation for the generating station and spillways.
The main civil works contract is Petrowest’s largest contract award since inception and provides the Company with a strong growth platform entering 2016 and further establishes Petrowest’s transformation to a diversified infrastructure company.
Rick Quigley, Petrowest’s President and Chief Executive Officer, states: “Over the past 10 years, Petrowest has grown from an energy focused service provider into one of Western Canada’s largest diversified infrastructure construction companies. Entering 2016, Petrowest not only has won our largest contract to date, it is strongly positioned to benefit from major infrastructure projects announced to date in Western Canada and expected to be announced in 2016″.
Petrowest, alongside its Peace River Hydro Partners (Acciona Infrastructure Canada Inc. and Samsung C&T Canada Ltd), are positioned to commence operations on the main civil works portion of the Site C project before the end of January. Additional details in regards to Petrowest’s interest in the Peace River Hydro Partners include:
- Petrowest is a 25% partner in Peace River Hydro Partners
- Main civil works total contract size is estimated to be approximately $1.75bln and to be executed over an eight year development period which is front end weighted to the first half of the project life
- Peace River Hydro Partners will purchase new equipment for the project
- Prior to the Partnership’s equipment arriving, Petrowest will rent equipment to Peace River Hydro Partners
- Total upfront capital commitment for Petrowest amounts to approximately $1.25 million
Entering 2016, Petrowest has successfully transformed into a diversified infrastructure company. In aggregate, Petrowest expects to have approximately 15% of its total revenues in 2016 (including Site C) derived from the E&P industry, of which 100% of its revenue is related to liquids rich natural gas projects such as the Duvernay in NW Alberta and the Montney in NW Alberta and NE BC. In addition, Petrowest is excited to announce that it has been named the Prime Contractor for Progress Energy’s civil earthworks program around the Fort St. John area.
Petrowest’s base business (excluding Site C) exited 2015 with over $100 million of projects expected to commence in 2016, which is over 25% higher than its lowest point in 2015. In the Construction Division, Petrowest has increased its focus on mid-stream and road infrastructure projects. In addition, in the Civil Division, Petrowest has been awarded additional contracts including additional work at the Fort St James mine and the Regina Ring Road, which are expected to contribute higher revenues in the first quarter and help contribute to a strong operational year.
Based on the information provided above, Petrowest currently expects its base business and the main civil works contract of Site C to achieve approximately $45 million in Adjusted EBITDA in 2016.
Additional Emerging Opportunities in 2016
In addition to the contracts expected to commence in 2016, Petrowest has a strong pipeline of near-term infrastructure opportunities which include:
Western Canadian Infrastructure Projects:
- Recent announcements from provincial governments project significant capital spending on current and future infrastructure projects. Petrowest has been invited to bid on specific projects in Saskatchewan, Alberta and BC which are expected to commence in the Spring/Summer of 2016.
Emerging BC LNG Projects:
- Recent BC LNG developments include both the 40-year natural gas export license by the National Energy Board for LNG Canada, as well as a facility permit for LNG Canada from the B.C. Oil and Gas Commission. In addition, Pacific NorthWest LNG is expecting a final decision from the Canadian Environmental Assessment Agency in the spring of 2016.
- Petrowest has established firm working relationships with both companies who provide engineering and procurement services and local First Nations.
Syndicated Credit Facility Update
Petrowest previously announced its lenders (under both the syndicated credit facility and the subordinated debt agreement) have granted waivers to February 29, 2016 conditional on Petrowest providing a 2016 budget to its lenders on or before January 18, 2016. Petrowest is pleased to announce the budget was submitted as of January 12, 2016 and is working with its lenders to put in place revised financial covenants before the end of February, 2016.
Adjusted EBITDA is a non-IFRS financial measure. The definition and use of non-IFRS financial measures by Petrowest is described in Petrowest’s Management, Discussion and Analysis of the consolidated financial statements for the three and nine months ended September 30, 2015, available under Petrowest’s profile on the SEDAR website at www.sedar.com.
FORWARD LOOKING INFORMATION
Certain information and statements contained in this news release constitute forward-looking information, including the expected Adjusted EBITDA for 2016, the value of projects expected to commence in 2016, the expected revenues for the first quarter of 2016 and the near-term infrastructure opportunities. Readers should review the cautionary statement respecting forward-looking information that appears below. Any forward-looking statements are made as of the date hereof and Petrowest does not undertake to publicly update and review such statements to reflect new events, subsequent events or otherwise, except to the extent events and circumstances have occurred that are reasonably likely to cause actual results to differ materially from material forward-looking information for a period that is not yet complete or as otherwise required by law.
The information and statements contained in this news release that are not historical facts are forward-looking statements. Forward-looking statements (often, but not always, identified by the use of words such as “seek”, “plan”, “continue”, “estimate”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “expect”, “may”, “anticipate” or “will” and similar expressions) may include plans, expectations, opinions, or guidance that are not statements of fact. Forward-looking statements are based upon the opinions, expectations and estimates of management as at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include, but are not limited to, such things as changes in industry conditions (including the levels of capital expenditures made by government agencies and companies undertaking infrastructure projects and oil and gas explorers and producers), the credit risk to which Petrowest is exposed in the conduct of its business, fluctuations in prevailing commodity prices or currency and interest rates, the competitive environment to which the various business divisions are, or may be, exposed in all aspects of their business, the ability of Petrowest’s various business divisions to access equipment (including parts) and new technologies and to maintain relationships with key suppliers, the ability of Petrowest’s various business divisions to attract and maintain key personnel and other qualified employees, various environmental risks to which Petrowest’s business divisions are exposed in the conduct of their operations, inherent risks associated with the conduct of the businesses in which Petrowest’s business divisions operate, timing and costs associated with the acquisition of capital equipment, the impact of weather and other seasonal factors that affect business operations, availability of financial resources or third-party financing and the impact of new laws or changes in administrative practices on the part of regulatory authorities. Forward-looking information respecting Adjusted EBITDA for 2016 and expected revenues for the first quarter of 2016 are based on the current budget of Petrowest (which is subject to change), factors that affected the historical growth of Petrowest’s business divisions, sources of historic growth opportunities and expectations relating to future economic and operating conditions including, without limitation, anticipated future growth opportunities. Forward-looking information concerning the value of projects expected to commence in 2016 is based on current commitments of projects and expectations relating to future economic and operating conditions. Forward-looking information concerning the near-term infrastructure opportunities for Petrowest is based upon the current competitive environment in which Petrowest’s business divisions operate, expectations relating to future economic and operating conditions and current and announced projects of provincial governments.
Although management of Petrowest believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Accordingly, readers should not place undue reliance upon any of the forward-looking information set out in this news release. All of the forward looking statements of Petrowest contained in this news release are expressly qualified, in their entirety, by this cautionary statement. The various risks to which Petrowest is exposed are described under “Risk Factors” in Petrowest’s Annual Information Form, available under Petrowest’s profile on the SEDAR website at www.sedar.com.
Petrowest is a diversified infrastructure company with primary operations based in northeastern British Columbia and northwestern Alberta. Petrowest’s operations are focused on industrial and civil infrastructure projects, gravel crushing and hauling activities.
Nikolaus Kiefer, Vice President of Investor Relations & Corporate Development at (403) 384-0405 or [email protected] CNW Group 2016