South Bow Corp., an independent oil pipeline operator, expressed concerns about its marketing segment's performance amid ongoing 10% tariffs on U.S. energy exports. The company noted that this situation creates volatility in crude price differentials, which impacts capacity usage on its pipelines. CEO Bevin Wirzba stated that customers are changing their oil transport strategies, potentially opting for storage or alternative routes. Consequently, South Bow has lowered its 2025 earnings forecast by $30 million due to market uncertainties and increased pipeline capacity outpacing oil supply from Western Canada. In its recent financial results, the firm reported a net income increase year-over-year.
Persistence of this uncertainty may create additional headwinds for uncommitted capacity on South Bow's pipeline systems and impact South Bow's marketing segment results.
The other options for our customers are to leave those barrels in storage, or move them east or west... as long as tariffs are in place, as it provides another incentive for customers to consider other options than moving their barrels south.
South Bow said it has cut its 2025 outlook for normalized earnings before interest, taxes, depreciation and amortization in its marketing segment by about $30 million compared with 2024, due in part to the market uncertainty resulting from tariffs.
During the last three months of 2024, South Bow reported normalized net income of $112 million, compared with $94 million during the same period a year earlier when its business was still part of TC Energy.
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