South Bow's Third-Quarter Results & 2026 Projections
CALGARY, Alberta, Nov. 13, 2025 -- South Bow Corp. (TSX: SOBO & NYSE: SOBO) has disclosed its financial and operational results for the third quarter of 2025 while providing insights about its outlook for 2026. All figures are presented in U.S. dollars unless noted otherwise.
Performance Highlights
Operational and Safety Metrics
- Average throughput of approximately 584,000 barrels per day (bbl/d) was recorded on the Keystone Pipeline during Q3 2025. The U.S. Gulf Coast segment saw an approximate throughput of 703,000 bbl/d in the same period.
- The first nine months of 2025 showed a throughput average of around 580,000 bbl/d on the Keystone Pipeline, with a similar trend on the U.S. Gulf Coast segment.
- The Blackrod Connection Project reached mechanical completion and the 25-km natural gas lateral is set to commence commercial service in early 2026, projecting increased cash flows in the latter part of 2026 and into 2027.
- Remedial actions related to the Milepost 171 incident continue, including the completion of multiple in-line inspections and various integrity digs to ensure pipeline integrity.
Financial Overview
- South Bow delivered stable financial results in Q3 2025, recording revenue of $461 million and a net income of $93 million, translating to $0.45 per share.
- The normalized earnings before interest, tax, depreciation, and amortization (EBITDA) were reported at $254 million, reflecting a 2% increase from Q2 2025, attributed to successful maintenance capital expenditures on the Keystone Pipeline System.
- The company achieved a significant rise in distributable cash flow, amounting to $236 million, primarily drove by recent changes in U.S. tax legislation and strategic tax efficiencies achieved by South Bow.
- Total long-term debt remained stable at $5.8 billion, and the net debt stood at $4.8 billion, with no change to the net debt-to-normalized EBITDA ratio, which remained at 4.6 times.
- On October 3, 2025, the company extended its C$2 billion revolving credit facility until 2029.
Enhancements for Shareholders
- In Q3 2025, South Bow declared total dividends of $104 million or $0.50 per share, with the board approving a quarterly dividend to be paid on January 15, 2026.
- These dividends will be classified as eligible dividends for Canadian tax purposes, solidifying the company’s commitment to returning value to its shareholders.
Corporate Developments and Future Outlook
Transition Updates
- South Bow plans to finalize its transition to a new supervisory control and data acquisition (SCADA) system as it exits the Transition Services Agreement.
- In early October, the company resolved ongoing variable toll disputes with various regulatory bodies, reaching its maximum indemnity liability of $22 million.
- The Board has ratified the 2026 budget aimed at bolstering South Bow's financial health while exploring opportunities for both organic and inorganic growth.
Forecast for 2025
- South Bow is re-confirming its guidance for 2025, projecting a normalized EBITDA with anticipated adjustments for the marketing segment to be approximately $30 million lower compared to the previous year, resulting in distributable cash flow expectations of $700 million for 2025.
- The effective tax rate is now forecasted to be between 20% to 21%, shaped by ongoing tax optimization strategies.
- Much of the guidance is underpinned by the company’s high-quality contracted cash flows and structural demand.
Projected Guidance for 2026
- Looking ahead to 2026, normalized EBITDA is projected at around $1.03 billion with operational steadiness supported by a 90% security commitment in arrangements.
- The company anticipates a modest downturn in normalized EBITDA for the Keystone Pipeline System segment due to planned expenditures focused on maintenance capital.
- Moreover, cash flows from the Blackrod Connection Project should gradually ramp up through 2026 and 2027.
- The effective tax rate in 2026 is estimated to be in the 22%-23% range, with a further reduction in the net debt-to-normalized EBITDA ratio expected as South Bow continues to strengthen its financial structure.
Frequently Asked Questions
What were South Bow's key financial results for Q3 2025?
South Bow reported a revenue of $461 million and a net income of $93 million, equating to $0.45 per share.
How does South Bow approach shareholder returns?
South Bow declared dividends totaling $104 million or $0.50 per share during Q3 2025, showing a commitment to returning value to shareholders.
What is the company’s guidance for 2026?
Normalized EBITDA is projected to be approximately $1.03 billion, with 90% secured through contracted arrangements.
What initiatives is South Bow undertaking following the Milepost 171 incident?
The company is pursuing remedial actions, including inspections and integrity digs, to uphold pipeline safety and reliability.
How is South Bow preparing for future financial needs?
The company has secured a revolving credit facility and maintains a plan focused on enhancing its investment-grade financial position and exploring growth opportunities.
