South Bow Corp · TSX:SOBO
South Bow — Corporate Update (September 2024)
41 slides from South Bow's corporate update, Sep 9, 2024
Slide 1: Virtual Corporate Update
Virtual Corporate Update SEPTEMBER 9, 2024
Slide 2: Agenda
Agenda CORPORATE & STRATEGIC OVERVIEW Bevin Wirzba President and Chief Executive Officer CORPORATE GOVERNANCE OVERVIEW Hal Kvisle Board Chair ASSET OVERVIEW Richard Prior Senior Vice-President and Chief Operating Officer FINANCIAL OVERVIEW Van Dafoe Senior Vice-President and Chief Financial Officer
Slide 3: Advisory Statements
Advisory Statements FORWARD-LOOKING INFORMATION This presentation includes certain forward-looking information, including future-oriented financial information or financial outlooks, which is intended to help current and potential investors understand Management's assessment of South Bow's future pl
Slide 4: Advisory Statements
Advisory Statements BASIS OF PREPARATION All financial figures and information have been prepared in Canadian dollars (which includes references to "dollars" and "$"), except where another currency has been indicated. NON-GAAP AND OTHER FINANCIAL MEASURES This presentation refers to comparable EBITD
Slide 5: Corporate & Strategic Overview
Corporate & Strategic Overview
Slide 6: South Bow at a Glance
South Bow at a Glance A strategic liquids pipelines franchise connecting resilient supply to the strongest demand markets in North America LIQUIDS PIPELINES SPANNING Liquids Pipeline 4,900 km Liquids Tank Terminal City FORT MCMURRAY SAFELY AND RELIABLY DELIVERING HARDISTY 1.25 MMbbl/d CALGARY LIQUID
Slide 7: Leadership Team
Leadership Team Harnessing team's deep expertise and high-performance culture to drive strategic value and results BEVIN WIRZBA VAN DAFOE RICHARD PRIOR LORI MURATTA President and Chief Executive Officer Senior VP and Chief Financial Officer Senior VP and Chief Operating Officer Senior VP and General
Slide 8: Vision and Values
Vision and Values Guiding strategic decision-making and long-term value creation through values-based culture DELIVERING ENERGY. FORGING PROGRESS. TOGETHER. WE DO WE TAKE WE ARE WE WIN THE RIGHT PRIDE IN SAFE AS A TEAM THING WHAT WE DO 8
Slide 9: Unrivalled Corridor
Unrivalled Corridor Safely and reliably delivering a premium service to customers South Bow Pipelines CONNECTS NORTH AMERICA'S STRONGEST South Bow Tank Terminal SUPPLY AND DEMAND MARKETS Peer Pipelines OFFERS COMPETITIVE TOLLS AND COMMERCIAL STRUCTURES PROVIDES MOST DIRECT PATH TO THE US GULF COAST
Slide 10: High-quality Contractual Framework
High-quality Contractual Framework Stable, predictable cash flows underpinned by strong contract tenor and creditworthy counterparties HIGHLY CONTRACTED STRONG STRUCTURAL CREDITWORTHY CASH FLOWS DEMAND FOR SERVICES CUSTOMER BASE 88% 98% 96% of comparable EBITDA1 is of customers are refiners, of reve
Slide 11: Enduring Market Fundamentals
Enduring Market Fundamentals South Bow's business is backstopped by a robust outlook for crude oil supply and demand for decades to come WCSB CRUDE OIL SUPPLY OUTLOOK1 WCSB Liquids Pipeline MMbbl/d ~5 MMbbl/d 2023 Average Production1 6.0 4.5 3.0 1.5 0.0 2024 2030 2050 PADD 2 PADD 2 AND 3 REFINING US
Slide 12: Outlook for Western Canadian Egress
Outlook for Western Canadian Egress South Bow is well-positioned to maintain and capture additional market share given its strategic attributes WCSB CRUDE OIL PIPELINE CAPACITY OUTLOOK1 2 MMbbl/d 0.3 0.2 0.1 Production Exceeds WCSB CRUDE OIL SUPPLY Pipeline Capacity EXPECTED TO EXCEED 0.0 Pipeline C
Slide 13: Market Confidence
Market Confidence Strong capital markets support underscores the durability of South Bow's business fundamentals EQUITY CAPITAL MARKETS DEBT CAPITAL MARKETS 97% 6x 8x shareholder approval over-subscribed over-subscribed TOTAL DEBT OFFERING HYBRID DEBT OFFERING 13
Slide 14: Capital Allocation Priorities
Capital Allocation Priorities Disciplined approach to preserve optionality and maximize total shareholder return over the long term In addition to paying a sustainable base dividend, South Bow will allocate capital to: 1 2 3 4 REDUCE INVEST IN REPURCHASE GROW LEVERAGE STRATEGIC CORRIDOR SHARES BASE
Slide 15: South Bow Is a Differentiated Investment
South Bow Is a Differentiated Investment Total shareholder return will be delivered organically through a sustainable dividend and low-risk, profitable growth STRONG AND IRREPLICABLE ASSETS FINANCIAL STRENGTH SUSTAINABLE BASE WITH A COMPELLING AND INVESTMENT-GRADE DIVIDEND GROWTH PROFILE DEBT CAPITA
Slide 16: Corporate Governance Overview
Corporate Governance Overview
Slide 17: Board of Directors
Board of Directors South Bow has built an experienced Board of Directors committed to the highest standards of corporate governance CHANSOO HAL GEORGE LEONARD JOUNG1 2 KVISLE LEWIS1 2* MALLETT3 4 Independent Director Board Chair Independent Director Independent Director BOB SONYA SHANNON MARY PAT FR
Slide 18: Asset Overview
6p souTHBOw Asset Overview
Slide 19: Keystone History
Keystone History Turning an innovative solution into reality and creating an irreplicable corridor with a tremendous opportunity set 2003 2005 2010 2024 Discussions to convert latent TransCanada announces Keystone operations begin, South Bow becomes an capacity on TransCanada's proposed Keystone oil
Slide 20: Keystone Pipeline System
Keystone Pipeline System Spanning 4,300 kilometres, system safely transports liquids across three Canadian provinces and eight US states AVERAGE THROUGHPUT1 2 Liquids Pipeline FORT MCMURRAY Mbbl/d Liquids Tank Terminal City 800 HARDISTY 600 CALGARY 400 564 602 582 596 620 200 0 2020 2021 2022 2023 2
Slide 21: US Gulf Coast Segment
US Gulf Coast Segment Marketlink utilizes capacity through a transportation lease to deliver domestic crude oil from Cushing to the Gulf Coast Liquids Pipeline AVERAGE THROUGHPUT1 Liquids Tank Terminal Mbbl/d City 800 183 600 130 161 152 155 400 STEELE CITY 509 533 606 WOOD RIVER 200 427 380 PATOKA
Slide 22: US Gulf Coast Connectivity
US Gulf Coast Connectivity Enhancing connectivity to refining and terminalling facilities to serve growing demand for heavy crude oil PORT NECHES LINK P66 Beaumont Terminal Motiva Port Neches Terminal CITGO Sour Lake Terminal Valero Lucas Terminal Motiva Port Arthur Refinery Sunoco Nederland Termina
Slide 23: Intra-Alberta Pipeline Systems
Intra-Alberta Pipeline Systems Connecting Alberta's oil sands production to key refining and export markets AB SK REMAINING CONTRACT TERM1 years FORT MCMURRAY Grand Rapids 19.8 White Spruce 19.7 OIL SANDS PRODUCTION OUTLOOK2 EDMONTON MMbbl/d ESTIMATED OIL SANDS RESERVES3 >160 billion barrels 4.0 Gra
Slide 24: Blackrod Connection Project
Blackrod Connection Project Increasing connectivity in Alberta with next growth project AB SK Connection from IPC's Blackrod SAGD project to South Bow's Grand Rapids Pipeline System FORT MCMURRAY 25-km crude oil and natural gas pipelines and associated facilities IPC Capital cost of C$250 mill
Slide 25: Safety and Operational Excellence
Safety and Operational Excellence Values-based culture places strong focus on safety and operational performance SAFETY ASSET INTEGRITY SYSTEM RELIABILITY SERVICE OFFERINGS Steadily improving occupational Deploying world-class asset System operating factor Valuable offerings include safety metrics w
Slide 26: Financial Overview
6p souTHBOw Financial Overview
Slide 27: Capital Allocation Priorities
Capital Allocation Priorities Disciplined approach to preserve optionality and maximize total shareholder return over the long term In addition to paying a sustainable base dividend, South Bow will allocate capital to: 1 2 3 4 REDUCE INVEST IN REPURCHASE GROW LEVERAGE STRATEGIC CORRIDOR SHARES BASE
Slide 28: Investment-grade Financial Position
Investment-grade Financial Position Deleveraging profile de-risked by strong commercial underpinning, stable cash flows, and attractive growth outlook DEBT MATURITIES1 INVESTMENT-GRADE CREDIT RATINGS2 C$ billions Moody's S&P Fitch Baa3 BBB- BBB- 2.0 Weighted average cost of long-term debt: 5.675% St
Slide 29: Sustainable Dividend
Sustainable Dividend South Bow's stable cash flows will underpin a sustainable base dividend with an attractive yield DIVIDEND PHILOSOPHY SOUTH BOW'S INAUGURAL DIVIDEND C$0.69 Dividends will be the primary means of returning capital to shareholders Dividend stability and sustainability is of for
Slide 30: Financial Outlook
Financial Outlook Stable, predictable financial outlook driven by highly contracted cash flows 2025E FINANCIAL OUTLOOK MODELLING ASSUMPTIONS US$ C$ billions Reporting currency $1.4 to $1.5 5.675% Weighted average cost of long-term debt 24% Effective tax rate C$25MM – Annual maintenance capital expen
Slide 31: Timeline to Spinoff Completion
Timeline to Spinoff Completion South Bow expected to become a standalone company on October 1, 2024 JULY 2023 SPINOFF SUBJECT TO: Spinoff announced Receipt of favourable tax rulings from Canadian and US authorities Approval by TC Energy shareholders JUNE 2024 Establishment of investment-grade debt c
Slide 32: Trading Timeline for South Bow Shares
1 Trading Timeline for South Bow Shares South Bow's shares are expected to commence trading on the TSX on October 2, 2024 SEPTEMBER 25 OCTOBER 1 OCTOBER 2 ~OCTOBER 7 Distribution record date South Bow becomes a Regular-way trading Regular-way trading If, as, and when-issued standalone comp
Slide 33: Investor Relations and Reporting
Investor Relations and Reporting What to expect from South Bow's reporting 2025 Q4 / YE 2024 EARNINGS INAUGURAL GUIDANCE RESULTS CALLS INVESTOR DAY Early 2025 March 5, 2025 Brief remarks from Management Late 2025 / Early 2026 with emphasis on Q&A 33
Slide 34: Q&A
6 souTHBow Q&A
Slide 35: Closing Remarks
6p souTHBOw Closing Remarks
Slide 36: Why Invest in South Bow?
Why Invest in South Bow? Total shareholder return will be delivered organically through a sustainable dividend and low-risk, profitable growth STRONG AND IRREPLICABLE ASSETS FINANCIAL STRENGTH SUSTAINABLE BASE WITH A COMPELLING AND INVESTMENT-GRADE DIVIDEND GROWTH PROFILE DEBT CAPITAL STRUCTURE Sout
Slide 37: Financial Reconciliations
6p souTHBOw Financial Reconciliations
Slide 38: Non-GAAP Reconciliations
Non-GAAP Reconciliations COMPARABLE EBITDA Year Ended December 31 C$ millions 2023 2022 2021 Comparable EBITDA 1,450 1,347 1,518 Depreciation and amortization (329) (321) (310) Comparable EBIT 1,121 1,026 1,208 Specific items: Keystone regulatory decisions (57) (27) -- Keystone XL preservation and o
Slide 39: Non-GAAP Reconciliations
Non-GAAP Reconciliations NET DEBT-TO-COMPARABLE EBITDA Net debt and comparable EBITDA are non-GAAP financial measures used to compute net debt-to-comparable EBITDA. Each of net debt and comparable EBITDA do not have any standardized meaning prescribed by GAAP and therefore, may not be comparable to
Slide 40: Contact Information
Contact Information SOUTH BOW CORPORATION 707 - 5 Street SW Calgary, AB Canada T2P 0Y3 www.southbow.com INVESTOR RELATIONS Martha Wilmot Director, Investor Relations Ben Pike Investor Relations Analyst investor.relations@southbow.com 40
Slide 41: Delivering Energy. Forging Progress. Together.
DELIVERING ENERGY. FORGING PROGRESS. TOGETHER.