South Bow Corp(SOBO)Q2 2026 法說會逐字稿

Good day, and thank you for standing by. Welcome to South Bow Q2 2026 Results Conference Call and Webcast. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Martha Wilmot. Please go ahead.

Thank you, Dana, and welcome, everyone, to South Bow's Second Quarter 2026 Earnings Call. With me today are Bevin Wirzba, President and Chief Executive Officer; Van Dafoe, Senior Vice President and Chief Financial Officer; and Richard Prior, Senior Vice President and Chief Operating Officer. Before I turn it over to Bevin, I'd like to remind listeners that today's remarks include forward-looking information and statements that are subject to the risks and uncertainties addressed in our public disclosure documents available under South Bow's SEDAR+ profile and in South Bow's filings with the SEC. Today's discussion will also include non-GAAP financial measures and ratios that may not be comparable to those presented by other entities. With that, I'll turn it over to Bevin.

Good morning, everyone. We appreciate you joining us today. While we're proud of our safe and reliable operations, strong financial performance and improved outlook for 2026, the defining achievement of the first half of the year was the success of our open season and the momentum we've continued to build across our growth portfolio. Securing 465,000 barrels a day of 20-year customer commitments from a broad producer group was a significant milestone for our team and, more importantly, a strong endorsement from our customers. This demonstrates the value of our corridor, the strength of our market position and the continued need for additional egress capacity to support growing Western Canadian crude oil production and deliver significant long-term economic benefits. These commitments are also a critical enabler for our customers. The production growth associated with these commitments will help generate the cash flows needed to enable ambitious larger scale investments across the Western Canadian Sedimentary Basin in the years ahead. Achieving commercial success has enabled us to move into the next phase of development as we advance the work required to support a final investment decision, which we are targeting for mid-2027. Over the coming months, we will focus on stakeholder engagement, execution planning, cost refinement, financing and securing the permit durability needed to support that decision. As we've said previously, permit durability remains a key requirement for South Bow. The infrastructure we operate today and the infrastructure we are looking to develop will be needed for decades to come, spanning multiple governments and market cycles while delivering significant long-term economic benefits. That's why it's critical that the certainty needed is in place to support these investments through the duration of their construction and throughout their operations. We have considered that requirement at every stage of this process, and we would not have launched the open season or advanced commercialization activities if we did not believe there was a credible path to securing the certainty needed to support a project of this importance and this scale. As with all growth opportunities, we will continue to evaluate the opportunity through the same disciplined low-risk framework that defines South Bow. With that, I'll hand it over to Richard to provide more detail on our operational performance, integrity activities and the progress we're making across our growth portfolio.

Thanks, Bevin. Safe and reliable operations, strong asset integrity and disciplined execution remain the foundation of our business. Starting with pipeline integrity, we continue to make meaningful progress on the remedial actions associated with the Milepost 171 incident. The data and insights gained through this work are being incorporated into our ongoing integrity management programs, helping to strengthen system integrity and support long-term safe and reliable operations. We remain encouraged by the progress we've made and continue to expect pressure restrictions to be lifted in a phased manner through the end of 2026 and into 2027 as this work advances. Turning to operations. Q2 was another solid quarter for the business. Performance on the U.S. Gulf Coast segment of the Keystone Pipeline System was particularly strong as disruptions to global crude oil trade drove increased demand for connectivity to refining and export markets. During the quarter, we established new throughput records on the U.S. Gulf Coast segment, reflecting close collaboration across our commercial and operational teams and highlighting the value of our corridor. Our team and assets continue to respond effectively to changing market conditions while providing customers with reliable access to the PADD 2 and 3 markets. More broadly, the quarter reinforced the strategic value of South Bow's Corridor. As Western Canadian production continues to grow, our customers increasingly value competitive market access, which we provide to North America's strongest demand markets. That same demand for market access underpins the growth opportunities we are advancing today, bringing me to our proposed Prairie Connector project and the joint development of the Liberty Bridge project with our partner, Bridger. As Bevin outlined in his earlier comments, our efforts today are focused on advancing the work required ahead of a final investment decision. To support disciplined planning and efficient execution, South Bow and Bridger are coordinating efforts while leveraging execution expertise and direct experience across our respective geographies. For Prairie Connector, our team continues to advance stakeholder engagement, execution planning and other development work streams. For Liberty Bridge, which would utilize an established corridor on privately held land to connect the Guernsey Hub to Cushing, our teams are active across a number of development work streams. That effort is focused on stakeholder and landowner engagement, permitting and execution planning. As we advance these projects, South Bow and Bridger will continue to bring the same operational, technical and commercial rigor that underpin our businesses. With that, I'll turn it over to Van to discuss our financial performance and updated outlook for 2026.

Thanks, Richard, and good morning. Our second quarter results demonstrate the strength of South Bow's underlying business. Strong operational performance and elevated demand for capacity on the U.S. Gulf Coast segment of our system translated into another quarter of solid financial results. At the same time, we continue to strengthen our balance sheet, return capital to shareholders and advance our growth priorities. Our strong results during the first half of the year reflect the competitive positioning of our assets and the efforts of our team to deliver value through a dynamic market environment. As a result, we have increased our full year normalized EBITDA guidance to $1.04 billion with a range of +/-2%. We have also increased our full year distributable cash flow guidance to $665 million with a range of +/-2%. Our strong earnings and cash flow generation continue to support balance sheet improvement. At the end of the second quarter, our leverage ratio improved to 4.4x net debt-to-normalized EBITDA, reflecting continued progress towards our highest capital allocation priority. This continued improvement in our financial position strengthens our ability to pursue growth opportunities while maintaining the disciplined capital allocation approach that defines South Bow. Accordingly, we have increased our growth capital outlook for the year to support development activities associated with the Prairie Connector and Liberty Bridge projects. These investments are focused on advancing the development activities required to support a final investment decision and are being evaluated through the same disciplined capital allocation lens that guides all investment decisions at South Bow. Finally, our Board of Directors approved our quarterly dividend of $0.50 per share yesterday, reflecting our ongoing commitment to returning capital to shareholders. With that brief overview of our financial performance and outlook, I'll turn it back to Bevin for closing remarks.

Thanks, Van. Thanks, Richard. So before we move to questions, I'd like to briefly touch on an important Board leadership transition that we announced yesterday. As part of our Board of Directors' ongoing succession planning process, Hal Kvisle stepped down as Chair of the Board, and George Lewis was appointed Chair. On behalf of the entire management team and myself personally, I'd like to thank Hal for his leadership, counsel and mentorship through South Bow's launch as an independent company and congratulate George on his appointment. We look forward to continuing to work closely with both Hal and George as we execute on our long-term strategy. So in closing and looking more broadly at the first half of the year, I believe South Bow continues to demonstrate the strengths that differentiate our business. We have delivered safe and reliable operations, strengthened our financial position and advanced our growth portfolio in a disciplined manner. At the same time, we continue to advance opportunities that build on the strategic advantages of our corridor and the capabilities we have collectively developed through decades of operating critical energy infrastructure. These opportunities have the potential to strengthen our competitive positioning and support the next phase of growth for both South Bow and our customers. The success of the open season reinforces our view that customers strongly support the additional egress capacity needed to grow Western Canadian crude oil production and that South Bow is uniquely positioned to help meet that demand. As we look ahead over the coming months and quarters, our priorities remain unchanged. We will continue to focus on safe and reliable operations, disciplined growth and financial strength. We believe those principles, combined with the advantages of our corridor and the opportunities in front of us, position South Bow to continue creating long-term value for shareholders while meeting our customers' evolving market access needs. With that, I'll now ask the operator to open the line for questions.

Our first question comes from the line of Maurice Choy of RBC Capital Markets.

I just want to start with the incremental details you shared about your successful open season. Obviously, there are many pipeline alternatives that are being proposed out there. So just curious whether at a very high level, what are your customers telling you about why your pipeline was the one that — or at least one of the ones that they supported?

Yes. Thank you, Maurice. Our customers, we've indicated all along that we are a customer-led strategy, and we've had the opportunity to listen to what they like about our base systems and what they're really striving for. And obviously, having the highest netback that you can deliver is important to our customers. Being able to offer a competitive toll is very critical, which we delivered in our open season — a very competitive toll over the long term with certainty around those tolls over a 20-year period. The second thing was getting to a market that was resilient. We've consistently said that the demand in the Gulf Coast for Canadian crude into that refining market was and is and will be resilient for decades to come. Enabling a batch system to serve directly in a bullet down to the Gulf Coast is what our customers were looking for. In addition to that, we have, since creating the initial system of Keystone, been able to deliver to multiple delivery points and having that flexibility for our customers to deliver into different kinds of exit markets is very critical for our customers.

And maybe you could finish off with a question on Liberty as well as Prairie Connector. You mentioned multiple times today in the past about permit durability, and that's being a key requirement. I wonder if you could just paint a blue sky scenario for us what the ideal situation is for you in terms of permit durability. What does that look like? And just take one step further, like what are some of the things that your counterparty who can give you that durability still wants to see before giving you that durability?

Yes, Maurice. I'd like to answer that by going back to first principles. As a developer, we've learned over the years that risk allocation in a project is really important. There are risks that we should be managing and risks that our customers are undertaking and risks that are not able to be mitigated by ourselves or our customers. That's what we focus on in terms of the permit durability component. While we all take execution and development risk across the project with our partner, our customers have taken 20-year commitments and commodity price exposure through that period. Ensuring that we have a permitted project in place that can remain durable through that period is something that we'll need others to step in on. We've been working on programs in the United States that are well established to apply and to work through the process of seeking that durability in the United States. In Canada, there are fewer precedents, but we did achieve a precedent when we advanced previous projects, and we're trying to navigate those right now. We're going to be a little bit light on the details on what that looks like specifically, Maurice, but we're well advanced in those discussions to seek what we can achieve. What's important for us is that we don't want to expose our shareholders to risk that they shouldn't be exposed to through the development of a project like this. We have proven that commerciality is there. We've proven that there's a desire to have the project move forward. We believe there's been very constructive support, both in Canadian governments as well as the United States government, and we're just trying to finalize what that form takes over the next number of months.

Our next question comes from the line of Sam Burwell of Jefferies.

I wanted to ask how much progress has been made on permitting Liberty given that you've characterized it as an existing corridor. So was there any pre-existing permitting to leverage? And then maybe at a higher level, how much is baked into the FID timeline in the way of contingencies, particularly in regards to permitting on the U.S. side?

Yes. Thanks. It's Richard here. With respect to the Liberty Bridge project, as we've mentioned, we acquired a significant amount of work that was previously done. We acquired that from Tallgrass and Bridger, which are owners of that work. That included corridor engineering and a number of right-of-way agreements that have been established, and that really puts you effectively a long way down the permitting process by having all of that work that was completed previously. There's more to come on this, and we're working right now and consulting with the agencies that will ultimately grant new permits for that part of the route. We'll have more to say at the times that we complete those permit filings. In terms of your question around timeline contingency, we looked at and studied, as did Bridger, all of the statutory permitting timelines and the regulations that are required across the projects. We've built those timelines into our schedule. We've also had consultations with the permitting agencies. So our timeline is according to those, and we believe that we're on track to reach an FID in mid-2027.

Okay. Great. And then another thing I noticed in the press release was the reference to evaluating inorganic opportunities. I mean, not expecting you guys to say what you're going to buy and when. But maybe just a little bit of color on the scope and do you have the bandwidth internally to pursue larger acquisitions while you're executing Prairie, Liberty and the whole scope of that project?

Yes. Thank you, Sam. The first and most important thing is that when we look at inorganic opportunities, they're within the same risk preferences and capital allocation principles that we've been demonstrating since our IPO. We do have the capacity internally. We've added team members through the year. We have a great team in place to evaluate opportunities. The strength of the growth prospects in our organic business also makes our currency valuable for inorganic potential. Developing organically is our priority. We've demonstrated that through the successful open season and moving that forward, and build multiples are much more accretive to shareholders than acquisition multiples. But I want to be clear that we think there could be complementary assets that we could add to the portfolio that match the joint strategy of both organic and inorganic going forward.

Our next question comes from the line of Jeremy Tonet of JPMorgan Securities.

This is Eli on for Jeremy. Just wanted to touch on long lead time item procurement, given a pretty expedited construction window here. Can you just frame whether you're already ordering and placing down payments on some of that equipment? And then maybe how much of a role do government subsidies play in those decisions?

Yes, Eli. I think we've been clear that we wouldn't expose our shareholders to material expenses or otherwise until we have the permit durability in place. With that in mind, we're managing our plan towards FID to secure the necessary durability to make some long lead purchases. We're not at that point today. But we've obviously spoken to all our suppliers and contractors to get us comfortable around our mid-2027 FID timeline for the project.

Got you. And then maybe there's been a lot of discussions of stakeholder consideration so far on the call today. But if we think about some of the activity we've seen in Montana on the partner's project, how did that kind of factor into your overall decision to maintain the FID? And what kind of conversations are you having with your partner on that sort of opposition from the stakeholder?

Yes, Eli. We're not going to speak on behalf of our partner, but you can appreciate even through Richard's remarks that we're well aware of all the permitting requirements and the importance of ensuring that stakeholders across our projects have the opportunity to be consulted through the normal regulatory processes. This is par for the course from our perspective in how you advance the project. Our partner is well aware of what those consultation requirements are. Those were already built into our schedule and our timeframe of how to pursue and get ready for an FID decision.

Our next question comes from the line of Aaron MacNeil of TD Cowen.

Maybe I'll follow up on Maurice's question on permit durability. There's been some discussion of a potential DOE loan. Is that a necessary prerequisite in your view for permit durability? Or are there other potential avenues to deliver that kind of certainty that you need to proceed with a formal FID? And if so, what does that actually look like?

Yes, Aaron. The way we've been thinking about it is like almost an insurance tower — a stack of various programs, methods, commitments by others to help secure the risks that we believe those providers are best positioned to provide for permit durability. In the United States, there are existing programs that we're working through. In Canada, there are fewer precedents on that front, but we have been in discussions for well over a year. We haven't reached conclusions on those discussions, but we wouldn't have proceeded with an open season if we didn't feel that we had customer support or broadly a pathway to secure what we needed in order to allocate capital on behalf of our shareholders to move forward.

Fair enough. Do you see the potential for permitting reform either before the midterms or during the lame-duck session as a potentially positive catalyst for either the Bridger expansion or Liberty Bridge projects? Or are you essentially too far along in both of those processes for it to matter? And if you are too far along, can you speak to how permitting reform might help you down the road on incremental projects in the future?

Well, Aaron, I'm not a political expert, but we are a member organization of the American Petroleum Institute. API, on our behalf and on behalf of all of our contributing members, has been actively working on the permitting reform file in the United States and believes that, in general, many aspects have achieved broad bipartisan support. I can't comment on whether or not it moves forward at a pace that supports what we're actively pursuing, but it certainly is a consideration that we've had for the last year.

Our next question comes from the line of Ben Lund at Goldman Sachs.

I wanted to pick up on the broader picture, but more so on the demand for Canadian heavies. We've seen a lot of moving pieces in the market, but curious if you can speak to what you're seeing in terms of real-time demand signals down at the Gulf Coast so far in the third quarter? And then also, is there any appetite to increase and add incremental throughput capacity or delivery points on the Gulf Coast to capture more of the value when the Prairie barrels arrive?

Yes, absolutely. Those are both great questions. We ran a 90-day open season, and there was a lot of macro activity going on during that period. Our customers, as they are taking on the risk of commodity exposure into that market over the next 20-plus years, are much more acutely aware of their views of the outlook of that market. Competitively sourcing reliable Canadian barrels out of a resource that has very low maintenance capital to see those barrels and that supply be resilient in a variety of market environments really fits well with serving the Gulf Coast environment. To your second question, since the development of our base Keystone asset, we've continually looked at adding different delivery points. Consistent with the Prairie Connector project, our team has been in conversations about seeking different delivery points and markets to provide that flexibility for our customers to manage their exposure over the next 20 years. We do have marine access from our systems. We're continuing to look at those options as well as other refinery connections in the Gulf Coast.

That's helpful. And maybe just a quick one on the Intra-Alberta side. Beyond Blackrod Phase 1 and the opportunity for Phase 2, it seems like Grand Rapids and White Spruce are positioned well to capture the growth in the basin. I'd be curious how conversations are progressing with the producers in the region on incremental production. And then how you'd frame up the way these types of projects compete for capital against the larger Prairie Connector and Liberty Bridge projects and even the kind of M&A that was mentioned earlier.

Ben, if you take us back to January of 2025, there was a lot of uncertainty in our business. Our customers were not in a position to grow and the capital markets they were supported by were looking for shareholder returns via buybacks and dividend growth. Fast forward a year, we have two very constructive governments, which has encouraged the capital markets as well as our customers to seek growth. We're fortunate to have pre-invested capital in our Grand Rapids corridor that is positioned very well. Even in the event Prairie Connector didn't advance, the growth in the basin has allowed us to begin discussions around leveraging that pre-invested capital in our corridors in Grand Rapids and at Hardisty to see potential increased barrel movement — whether that's through West Coast solutions or out East or South via our systems. We have seen more opportunities and more discussions in the Intra-Alberta than we did at the time of spin for sure. On the inorganic side, that means some of the inorganic assets in the Intra-Alberta probably have a little bit more value to them because they have a good growth outlook as well. We're being cautious and will be very disciplined on our approach on the inorganic side.

Our next question comes from the line of Theresa Chen of Barclays.

Bevin, would you elaborate a little bit more on your view of WCS growth over both the near and medium term? Per your earlier comments and in the press release, it looks like production remains below total pipeline egress right now, but shippers are in active negotiations with the Canadian government, it seems. How do you see the path forward for WCS production moving over the next several years? What do you view as the key catalysts or constraints that will determine the pace of growth?

Great question, Theresa. Going back to when we launched, my comments around the environment in 2025 were that the basin had grown about 1 million barrels a day over the prior 10 years. With the TMX pipeline coming on, we were around 250,000 barrels a day long on egress, but we felt that growth in the basin through optimization capital primarily would see that supply-demand and egress balance get into a situation where we'd be short on egress by 2027. Some additional capacity developments have shifted that view perhaps to mid-2027 where we'd see the basin exceed available capacity. I've connected recently with CEOs of a number of our customers, and they share the view that their base assets will be able to grow to exceed what's currently available. That's what underpinned the desire of our customers to underwrite our Prairie Connector project. Longer term, we see our project as a way to ramp into the larger aspirations that are occurring in Western Canada to see other egress markets. Consistently, if you read quarterly releases of our customers, they've been able to demonstrate significant improvements in operating costs and maintenance capital to underwrite that growth. We see the environment as constructive to support not only our base business but ongoing growth in the Intra-Alberta market.

And on the topic of capacity to digest this magnitude of potential growth across your assets: your mention of currency as a potential tool for inorganic growth — can you elaborate more on potential financing options for both inorganic and organic? Currency is one consideration, but also possibly deep pools of private capital that may be available to you. Any thoughts there?

At our Investor Day in November, we laid out the different capital options. There's equity — our shares — but there's also pools of capital that have been very active in private infrastructure and investment-grade joint ventures. The debt capital markets have been constructive. We've seen a number of processes this year; some haven't concluded, but we've been monitoring them closely. I'll pass it to Van to describe how we generally think of our capital stack.

Yes. Out of the gate, our debt was at around 5x net debt to EBITDA. We brought that down to 4.4x. If you model it out and take the credit rating agencies into account, you can conclude how much additional debt we can take on. Beyond that, we'd look at equity, insurance capital, hybrids or other forms of capital. As Bevin mentioned, we're looking at all forms, and we are ensuring that the credit rating agencies are involved and are up to speed on our thoughts.

Our next question comes from the line of Keith Stanley of Wolfe Research.

First, it's obviously very early days on this proposed 1 million barrel-a-day West Coast pipeline backed by the government. How does that project being on the table impact how you think about Prairie Connector as well as the timing for when and how you'd recontract Keystone, if it does at all?

Thanks, Keith. Our customers that were part of that trilateral agreement were well aware of the ambitions of the government on other egress solutions. Even with that knowledge, they bid confidently into our open season on Prairie Connector. We believe our commercialization is very solid. What's important on recontracting is, irrespective of future solutions, where you're delivering those barrels and at what cost. We believe we can continually be the most competitive solution for those barrels. A West Coast solution would likely target different barrels — material new greenfield production — whereas we targeted the optimization barrels coming from the basin. Those are incremental barrels, and we don't view it as mutually exclusive to our systems. As long as we provide the best customer solutions at a competitive rate, we think there's room for both.

Second one on Prairie Connector, just to follow up. Are there ways to achieve the government assurance of permit durability beyond U.S. legislation that we might not be thinking of? You mentioned a stacked insurance-type pyramid. Are there multiple paths to get to permit durability, or is there one you have in mind?

No, I think there are multiple paths. Going back to my risk allocation comments, many beneficiaries — not only ourselves and our customers, but multiple jurisdictions — would benefit from the economic benefits this project will deliver. Matching the right risks in the project to the right beneficiaries is the path we're taking. There are many discussions underway. If I describe the pie of my day, it looks very different than it did 1.5 years ago. Our team is active on many fronts.

Our next question comes from the line of Sumantra Banerjee of UBS.

Great to see the guidance raise. Aside from the market volatility that we've been seeing and the potential pressure restrictions being lifted earlier, I was curious if there's anything else that may push you towards the top end of the guidance?

We've seen the first half of the year benefit from macro environment volatility that provided additional opportunity beyond our budget expectations. Inventories in Hardisty and Cushing are at all-time lows, and our guidance reflects our view that the second half of the year will be modest compared to the first half. Things that could drive us to the upside would be events where arbs open up. The goal of our team is to keep our systems available for spot volumes. As Richard pointed out, we established some record volumes, so we know what we can do. Right now, we're tempered by inventory levels and the broader macro environment.

Got it. That's very helpful. I also wanted to touch upon Blackrod. That $10 million you called out in the press release for growth CapEx — just curious about what activities are needed for that and the completion.

Yes. With respect to Blackrod, we're well into final wet commissioning activities. The capital we're consuming in 2026 for the project is really just finalization activities to get it into service. We expect to be through all the wet commissioning activities within the next month or two. Beyond that, it's final reclamation of the site.

Our next question comes from the line of Praneeth Satish of Wells Fargo.

I realize it's still very early and Prairie Connector hasn't reached FID. Assuming the project does move forward as planned, how much future expansion capacity could the system support? Could Prairie Connector and Liberty Pipeline be expanded towards the original 800,000 barrels a day that Keystone XL was designed to move? Or could it move even higher? And then as we think about expansion economics, is it reasonable to assume that any expansion would fall towards the low end of your 5x to 7x build multiple given that it's mostly brownfield?

Great question, Praneeth. We're leveraging our pre-invested corridor, which was permitted for those higher volumes. We've decided to capitalize Prairie Connector at a lower level that could be underwritten by the 465,000 barrels a day from the open season. The systems are designed to be easily expanded in the future to capture north of 800,000 barrels a day, and those expansions would certainly be at a build multiple at the low end or even below our normal range, given that we would mainly need additional pumping capacity. We're matching our system design from up in Alberta, ex-Hardisty, all the way down to the Gulf Coast as a similarly sized system.

Got you. And on the timeline from mid-2027 FID to year-end 2028 in-service date, it seems like a compressed timeline. Looking at the schedule, that would be two construction windows. Can you help us understand if Prairie Connector and Liberty can be done in a single construction season, or would it require two? How much cushion is there in that timeframe?

At this point, we're focused on the base plan and base schedule, which targets a mid-2027 FID. That gives us two construction seasons to build these pipelines. We're not at this stage considering contingencies or accelerated schedules. Our current plan is built on those two construction seasons.

Our next question comes from the line of Benjamin Pham of BMO.

You mentioned you're advancing the Prairie Connector project and the joint development of the Liberty Bridge. Can you talk about willingness — or lack of willingness on the Bridger side — with respect to why you didn't jointly develop that piece of the project?

Ben, this is a highly coordinated effort and project. We're putting together three projects, all underwritten by customers and leveraging the strengths of each organization. By the time we get to FID, there will be more clarity around execution and structure. In Canada, we have our permits that we're maintaining. Bridger has an expansion project that logically fits within that scope, and jointly we're advancing another project. Collectively, we feel this approach of working on what's in our backyards and developing three separate, highly coordinated projects is the right way to serve customers' needs.

Great. And on the funding side, you mentioned the credit rating agencies. When you think about the 4x target, are you aligning with the agencies in a way where you take a hybrid and then the project debt is off balance sheet? Can you clarify how that works if you are aligned with the credit rating agencies?

We keep the credit rating agencies up to speed so they are mark-to-market on our modeling for Prairie Connector. There are different ways to use nontraditional debt instruments, and we're working with the credit rating agencies to ensure our investment-grade rating stays where it is.

Okay. And maybe a follow-up related to private capital versus public markets: when South Bow was spun out, there was a wide spread between private and public valuations. Has that gap closed noticeably? Are the dynamics substantially different now?

Ben, it's circumstantial to certain assets. There has been a significant increase in the pool of infrastructure capital globally. Private market inflows into infrastructure funds have been significant. The markets are converging to a degree, but it's focused on the risk preferences and commercial profile of assets. When we refer to investment-grade joint ventures, it's long-life, highly contracted assets that are key. Capital is not flowing to merchant assets in the same way.

I'm showing no further questions at this time. I would now like to turn it back to Bevin Wirzba for closing remarks.

Yes. Thank you all for joining us today and for your continued interest in South Bow. We look forward to updating you on our progress in the months ahead and enjoy the rest of your summer.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.