Q2 2026 Tidewater Renewables Ltd Earnings Call

August 13, 2026

Speaker #1: Good afternoon, ladies and gentlemen, and welcome to the Tidewater Midstream and Infrastructure Limited and Tidewater Renewables Limited Q2 2026 financial results conference call. At this time, all lines are in listen-only mode.

Operator: Good afternoon, ladies and gentlemen, and welcome to the Tidewater Midstream and Infrastructure Ltd. and Tidewater Renewables Ltd. Q2 2026 financial results conference call. At this time, 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 0 for the operator. This call is being recorded on Thursday, 13 August 2026. I would now like to turn the conference over to Mr. Ian Quartley, CFO. Please go ahead.

Operator: Good afternoon, ladies and gentlemen, and welcome to the Tidewater Midstream and Infrastructure Ltd. and Tidewater Renewables Ltd. Q2 2026 financial results conference call. At this time, 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. This call is being recorded on Thursday, 13 August 2026. I would now like to turn the conference over to Mr. Ian Quartly, CFO. Please go ahead.

Speaker #1: Following the presentation, we will conduct a Q&A session. If at any time during this call you require immediate assistance, please press star 0 for the operator.

Speaker #1: This call is being recorded on Thursday, August 13, 2026, and I would now like to turn the conference over to Mr. Ian Courtney, CFO.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Rina, and welcome everyone to the joint conference call for the second quarter 2026 results of both Tidewater Midstream and Infrastructure Limited, and Tidewater Renewables Limited.

Ian Quartly: Thank you, Ina, and welcome everyone to the joint conference call for the Q2 2026 results of both Tidewater Midstream and Infrastructure Ltd. and Tidewater Renewables Ltd. Joining me today is our CEO, Jeremy Baines, who will provide an update on our operational performance, regulatory tailwinds, and favorable market conditions we have seen to start the year. I will follow with the financial results and details on the increased 2026 guidance, and then we will open the line for your questions. This morning, both Tidewater Midstream and Tidewater Renewables reported results for the second quarter ended 30 June 2026. A copy of the news releases, financial statements, and MD&As may be accessed on SEDAR+ or on the respective companies' websites.

Speaker #2: Joining me today is our CEO, Jeremy Bains, who will provide an update on our operational performance, regulatory tailwinds, and the favorable market conditions we have seen to start the year.

Speaker #2: I will follow with the financial results and details on the increased 2026 guidance, and then we'll open the line for your questions. This morning, both Tidewater Midstream and Tidewater Renewables reported results for the second quarter ended June 30, 2026.

Speaker #2: A copy of the news releases, financial statements, and MD&As may be accessed on CEDAR+ or on the respective company's websites. Before we get started, I'd like to note that today's call is being recorded for the benefit of individual shareholders, the media, and other interested parties who may want to review the call at a later time.

Ian Quartly: Before we get started, I would like to note that today's call is being recorded for the benefit of individual shareholders, the media, and other interested parties who may want to review the call at a later time. A recorded call will be available through Cision. Some of the comments made today may be forward-looking in nature and are based on Tidewater's current expectations, judgments, and projections. Forward-looking statements we express today are subject to risks and uncertainties, which can cause actual results to differ from expectations. Further, some of the information provided refers to non-GAAP measures. To know more about these forward-looking statements, non-GAAP measures, and risk factors, please see the company's various financial reports, which are available on the company's websites and on SEDAR+. I will now turn the call over to Jeremy.

Speaker #2: The recorded call will be available through Cision. Some of the comments made today may be forward-looking in nature and are based on Tidewater's current expectations, judgments, and projections.

Speaker #2: Forward-looking statements we express today are subject to risks and uncertainties, which can cause actual results to differ from expectations. We may refer to non-GAAP measures. To know more about these forward-looking statements, non-GAAP measures, and risk factors, please see the company's various financial reports, which are available on the company's website and on CedarPlus.

Speaker #2: I'll now turn the call over to Jeremy.

Speaker #3: Thanks, Ian, and good morning to everybody. Thank you for joining us today. I'm going to start off my remarks by talking about Tidewater Renewables.

Jeremy Baines: Thanks, Ian, and good morning to everybody, and thank you for joining us today. I am going to start off my remarks talking about Tidewater Renewables. During the second quarter, the HDRD complex achieved record average daily throughput of 3,315 barrels per day, representing a 111% utilization rate. The team has done a fantastic job completing a number of very low-cost debottlenecking initiatives, which along with flawless facility reliability, enabled the HDRD complex to consistently operate above nameplate capacity. This was extremely important to produce above nameplate capacity during a quarter when we realized record margins on the sale of the renewable diesel sold at US import parity pricing from the facility.

Speaker #3: During the second quarter, the HDRD complex achieved record average daily throughput of 3,315 barrels per day, representing a 111% utilization rate. The team has done a fantastic job completing a number of very low-cost debottlenecking initiatives, which, along with flawless facility reliability, enabled the HDRD complex to consistently operate above nameplate capacity.

Speaker #3: This was extremely important to produce above nameplate capacity during a quarter when we realized record margins on the sale of the renewable diesel sold to U.S.

Speaker #3: Import parity pricing from the facility. We also captured an additional $0.16 per liter of margin from the biofuels production incentive, which led to the record financial results that Ian will discuss later on the call.

Jeremy Baines: We also captured an additional CAD 0.16 per liter of margin from the biofuels production incentive, which led to the record financial results that Ian will discuss later on the call. On the regulatory front, during Q1 2026, Tidewater Renewables received conditional approval from Natural Resources Canada for the Biofuel Production Incentive program. On 7 July, the contribution agreement was executed, which secures total funding in line with the full annual production capacity of the HDRD complex. We expect to receive both the Q1 and Q2 cash contributions totaling CAD 13.8 million during Q3 2026, with subsequent contributions to be received quarterly in arrears, providing a consistent boost to our cash flow and liquidity. Moving next to the sustainable aviation fuel project, which continues to progress towards a final investment decision during Q4 of this year.

Jeremy Baines: We also captured an additional CA$ 0.16 per liter of margin from the biofuels production incentive, which led to the record financial results that Ian will discuss later on the call. On the regulatory front, during Q1 2026, Tidewater Renewables received conditional approval from Natural Resources Canada for the Biofuel Production Incentive program. On 7 July, the contribution agreement was executed, which secures total funding in line with the full annual production capacity of the HDRD complex. We expect to receive both the Q1 and Q2 cash contributions totaling CAD 13.8 million during Q3 2026, with subsequent contributions to be received quarterly in arrears, providing a consistent boost to our cash flow and liquidity. Moving next to the sustainable aviation fuel project, which continues to progress towards a final investment decision during Q4 of this year.

Speaker #3: On the regulatory front, during the first quarter of 2026, Tidewater Renewables received conditional approval from Natural Resources Canada for the biofuel production incentive program.

Speaker #3: On July 7, the contribution agreement was executed, which secures total funding in line with the full annual production capacity of the HDRD complex. We expect to receive both the first and second quarter cash contributions totaling $13.8 million during the third quarter of 2026, with subsequent contributions to be received quarterly in arrears, providing a consistent boost to our cash flow and liquidity.

Speaker #3: Moving next to the Sustainable Aviation Fuel project, which continues to progress towards a final investment decision during the fourth quarter of this year. On June 19, 2026, Tidewater Renewables executed a new initiative agreement with the Government of British Columbia, which will provide additional BCLCFS credits to support the funding of critical pre-FID activities.

Jeremy Baines: On 19 June 2026, Tidewater Renewables executed a new initiative agreement with the Government of British Columbia, which will provide additional BCLCFS credits to support the funding of critical pre-FID activities. These pre-FID activities are expected to allow Tidewater Renewables to preserve project schedule, maintain vendor and fabrication capacity availability, mature engineering deliverables, support regulatory advancement, and position the project for efficient execution post-FID. Tidewater Renewables expects to receive BCLCFS credits in Q3 and Q4 2026 as certain project milestones are achieved. Now moving over to Tidewater Midstream. Throughput at the Prince George Refinery averaged 10,032 barrels per day in Q2 due to a planned 17-day partial facility outage during April to complete scheduled equipment cleaning and other maintenance activities. Excluding the impact of the scheduled outage, throughput at PGR averaged 12,060 barrels per day, or 101% of design capacity.

Speaker #3: These pre-FID activities are expected to allow Tidewater Renewables to preserve the project schedule, maintain vendor and fabrication capacity availability, mature engineering deliverables, support regulatory advancement, and position the project for efficient execution post-FID.

Speaker #3: Tidewater Renewables expects to receive BCLCFS credits in the third and fourth quarters of 2026 as certain project milestones are achieved. Now, moving over to Tidewater Midstream.

Speaker #3: Throughput at the Prince George refinery averaged 10,032 barrels per day in the second quarter, due to a planned 17-day partial facility outage during April to complete scheduled equipment cleaning and other maintenance activities.

Speaker #3: Excluding the impact of the scheduled outage, throughput at PGR averaged 12,060 barrels per day, or 101% of design capacity. Market conditions for refined products were at historically high levels during the second quarter due to global energy supply disruptions and the reduction of global refining capacity, particularly in the Middle East and Russia.

Jeremy Baines: Market conditions for refined products were at historically high levels during Q2 due to global energy supply disruptions and the reduction of global refining capacity, particularly in the Middle East and Russia. As a result, the Prince George crack spread averaged $118 per barrel in Q2 2026, a 16% increase from Q1 2026. Looking ahead to the H2 of the year and beyond, the refining macro environment remains very constructive. Globally, there is approximately 10% of refining capacity offline, and most of that is due to damaged equipment that will take an extended time to repair or rebuild. At the same time, inventories of refined products are at historically low levels. As previously disclosed, Tidewater Midstream hedged approximately 50% of crack spread exposure between April and December 2026.

Speaker #3: As a result, the Prince George crack spread averaged $118 per barrel in the second quarter of 2026, a 16% increase from the first quarter of 2026.

Speaker #3: Looking ahead to the second half of the year and beyond, the refining macro environment remains very constructive. Globally, approximately 10% of refining capacity is offline, and most of that is due to damaged equipment that will take an extended time to repair or rebuild.

Speaker #3: At the same time, inventories of refined products are at historically low levels. As previously disclosed, Tidewater Midstream hedged approximately 50% of crack spread exposure between April and December 2026.

Speaker #3: Subsequent to the second quarter, during the second half of July, Tidewater Midstream entered into additional hedges for approximately 40% of its crack spread exposure for 2027 at fixed prices significantly above both mid-cycle pricing and 2026 realized hedge pricing.

Jeremy Baines: Subsequent to Q2, during the H2 of July, Tidewater Midstream entered into additional hedges for approximately 40% of its crack spread exposure for 2027 at fixed prices significantly above both mid-cycle pricing and 2026 realized hedge pricing. Tidewater's hedging program is designed to manage commodity price volatility and establish a baseline for the corporation's free cash flow. At the BRC gas processing, throughput averaged 105 million cubic feet per day during Q2 2026, an 8% decrease over the previous quarter. The lower throughput was primarily due to NGTL curtailments that limited producer volumes coming through the facility, which also decreased fractionation facility utilization to 76% in Q2, compared to 90% in Q1 2026. We continue to hold active discussions with prospective and existing customers as we focus on increasing utilization at the BRC.

Speaker #3: Tidewater's hedging program is designed to manage commodity price volatility and establish a baseline for the corporation's free cash flow. At the BRC gas processing facility, throughput averaged 105 million cubic feet per day during the second quarter of 2026.

Speaker #3: An 8% decrease over the previous quarter. The lower throughput was primarily due to NGTL curtailments that limited producer volumes coming through the facility. This also decreased fractionation facility utilization to 76% in the second quarter, compared to 90% in the first quarter of 2026.

Speaker #3: We continue to hold active discussions with prospective and existing customers as we focus on increasing utilization at the BRC. The Ram River gas plant remains temporarily curtailed, while sulfur handling operations continue to operate.

Jeremy Baines: The Ram River Gas Plant remains temporarily curtailed while sulfur handling operations continue to operate. Current market prices, especially for sulfur, are at levels that are highly economic for sour gas producers, and our intent is to restart the gas plant when production in the area resumes. Looking ahead, we continue to remain focused on driving operational excellence, enhancing margins, and executing on strategic initiatives, including maximizing utilization at the PGR and HDRD complex, strengthening commercial platforms and offtakes, advancing our SAF project while managing capital prudently, increasing our midstream facility utilizations at BRC and Ram River, progressing non-core asset sales to unlock liquidity, and we continue to advocate for a fair regulatory and trade environment. We believe these building blocks position us for both revenue growth and margin expansion during H2 2026. With that, I will now turn it to Ian for the financial review.

Speaker #3: Current market prices, especially for sulfur, are at levels that are highly economic for sour gas producers, and they intend to restart the gas plant when production in the area resumes.

Speaker #3: Looking ahead, we continue to remain focused on driving operational excellence, enhancing margins, and executing on strategic initiatives, including maximizing utilization at the PGR and HDRD complex, strengthening commercial platforms and offtakes, advancing our SAF project while managing capital prudently, increasing our Midstream facility utilizations at BRC and Ram River, progressing non-core asset sales to unlock liquidity, and we continue to advocate for a fair regulatory and trade environment.

Speaker #3: We believe these building blocks position us for both revenue growth and margin expansion during the second half of 2026. With that, I'll now turn it over to Ian for the financial review.

Speaker #2: Thanks, Jeremy. Tidewater Renewables generated record adjusted EBITDA of $56 million during the second quarter. This performance was underpinned by the HDRD complex running above nameplate capacity, which allowed us to capture the improving market pricing by leveraging our off-take contracts that are indexed to U.S. import pricing benchmarks.

Ian Quartly: Thanks, Jeremy. Tidewater Renewables generated record adjusted EBITDA of CAD 56 million during Q2. This performance was underpinned by the HDRD complex running above nameplate capacity, which allowed us to capture the improving market pricing by leveraging our offtake contracts that are indexed to US import parity pricing benchmarks. Included in the CAD 56 million of adjusted EBITDA is CAD 7.7 million of expected proceeds recognized during Q2 from the biofuels production incentive and CAD 7.7 million of adjusted EBITDA from the equity investment in the cattle company, primarily due to increase in cattle prices. Tidewater Midstream generated deconsolidated adjusted EBITDA of CAD 32.9 million in Q2 2026, an increase of CAD 7.3 million from Q1 2026. This performance was primarily driven by stronger crack spreads at the Prince George Refinery, which were partially offset by realized losses on the crack spread hedges.

Speaker #2: Included in the 56 million of adjusted EBITDA is 7.7 million of expected proceeds recognized during the second quarter from the biofuels production incentive, and 7.7 million of adjusted EBITDA from the equity investment in the cattle company primarily due to increasing cattle prices.

Speaker #2: Tidewater Midstream generated deconsolidated adjusted EBITDA of $32.9 million in the second quarter of 2026, an increase of $7.3 million from the first quarter of 2026.

Speaker #2: This performance was primarily driven by stronger crack spreads at the Prince George refinery which were partially offset by realized losses on the crack spread hedges.

Speaker #2: At the Tidewater Consolidated Group level, second quarter adjusted EBITDA of $88.9 million was a quarterly record, and the $39.2 million increase over the first quarter of 2026.

Ian Quartly: At the Tidewater consolidated group level, Q2 adjusted EBITDA of CAD 88.9 million was a quarterly record and a CAD 39.2 million increase over Q1 2026. Moving now to the credit facilities and leverage, where both Tidewater Renewables and Tidewater Midstream made significant progress towards our debt reduction and deleveraging targets during Q2. Consolidated net debt decreased by CAD 44.4 million during Q2 due to a CAD 30.9 million debt reduction at Tidewater Midstream, in addition to a CAD 13.5 million debt reduction at Tidewater Renewables. When combined with the higher adjusted EBITDA reported in Q2, this has resulted in significant reductions in each company's leverage. Tidewater Renewables reported a debt to adjusted EBITDA ratio of 1.47 times at 30 June, and Tidewater Midstream reported a debt to adjusted EBITDA ratio of 2.3 times.

Speaker #2: Moving now to the credit facilities and leverage, both Tidewater Renewables and Tidewater Midstream made significant progress toward our debt reduction and deleveraging targets during the second quarter.

Speaker #2: Consolidated net debt decreased by $44.4 million during the second quarter, due to a $30.9 million debt reduction at Tidewater Midstream, in addition to a $13.5 million debt reduction at Tidewater Renewables.

Speaker #2: When combined with the higher adjusted EBITDA reported in the second quarter, this has resulted in significant reductions in each company's leverage. Tidewater Renewables reported a debt-to-adjusted EBITDA ratio of 1.47 times at June 30, and Tidewater Midstream reported a debt-to-adjusted EBITDA ratio of 2.3 times.

Speaker #2: On a consolidated basis, the debt-to-adjusted EBITDA ratio of 1.7 times is now back within the target range of 1.2 to 2.5 times. With the release of the second quarter financial results this morning, we also announced increases to the full-year 2026 adjusted EBITDA guidance.

Ian Quartly: On a consolidated basis, the debt to adjusted EBITDA ratio of 1.7 times is now back within the target range of 1.2 to 2.5 times. With the release of the Q2 financial results this morning, we also announced increases to the full year 2026 adjusted EBITDA guidance. Consolidated adjusted EBITDA is now forecast to be between CAD 230 million and CAD 250 million, an increase of 20% over the midpoint of the previous guidance. Tidewater Renewables' adjusted EBITDA guidance was increased to between CAD 130 million and CAD 140 million, and Tidewater Midstream's deconsolidated adjusted EBITDA guidance was increased to between CAD 100 million and CAD 110 million. The primary drivers for the increased adjusted EBITDA guidance are higher facility utilization, sustained strength in forward market crack spreads, and improved pricing for renewable diesel and emission credits.

Speaker #2: Consolidated adjusted EBITDA is now forecast to be between $230 million and $250 million, an increase of 20% over the midpoint of the previous guidance.

Speaker #2: Tidewater Renewables' adjusted EBITDA guidance was increased to between $130 million and $140 million, and Tidewater Midstream's deconsolidated adjusted EBITDA guidance was increased to between $100 million and $110 million.

Speaker #2: The primary drivers for the increased adjusted EBITDA guidance are higher facility utilization, sustained strength in forward market crack spreads, and improved pricing for renewable diesel and emission credits.

Speaker #2: Forecasted 2026 capital expenditures remain unchanged at $2 to $3 million for Tidewater Renewables and $20 to $25 million for Tidewater Consolidated. This capital guidance includes both growth and maintenance capital, and is net of the BCLCFS credits expected to be received under the executed initiative agreements for capital projects.

Ian Quartly: Forecasted 2026 capital expenditures remain unchanged at CAD 2 to 3 million for Tidewater Renewables and CAD 20 to 25 million for Tidewater consolidated. This capital guidance includes both growth and maintenance capital and is net of the BCLCFS credits expected to be received under the executed initiative agreements for capital projects. By maintaining a disciplined capital program, the resulting free cash flow will be primarily directed towards debt reduction. That concludes our prepared remarks. Nina, please open the line for questions.

Speaker #2: By maintaining a disciplined capital program, the resulting free cash flow will be primarily directed towards debt reduction. That concludes our prepared remarks. Ian, please open the line for questions.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star, followed by one on your telephone keypad.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the 1 on your telephone keypad. You will hear a prompt that your hand has been raised. Should you wish to cancel your request, please press star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. 1 moment please for your first question. Thank you. Your first question comes from the line of Rob Houk from Scotiabank. Please go ahead.

Speaker #1: You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star, followed by 2.

Speaker #1: If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Thank you, and your first question, counselor, on the line of Rob Hope from Scotiabank. Please go ahead.

Speaker #3: Morning, everyone. First question is on the SAF project. So, as we take a look at a Q4 potential sanctioning of a project, can you update us with any, you know, we'll call it key milestones we should be looking for, as well as sizing and cost, and potential in-service date of the asset?

Rob Houk: Morning, everyone. First question is on the SAF project. As we take a look at a Q4 potential sanctioning of the project, can you update us with any, we will call it key milestones we should be looking for, as well as sizing and cost and potential in-service date of the asset?

Rob Hope: Morning, everyone. First question is on the SAF project. As we take a look at a Q4 potential sanctioning of the project, can you update us with any, we will call it key milestones we should be looking for, as well as sizing and cost and potential in-service date of the asset?

Speaker #4: Yeah, great. Thanks for the question, Rob. So, milestones—we've been very consistent on this. We need the regulatory environment to support the project. There are really two pieces to that.

Ian Quartly: Yeah. Great. Thanks for the question, Rob. Milestones, we have been very consistent on this. We need the regulatory environment to support the project. There is really 2 pieces to that. We are waiting for the targeted amendments that Environment and Climate Change Canada is looking at around the CFR and how they treat SAF there. But we are expecting to see those come out sometime here, I am guessing in the Q3. The second piece would be some other regulatory programs around support for a SAF industry in Canada that we are watching for. With those, we would go ahead and FID the project later this year. Capital cost is about a CAD 1.2 billion build-out, is what we are at. We have got a very detailed and solid Class 3 FEED on that.

Jeremy Baines: Yeah. Great. Thanks for the question, Rob. Milestones, we have been very consistent on this. We need the regulatory environment to support the project. There is really 2 pieces to that. We are waiting for the targeted amendments that Environment and Climate Change Canada is looking at around the CFR and how they treat SAF there. But we are expecting to see those come out sometime here, I am guessing in the Q3. The second piece would be some other regulatory programs around support for a SAF industry in Canada that we are watching for. With those, we would go ahead and FID the project later this year. Capital cost is about a CAD 1.2 billion build-out, is what we are at. We have got a very detailed and solid Class 3 FEED on that.

Speaker #4: We're waiting for the targeted amendments that ECCC is looking at around the CFR and how they treat SAF there, but we're expecting to see those come out sometime here—I'm guessing in the third quarter. Then the second piece would be some other regulatory programs around support for a SAF industry in Canada that we're watching for.

Speaker #4: With those, we would go ahead and FID the project later this year. Capital cost is about a $1.2 billion build-out, is what we're at.

Speaker #4: We've got a very detailed and solid Class 3 feed on that.

Speaker #3: Appreciate that. And then maybe moving over to the hedging program, can you update us on how you're thinking about the level of hedging that is appropriate for Tidewater?

Rob Houk: Appreciate that. Then maybe moving over to the hedging program. Can you update us on how you are thinking about the level of hedging that is appropriate for Tidewater Renewables? It does appear that 50% is kind of the number for 2026. You have already got 40% for 2027. Could we see potentially you layering on above that, depending on what the forward market looks like? Or is that kind of 50-ish percent open the sweet spot for the company?

Rob Hope: Appreciate that. Then maybe moving over to the hedging program. Can you update us on how you are thinking about the level of hedging that is appropriate for Tidewater Renewables? It does appear that 50% is kind of the number for 2026. You have already got 40% for 2027. Could we see potentially you layering on above that, depending on what the forward market looks like? Or is that kind of 50-ish percent open the sweet spot for the company?

Speaker #3: So, you know, it does appear that 50% is kind of the number for 2026. You've already got 40% for 2027. You know, is could we see potentially you know, you layering on above that, depending on what the forward market looks like, or you know, is that kind of 50-ish percent open you know, the sweet spot for the company?

Speaker #4: Yeah, that's a good question. We've been sort of monitoring the situation, and obviously we're in a fairly attractive crack spread environment. We wanted to put a baseline of cash flow under the business for the year to ensure we met some of our debt reduction goals, and so that led us to the 50% hedge program in '26.

Ian Quartly: Yeah, that is a good question. We have been monitoring the situation and obviously, we are in a fairly attractive crack spread environment. We wanted to put a baseline of cash flow under the business for the year to ensure we met some of our debt reduction goals. That led us to the 50% hedge program in 2026. We have started layering in at 2027.

Jeremy Baines: Yeah, that is a good question. We have been monitoring the situation and obviously, we are in a fairly attractive crack spread environment. We wanted to put a baseline of cash flow under the business for the year to ensure we met some of our debt reduction goals. That led us to the 50% hedge program in 2026. We have started layering in at 2027.

Speaker #4: We've started layering in at '27. We like where the forward cracks are in '27, so putting some certainty under those is, we think, prudent.

Jeremy Baines: We like where the forward cracks are in 2027, so putting some certainty under those is, we think, prudent. I do not see us, maybe opportunistically in certain points, if we could go above 50%, but 50% seems to be the right spot for us to just make sure we take some of the volatility out of revenues.

Speaker #4: You know, I don't see us—maybe opportunistically at certain points—if we could go above 50, but 50 seems to be the right sort of spot for us to just make sure we, you know, take some of the volatility out of revenues.

Speaker #3: Thank you.

Rob Houk: Thank you.

Rob Hope: Thank you.

Speaker #1: Thank you. Once again, should you have a question, please press star, followed by the one on your telephone keypad. Your next question, counselor on the line of Maurice Choi from RBC Capital Markets, please go ahead.

Operator: Thank you. Once again, should you have a question, please press star followed by the 1 on your telephone keypad. Your next question comes from the line of Maurice Choy from RBC Capital Markets. Please go ahead.

Speaker #3: Thanks.

Maurice Choy: Thanks. Morning, everyone. Just wanted to talk about funding for a moment. The net debt to EBITDA clearly has come down very nicely into target ranges. I guess in the past, you've directed a lot of attention to raising new capital through, I guess, non-core asset sales, for example. When you think about your funding plan, and how much cash you're generating, is there still a need to go about some of those initiatives? Or should we think about this balance sheet meant to support initiatives like the SAF, for example, or other growth projects?

Speaker #5: Good morning, everyone. I just want to talk about funding for a moment. The net debt to EBITDA has clearly come down very nicely into target ranges, and in the past, you've directed a lot of attention to raising new capital through, for example, non-core asset sales.

Speaker #5: You know, when you think about your funding plan and how much cash you're generating, like, is there still a need to you know, go about some of those initiatives, or should we think about you know, this balance sheet meant to support initiatives like the SAF, for example, or other growth projects?

Speaker #4: Yeah, no, good question. Thank you, Maurice. So, two things. We will continue to pursue the non-core asset sales that we've talked about in the past, and we're on track with the guidance we've given the market there.

Jeremy Baines: Yeah. No, good question. Thank you, Maurice. So two things. We will continue to pursue the non-core asset sales that we've talked about in the past, and we're on track to the guidance we've given the market there. We have done a deep review over the last couple of years of all of our assets, and any assets that aren't generating an appropriate return and don't fit our strategy, we are actively working to core up and sell those assets. So we will continue on that front. It's really a matter more of do these assets fit our strategy? But most importantly, do they generate an appropriate return? The assets we're selling, some of them are negative, period, like don't generate any return, but do have some value to others. So we're continuing on that path and on track.

Speaker #4: We have done a deep review over the last couple years of all of our assets, and any assets that aren't generating an appropriate return and don't fit our strategy, we are actively working to core up and sell those assets.

Speaker #4: So, we will continue on that front. It's really a matter more of do these assets fit our strategy, but most importantly, do they generate an appropriate return, and so the assets we're selling, some of them are negative period, like, don't generate any return.

Speaker #4: But ours do have some value to others, and so we're continuing on that path and on track. As far as funding going forward, yes, obviously we've been very careful in managing our capital programs over the last couple of years.

Jeremy Baines: As far as funding going forward, yes, obviously, we've been very careful in managing our capital programs over the last couple of years. I think the team has done a very good job in implementing a new risk-based framework, ensuring that every dollar we spend generates an appropriate return or an appropriate reduction in risk. So we'll continue to do that. The big item I think that you're probably thinking about is our SAF project. Assuming the regulatory environment gets to the spot that we need for us to go ahead and FID that project, we see that the ability to finance and fund that program, we expect to get the same level of support for that project as we did on the RD plant on a relative basis.

Speaker #4: I think the team has done a very good job in implementing a new risk-based framework, ensuring that every dollar we spend generates an appropriate return or an appropriate reduction in risk, so we'll continue to do that.

Speaker #4: The big item I think that you're probably thinking about is our SAF project, and you know, we do you know, assuming the regulatory environment gets to the spot that we would like that we need for us to go ahead and FID that project, we see that you know, the ability to finance and fund that program, we expect to get the same level of support for that project as we did on the RD plant on a relative basis.

Speaker #4: We do see that, over a three-year build period for that project, we can contribute funds out of cash flow from operations to fund that build.

Jeremy Baines: We do see that an ability to, over a three-year build period for that project, contribute funds out of cash flow from operations to fund that build. As the project goes here, we feel pretty comfortable with our ability to do that. We do have other alternatives. We have a First Nations partner who is taking a look at a small equity stake in that project, who is very supportive of the project. There are others who have expressed an interest in partnering with us, so we have that option as well. We feel like we are in good shape to meet our key funding programs. Obviously, we will always continue to treat our capital and our spending there, ensuring that we are getting an appropriate risk-adjusted return on it.

Speaker #4: You know, as the project goes here, we feel pretty comfortable with our ability to do that. We do have other alternatives. We've got a First Nations partner who's taking a look at a small equity stake in that project, who's very supportive of the project.

Speaker #4: There are others who've expressed an interest in partnering with us, so we have that option as well. So, we feel like we're in good shape.

Speaker #4: To meet our key funding programs, obviously we will always continue to treat our capital and our spending there, ensuring that we're getting an appropriate risk-adjusted return on it.

Speaker #5: Thanks. And Maurice, just a quick clarification on that part—you mentioned a three-year build. You can probably fund that out of your own operating cash flows?

Maurice Choy: Thanks. Maybe just a quick clarification on that part. You mentioned a three-year build. You can probably fund that out of your own operating cash flows. So it sounds like you do not necessarily need other funding partners, but you probably welcome the collaboration and reconciliation bit. Is that fair?

Speaker #5: So, it sounds like you don't necessarily need other funding partners, but you probably welcome the collaboration and reconciliation bit. Is that fair?

Speaker #4: Yeah, like, right now, obviously we're working with a potential First Nations partner. We would like them to join the project if they so choose to invest.

Jeremy Baines: Yeah. Right now, obviously, we are working with a potential First Nations partner. We would like them to join the project if they so choose to invest. Otherwise, we believe through the Part 3 agreements and cash flow from operations, we have the ability to do this whole SAF project on our own. It is a three-year build-out, online 2030, and will have a meaningful impact on our cash flows at that time. So that is the base case, but we do have a lot of other alternatives available to us to consider as we move forward on that project.

Speaker #4: Otherwise, we believe, through the Part III agreements and cash flow from operations, we have the ability to do this whole SAF project on our own.

Speaker #4: It's a three-year build-out online 2030, and we'll have a meaningful impact on our cash flows at that time. So, that's the base case, but we do have a lot of other alternatives available to us to consider as we move forward on that project.

Speaker #5: Understood. And maybe just thinking more holistically about the Tidewater complex, you know, obviously when Tidewater Renewables was first created, it was under a very different environment and different market expectations.

Maurice Choy: Understood. Maybe just thinking more holistically of the Tidewater complex. Obviously when Tidewater Renewables was first created, it was under a very different environment, different market expectations, different outlook. We are where we are today, and I just wonder, Maurice, if you could just reset our views as to why you still think this is the right construct today. Perhaps what variables could change for you to reconsider the structure itself?

Speaker #5: Different outlook. And we are where we are today, and I just wonder whether you could, you know, reset our views as to why you still think this is the right construct today. Perhaps, what variables could change for you to reconsider the structure itself?

Speaker #4: So, when we look at the business—and I think I've been saying this from day one—we see it as a fuels business and a midstream business.

Jeremy Baines: When we look at the business, I think I have been saying this from day one, we see it as a fuels business and a midstream business. We have a great team that has very good experience across both of those lines of business, both building, owning, operating. We continue to see constructive environments around both of those business streams. We see a very supportive regulatory environment supporting renewable fuels. We have seen global events that are very supportive of our conventional fuels refining business, and we continue to see the build-out and development of a great resource in Western Canada that supports the demand for our midstream services. We are very comfortable with our businesses. We have two companies. We have generated significant efficiencies operating them. We continue to work to generate cash flow for all our shareholders and optimize the businesses.

Speaker #4: We have a great team that has very good experience across both of those lines of business, both building, owning, and operating. We continue to see constructive environments around both of those business streams.

Speaker #4: We see a very supportive regulatory environment supporting renewable fuels. We've seen global events that are very supportive of our conventional fuels refining business, and we continue to see the build-out and development of a great resource in Western Canada that supports the demand for our midstream services.

Speaker #4: So, we're very comfortable with our businesses. We have two companies, we have generated significant efficiencies operating them, and we continue to work to generate cash flow for all our shareholders and optimize the businesses.

Speaker #5: Understood. Thank you.

Maurice Choy: Understood. Thank you.

Speaker #2: Thank you once again. Should you have a question, please press star followed by one on your telephone keypad. There are no further questions at this time.

Operator: Thank you. Once again, should you have a question, please press star followed by the one on your telephone keypad. There are no further questions at this time. I will now hand the call back to Mr. Ian Quartly for any closing remarks.

Speaker #2: I will now hand the call back to Mr. Ian Quartey for any closing remarks.

Speaker #1: Thanks, everyone, for joining the call. The team's available to address any of your outstanding items with our contact information in the bottom of each company's press release.

Jeremy Baines: Thanks, everyone, for joining the call. The team is available to address any of your outstanding items with our contact information in the bottom of each company's press release. Thank you.

Ian Quartly: Thanks, everyone, for joining the call. The team is available to address any of your outstanding items with our contact information in the bottom of each company's press release. Thank you.

Speaker #1: Thank you.

Operator: This concludes today's call. Thank you for participating. You may all disconnect.