Q2 2026 South Bow Corp Earnings Call

August 6, 2026

Operator: Good day. Thank you for standing by. Welcome to South Bow Q2 2026 Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Martha Wilmot. Please go ahead.

Speaker #1: again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Martha Wilmot.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Dana, and welcome everyone to South Bow's second quarter, 2026, earnings call. With me today are Bevin Wirzba, president and chief executive officer; Van Dafoe, senior vice president and chief financial officer; and Richard Prior, senior vice president and chief operating officer.

Martha Wilmot: Thank you, Dana. Welcome everyone to South Bow's Q2 2026 earnings call. With me today are Bevin Wirzba, President and Chief Executive Officer, Van Dafoe, Senior Vice President and Chief Financial Officer, Richard Prior, Senior Vice President and Chief Operating Officer. Before I turn it over to Bevin, I'd like to remind listeners that today's remarks include forward-looking information and statements that are subject to the risks and uncertainties addressed in our public disclosure documents available under South Bow's SEDAR+ profile, in South Bow's filings with the SEC. Today's discussion will also include non-GAAP financial measures, ratios that may not be comparable to those presented by other entities. With that, I'll turn it over to Bevin.

Speaker #2: Before I turn it over to Bevin, I'd like to remind listeners that today's remarks include forward-looking information and statements that are subject to the risks and uncertainties addressed in our public disclosure documents, available under South Bow Cedar Plus Profile and in South Bow's filings with the SEC.

Speaker #2: Today's discussion will also include non-GAAP financial measures and ratios that may not be comparable to those presented by other entities. With that, I'll turn it over to Bevin.

Speaker #3: Good morning, everyone. we appreciate you joining us today. While we're proud of our safe and reliable operations, strong financial performance, and improved outlook for 2026, the defining achievement of the first half of the year was the success of our Open Season and the momentum we've continued to build across our growth portfolio.

Bevin Wirzba: Good morning, everyone. We appreciate you joining us today. While we're proud of our safe and reliable operations, strong financial performance, improved outlook for 2026, the defining achievement of H1 was the success of our open season, the momentum we've continued to build across our growth portfolio. Securing 465,000 barrels a day of 20-year customer commitments from a broad producer group was a significant milestone for our team, more importantly, a strong endorsement from our customers. This demonstrates the value of our corridor, the strength of our market position, the continued need for additional egress capacity to support growing Western Canadian crude oil production, deliver significant long-term economic benefits. These commitments are also a critical enabler for our customers.

Speaker #3: Securing $465,000 barrels a day of 20-year customer commitments from a broad producer group was a significant milestone for our team and, more importantly, a strong endorsement from our customers.

Speaker #3: 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 and deliver significant long-term economic benefits.

Speaker #3: These commitments are also a critical enabler for our customers. The production growth associated with these commitments will help generate the cash flows needed to enable ambitious, larger-scale investments across the Western Canadian sedimentary basin, in the years ahead.

Bevin Wirzba: The production growth associated with these commitments will help generate the cash flows needed to enable ambitious, larger-scale investments across the Western Canadian Sedimentary Basin in the years ahead. Achieving commercial success has enabled us to move into the next phase of development as we advance the work required to support a FID, which we are targeting for mid-2027. Over the coming months, we will focus on stakeholder engagement, execution planning, cost refinement, financing, securing the permit durability needed to support that decision. As we've said previously, permit durability remains a key requirement for South Bow. The infrastructure we operate today, the infrastructure we are looking to develop will be needed for decades to come, spanning multiple governments and market cycles while delivering significant long-term economic benefits.

Speaker #3: Achieving commercial success has enabled us to move into the next phase of development as we advance the work required to support a final investment decision.

Speaker #3: Which we are targeting for mid-2027. Over the coming months, we will focus on stakeholder engagement, execution planning, cost refinement, financing, and securing the permit durability needed to support that decision.

Speaker #3: As we've said previously, permit durability remains a key requirement for South Bow. The infrastructure we operate today and the infrastructure we are looking to develop will be needed for decades to come, spanning multiple governments and market cycles, while delivering significant long-term economic benefits.

Speaker #3: That's why it's critical that the certainty needed is in place to support these investments through the duration of their construction and throughout their operations.

Bevin Wirzba: That's why it's critical that the certainty needed is in place to support these investments through the duration of their construction and throughout their operations. We have considered that requirement at every stage of this process, and we would not have launched the open season or advanced commercialization activities if we did not believe there was a credible path to securing the certainty needed to support a project of this importance and this scale. As with all growth opportunities, we will continue to evaluate the opportunity through the same disciplined, low-risk framework that defines South Bow. With that, I'll hand it over to Richard to provide more detail on our operational performance, integrity activities, and the progress we're making across our growth portfolio.

Speaker #3: We have considered that requirement at every stage of this process, and we would not have launched the Open Season or Advanced Commercialization activities if we did not believe there was a credible path to securing the certainty needed to support a project of this importance and this scale.

Speaker #3: As with all growth opportunities, we will continue to evaluate the opportunity through the same disciplined, low-risk framework that defines South Bow. With that, I'll hand it over to Richard to provide more detail on our operational performance, integrity activities, and the progress we're making across our growth portfolio.

Speaker #4: Thanks, Bevin. Safe and reliable operations, strong asset integrity, and disciplined execution remain the foundation of our business. Starting with pipeline integrity, we continue to make meaningful progress on the remedial actions associated with the Milepost 171 incident.

Richard Prior: Thanks, Bevin. Safe and reliable operations, strong asset integrity, and disciplined execution remain the foundation of our business. Starting with pipeline integrity, we continue to make meaningful progress on the remedial actions associated with the milepost 171 incident. The data and insights gained through this work are being incorporated into our ongoing integrity management programs, helping to strengthen system integrity and support long-term safe and reliable operations. We remain encouraged by the progress we've made and continue to expect pressure restrictions to be lifted in a phased manner through the end of 2026 and into 2027 as this work advances. Turning to operations, Q2 was another solid quarter for the business. Performance on the US Gulf Coast segment of the Keystone Pipeline system was particularly strong as disruptions to global crude oil trade drove increased demand for connectivity to refining and export markets.

Speaker #4: The data and insights gained through this work are being incorporated into our ongoing integrity management programs helping to strengthen system integrity and support long-term safe and reliable operations.

Speaker #4: We remain encouraged by the progress we've made, and continue to expect pressure restrictions to be lifted in a phased manner through the end of 2026 and into 2027 as this work advances.

Speaker #4: Turning to operations, Q2 was another solid quarter for the business. Performance on the U.S. Gulf Coast segment of the Keystone Pipeline System was particularly strong as disruptions to global crude oil trade drove increased demand for connectivity to refining and export markets.

Speaker #4: During the quarter, we established new throughput records on the U.S. Gulf Coast segment, reflecting close collaboration across our commercial and operational teams and highlighting the value of our corridor.

Richard Prior: During the quarter, we established new throughput records on the US Gulf Coast segment, reflecting close collaboration across our commercial and operational teams and highlighting the value of our corridor. Our team and assets continue to respond effectively to changing market conditions while providing customers with reliable access to the PADD II and III markets. More broadly, the quarter reinforced the strategic value of South Bow's corridor. As Western Canadian production continues to grow, our customers increasingly value competitive market access, which we provide to North America's strongest demand markets. That same demand for market access underpins the growth opportunities we are advancing today, bringing me to our proposed Prairie Connector project and the joint development of the Liberty Bridge project with our partner, Bridger. As Bevin outlined in his earlier comments, our efforts today are focused on advancing the work required ahead of a final investment decision.

Speaker #4: Our team and assets continue to respond effectively to changing market conditions, while providing customers with reliable access to the PAD 2 and 3 markets.

Speaker #4: More broadly, the quarter reinforced the strategic value of South Bow's corridor. As Western Canadian production continues to grow, our customers increasingly value competitive market access, which we provide to North America's strongest demand markets.

Speaker #4: That same demand for market access underpins the growth opportunities we advancing today bringing me to our proposed Prairie Connector project and the joint development of the Liberty Bridge project with our partner Bridger.

Speaker #4: As Bevin outlined in his earlier comments, our efforts today are focused on advancing the work required ahead of a final investment decision. To support disciplined planning and efficient execution, South Bow and Bridger are coordinating efforts while leveraging execution expertise and direct experience across our respective geographies.

Richard Prior: To support disciplined planning and efficient execution, South Bow and Bridger are coordinating efforts while leveraging execution expertise and direct experience across our respective geographies. For Prairie Connector, our team continues to advance stakeholder engagement, execution planning, and other development workstreams. For Liberty Bridge, which would utilize an established corridor on privately held land to connect the Guernsey hub and Cushing, our teams are active across a number of development workstreams. That effort is focused on stakeholder and landowner engagement, permitting, and execution planning. As we advance these projects, South Bow and Bridger will continue to bring the same operational, technical, and commercial rigor that underpin our businesses. With that, I'll turn it over to Van to discuss our financial performance and updated outlook for 2026.

Speaker #4: For Prairie Connector, our team continues to advance stakeholder engagement, execution planning, and other development workstreams. For Liberty Bridge—which would utilize an established corridor on privately held land to connect the Guernsey Hub and Cushing—our teams are active across a number of development workstreams.

Speaker #4: That effort is focused on stakeholder and landowner engagement, permitting and execution planning. As we advance these projects, South Bow and Bridger will continue to bring the same operational, technical, and commercial rigor that underpin our businesses.

Speaker #4: With that, I'll turn it over to Van to discuss her financial performance and updated outlook for 2026.

Speaker #5: Thanks, Richard, and good morning. Our second-quarter results demonstrate the strength of South Bow's underlying business. We saw strong operational performance and elevated demand for capacity in the U.S.

Van Dafoe: Thanks, Richard, and good morning. Our Q2 results demonstrate the strength of South Bow's underlying business. Strong operational performance and elevated demand for capacity on the US Gulf Coast segment of our system translated into another quarter of solid financial results. At the same time, we continued to strengthen our balance sheet, return capital to shareholders, and advance our growth priorities. Our strong results during H1 reflect the competitive positioning of our assets and the efforts of our team to deliver value through a dynamic market environment. As a result, we have increased our full year normalized EBITDA guidance to CAD 1.04 billion within a range of 2% at the upper end and 1% at the lower end. We have also increased our full year distributable cash flow guidance to CAD 665 million within a range of 2%.

Speaker #5: Gulf Coast segment of our system translated into another quarter of solid financial results. At the same time, we continue to strengthen our balance sheet, return capital to shareholders, and advance our growth priorities.

Speaker #5: Our strong results during the first half of the year reflect a competitive positioning of our assets and the efforts of our team to deliver value through a dynamic market environment.

Speaker #5: As a result, we have increased our full-year normalized EBITDA guidance to 1.04 billion, within a range of 2% at the upper end and 1% at the lower end.

Speaker #5: We have also increased our full-year distributable ble cash flow guidance to 665 million, within a range of 2%. Our strong earnings and cash flow generation continue to support balance sheet improvement.

Van Dafoe: Our strong earnings and cash flow generation continue to support balance sheet improvement. At the end of Q2, our leverage ratio improved to 4.4x net debt to normalized EBITDA, reflecting a continued progress towards our highest capital allocation priority. This continued improvement in our financial position strengthens our ability to pursue growth opportunities while maintaining the disciplined capital allocation approach that defines South Bow. Accordingly, we have increased our growth capital outlook for the year to support development activities associated with the Prairie Connector and Liberty Bridge projects. These investments are focused on advancing the development activities required to support a FID and are being evaluated through the same disciplined capital allocation lens that guides all investment decisions at South Bow. Finally, our board of directors approved our quarterly dividend of CAD 0.50 per share yesterday, reflecting our ongoing commitment to returning capital to shareholders.

Speaker #5: At the end of the second quarter, our leverage ratio improved to 4.4 times net debt to normalized EBITDA, reflecting a continued progress towards our highest capital allocation priority.

Speaker #5: This continued improvement in our financial position strengthens our ability to pursue growth opportunities while maintaining the disciplined capital allocation approach that defines South Bow.

Speaker #5: Accordingly, we have increased our growth capital outlook for the year to support development activities associated with the Prairie Connector and Liberty Bridge projects. These investments are focused on advancing the development activities required to support a final investment decision and are being evaluated through the same disciplined capital allocation lens that guides all investment decisions at South Bow.

Speaker #5: Finally, our board of directors approved our quarterly dividend of 50 cents per share yesterday, reflecting our ongoing commitment to returning capital to shareholders. With that brief overview of our financial performance and outlook, I'll turn it back to Bevin for closing remarks.

Van Dafoe: With that brief overview of our financial performance and outlook, I'll turn it back to Bevin for closing remarks.

Speaker #2: Yeah, thanks, Van. Thanks, Richard. So, before we move to questions, I'd like to briefly touch on an important board leadership transition that we announced yesterday.

Bevin Wirzba: Yeah. Thanks, Ben. Thanks, Richard. Before we move to questions, I'd like to briefly touch on an important board leadership transition that we announced yesterday. As part of our board of directors' ongoing succession planning process, Hal Kvisle stepped down as Chair of the Board and George Lewis was appointed Chair. On behalf of the entire management team and myself personally, I'd like to thank Hal for his leadership, counsel, and mentorship through South Bow's launch as an independent company, and congratulate George on his appointment. We look forward to continuing to work closely with both Hal and George as we execute on our long-term strategy. In closing and looking more broadly at H1, I believe South Bow continues to demonstrate the strengths that differentiate our business.

Speaker #2: As part of our board of directors' ongoing succession planning process, Hal Quisley stepped down as chair of the board, and George Lewis was appointed chair.

Speaker #2: On behalf of the entire management team and myself personally, I'd like to thank Hal for his leadership, counsel, and mentorship through South Bow's launch as an independent company and congratulate George on his appointment.

Speaker #2: We look forward to continuing to work closely with both Hal and George as we execute on our long-term strategy. So, in closing, and looking more broadly at the first half of the year, I believe South Bow continues to demonstrate the strengths that differentiate our business.

Speaker #2: We have delivered safe and reliable operations, strengthened our financial position, and advanced our growth portfolio in a disciplined manner. At the same time, we continue to advance opportunities that build on the strategic advantages of our corridor and the capabilities we have collectively developed through decades of operating critical energy infrastructure.

Bevin Wirzba: We have delivered safe and reliable operations, strengthened our financial position, and advanced our growth portfolio in a disciplined manner. At the same time, we continue to advance opportunities that build on the strategic advantages of our corridor and the capabilities we have collectively developed through decades of operating critical energy infrastructure. These opportunities have the potential to strengthen our competitive positioning and support the next phase of growth for both South Bow and our customers. The success of the open season reinforces our view that customers strongly support the additional egress capacity needed to grow Western Canadian crude oil production, and that South Bow is uniquely positioned to help meet that demand. As we look ahead over the coming months and quarters, our priorities remain unchanged. We will continue to focus on safe and reliable operations, disciplined growth, and financial strength.

Speaker #2: These opportunities have the potential to strengthen our competitive positioning and support the next phase of growth for both South Bow and our customers. The success of the Open Season reinforces our view that customers strongly support the additional egress capacity needed to grow Western Canadian crude oil production.

Speaker #2: And that South Bow is uniquely positioned to help meet that demand. As we look ahead over the coming months and quarters, our priorities remain unchanged.

Speaker #2: We will continue to focus on safe and reliable operations, disciplined growth, and financial strength. We believe those principles combined with the advantages of our corridor and the opportunities in front of us position South Bow to continue creating long-term value for shareholders while meeting our customers' evolving market access needs.

Bevin Wirzba: We believe those principles, combined with the advantages of our corridor and the opportunities in front of us, position South Bow to continue creating long-term value for shareholders while meeting our customers' evolving market access needs. With that, I'll now ask the operator to open the line for questions.

Speaker #2: With that, I'll now ask the operator to open the line for questions.

Speaker #1: Thank you. At this time, we will conduct the question-and-answer session. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Maurice Choy of RBC Capital Markets. Your line is now open.

Speaker #1: To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Maurice Choi, of RBC Capital Markets.

Speaker #1: Your line is now open.

Speaker #2: Thank you, and good morning, everyone. I just want to start with the incremental details you shared about your successful Open Season. Obviously, there are many pipeline alternatives that are being proposed out there.

Maurice Choy: Thank you. Good morning, everyone. Just want to start with the incremental details you shared about your successful open season. Obviously, there are many pipeline alternatives that are being proposed out there. Just curious whether, at a very high level, what are your customers telling you about why your pipeline was the one that, or at least one of the ones that they supported?

Speaker #2: So, just curious whether at a very high level, what are your customers telling you about why your pipeline was the one that, or at least one of the ones that they supported?

Speaker #3: Yeah, thank you, Maurice. Our customers, you know, we've indicated all along that we are a customer-led strategy, and we've had the opportunity to listen to what they like about our base systems.

Bevin Wirzba: Yeah. Thank you, Maurice. Our customers. We've indicated all along that we are a customer-led strategy and we've had the opportunity to listen what they like about our base systems, and what they're really striving for. Obviously, having the highest net back that you can deliver is important to our customers. So having a competitive toll is very critical, which we delivered in our open season, a very competitive toll over the long term with certainty around those tolls over a 20-year period. The second thing was getting to a market that was resilient. We've consistently said that the demand in the Gulf Coast for Canadian crude into that refining market, was and is, and will be resilient for decades to come. So enabling a batch system to serve directly in a bullet down to the Gulf Coast is what our customers were looking for.

Speaker #3: And what they're really striving for. And obviously, having the highest net back that you can deliver is important to our customers. And so, having a competitive toll is very critical, which we delivered in our Open Season, very competitive toll over the long term, with certainty around those tolls over a 20-year period.

Speaker #3: The second thing was getting to a market that was resilient. And we've consistently said that the demand in the Gulf Coast for Canadian crude into that refining market was and is and will be resilient for decades to come.

Speaker #3: And so, enabling a batch system to serve directly in a bullet down to the Gulf Coast is what our customers were looking for. In addition to that, we have since creating the initial system of Keystone, been able to deliver to multiple delivery points.

Bevin Wirzba: In addition to that, we have, since creating the initial system of Keystone, been able to deliver to multiple delivery points, and having that flexibility for our customers to deliver into different kind of exit markets is very critical for our customers.

Speaker #3: And having that flexibility for our customers to deliver into different kind of exit markets is very critical for our customers.

Speaker #2: Thanks. And maybe you could finish off with a question on Liberty as well as Prairie Connector. You mentioned multiple times today and in the past about permit durability and that's being a key requirement.

Maurice Choy: Thanks. Maybe you could finish off with a question on Liberty as well as Prairie Connector. You mentioned multiple times today and in the past about permit durability and that's being a key requirement. I wonder if you could just paint a blue sky scenario for us, what the ideal situation is for you in terms of permit durability. What does that look like? Just take one step further, what are some of the things that your counterparty who can give you that durability still wants to see before giving you that durability?

Speaker #2: I wonder if you could just paint a blue sky scenario for us. What the ideal situation is for you in terms of permit durability.

Speaker #2: What does that look like? And just pick one step further, like what are some of the things that your counterparty who can give you that durability still wants to see before giving you that durability?

Speaker #3: Yeah, Maurice, I'd like to answer that by going back to first principles. You know, as a learned over the years that risk allocation and a project is really important.

Bevin Wirzba: Yeah, Maurice, I'd like to answer that by going back to first principles. As a developer, we've learned over the years that risk allocation in a project is really important, and there's risks that we should be managing, risks that our customers are undertaking, and risks that are not able to be mitigated by ourselves or our customers. That's what we focus on in terms of the permit durability component. While we all take execution and development risk across the project with our partner, our customers have taken 20-year commitments and commodity price exposure, through that period, ensuring that we have a permitted project in place that can remain durable through that period is something that we'll need others to step in on.

Speaker #3: And there's risks that we should be managing, and there's risks that our customers are undertaking. And there's risks that are not able to be mitigated by ourselves or our customers.

Speaker #3: And that's what we focus on in terms of the permit durability component. And so, while we all take execution and development risk across the project with our partner, our customers have taken 20-year commitments and commodity price exposure through that period.

Speaker #3: Ensuring that we have a permitted project in place that can remain durable through that period is something that we'll need others to step in on.

Speaker #3: And so, we've been working on programs in the United States that are well established to apply and to work through the process of seeking that durability in the United States.

Bevin Wirzba: We've been working on programs in the United States that are well-established to apply and to work through the process of seeking that durability in the United States. In Canada, there are fewer precedents, but we did achieve a precedent when we advanced previously projects, and we're trying to navigate those right now. We're going to be a little bit light on the details on what that looks like specifically, Maurice, but we're well advanced in those discussions to seek what we can achieve. What's important for us is that we don't want to expose our shareholders to risks that they shouldn't be exposed through the development of a project like this. We've proven that commerciality is there. We've proven that there's a desire to have the project move forward.

Speaker #3: In Canada, there is, there are fewer precedents, but we did achieve a precedent when we advanced previously projects, and we're trying to navigate those right now.

Speaker #3: And so, we're going to be a little bit light on the details at on what that looks like specifically, Maurice. But we were well advanced in those discussions to seek what we can achieve.

Speaker #3: And what's important for us is that we don't want to expose our shareholders to risks that they shouldn't be exposed through the development of a project like this.

Speaker #3: So, we've proven that commerciality is there. We've proven that there's a desire to have the project move forward. We believe there's been very constructive support, both in Canadian governments as well as the United States government.

Bevin Wirzba: We believe there's been very constructive support, both in Canadian governments as well as the United States government, and we're just trying to finalize what form that takes over the next number of months.

Speaker #3: And we're just trying to finalize what that, what form that takes over the next number of months.

Speaker #2: Perfect. That makes sense. Thank you very much.

Maurice Choy: Perfect. That makes sense. Thank you very much.

Speaker #1: Thank you. Our next question comes from the line of Sam Burwell of Jefferies. Your line is now open.

Operator: Thank you. Our next question comes from the line of Sam Burwell of Jefferies. Your line is now open.

Speaker #4: Hey, guys, good morning. Wanted to ask how much progress has been made on permitting Liberty given that you've characterized it as an existing corridor.

Sam Burwell: Hey, guys. Good morning. Wanted to ask how much progress has been made on permitting Liberty, given that you've characterized it as an existing corridor. Was there any preexisting permitting to leverage? Maybe at a higher level, how much is baked into the FID timeline in the way of contingencies, particularly in regards to permitting on the US side?

Speaker #4: So, was there any pre-existing permitting to leverage? And then maybe at a higher level, how much is baked into the FID timeline and the way of contingencies particularly in regards to permitting on the U.S.

Speaker #4: side?

Speaker #3: Yeah, thanks. It's richer here. So, with respect to the Liberty Bridge project, as we've mentioned, you know, we acquired a significant amount of work that was previously done.

Richard Prior: Yeah. Thanks. It's Richard here. With respect to the Liberty Bridge project, as we've mentioned, we acquired a significant amount of work that was previously done. We acquired that from Tallgrass and Bridger, which are owners of that work. That included corridor engineering, a number of rights-of-way agreements that have been established and that really puts you effectively a long way down the permitting process by having all of that work that was completed previously. There's more to come on this and we're working right now and consulting with the agencies that will ultimately grant new permits for that part of the route. We'll have more to say at the times that we complete those permit filings. In terms of your question around what's involved for, I guess, timeline contingency.

Speaker #3: And so, we required that from Tallgrass and Bridger, which are all owners of that work. And so, that included a corridor, engineering, you know, a number of rights-away agreements to that have been established in that really puts you effectively a long way down the permitting process by having all of that work that was completed previously.

Speaker #3: And so, there's more to come on this, and we're working right now and consulting with the agencies that will ultimately grant new permits for that part of the route.

Speaker #3: And we'll have more to say at the times that we complete those permit filings. And then in terms of, you know, your question around, you know, what's involved for, I guess, timeline contingency, you know, we looked at and studied as did Bridger, you know, all of the statutory permitting timelines and the regulations that are required across the projects.

Richard Prior: We looked at and studied, as did Bridger, all of the statutory permitting timelines and the regulations that are required across the projects. We've built those timelines into our schedule. We've also had consultations with the permitting agencies, our timeline is according to those, and we believe that we maintain on track to reach an FID in mid 2027.

Speaker #3: And we've built those timelines into our schedule. We've also had consultations with the permitting agencies. And so, our timeline is according to those. And we believe that we maintain on track to reach an FID in mid-2027.

Speaker #4: Okay, great. And then another thing I noticed in the press release was the reference to evaluating inorganic opportunities. I mean, not expecting you guys to say what you're going to buy and when, but maybe just like a little bit of color on sort of the scope and just do you have the bandwidth internally to pursue larger acquisitions while you're executing Prairie Liberty in that the whole scope of that project?

Sam Burwell: Okay, great. Another thing I noticed in the press release was the reference to evaluating inorganic opportunities. I mean, not expecting you guys to say what you're going to buy and when, but maybe just a little bit of color on sort of the scope and just do you have the bandwidth internally to pursue larger acquisitions while you're executing Prairie, Liberty, and the whole scope of that project?

Speaker #3: Yeah, thank you, Sam. The first and most important thing is that when we look at inorganic opportunities, they're within the same risk preferences and kind of capital allocation principles that we've been demonstrating since our IPO.

Bevin Wirzba: Yeah. Thank you, Sam. The first and most important thing is that when we look at inorganic opportunities, they are within the same risk preferences and kind of capital allocation principles that we have been demonstrating since our IPO. We do have the capacity internally. We have added team members through the year. We have a great team in place to evaluate opportunities, and we are seeing that with the strength of the growth prospects in our organic business that makes our currency through inorganic potential. Developing organic is obviously our priority. We have demonstrated that through the successful open season and moving that forward. Build multiples are much more accretive to shareholders than acquisition multiples. Want to be clear that we think that there could be complementary assets that we could add to the portfolio that match that joint strategy of both organic and inorganic going forward.

Speaker #3: We do have the capacity internally. We've added team members through the year we have a great team in place to evaluate opportunities. And we're seeing that, you know, with the strength of the growth prospects in our organic business, that makes our currency through inorganic a potential.

Speaker #3: But, you know, developing organic is obviously our priority. We've demonstrated that through the successful open season and moving that forward. And build multiples are much more creative to shareholders than acquisition multiples.

Speaker #3: But we want to be clear that we think that there could be complementary assets that we could add to the portfolio that match that joint strategy of both organic and inorganic going forward.

Speaker #4: All right, good stuff. Thank you, guys.

Sam Burwell: All right. Good stuff. Thank you, guys.

Speaker #3: Thanks, Sam.

Bevin Wirzba: Thanks, Sam.

Speaker #1: Thank you. Our next question comes from the line of Jeffrey Tonet of JPMorgan Securities. Your line is now open.

Operator: Thank you. Our next question comes from the line of Jeremy Tonet of J.P. Morgan Securities. Your line is now open.

Speaker #5: Hey, good morning, everyone. This is Eli on for Jeremy. Just wanted to touch on long lead time item procurement, given a pretty expedited construction window here.

[Analyst] (J.P. Morgan Securities): Hey, good morning, everyone. This is Eli on for Jeremy. Just wanted to touch on long lead time item procurement given a pretty expedited construction window here. Can you just frame whether you're already ordering and placing down payments on some of that equipment, and then maybe how much of a role do government subsidies play in those decisions?

Eli Jossen: Hey, good morning, everyone. This is Eli on for Jeremy. Just wanted to touch on long lead time item procurement given a pretty expedited construction window here. Can you just frame whether you're already ordering and placing down payments on some of that equipment, and then maybe how much of a role do government subsidies play in those decisions?

Speaker #5: Can you just frame whether you're already ordering and placing down payments on some of that equipment, and then maybe how much of a role do government subsidies play in those decisions?

Speaker #3: Yeah, Eli, I think we've been clear that we wouldn't expose our shareholders to kind of material expenses or otherwise until you know we have the permit durability in place.

Bevin Wirzba: Yeah, Eli, I think we've been clear that we wouldn't expose our shareholders to material expenses or otherwise until we have the permit durability in place. With that in mind, we're obviously managing our plan towards FID to secure the necessary durability to make some long lead purchases. We're not at that point today, but we've obviously spoken to all our suppliers and contractors to get us comfortable around our mid-2027 FID timeline for the project.

Speaker #3: And so, with that in mind, we're obviously managing our plan towards FID to secure the next necessary durability to make some long-lead purchases.

Speaker #3: We're not at that point today. But we've obviously spoken to all our suppliers and contractors to get us comfortable around our mid-2027 FID timeline for the project.

Speaker #5: Gotcha. And then maybe there's been a lot of discussions of stakeholder considerations so far on the call today, but if we think about some of the activity we've seen in Montana on the partners' project, you know, how did that kind of factor into your overall decision to maintain the FID and, you know, what kind of conversations are you having with your partner on that sort of opposition from the stakeholder?

[Analyst] (J.P. Morgan Securities): Got you. Maybe, there's been a lot of discussions of stakeholder considerations so far on the call today, but if we think about some of the activity we've seen in Montana on the partners project, how did that factor into your overall decision to maintain the FID and what kind of conversations are you having with your partner on that opposition from the stakeholder? Thanks.

Eli Jossen: Got you. Maybe, there's been a lot of discussions of stakeholder considerations so far on the call today, but if we think about some of the activity we've seen in Montana on the partners project, how did that factor into your overall decision to maintain the FID and what kind of conversations are you having with your partner on that opposition from the stakeholder? Thanks.

Speaker #5: Thanks.

Speaker #3: Yeah, Eli, you know, we're not going to speak on behalf of our partner, but you could appreciate even through Richard's remarks that we're well aware of all the permitting requirements and the importance of ensuring that stakeholders across our projects have the opportunity to be consulted through the normal regulatory processes.

Bevin Wirzba: Yeah, Eli, we're not going to speak on behalf of our partner, but you could appreciate, even through Richard's remarks, that we're well aware of all the permitting requirements and the importance of ensuring that stakeholders across our projects have the opportunity to be consulted through the normal regulatory processes. This is just par for the course from our perspective of how you advance a project. We are, and our partner is well aware of what those consultation requirements are. Those were already built into our schedule and our timeframe of how to pursue and get ready for an FID decision.

Speaker #3: And so, this is just par for the course. From our perspective of how you advance a project. And so, we are and our partners well aware of what those consultation requirements are.

Speaker #3: And so, those were already built into our schedule and our timeframe of how to pursue and get ready for an FID decision.

[Analyst] (J.P. Morgan Securities): Great. Thanks for the color.

Eli Jossen: Great. Thanks for the color.

Speaker #5: Great. Thanks for the caller.

Speaker #3: Thanks, Eli.

Bevin Wirzba: Thanks, Eli.

Speaker #1: Thank you. Our next question comes from the line of Aaron McNeil of TD Callan. Your line is now open.

Operator: Thank you. Our next question comes from the line of Aaron MacNeil of TD Cowen. Your line is now open.

Speaker #6: Hey, morning all. Thanks for taking my questions. Maybe I'll follow up on Maurice's question on permit durability. There's been some discussion of a potential DOE loan; is that a necessary prerequisite in your view for permit durability, or are there other potential avenues to deliver that kind of certainty that you need to proceed with a formal FID?

Aaron MacNeil: Hey, morning all. Thanks for taking my questions. Maybe I'll follow up on Maurice's question on permit durability. There's been some discussion of a potential DOE loan. Is that a necessary prerequisite in your view for permit durability, or are there other potential avenues to deliver that kind of certainty that you need to proceed with a formal FID? If so, what does that actually look like?

Speaker #6: And if so, would does that actually look like?

Speaker #3: Yeah, Aaron, thanks for the question. The way we've been thinking about it is like almost an insurance tower. A stack of various programs methods commitments by others to help secure the risks that we believe that those providers are best positioned to provide that permit durability.

Bevin Wirzba: Aaron, thanks for the question. The way we have been thinking about it is like almost an insurance tower, a stack of various programs, methods, commitments by others to help secure the risks that we believe that those providers are best positioned to provide that permit durability. In the United States, there are existing programs that we are working through. As I mentioned in Canada, there are less precedents on that front. We would not have, as per my remarks, we have been in these discussions for well over 1 year. Obviously, we have not gotten to conclusion on those discussions, but we would not have proceeded with an open season if we did not feel that we had customer support or broadly a pathway to secure what we needed in order to allocate capital on behalf of our shareholders to move forward.

Speaker #3: So, in the United States, there are existing programs that we're working through. As I mentioned in Canada, there are less precedence on that front, but we've been we would not have as per my remarks we've been in these discussions for well over a year.

Speaker #3: Obviously, we haven't gotten to conclusion on those discussions, but we wouldn't have proceeded with an open season if we didn't feel that we had customer support or broadly a pathway to secure what we needed in order to put allocate capital on behalf of our shareholders to move forward.

Aaron MacNeil: Okay. Fair enough. Do you see the potential for permitting reform either before the midterms or during the lame duck session as a potentially positive catalyst for either the Bridger expansion or Liberty Bridge projects? Are you essentially too far along in both of those processes for it to matter? If you are too far along, can you speak to how permitting reform might help you down the road on incremental projects in the future?

Speaker #6: Okay, fair enough. Do you see the potential for permitting reform, either before the midterms or during the lame duck session, as a potentially positive catalyst for either the Bridger expansion or Liberty Bridge projects?

Speaker #6: Or are you essentially too far along in both of those processes for it to matter? And if you are too far along, like can you speak to how permitting reform might help you sort of down the road on incremental projects in the future?

Speaker #3: Well, Aaron, you know, I'm not a political expert. But we are a member organization of the American Petroleum Institute, and API on our behalf, and on behalf of all of our contributing members and participants, have been actively working on the permitting reform file in the United States.

Bevin Wirzba: Well, Aaron, I am not a political expert, we are a member organization of the American Petroleum Institute, API on our behalf and on the behalf of all of our contributing members and participants, have been actively working on the permitting reform file in the United States, believe that that, in general, has achieved broadly bipartisan support in many aspects. I cannot comment on to whether or not it moves forward at a pace that supports what we are actively pursuing. It certainly is a consideration that we have had for the last 1 year.

Speaker #3: And believe that that in general has achieved broadly bipartisan support in many, many aspects. And I can't comment on to whether or not it moves forward at a pace that supports what we're actively pursuing.

Speaker #3: But it certainly is a consideration that we've had for the last year.

Speaker #6: Okay. Thanks. I'll turn it back.

Aaron MacNeil: Okay. Thanks. I will turn it back.

Speaker #1: Thank you. Our next question comes from the line of Ben Lund at Goldman Sachs. Your line is now open.

Operator: Thank you. Our next question comes from the line of Ben Lund at Goldman Sachs. Your line is now open.

Speaker #6: Hey team, good morning and thank you for the time. I wanted to pick up on the broader picture, but more so on the demand for Canadian heavies.

Ben Lund: Hey, team. Good morning and thank you for the time. I wanted to pick up on the broader picture, but more so on the demand for Canadian heavies. We've seen a lot of moving pieces in the market, but curious if you can speak to what you're seeing in terms of real-time demand signals down at the Gulf Coast so far in Q3. Also, is there any appetite to increase and add incremental throughput capacity or delivery points on the Gulf Coast to capture more of the value when the prairie barrels arrive? Thanks.

Speaker #6: We've seen a lot of moving pieces in the market, but curious if you can speak to what you're seeing in terms of real-time demand signals down at the Gulf Coast so far in the third quarter.

Speaker #6: And then also, is there any appetite to increase and add incremental throughput capacity or, you know, delivery points on the Gulf Coast to capture more of the value when the prairie barrels arrive?

Speaker #6: Thanks.

Speaker #3: Yeah, absolutely. That's a those are both great questions. You know, we ran a 90-day open season and, you know, there was a lot of macro activity going on during that period of time.

Bevin Wirzba: Yeah, absolutely. Those are both great questions. We ran a 90-day open season and there was a lot of macro activity going on during that period of time. Our customers are clearly, as they are taking on the risk of commodity exposure into that market over the next 20 plus years, are much more acutely aware of their views of the outlook of that market. Competitively sourcing reliable Canadian barrels out of a resource that has very low maintenance and maintenance capital to see those barrels and that supply be resilient in a variety of market environments really fits well with serving that Gulf Coast environment. To your second question, since the development of our base Keystone asset, we've continually looked at adding different delivery points.

Speaker #3: And our customers are clearly as they are taking on the risk of commodity exposure into that market over the next 20-plus years, are much more acutely aware of their views of the outlook of that market.

Speaker #3: But competitively, sourcing reliable Canadian barrels out of a resource that has very low maintenance and maintenance capital to see those barrels and that supply be resilient in a variety of market environments, really fits well with serving that Gulf Coast environment.

Speaker #3: To your second question, you know, since the development of our base Keystone, we've asset we've continually looked at adding different delivery points and consistent with the prairie connector project, our team has been in conversations of seeking different delivery points and markets to provide that flexibility for our customers.

Bevin Wirzba: Consistent with the Prairie Connector project, our team has been in conversations of seeking different delivery points and markets to provide that flexibility for our customers to manage their exposure over the next 20 years. We do have marine access from our systems, so we're continuing to look at those options as well as other refinery connections in the Gulf Coast.

Speaker #3: To manage their exposure over the next 20 years, we do have marine access from our systems and so we're continuing to look at those options as well as other you know refinery connections in the Gulf Coast.

Speaker #6: That's helpful. And maybe just a quick one on the Inter Alberta side. But beyond Blackrock phase one and the opportunity for phase two, it seems like Grand Rapids and White Spruce are positioned well to capture the growth in the basin.

Ben Lund: That's helpful. Maybe just a quick one on the intra-Alberta side. Beyond Blackrod Phase 1 and the opportunity for Phase 2, it seems like Grand Rapids and White Spruce are positioned well to capture the growth in the basin. I'd be curious how conversations are progressing with the producers in the region on incremental production, then maybe how you'd frame up the way these types of projects compete for capital against the larger Prairie Connector and Liberty Bridge projects, and even the kind of M&A that was mentioned earlier.

Speaker #6: I'd be curious how conversations are progressing with the producers in the region on incremental production. And then maybe how you'd frame up the way these types of projects compete for capital against, you know, the larger prairie connector and Liberty Bridge products.

Speaker #6: And even the kind of M&A that was mentioned earlier.

Speaker #3: Yeah, Ben, you know, if you take us back to January of 2025, you know, there's a lot of uncertainty from on the geopolitics around our business.

Bevin Wirzba: Ben, if you take us back to January 2025, there's a lot of uncertainty from the geopolitics around our business. Our customers were not in a position to grow, and the capital markets that they were supported by were looking for shareholder returns via buybacks and dividend growth. Fast-forward a year, we have two very constructive governments which has encouraged the capital markets as well as our customers to seek that growth. We're very fortunate to have pre-invested capital in our Grand Rapids corridor that is positioned very well. Even in the event Prairie Connector didn't advance, the growth in the basin has allowed us to begin discussions around leveraging that pre-invested capital in our corridors in the Grand Rapids and in Hardisty to seek potential seeing more barrels move, and whether that's through West Coast solutions or out east or south via our systems.

Speaker #3: Our customers were not in a position to grow, and the capital markets that they were supported by were looking for shareholder returns via buybacks and dividend growth.

Speaker #3: Fast forward a year, we have two very constructive governments, which has encouraged the capital markets as well as our customers to seek that growth.

Speaker #3: So we're very fortunate to have pre-invested capital in our Grand Rapids corridor that is positioned very well, even in the event prairie connector didn't advance.

Speaker #3: The growth in the basin has allowed us to begin discussions around leveraging that pre-invested capital in our corridors in the Grand Rapids. And in hardesty to seek potential seeing more barrels move and whether that's through West Coast Solutions or out east or south via our systems, we have seen more opportunities and more discussions in the Inter Alberta than we did at the time of spin for sure.

Bevin Wirzba: We have seen more opportunities and more discussions in the intra-Alberta than we did at the time of spin, for sure. On the inorganic side, that means some of the inorganic assets that are in the intra-Alberta probably have a little bit more value to them because they have a good growth outlook as well. We're just being cautious, and we'll be very disciplined on our approach on the inorganic side.

Speaker #3: And, you know, on the inorganic side, that means some of the inorganic assets that are in Inter Alberta probably have a little bit more value to them because they have a good growth outlook as well.

Speaker #3: And so we're just being cautious and we'll be very disciplined on our approach on the inorganic side.

Speaker #6: Great. Thank you so much.

Ben Lund: Great. Thank you so much.

Speaker #1: Our next question comes from the line of Teresa Chen of Barclays. Your line is now open.

Operator: Our next question comes from the line of Theresa Chen of Barclays. Your line is now open.

Speaker #5: Good morning. Thank you for taking my questions. Bevin, would you elaborate a little bit more on your view of WCS growth over both near and medium term?

Theresa Chen: Morning. Thank you for taking my questions. Bevin, would you elaborate a little bit more on your view of WCS growth over both near and medium term? Per your earlier comments and in the press release, it looks like production remains below total pipeline egress right now. Shippers are in active negotiations with the Canadian government, it seems. How do you see the path forward for WCS production moving over the next several years? What do you view as the key catalysts or constraints that will determine the pace of growth?

Speaker #5: Per your earlier comments and in the press release, it looks like production remains below total pipeline egress right now. But shippers are in active negotiations with the Canadian government, it seems.

Speaker #5: How do you see the past forward for WCS production moving over the next several years? What do you view as the key catalyst or constraints that will determine the pace of growth?

Speaker #3: Yeah, great question, Teresa. We had an outlook, and, you know, going back to when we launched and my comments around what the environment was like in 2025, we felt at that point in time, you know, the basin had grown about a million barrels a day over the 10 years prior.

Bevin Wirzba: Yeah. Great question, Teresa. We had an outlook and going back to when we launched and my comments around what the environment was like in 2025, we felt at that point in time the basin had grown about 1 million barrels a day over the 10 years prior. We felt that with the TMX pipeline coming on, that we were around 250,000 barrels a day long egress, but that the growth in the basin through optimization capital primarily would see that supply demand or an egress balance get into a situation where we're short egress by kind of 2027. There's been some additional capacity developed, shifting our view maybe perhaps to mid-2027, where we'd see that the basin will have exceeded the capacity.

Speaker #3: And we felt that with the TMX pipeline coming on, that we were around 250,000 barrels a day long egress, but that the growth in the basin through optimization capital primarily would see that that supply-demand and egress balance get into a situation where we're short egress by kind of 2027.

Speaker #3: Now, there's been some additional capacity developed shifting our view maybe perhaps to mid-27, where we'd see that the basin will have exceeded the capacity.

Speaker #3: And I've connected here very recently in the last few weeks with the CEOs of a number of our customers and they share the same view that their or their base assets will be able to grow to achieve growth out of their assets to exceed what's currently available.

Bevin Wirzba: I've connected here very recently in the last few weeks with the CEOs of a number of our customers, and they share the same view that their base assets will be able to grow to achieve growth out of their assets to exceed what's currently available. That's what really underpinned the desire of our customers to underwrite our Prairie Connector project as they see that from their base assets. Longer term, we see our project as a way to ramp into the larger aspirations that are occurring in Western Canada to see other egress markets. Consistently, I think if you read the quarterly releases of our customers, they've all been able to demonstrate very significant improvements in operating costs and maintenance capital cost to underwrite that growth.

Speaker #3: And that's what really underpinned the desire of our customers to underwrite our prairie connector project as they see that from their base assets. Longer term, we see our project as a way to ramp into the larger aspirations that are occurring in Western Canada to see other egress markets and, you know, the consistently, I think if you read the quarterly releases of our customers, they've all been able to demonstrate very significant improvements in operating costs and maintenance capital costs to underwrite that growth.

Speaker #3: So we see the environment as being very constructive to support not only our base business, but also ongoing growth out of in the Inter Alberta market.

Bevin Wirzba: We see the environment as being very constructive to support not only our base business but also ongoing growth in the intra-Alberta market.

Speaker #5: Thank you. And on the topic of capacity, to digest this magnitude of potential growth across your assets, your comment about currency, your currency as a potential tool for inorganic growth, can you just elaborate more on potential financing options for both inorganic and organic currency as one consideration, but also possibly, you know, deep pools of private capital that may be available to you?

Theresa Chen: Thank you. On the topic of capacity to digest this magnitude of potential growth across your assets, your comment about your currency as a potential tool for inorganic growth, can you just elaborate more on potential financing options for both inorganic and organic? Currency is one consideration, possibly deep pools of private capital that may be available to you. Any thoughts there?

Speaker #5: Any thoughts there?

Speaker #3: Yeah, Teresa, at our investor day in November, we laid out a column, the colors of the rainbow. There's obviously there's equity, there's our shares, but there's also you know, the pools of capital that have been very active say on the private insurance or investment-grade joint venture capital, the debt capital markets have been very constructive.

Bevin Wirzba: Yeah. Theresa, at our investor day in November, we laid out, I call them the colors of the rainbow. Obviously there's equity, there's our shares, there's also the pools of capital that have been very active, say, on the private insurance or investment grade joint venture capital. The debt capital markets have been very constructive. We've seen a number of processes this year. Some haven't come to conclusion, we've been monitoring them closely. I'll pass it to Van to describe how we generally think of our capital stack.

Speaker #3: And we've seen a number of processes this year some haven't come to conclusion, but we've been monitoring them closely. And so you know, I'll pass it to Van to kind of describe kind of how we generally think of our capital stack.

Speaker #4: Yeah, so out of the gate, obviously our debt was at around 5 times net debt to EBITDA. We've brought that down to 4.4 times, and if you take the credit rating agencies into account, you can come to a conclusion on how much additional debt we can take on. Beyond that, we would have to look at equity, or debt insurance capital, or hybrids, or other forms of capital. So, as Bevin mentioned, we're looking at all forms and we also are ensuring that the credit rating agencies are involved and are up to speed on our thoughts.

Van Dafoe: Yeah. Out of the gate, obviously our debt was at around 5x net debt to EBITDA. We've brought that down to 4.4x. If you model it out and take the credit rating agencies into account, you can come to a conclusion on how much traditional additional debt we can take on. Besides that, we'd have to look at equity or that insurance capital or hybrids or other forms of capital. As Bevin mentioned, we're looking at all forms, we also are ensuring that the credit rating agencies are involved and are up to speed on our thoughts.

Speaker #5: Thank you.

Theresa Chen: Thank you.

Speaker #1: Thank you. Our next question comes from the line of Keith Stanley of Wolfe Research. Your line is now open.

Operator: Thank you. Our next question comes from the line of Keith Stanley of Wolfe Research. Your line is now open.

Keith Stanley: Hi. Good morning. First one to start, it's obviously very early days on this proposed 1 million barrel a day West Coast pipeline backed by the government. How does that project being on the table impact how you think about Prairie Connector, as well as, I guess, the timing for when and how you'd recontract Keystone, if it does at all?

Speaker #6: Hi, good morning. First, wanted to start, it's obviously very early days on this proposed million barrel a day West Coast pipeline. Backed by the government, but how does that project being on the table impact how you think about prairie connector as well as I guess the timing for when and how you'd re-contract Keystone if it does at all?

Speaker #3: Yeah, thanks Keith. Certainly our customers that were part of that trilateral agreement were well aware of the ambitions of the government on other egress solutions and even in that intimate knowledge of where that was going, they bid in very confidently into our open season on prairie connectors.

Bevin Wirzba: Yeah. Thanks, Keith. Certainly our customers that were part of that trilateral agreement were well aware of the ambitions of the government on other egress solutions. Even in that intimate knowledge of where that was going, they bid in very confidently into our open season on Prairie Connector. We believe our commercialization is very solid there. What's important on recontracting, Keith, is irrespective of whatever solutions come up in the future, is where you're delivering those barrels and at what cost. We believe that we can continually be the most competitive solution for those barrels. A West Coast solution, I mentioned to Theresa that we were really targeting the optimization barrels that were going to come in the basin, not the new greenfield projects to underwrite Prairie Connector.

Speaker #3: So, we believe our commercialization is very solid there. What's important on re-contracting, Keith, is irrespective of whatever solutions come up in the future, it's where you're delivering those barrels and at what cost.

Speaker #3: And we believe that we can continually be the most competitive solution for those barrels. And a West Coast solution, you know, I mentioned to Teresa that we were really targeting the optimization barrels that were going to come in the basin, not the new greenfield projects, to underwrite prairie connector.

Speaker #3: And so any material if as the West Coast solution moves forward and we're encouraged by the basin growing and our customers growing, but those would require very significant greenfield investments.

Bevin Wirzba: As the West Coast solution moves forward, we're encouraged by the basin growing and our customers growing, those would require very significant greenfield investments, new production streams in addition to the ones that are currently on our base systems. These are incremental barrels, and we don't believe that it's mutually exclusive to our systems to see our barrels move away. As long as we do our job and provide the best customer solutions at a very competitive rate, we think that there's room for both.

Speaker #3: So, new production streams in addition to the ones that are currently on our base systems. So these are incremental barrels, and we don't believe that it's mutually exclusive to our systems to see our barrels move away.

Speaker #3: So as long as we do our job and provide the best customer solutions at a very competitive rate, we think that there's room for both.

Speaker #6: Got it. That makes a lot of sense. Second one, on prairie connector, just to follow up, are there ways to achieve the government assurance of permit durability beyond U.S.

Keith Stanley: Got it. That makes a lot of sense. Second one, on Prairie Connector, just to follow up, are there ways to achieve the government assurance of permit durability beyond US legislation that we might not be thinking of? You mentioned a stacked insurance type pyramid to figure this out. Maybe there's executive branch options. I guess my question is, are there multiple paths to get to the permit durability, or is it one really that you have in mind?

Speaker #6: legislation that we might be not be thinking of? You mentioned kind of like a stacked insurance type pyramid to figure this out. Maybe there's executive branch options.

Speaker #6: Just I guess my question is, are there multiple paths to get to the permit durability or is it one really that you have in mind?

Speaker #3: No, I think Keith, as I mentioned, there are multiple paths. Going back to my risk allocation, comments, there are many beneficiaries. You know, not only ourselves and our customers, but many jurisdictions benefit from the economic benefits that this project will deliver.

Bevin Wirzba: No, I think, Keith, as I mentioned, there are multiple paths. Going back to my risk allocation comments, there are many beneficiaries, not only ourselves and our customers, but many jurisdictions benefit from the economic benefits that this project will deliver. Matching the right risks that are in the project to the right beneficiary is the path that we're taking. There's many of those discussions and if I describe the pie of my day, it looks very different than it did a year and a half ago. Same with our team. We're active on many fronts.

Speaker #3: And so matching the right risks that are in the project to the right beneficiary is the path that we're taking. And so those are, there's many of those discussions and you know, if I describe the pie of my day, it looks very different than it did a year and a half ago.

Speaker #3: And same with our team—you know, we're active on many fronts.

Speaker #6: Thank you.

Keith Stanley: Thank you.

Speaker #3: Yeah, thanks Keith.

Bevin Wirzba: Yeah. Thanks, Keith.

Speaker #1: Thank you. Our next question comes from the line of Samantha Banerjee of UBS. Your line is now open.

Operator: Thank you. Our next question comes from the line of Sumantra Banerjee of UBS. Your line is now open.

Speaker #7: Hi, good morning. Thanks so much for taking the question. Great to see the guidance phrase and aside from the market volatility that we've been seeing and also you've talked about the pressure restrictions potentially being lifted before, I was curious if there's anything else that may push you towards the top end of the guidance.

Sumantra Banerjee: Hi. Good morning. Thanks so much for taking the question. Great to see the guidance raise. Aside from the market volatility that we've been seeing, also you've talked about the pressure restrictions potentially being lifted before, I was curious if there's anything else that may push you towards the top end of the guidance?

Bevin Wirzba: H1, I referred to there was a lot of macro environment volatility that provided some additional opportunity that H1 we outperformed our own budget expectations. Inventories in Hardisty and Cushing are at a kind of all-time lows. We think that our guidance reflects our view that H2 will be modest compared to H1. Things that could drive us to the upside would be just different events where those arbs open up. The goal of our team, our system operating factor in this last bit exceeded our expectations as well. Having our systems open and available for spot volumes. As Richard pointed out, we had some record volumes, so we know what we can do.

Speaker #3: You know, we've seen you know, the first half of the year, I referred to there was a lot of macro environment opportunity that the front half of the year we may have outperformed kind of our own budget expectations.

Speaker #3: But inventories in hardesty and cushing are at kind of all-time lows and so we think that our guidance, you know, reflects our view that the second half of the year will be modest compared to the first half of the year.

Speaker #3: Things that could drive us to the upside, you know, would be just different events where those ARBs open up. And the goal of our team, you know, our system operating factor in this last bit exceeded our expectations as well.

Speaker #3: So having our systems open and available for spot volumes as Richard pointed out, we had some record volumes. So we know what we can do, but you know, right now we're tempered by kind of inventory levels and the broader macro that's out there.

Bevin Wirzba: right now we're tempered by inventory levels and the broader macro that's out there.

Speaker #7: Got it. That's very helpful. And then also wanted to touch upon Blackrod that 10 million that you called out in the press release for the growth capex is curious about what activities are needed for that and the completion.

Sumantra Banerjee: Got it. That's very helpful. Then also wanted to touch upon Blackrod, that CAD 10 million that you called out in the press release for the growth CapEx. Just curious about what activities are needed for that and the completion.

Speaker #6: Yeah, so it's Richard here. With respect to Blackrod, we're well into final wet commissioning activities. And so the capital that we're consuming in 2026 for the project, it's really just finalization activities of the project.

Richard Prior: Yeah. It's Richard here. With respect to Blackrod, we're well into final wet commissioning activities. So the capital that we're consuming in 2026 for the project, it's really just finalization activities of the project to get it into service. We expect to be through all the wet commissioning activities here within the next month or two. Then beyond that, it's just simple final reclamation of the site.

Speaker #6: To get it into service, we expect to be through all the wet commissioning activities here within the next month or two and then beyond that, it's just simple final reclamation of the sites.

Speaker #7: Got it. Thank you so much. That's very helpful.

Sumantra Banerjee: All right. Thank you so much. That's very helpful.

Operator: Our next question comes from the line of Praneeth Satish of Wells Fargo. Your line is now open.

Speaker #1: Our next question comes from the line of Praneeth Shatis of Wells Fargo. Your line is now open.

Speaker #3: Good morning. Good morning, everyone. So I realize it's still very early and you know, prairie connector hasn't reached FID, but assuming the project does move forward as planned, how much future expansion capacity could the system support?

Praneeth Satish: Good morning, everyone. I realize it's still very early and Prairie Connector hasn't reached FID, but assuming the project does move forward as planned, how much future expansion capacity could the system support? Could Prairie Connector and Liberty Pipeline be expanded towards the original 800,000 barrels per day that Keystone XL was designed to move, or could it move even higher? As we think about the expansion economics, I guess, is it reasonable to assume that any expansion would fall towards the low end of your 5x to 7x build multiple, given that it's mostly brownfield?

Speaker #3: Could it, could prairie connector and Liberty pipeline be expanded towards the original 800,000 barrels per day that Keystone Excel was designed to move or could it move even higher?

Speaker #3: And then as we think about the expansion economics, I guess, is it reasonable to assume that any expansion would fall towards the low end of year five to seven times build multiple given that it's mostly brownfield?

Speaker #6: Yeah, great question, Praneeth. We're leveraging our pre-invested corridor, which was you know, permitted for those higher volumes, as you suggest. We've decided an approach to capitalize prairie connector at a lower level to that could be underwritten by you know, the 465,000 barrels a day that we achieved through the open season, but it is the systems are designed that could be easily expanded in the future to capture you know, north of that 800,000 barrels a day in the future.

Bevin Wirzba: Yeah. Great question, Praneeth. We're leveraging our pre-invested corridor, which was permitted for those higher volumes as you suggest. We've decided an approach to capitalize Prairie Connector at a lower level that could be underwritten by the 465,000 barrels a day that we achieve through the open season. The systems are designed that could be easily expanded in the future to capture north of that 800,000 barrels a day in the future. Those would certainly be at a build multiple at the low end or even below the end of our normal range, given all we would need is additional pumping capacity. We're matching our system design from up in Alberta, ex Hardisty, all the way down to the Gulf Coast as a similarly sized system.

Speaker #6: And those would certainly be at a build multiple at the low end, or even below the end, of our normal range. Given all we would need is additional pumping capacity.

Speaker #6: So we're matching our system design from up in Alberta, ex-Hardisty, all the way down to the Gulf Coast, as a similarly sized system.

Speaker #3: Gotcha. That's helpful.

Praneeth Satish: Got you. That's helpful.

Speaker #6: And I think.

Bevin Wirzba: And I think-

Speaker #3: Oh, sorry, go ahead.

Praneeth Satish: Sorry. Go ahead.

Speaker #6: And I was just going to say, and I think I know one of the first questions is why what made our project different. I think that expandability was of very high appeal to our customers in that they could see the ability to have contingency for our system to grow at very low rates.

Bevin Wirzba: I was just going to say, and I think I know one of the first questions was what made our project different. I think that expandability was of very high appeal to our customers in that they could see the ability to have contingency for our system to grow at very low rates. That was another feature of our project.

Speaker #6: So that was another feature of our project.

Speaker #3: Makes sense. Maybe staying on the project. So you know, when we think about the timeline from mid-2027 FID to year-end 2028 in service date, I mean, does seem like a bit of a compressed timeline there.

Praneeth Satish: Makes sense. Maybe staying on the project, when we think about the timeline from mid-2027 FID to year-end 2028 in-service date, it does seem like a bit of a compressed timeline there. Looking at this schedule, I guess that would be two construction windows. Can you help us understand if Prairie Connector and Liberty, can they be done in a single construction season or would it require two? Just trying to get a sense of how much cushion there is there in that timeframe.

Speaker #3: You know, looking at this schedule, I guess that would be two construction windows, but can you help us understand if prairie connector and Liberty can they be done in a single construction season or would it require two?

Speaker #3: And just trying to get a sense of you know, how much cushion there is there in that timeframe.

Speaker #6: Yeah, I would just say at this point in time, we're focused on the base plan and the base schedule, which would be a you know, targeting a mid-2027 FID and then as you point out, you know, that gives us two construction seasons to build these pipelines.

Richard Prior: Yeah. I'd just say at this point in time, we're focused on the base plan and the base schedule, which would be targeting a mid-2027 FID. As you point out, that gives us two construction seasons to build these pipelines. We're not, at this stage, considering contingencies and accelerated schedules or different plans to that.

Speaker #6: And you know, we're not at this stage, you know, considering contingencies and accelerated schedules or different plans to that. So understood.

Praneeth Satish: Understood. I'll leave it there. Thanks, guys.

Speaker #3: I'll leave it there. Thanks, guys.

Speaker #6: You too.

Richard Prior: Thank you.

Speaker #1: Our next question comes from the line of Benjamin Pham of BMO. Your line is now open.

Operator: Our next question comes from the line of Benjamin Pham of BMO. Your line is now open.

Speaker #5: Good morning. You mentioned you're advancing the prairie connector project. You've now mentioned the joint development of the Liberty bridge. Can you talk about your willingness or really the lack of willingness on the bridge area?

Benjamin Pham: Good morning. You mentioned you're advancing the Prairie Connector project. You've now mentioned the joint development of the Liberty Bridge. Can you talk about your willingness or really the lack of willingness on the Bridger side of things with respect to why you didn't want to jointly develop that piece of the project?

Speaker #5: Side of things. With respect to why you didn't want to jointly develop that piece of the project.

Speaker #3: Well, Ben, this is a highly coordinated effort and project. There's clearly we're putting together three very good projects. All underwritten by customers and you know, leveraging the strengths of each of our organizations.

Bevin Wirzba: Well, Ben, this is a highly coordinated effort and project. Clearly, we're putting together three very good projects, all underwritten by customers and leveraging the strengths of each of our organizations. You could appreciate that by the time we get to FID, there'll be much more clarity around how the overall execution and the structure of our plans going forward. Obviously, in Canada, we have our permits that we're maintaining, and those have been maintained by us. Bridger has an expansion project that logically fits within that scope, and jointly, we're advancing the development of a different project. Collectively, we feel that is a good approach to developing a project that can serve the needs of our customers. There's not much more magic to it other than we're working on what's in our backyards and working on three separate projects that are highly coordinated together.

Speaker #3: And so you could appreciate that you know, by the time we get to FID, there'll be a much more clarity around how the overall execution and the structure of our plans going forward.

Speaker #3: Well, you know, obviously in Canada we have our permits that we're maintaining, and those have been maintained by us. Bridger has an expansion project that logically fits within that scope, and jointly we're advancing the development of a different project.

Speaker #3: And so collectively we feel that that is a good approach to developing a project that can serve the needs of our customers. So there's not much more magic to it other than kind of we're working on what's in our backyards and working on three separate projects that are highly coordinated together.

Benjamin Pham: Right. Got it. I know there was a question earlier on the funding side of things, whether it's Prairie Connector or other initiatives on the go. Can you clarify the, I know you mentioned the credit rating agencies, when you think about the 4x target, are you aligning with the agencies where you take a hybrid and then the project debt is off balance sheet? Can you clarify how that works if you are aligning with the credit rating agencies?

Speaker #5: Right. Got it. And I know there's a question earlier in the funding side of things, whether it's prairie connector or other initiatives on the go.

Speaker #5: Can you clarify the I know you mentioned the credit rating agencies. When you think about the four times target, are you aligning with the agencies where you're you take a hybrid and then the project debt gave us off balance sheet.

Speaker #5: Can you clarify how that works if you are aligning with the credit rating agencies?

Speaker #2: Yeah, Ben, it's Van here. We keep the credit rating agencies up to speed so they are mark to market on our modeling on prairie connector.

Van Dafoe: Yeah, Ben, it's Van here. We keep the credit rating agencies up to speed, so they are mark-to-market on our modeling on Prairie Connector. There's different ways to use, let's say, non-traditional debt instruments. Again, we're working with the credit rating agencies to ensure our investment-grade rating stays where it is.

Speaker #2: And so, you know, there are different ways to use, let's say, non-traditional debt instruments. And again, we're working with the credit rating agencies to ensure our investment grade rating stays where it is.

Speaker #5: Okay. And maybe just a follow-up on that related is you mentioned some comments on private capital as an opportunity and JVs. I recollect when South Bow was spun up from Trapp, there was quite a widespread between private and the public markets and that's what drove the public spin out.

Benjamin Pham: Okay. Maybe just a follow-up on that related, I see you mentioned some comments on private capital as an opportunity in JVs. I recollect when South Bow was spun off from TC Energy, there was quite a wide spread between private and the public markets, and that's what drove the public spin-out. Can you characterize or comment on how that's changed, if any, over time? Now we're talking less about ESG, the public portfolio is much more positive than it was a few years ago. Has that gap closed in noticeably?

Speaker #5: Can you characterize or comment on how that's changed if any? Over time now we're talking less about ESG, the outlook with oil is much more positive than it was a few years ago.

Speaker #5: Has that gap closed in noticeably?

Speaker #3: You know, Ben, I think it's very circumstantial to the certain assets. There's certainly a significant increase in the pool of infrastructure capital globally. You know, when we talk to private markets, the inflows that have come into those infrastructure funds is very, very significant.

Bevin Wirzba: Ben, I think it's very circumstantial to certain assets. There's certainly a significant increase in the pool of infrastructure capital globally. When we talk to private markets, the inflows that have come into those infrastructure funds is very significant. Obviously, you see a huge pull on those funds into the activities of data centers and other things. The pools of capital flowing even into assets like ours are significant. The markets are converging between private and public to a degree, but it's really focused on the risk preferences and the commercial profile of the assets is very important for those private markets. When we refer to investment-grade joint ventures, it's long life, highly contracted assets that are key. The capital's not flowing to merchant assets or things that have risk preferences that look differently to our business.

Speaker #3: Obviously, you see a huge pull on those funds into, you know, the activities of data centers and other things. But the pools of capital flowing even into assets like ours are significant.

Speaker #3: So the markets are converging, you know, between private and public to a degree, but it's really focused on the risk preferences and the commercial profile of the assets, which is very, very important for those private markets.

Speaker #3: And so when we refer to investment grade joint ventures, it's long life, highly contracted assets that are key that the capital is not flowing to merchant assets or things that have risk preferences that look differently to our business.

Benjamin Pham: Yeah, that's good context. Thank you.

Speaker #5: That's good context. Thank you.

Speaker #3: Thanks, Ben.

Bevin Wirzba: Thanks, Ben.

Speaker #1: I'm showing no further questions at this time. I would now like to turn it back to Bevin Wirzba for closing remarks.

Operator: I'm showing no further questions at this time. I would now like to turn it back to Bevin Wirzba for closing remarks.

Speaker #3: Thank you all for joining us today and for your continued interest in South Bow. We look forward to updating you on our progress in the months ahead.

Bevin Wirzba: Yeah. Thank you all for joining us today and for your continued interest in South Bow. We look forward to updating you on our progress in the months ahead. Enjoy the rest of your summer.

Speaker #3: And enjoy the rest of your summer.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

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