South Bow (SOBO) Investor Update summary

Strategic Positioning and Business Fundamentals

• Operates a 4,900 km critical energy infrastructure corridor connecting resilient Canadian crude supply to major U.S. refining markets, with a supply push and demand pull asset structure and industry-leading commercial contracts averaging 7.5–8.5 years in duration.

• 88% of EBITDA is contracted, 96% of revenue is with investment-grade customers, and the business carries minimal commodity price or volumetric risk.

• The system serves the two largest U.S. refining markets (PADD 2 and PADD 3), with expectations of continued growth in Canadian heavy crude demand and supply.

• The company delivers 1.25 million barrels per day and operates 7.6 million barrels of tank terminal storage.

• Recent investor engagement resulted in 97% shareholder approval for the spin-off and a debt offering that was over six times oversubscribed.

Growth Projects and Operational Performance

• Keystone system throughput has increased, with 585,000 barrels per day contracted and 35,000 barrels per day reserved for spot, achieving a 95% system operating factor in H1 2024.

• Keystone Pipeline System spans 4,300 km, with average throughput of 596 Mbbl/d in 2023 and a system operating factor of 95%.

• Recent capital-efficient projects include the Port Neches Link and Houston Link, enhancing connectivity and customer optionality.

• The Blackrod Connection project, a CAD 250 million investment, is expected in service by 2026 and underpins near-term growth, driving 2–3% comparable EBITDA CAGR.

• Intra-Alberta pipelines, including Grand Rapids and White Spruce, have long-term contracts and are directly connected to TMX, supporting stable cash flows.

Financial Strategy and Capital Allocation

• Initial net debt to EBITDA is about 5x, with a target to reduce to 4.0x over the long term, supported by growth projects and debt reduction.

• Capital priorities include reducing leverage by 0.25x–0.50x net debt-to-comparable EBITDA within three years, investing in strategic corridor projects, opportunistic share repurchases, and sustainable dividend growth.

• A $2 billion credit facility provides additional liquidity, and the company will focus on opportunistic share buybacks and a stable, sustainable dividend.

• The inaugural quarterly dividend is set at CAD 0.69 per share (about US$2.00/share annually), with future increases contingent on reducing payout ratios below 100% of earnings.

• 2025 financial outlook projects C$1.4–$1.5 billion in comparable EBITDA, minimal commodity price risk, and stable, predictable cash flows.