South Bow Q2 Earnings Call Highlights

South Bow raised its 2026 outlook, targeting normalized EBITDA of CAD 1.04 billion and distributable cash flow of CAD 665 million, supported by strong U.S. Gulf Coast Keystone demand. Net leverage improved to 4.4 times, and the board approved a CAD 0.50 quarterly dividend. The company secured 465,000 barrels per day of 20-year commitments through the Prairie Connector open season, enabling development to proceed toward a targeted mid-2027 final investment decision. The jointly advanced Liberty Bridge Project is on the same timetable, with both projects potentially entering service by late 2028. South Bow continues remediation following the Milepost 171 incident, with pressure restrictions expected to be lifted in phases through late 2026 and 2027. Management also sees Western Canadian production eventually outpacing available pipeline capacity and believes Prairie Connector could expand beyond 800,000 barrels per day. South Bow NYSE: SOBO said its second-quarter results reflected strong operating performance and elevated demand on the U.S. Gulf Coast portion of its Keystone Pipeline System, prompting the company to raise its 2026 financial outlook while advancing major expansion projects. President and Chief Executive Officer Bevin Wirzba said the company’s defining achievement in the first half was a successful open season that secured 465,000 barrels per day of 20-year customer commitments from a broad group of producers. The commitments support the proposed Prairie Connector Project and provide South Bow with a basis to advance toward a targeted final investment decision in mid-2027. "This demonstrates the value of our corridor, the strength of our market position, and the continued need for additional egress capacity to support growing Western Canadian crude oil production," Wirzba said. Senior Vice-President and Chief Financial Officer Van Dafoe said strong operations and demand for capacity on the U.S. Gulf Coast segment produced solid second-quarter results. South Bow raised its full-year normalized EBITDA guidance to CAD 1.04 billion, with a range of 2% above and 1% below that figure. It also lifted projected distributable cash flow to CAD 665 million, within a range of 2%. The company’s leverage ratio improved to 4.4 times net debt to normalized EBITDA at the end of the second quarter, Dafoe said, marking continued progress toward its balance-sheet objectives. South Bow also increased its growth capital outlook for 2026 to support development work on Prairie Connector and the Liberty Bridge Project. Dafoe said the spending is intended to advance work needed for an eventual final investment decision and remains subject to the company’s capital-allocation framework. The board approved a quarterly dividend of CAD 0.50 per share. During the question-and-answer session, Wirzba said South Bow’s first-half performance exceeded its internal budget expectations due in part to macroeconomic volatility that created additional opportunities. However, he said management expects the second half to be more modest than the first half, citing low inventories at Hardisty and Cushing and the broader market environment. Senior Vice-President and Chief Operating Officer Richard Prior said South Bow continued remedial work associated with the Milepost 171 incident. Information gathered through that work is being incorporated into the company’s integrity-management programs. South Bow expects pressure restrictions to be lifted in phases through the end of 2026 and into 2027 as the remediation work progresses, Prior said.