Joel Macleod - Tidewater Midstream & Tidewater Renewables

In this episode of the Canadian Equities podcast Joel Macleod, Chairman & CEO of Tidewater Midstream & Tidewater Renewables, joins Robert Cooper to discuss entrepreneurs, energy infrastructure, deal making and energy transition. For the full length version of the Canadian Equities podcast connect with us at acumencapital.com/podcast.  

Transcript

Moderator 0:00

Welcome to Canadian Equities, a short biweekly podcast series, where we speak with top business leaders and hear their perspectives on the industries in which they operate for the full length version. Find our link in the podcast notes or connect with us at acumencapital.com I'm your host Robert Cooper today I'm joined by Tidewater midstream and infrastructure, founder and CEO. Joel McCloud. Tidewater is a Canadian integrated midstream and infrastructure company that has interest in refining, natural gas processing, corral storage, and transportation, rail logistics, and gas storage. More recently, Tidewater spun out a new business, Tidewater renewables that is involved in the energy trends. Today we will be discussing entrepreneurs, energy infrastructure. Deal-making in the energy transition. Joel, thanks for spending time with us today.

Joel MacLeod 0:47

Well, thanks Rob. And thanks to the acumen team for all your support,

Moderator 0:51

Joe Smith, prior to starting predator and then Tidewater, what made you want to make the jump from working for someone so to speak, to working for yourself as not.

Joel MacLeod 1:02

Well, that's a great question, Rob. I would say TMTM has everything, but on, on the early days, um, even the first oil and gas acquisition I did in predator oil,$15 million transaction, personal guarantee, I would say just believing, believing in yourself and then having support from those around you. And then obviously as we get to the size of a Tidewater. Your team is, is everything you can no longer rely on yourself to, to drive the, the majority of the value. So team, uh, continues to be more and more in a pardon than just a, always a big thank you to all my team members,

Moderator 1:38

Joel, for those who may not know Tidewater, what exactly do you.

Joel MacLeod 1:42

So Tidewater midstream. Um, initially we had a crude oil non-compete. So when we started six, seven years ago, we were very focused on NGLs. Propane in particular, propane was around zero, um, and NGLs, and then into gas storage gas. But if we were to simplify what we do, our goal is to improve producers, net backs, or customers being producers, their gas molecules, or a gas storage. Um, Egress options, but also net back improvement options, propane, uh, leveraging our railcars, our pipelines, where we connect in even our fractionation. Razzle river to deliver, improve net backs for those customers on their propane. And now with the refinery as well in, in BC tied into the BC Montney to be able to offer diesel based, um, pricing or work towards diesel based pricing, we have gasoline, uh, and just having options to, to give to our customers to help improve their profit margins. Or as we refer to in the oil and gas industry, they're going to have back.

Moderator 2:46

Tidewater renewables is perfectly positioned for the energy transition. How do you see that? So-called transition playing out over the coming.

Joel MacLeod 2:55

Yeah, transition. I think we're all, anyone who says they're an expert, I'd say we're all, we're all learning. We definitely feel we're a leader in clean fuels within Tidewater renewables. We're very fortunate to have one of two refineries in BC. So ourselves and Parkland have, have the two refineries in BC. And those of you that aren't Canadian too, just background would be BC's essentially the California of Canada. So definitely the greenest province have the highest diesel prices in north America. Gasoline as well and have LCFS credits in DC that would trade significantly higher that than California. Um, that's mainly due to us not having national rent and DTC programs, but just trying to give the listeners a sense. Of the environment in British Columbia. So we're very fortunate to have one of two refineries and very fortunate to have the BC government support. The BC government supported our first project, 225 million of capital with a hundred million of, of grant support. Uh, so Rob we'd like to work towards being a leader in clean fuels to see that government support we've seen in VC result. We've also seen support in Alberta and also from the federal government. And we will have. What I believe is the first renewable diesel facility online here in Q1 of 2023, our$225 million project, and then are working hard to leverage our knowledge of the natural gas industry, our relationships with the agriculture industry on, on projects, like our engine. And feedstocks for our renewable diesel project. But I would say to be a leader in clean fuels in Canada and reduce the carbon intensity of fuels starting with our renewable diesel project. But don't be surprised if that involves into R and G hydrogen. We have hydrogen production. With our renewable diesel project, we'll also have a large, uh, renewable hydrogen plant with excess hydrogen, low carbon intensity, hydrogen, um, our gas storage asset that resides in Tidewater renewables, and even, even our carbon capture assets that sit in, uh, Tidewater midstream today. Uh, I feel we're positioned as well as anyone to, to bring low carbon intensity fuels to the market and potentially to, to the global.

Moderator 5:05

You've completed a lot of transactions over your career in your mind. And beyond price and asset quality and those sorts of motherhood statements around M and a what makes for a successful transaction. And, and I guess here, I'm thinking of an integration plan or realizing cost synergies or things of that.

Joel MacLeod 5:25

Every every acquisition is, is a little different. I think for us, Rob, one, one thing, if it boils down to, especially on the larger acquisitions would be people. I think the prince George acquisition of the refinery would be a great example. Um, we have, uh, I don't think we've changed. Uh, less than 1% of the people who have changed. So to have an incredible team on the ground that knows refining better than I ever will to have a refinery that, that runtimes our top desk style profit margins or. Top top Cortel for sure. And maybe even towards top decile. So people are, are so important to us. Um, and, and having them believe in the story, being there to support them. And I think even if you looked at a prince George, I think we've had record refined product sales and COVID years, and we continue to debottleneck that refinery and, and improve free cashflow generation. But the biggest contributor to that is not us or me and head office. It's our team. On the ground. We definitely have ideas, have a lot of crazy ideas. Um, but the execution, the day-to-day operation, that's our field team and really appreciate all that they do.

Moderator 6:38

What's been the most difficult challenge you've had to deal with as an entrepreneur.

Joel MacLeod 6:45

I would say, Rob, it probably is. These last two years. Most of my experience has been in smaller companies. Although prime west was a large entity that sold for 4 billion, but the companies I ran have been smaller on a 10, 20, 30, 40 people. So for us to now have 450 staff, um, I would say that. Uh, that has been for me, our biggest struggle. We care a lot about our people and someone say, Joel, you care too much about our people, but they're on our team. And they're part of our Tidewater family. And I would just say seeing the mental health of 450 people most would say, statistics are going to show that you will have one or 2%, especially through COVID. And it's the first time in my career, Rob, that I've seen that. Maybe even burnout but stress. Uh, and for me that that's tough. If there's a transaction or a deal or a commercial transaction can always find ways to work through or let her go. But when you have your own team members struggling with COVID. For me, that's not something I can just let, let, let pass by. So it feels as though we're we're through the majority, definitely of the COVID pain energy industry is picking up. We've spun out our renewables, an entity with a lot of interests. So there's a lot of excitement in the office. Morales definitely heading in the right direction. And it feels like the majority is behind us, but even I have to learn, uh, as. 400 plus people that, that we're going to, I think you'll continue to see mental health. And then I, I have to learn, our team has to learn how, how to deal with that and really be for me, it's just being there to talk to those team members and hear them and listen. Um, but I, I think a lot of learning on that front for myself and, and more than happy to support our team members is we wouldn't be here without,

Moderator 8:30

Joel. Was there someone in your career that you looked up to, or was your mentor and that you modeled yourself yourself after in business, or alternatively gave you a lot of guidance as you went through your career that you want to tell.

Joel MacLeod 8:43

I think there was actually quite a few, but the one that that would stand out would be Mr. Don garner. Um, I was probably, I don't know, 25 or so when I received my CA slash CPA, uh, servings ox. Um, working at prime, less energy trusts were gone was the CEO, um, that entity to attack a for, for 4 billion and Dawn semiretired. And, and I went to him, uh, in my late twenties to start to go to land sales, acquire land, uh, and even how he conducted himself as, as a Saskatchewan farm boy, just being open and honest and direct with my back. As well being, uh, I'd, I'd say coming from, um, definitely no connections to oil and gas farming, uh, hardworking dishwasher. Um, one, my first job, just, just having someone I could relate to. It was very, very successful and he messaged to me just be yourself, you'll be open and honest work hard, and I never feel I'm the smartest. In the room, but happy to work as hard as, as anyone. So I'd say Dawn's mentorship has been huge. And even in those first transactions, Rob, uh, he was always an ambassador and a supporter and having his name associated with those first$15 million personal guarantee type of opportunities were huge for me. So always have a big thanks and lots of time for Don.

Moderator 10:04

Thanks for joining us today on Canadian.

Joel MacLeod 10:07

Thanks for having us, probably. We really appreciate it and appreciate all of acumen.

Moderator 10:14

Note that this podcast is not making an investment recommendation on any companies discussed. We welcome your comments on today's episode or any other episode. Connect with us at Acumen Capital dot com.