South Bow Corporation

South Bow Corp. raised its 2026 distributable cash flow guidance to about US$665 million after a stronger-than-expected first half, while maintaining a quarterly dividend of US$0.50 per share. The higher guidance follows second-quarter 2026 distributable cash flow of US$175 million, up 4% from the first quarter, and reflects fee-based revenue from the Keystone Pipeline System that currently covers the dividend. The company's narrative projects $2.1 billion in revenue and $458.8 million in earnings by 2029, assuming 1.9% yearly revenue growth and a slight $1.2 million earnings decrease from $460.0 million today, with a CA$51.03 fair value implying 6% upside. Elevated debt levels and interest costs remain the key risk to watch, even as the upgraded cash flow outlook supports the near-term cash flow stability case.

South Bow Corp. reported second-quarter 2026 revenue of $546 million and net income of $134 million, or $0.64 a share, as disrupted global crude flows drove shippers to its US Gulf Coast system. Throughput on the US Gulf Coast segment of the Keystone Pipeline System averaged roughly 800,000 barrels per day, up from 709,000 bbl/d in the first quarter and 760,000 bbl/d a year earlier, lifting normalized EBITDA to $280 million, a 9% increase from the first quarter, and distributable cash flow to $175 million, up 4% sequentially. The board declared a quarterly dividend of $0.50 a share, payable October 15, to shareholders of record as of September 29, and management raised full-year guidance to $1.04 billion in normalized EBITDA and $665 million in distributable cash flow. An open season closed with 20-year binding commitments from nine customers for 465,000 bbl/d of firm transportation service from Hardisty, Alta., to US delivery points. South Bow warned that third-quarter normalized EBITDA will land about 10% below the second quarter's $280 million as declining crude inventories at Cushing, Okla., tighten pricing differentials, and it raised growth capital spending guidance to approximately $80 million, largely for $65 million of pre-final investment decision costs tied to the proposed Prairie Connector and Liberty Bridge Pipeline projects, with a final investment decision not targeted until mid-2027.

Algoma Steel and South Bow shares rose after President Trump announced a tentative deal to stave off potential new 50% duties on $20 billion worth of Canadian imports. Algoma Steel surged 14.5% in Thursday's trading, while South Bow initially jumped before paring gains to 0.8% after Trump indicated the cross-border Keystone XL pipeline project could be revived. Algoma has been hard hit by Trump administration tariffs aimed at the steel industry, and the company warned the earlier 50% U.S. Section 232 tariff had fundamentally altered and permanently disrupted its cross-border business model. The company's Q2 shipments to the U.S. represented 23% of total steel shipments, down sharply from 54% in the year-earlier quarter and a historical range of 45%-55%. United Steelworkers union national director Marty Warren said existing tariffs continue to hurt Canadian steel, aluminum, copper, forestry, automotive, and other industries.