On August 5, South Bow Corp. (NYSE:SOBO) reported second-quarter 2026 results that showed how much one Gulf Coast pipeline segment can move the needle for a company barely two years removed from its spinoff. Revenue reached $546 million and net income climbed to $134 million, or $0.64 a share, as disrupted global crude flows sent shippers scrambling for capacity on the company's US Gulf Coast system. The board also declared a quarterly dividend of $0.50 a share, payable October 15, to shareholders of record as of September 29.
The headline number was throughput. The US Gulf Coast segment of the Keystone Pipeline System averaged roughly 800,000 barrels per day in the second quarter, up from 709,000 bbl/d in the first quarter and 760,000 bbl/d a year earlier, as disruptions to global crude oil trade flows pushed shippers toward the corridor. That volume flowed straight to the bottom line.
Normalized EBITDA rose to $280 million, a 9% increase from the first quarter, and distributable cash flow reached $175 million, up 4% sequentially. Net income more than doubled from the first quarter's $77 million. The balance sheet moved in the same direction.
Net debt fell to $4.594 billion from $4.738 billion at the end of the first quarter, and the net debt-to-normalized EBITDA ratio improved to 4.4 times from 4.7 times. South Bow also locked in long-term demand: 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. Management responded to the stronger first half by raising full-year guidance, lifting the 2026 normalized EBITDA target to $1.04 billion and the distributable cash flow target to $665 million.
The same release that raised guidance also flagged why the second quarter's strength may not repeat. South Bow expects third-quarter normalized EBITDA to land about 10% below the second quarter's $280 million, as declining crude inventories at Cushing, Okla., tighten pricing differentials and cool demand for Gulf Coast capacity. Management also said demand for uncommitted space on the core Keystone Pipeline is likely to stay tempered through the rest of 2026, since Western Canadian crude supply growth continues to lag total pipeline egress capacity.
Debt remains a real number even after the quarter's improvement. Total long-term debt stood at $5.734 billion at quarter end, and the leverage ratio, while lower, is still above 4 times normalized EBITDA. Growth capital spending guidance was also raised to approximately $80 million, largely to cover $65 million of pre-final investment decision costs tied to the proposed Prairie Connector and Liberty Bridge Pipeline projects, neither of which has been sanctioned; a final investment decision is not targeted until mid-2027.
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