South Bow (SOBO) investor relations material

Strategic direction and growth outlook

• Focused on safe operations, cost optimization, and delivering value to customers and shareholders, with a strong emphasis on organic and inorganic growth opportunities over the next five years.

• Ambitious target to double or triple enterprise value within three to five years, leveraging both organic projects and M&A, while maintaining a low-risk profile and disciplined capital allocation.

• Successfully completed spinoff, establishing an independent liquids pipeline company with a 4,900 km network and $11B enterprise value.

• Plans to expand within the existing Canada-U.S. corridor, prioritizing projects that leverage pre-invested capital and offer synergies, with no intention to diversify into unrelated asset classes.

• Growth strategy includes optimizing current assets, expanding intra-Alberta pipelines, and pursuing vertical integration to capture more of the value chain.

Financial guidance and capital allocation

• 2026 normalized EBITDA guidance set at $2.6 billion, with distributable cash flow (DCF) guidance at $655 million, reflecting tax optimization benefits in 2025 and 2026.

• Committed to reducing leverage to four times by late 2027, a year ahead of previous targets, and maintaining a sustainable dividend with a 7-8% yield.

• Capital allocation priorities are to fund dividends, debt reduction, and growth capital from internal cash flow, with external financing reserved for large-scale opportunities.

• Dividend payout ratio targeted to decrease from initial 123% to below 100% over the medium term.

• No recontracting benefits are embedded in current enterprise value growth targets; focus remains on optimizing existing contracts and preparing for future recontracting.

Operational excellence and asset integrity

• Achieved 1.5 million work hours without a recordable incident, emphasizing a culture of safety and simplified processes.

• Invests $150 million annually in pipeline integrity, employing advanced inspection technologies and proactive risk management.

• Responded effectively to the Milepost 171 incident, implementing remedial programs and expecting to lift pressure restrictions incrementally in 2026.

• Industry-leading asset integrity program, targeting lower accident rates through proactive inspections and technology.

• Comprehensive integrity program includes increased in-line inspections and integrity digs through 2026.