Key Highlights

● Second-quarter normalised EBITDA rose to $280 million, up 9 per cent from the first quarter.

● Distributable cash flow was $175 million, up 4 per cent from the prior quarter.

● Net debt to normalised EBITDA improved to 4.4 times from 4.7 times.

● The board declared a quarterly dividend of $0.50 per share, covered by cash flow.

South Bow Corporation (NYSE:SOBO) operates crude oil pipelines, led by the Keystone system that carries Canadian crude to US refining markets, and is led by chief executive Bevin Wirzba. Its common shares are listed on both the Toronto Stock Exchange and the New York Stock Exchange under the symbol SOBO, according to the company's second-quarter release of 5 August 2026. The company reports in US dollars, and its dividend is declared in US dollars, so investors using either listing are looking at the same dollar-denominated payment, although Canadian-dollar conversion will vary with exchange rates. The company's own guidance assumes C$1.39 per US dollar for 2026.

Second-quarter earnings and cash flow

For the second quarter of 2026, South Bow reported net income of $134m, or $0.64 per share, compared with $96m in the second quarter of 2025. Normalised EBITDA, the company's preferred earnings measure, was $280m, up 9 per cent from $257m in the first quarter and above the $250m recorded a year earlier. Distributable cash flow was $175m, up 4 per cent from $168m in the previous quarter. For the first six months, net income was $211m, normalised EBITDA was $537m and distributable cash flow was $343m. Keystone throughput averaged about 596,000 barrels per day with a 93 per cent operating factor, while the US Gulf Coast system moved about 800,000 barrels per day. Remediation and in-line inspections following the Milepost 171 incident were described as ongoing.

Guidance, leverage and the dividend

Management guides to 2026 normalised EBITDA of $1,040m and distributable cash flow of $665m, with a tolerance of around two per cent on cash flow. It also expects third-quarter normalised EBITDA to be about 10 per cent lower than the second quarter's $280m. Net debt was $4.6bn at 30 June, down from $4.7bn at the end of March, and net debt to normalised EBITDA improved to 4.4 times from 4.7 times. The company expects that ratio to decline modestly through the year. On dividends, the board declared $0.50 per share, payable on 15 October 2026 to holders of record on 29 September 2026, and designated as an eligible dividend for Canadian tax purposes. Paid dividends in the second quarter totalled $104m. Annualised, $0.50 a quarter equals $2.00 per share, and the quarter's distributable cash flow of $175m covered the $104m paid, though the cover on any single quarter says little about the future. Growth spending of about $80m is planned for 2026.

Growth Projects Still Await a Final Decision

South Bow's Keystone system kept moving at a 93 per cent operating factor in the quarter, and the company is working to bring leverage down from its still-elevated 4.4 times level. Its two biggest growth options, the Prairie Connector and the Liberty Bridge Pipeline, carry binding customer commitments but remain contingent on regulatory, commercial and financing conditions, with a final investment decision targeted for mid-2027, so neither is yet reflected in guidance.