Highlights
Safety and operational performance
Recorded average throughput of approximately 584,000 barrels per day (bbl/d) on the Keystone Pipeline in the third quarter of 2025, and approximately 703,000 bbl/d on the U.S. Gulf Coast segment of the Keystone Pipeline System.
Throughput on the Keystone Pipeline and the U.S. Gulf Coast segment of the Keystone Pipeline System averaged approximately 580,000 bbl/d and approximately 730,000 bbl/d, respectively, during the first nine months of 2025.
Achieved mechanical completion for the Blackrod Connection Project and placed the 25-km natural gas lateral into commercial service. Final facility activities are currently underway, and the project remains on schedule to be placed into service in early 2026. Associated cash flows are expected to increase throughout the second half of 2026 and into 2027.
Continued to advance remedial actions relating to the incident that occurred at Milepost 171 (MP-171) of the Keystone Pipeline, including completing six in-line inspections and 37 integrity digs to date. See "Milepost 171 incident" of this news release for additional details.
Financial performance
Delivered stable financial results in the third quarter of 2025 due to the Company's strong commercial underpinnings.
Generated revenue of $461 million and net income of $93 million ($0.45/share).
Recorded normalized earnings before interest, income taxes, depreciation, and amortization (normalized EBITDA)1 of $254 million, representing a 2% increase from the second quarter of 2025 due to higher contributions from maintenance capital expenditures for system integrity projects on the Keystone Pipeline System, offset by expected losses in the Marketing segment.
Reported distributable cash flow1 2 of $236 million, representing an increase of $69 million from the second quarter of 2025, driven primarily by changes in U.S. tax legislation and South Bow's tax optimization efforts.
Maintained total long-term debt and net debt1 outstanding of $5.8 billion and $4.8 billion, respectively, during the third quarter of 2025. The Company's net debt-to-normalized EBITDA ratio1 was unchanged at 4.6 times as at Sept. 30, 2025.
On Oct. 3, 2025, extended the tenor of the Company's C$2 billion revolving credit facility by one year, maturing on Oct. 3, 2029.
Returns to shareholders
Declared dividends totalling $104 million or $0.50/share to shareholders during the third quarter of 2025.
South Bow's board of directors (the Board) approved a quarterly dividend of $0.50/share, payable on Jan. 15, 2026, to shareholders of record at the close of business on Dec. 31, 2025. The dividends will be designated as eligible dividends for Canadian income tax purposes.
Corporate updates
South Bow expects to complete the transition to its new supervisory control and data acquisition (SCADA) system in the fourth quarter of 2025, the final significant item in exiting the Transition Services Agreement (TSA) with TC Energy Corporation (TC Energy) as it relates to the spinoff transaction (the Spinoff).
In early October, South Bow and associated parties mutually agreed to withdraw all complaints and protests relating to the variable toll disputes filed with the Canada Energy Regulator, the Federal Energy Regulatory Commission, the Court of King's Bench of Alberta, and the United States Court of Appeals for the District of Columbia Circuit.
As part of the Separation Agreement between South Bow and TC Energy, TC Energy indemnified South Bow for matters that existed prior to the Spinoff. Following the withdrawal of the variable toll disputes, South Bow reached its maximum indemnity liability of $22 million.
The Board has approved South Bow's 2026 budget, which is focused on strengthening the Company's financial position, maturing and executing a portfolio of organic and inorganic growth opportunities, and delivering strong and sustainable returns to shareholders. Normalized EBITDA is projected to be approximately $1.03 billion, within a range of 2%, with approximately 90% secured through committed arrangements. See "2026 guidance" of this news release for additional details.
South Bow's unaudited consolidated interim financial statements and notes (the financial statements), and management's discussion and analysis (MD&A) as at and for the three and nine months ended Sept. 30, 2025 (the Q3 2025 MD&A) are available on South Bow's website at www.southbow.com, under South Bow's SEDAR+ profile at www.sedarplus.ca, and in South Bow's filings with the U.S. Securities and Exchange Commission (SEC) at www.sec.gov. Certain disclosure within "Specified Financial Measures" of the Q3 2025 MD&A is incorporated by reference into this news release.
____________________1 Non-GAAP financial measure or non-GAAP ratio that do not have standardized meanings under generally accepted accounting principles (GAAP) and may not be comparable to measures presented by other entities. See "Specified financial measures" of this news release.2 In the second quarter of 2025, South Bow modified the definition of distributable cash flow. Comparative measures have been restated to reflect these changes. See "Specified financial measures" of this news release.
Financial and operational results
$ millions, unless otherwise noted
Three Months Ended
Nine Months Ended
June 30,2025
Sept. 30,2025
Sept. 30,2024
Sept. 30,2025
Sept. 30,2024
FINANCIAL RESULTS
Revenue
524
461
534
1,483
1,632
Income from equity investments
13
12
12
38
37
Net income
96
93
61
277
261
Per share1
0.46
0.45
0.29
1.33
1.26
Normalized net income2
87
99
86
284
271
Per share1 2
0.42
0.47
0.41
1.36
1.31
Normalized EBITDA2
250
254
262
770
801
Keystone Pipeline System
234
260
257
729
778
Marketing
(1
)
(17
)
(7
)
(2
)
(12
)
Intra-Alberta & Other
17
11
12
43
35
Distributable cash flow2 3
167
236
190
560
466
Dividends declared
104
104
—
312
—
Per share1
0.50
0.50
—
1.50
—
Capital expenditures4
34
52
62
118
94
Total long-term debt5
5,774
5,751
10,452
5,751
10,452
Net debt2 6
4,903
4,836
4,827
4,836
4,827
Net debt-to-normalized EBITDA (ratio)2 7
4.6
4.6
4.5
4.6
4.5
Common shares outstanding, weighted average diluted (millions)8
208.8
208.8
207.6
208.7
207.6
Common shares outstanding (millions)8
208.2
208.3
207.6
208.3
207.6
OPERATIONAL RESULTS
Keystone Pipeline System Operating Factor (SOF) (%)9
93
92
95
94
95
Keystone Pipeline throughput (Mbbl/d)
544
584
616
580
627
U.S. Gulf Coast segment of Keystone Pipeline System throughput (Mbbl/d)10
760
703
815
730
738
Marketlink throughput (Mbbl/d)
625
547
636
574
613
Per share amounts, with the exception of dividends, are based on weighted average diluted common shares outstanding.
Non-GAAP financial measure or non-GAAP ratio that do not have standardized meanings and may not be comparable to measures presented by other entities. See "Specified financial measures" of this news release.
In the second quarter of 2025, South Bow modified the definition of distributable cash flow. Comparative measures have been restated to reflect these changes. See "Specified financial measures" of this news release.
Capital expenditures per the investing activities of the consolidated statements of cash flows of the financial statements.
Total long-term debt as at Sept. 30, 2025 and June 30, 2025 includes the Company's senior unsecured notes and junior subordinated notes. Total long-term debt as at Sept. 30, 2024 includes the Company's long-term debt to affiliates of TC Energy.
Includes 50% equity treatment of South Bow's junior subordinated notes.
South Bow expects that its net debt-to-normalized EBITDA ratio will increase modestly through the remainder of 2025 as the Company continues to invest in the Blackrod Connection Project and incur one-time separation costs of approximately $30 million to $40 million associated with the Spinoff in 2025. South Bow anticipates exiting 2025 with a net debt-to-normalized EBITDA ratio of approximately 4.7 times. On Aug. 6, 2025, the Company previously disclosed its expectation of exiting 2025 with a net debt-to-normalized EBITDA ratio of approximately 4.8 times. The net debt-to-normalized EBITDA ratio was 4.5 times as at Dec. 31, 2024.
The common shares issued on Oct. 1, 2024 have been used for comparative periods, as the Company had no common shares outstanding prior to the Spinoff. For periods prior to Oct. 1, 2024, it is assumed there were no dilutive equity instruments, as there were no equity awards of South Bow outstanding prior to the Spinoff.
SOF measures South Bow's ability to deliver crude oil at the planned maximum rate of the Keystone Pipeline.
Comprises throughput originating in Hardisty, Alta. transported on the Keystone Pipeline, and throughput originating in Cushing, Okla. transported on Marketlink for destination in the U.S. Gulf Coast.
Milepost 171 incident
Following the MP-171 incident, the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a Corrective Action Order (CAO) requiring South Bow to undertake corrective actions, including operating under pressure restrictions for specific segments of the pipeline.
Total costs relating to the incident, estimated at approximately $55 million, are largely expected to be recovered through the Company's insurance policies by early 2026. As of Sept. 30, 2025, South Bow has received approximately $16 million in reimbursements under its insurance policies.
The timing of PHMSA's expected release of the independent third-party root cause analysis (RCA) has been impacted by the U.S. federal government shutdown.
Initial findings
According to the mechanical and metallurgical analysis, both the pipe and welds conformed to industry standards for design, materials, and mechanical properties.
The failure resulted from a fatigue crack that originated along the pipe's manufactured long-seam weld.
Remedial actions
South Bow is actively progressing its remedial actions, with six in-line inspection runs and 37 integrity digs completed to date. Preliminary results indicate no injurious issues.
The in-line inspection process has been modified to address tool limitations by overlaying data from previous tool runs and implementing improvements in data analysis methods. South Bow will continue to work closely with its in-line inspection technology vendors to advance tool performance and validation, address and resolve tool limitations, and develop new technologies.
Additional in-line inspection tool runs and integrity digs are planned for 2025 and 2026 as part of South Bow's comprehensive program to address the findings and recommendations from the RCA investigation.
As part of PHMSA's CAO, South Bow is finalizing its remedial work plan to submit to the regulator for approval. This plan includes the corrective actions already completed. As South Bow conducts this remedial work, any findings will be incorporated into the plan and the Company's programs to enhance system integrity and ensure safe operations. South Bow is committed to maintaining transparency with its regulators, customers, and industry peers throughout this process.
Outlook
Market outlook
Western Canadian Sedimentary Basin (WCSB) crude oil supply is expected to grow modestly throughout 2026 and remain below available pipeline egress capacity, resulting in continued low demand for uncommitted capacity on the Keystone Pipeline.
Pricing differentials impacting the rates South Bow can charge for capacity on the U.S. Gulf Coast segment of its Keystone Pipeline System are expected to remain tight throughout 2026.
Guidance
South Bow's guidance aims to inform readers about Management's expectations for 2025 and 2026 financial and operational results. Readers are cautioned that these estimates may not be suitable for any other purpose. See "Forward-looking information and statements" of this news release for additional information regarding factors that could cause actual events to be significantly different from those expected.
2025 guidance
South Bow is reaffirming its 2025 guidance for normalized EBITDA, including forecasting the Marketing segment to be approximately $30 million lower in 2025 compared to 2024.
South Bow is revising its outlook for distributable cash flow in 2025 to $700 million, within a range of 2%, to reflect lower expected current taxes resulting from changes in U.S. tax legislation and South Bow's tax optimization efforts, and higher expected interest income and other. With lower expected current taxes in 2025, South Bow's effective tax rate is now expected to range between 20% and 21%.
All other guidance items remain unchanged.
South Bow's updated 2025 annual guidance is outlined below:
$ millions, except percentages
2025 Guidance1 2(August 2025)
2025 Guidance2(November 2025)
2025 YTD Actuals
Normalized EBITDA3
1,010 +1% / -2%
1,010 +1% / -2%
770
Interest expense
325 +/- 2%
325 +/- 2%
248
Effective tax rate (%)
23% - 24%
20% - 21%
19%
Distributable cash flow3
590 +/- 3%
700 +/- 2%
560
Capital expenditures
Growth4
110 +/- 3%
110 +/- 3%
92
Maintenance4 5
55 +/- 3%
55 +/- 3%
32
See South Bow's Aug. 6, 2025 news release "South Bow Reports Second-quarter 2025 Results and Declares Dividend", available on South Bow's website at www.southbow.com, under South Bow's SEDAR+ profile at www.sedarplus.ca, and in South Bow's filings with the SEC at www.sec.gov.
Assumes average foreign exchange rate of C$/U.S.$1.43.
See "Outlook and Guidance" of the Q3 2025 MD&A for historical normalized EBITDA and distributable cash flow, which information is incorporated by reference into this news release.
Supplementary financial measure. See "Specified Financial Measures" of the Q3 2025 MD&A, certain information from which is incorporated by reference into this news release.
Maintenance capital expenditures are generally recoverable through South Bow's tolling arrangements.
2026 guidance
South Bow's financial outlook for 2026 is underpinned by the Company's highly contracted cash flows and structural demand for services. Normalized EBITDA is projected to be approximately $1.03 billion, within a range of 2%, with approximately 90% secured through committed arrangements, which carry minimal commodity price or volumetric risk.
Normalized EBITDA for the Keystone Pipeline System segment is expected to be approximately $15 million lower in 2026 compared to 2025 due to lower normalized EBITDA associated with planned maintenance capital expenditures following an active maintenance and integrity program in 2025. Additionally, tight pricing differentials are expected to continue placing downward pressure on the Company's U.S. Gulf Coast segment of its Keystone Pipeline System.
Normalized EBITDA for the Marketing segment is expected to be approximately $25 million higher in 2026, reflecting a recovery from the losses realized in 2025.
Normalized EBITDA for the Intra-Alberta & Other segment is expected to increase by approximately $10 million in 2026 relative to 2025, with Blackrod Connection Project cash flows increasing throughout the second half of 2026 and into 2027.
South Bow anticipates that its 2026 financial charges will be approximately $315 million, within a range of 2%, and that the Company's effective tax rate will range from 22% to 23%.
Distributable cash flow is expected to be approximately $655 million, within a range of 2%, primarily reflecting higher anticipated current taxes in 2026 relative to 2025.
South Bow plans to invest approximately $10 million in early 2026 to complete the Blackrod Connection Project. The Company will update its outlook for growth capital expenditures once it sanctions its next development project.
Maintenance capital expenditures are estimated to be approximately $25 million, within a range of $10 million, following an active maintenance and integrity program in 2025. These expenditures are generally recoverable through South Bow's tolling arrangements.
South Bow expects its net debt-to-normalized EBITDA ratio to decrease modestly through 2026.
South Bow's 2026 annual guidance is outlined below:
$ millions, except percentages
2026 Guidance 1
Normalized EBITDA 2
1,030 +/- 2%
Financial charges 3
315 +/- 2%
Effective tax rate (%)
22% - 23%
Distributable cash flow 2
655 +/- 2%
Capital expenditures
Growth 4 5
10
Maintenance 4 6
25 +/- 10
Assumes average foreign exchange rate of C$/U.S.$1.39.
See "Outlook and Guidance" of the Q3 2025 MD&A for historical normalized EBITDA and distributable cash flow, which information is incorporated by reference into this news release.
Comprised of interest expense and interest income and other.
Supplementary financial measure. See "Specified Financial Measures" of the Q3 2025 MD&A, certain information from which is incorporated by reference into this news release.
South Bow will update its outlook for growth capital expenditures once it sanctions its next development project.
Maintenance capital expenditures are generally recoverable through South Bow's tolling arrangements.
Capital allocation priorities
South Bow takes a disciplined approach to capital allocation to preserve optionality and maximize total shareholder returns over the long term. The Company's capital allocation priorities are built on a foundation of financial strength and supported by South Bow's stable, predictable cash flows. South Bow's capital allocation priorities include:
paying a sustainable base dividend;
strengthening the Company's investment-grade financial position; and
leveraging existing infrastructure within South Bow's strategic corridor to offer customers competitive connections and enhanced optionality.
Conference call and webcast details
South Bow's senior leadership will host a conference call and webcast to discuss the Company's third-quarter 2025 results and 2026 outlook on Nov. 14, 2025 at 8 a.m. MT (10 a.m. ET).
Date
Nov. 14, 2025
Time
8 a.m. MT (10 a.m. ET)
Conference call link
https://register-conf.media-server.com/register/BI7d28e530fb654087a3a1bb5a2c17892d
Webcast link
https://edge.media-server.com/mmc/p/i7eevia6
Register ahead of time to receive a unique PIN to access the conference call via telephone. Once registered, participants can dial into the conference call from their telephone via the unique PIN or click on the "Call Me" option to receive an automated call directly on their telephone.
Visit www.southbow.com/investors for the replay following the event.
Investor day
South Bow will hold its inaugural investor day on Nov. 19, 2025 in New York City. The webcasted event will include presentations from South Bow's senior leadership on the Company's long-term strategy, capital allocation priorities, and growth outlook.
Date
Nov. 19, 2025
Time
7 a.m. MT (9 a.m. ET)
