SOBO

• Core Business & Operational Performance

  • Safe, reliable operations and strong asset integrity remain the foundational priorities of the business
  • Remedial work for the milepost 171 incident continues progressing on schedule; pressure restrictions are expected to be lifted phased through the end of 2026 and into 2027
  • Q2 2026 delivered solid overall financial results, driven by strong performance on the U.S. Gulf Coast Keystone segment
  • Black Rod Phase 1 is in final wet commissioning, expected to enter service within the next 1-2 months, with only final site reclamation remaining after commissioning

• Growth Project Milestones

  • The open season for the Prairie Connector growth project secured 465,000 barrels per day of 20-year customer commitments, a major milestone endorsed by customers that demonstrates strong market demand for additional Western Canadian crude oil egress capacity
  • Commercial success allows advancement to pre-final investment decision (FID) development work, with FID targeted for mid-2027
  • South Bow is jointly developing the Liberty Bridge project with partner Bridger, which will connect the Guernsey Hub to Cushing via an existing privately held corridor, leveraging pre-existing development work from prior owners
  • Prairie Connector and Liberty Bridge are both designed to be expandable in the future, with Prairie Connector able to grow to over 800,000 barrels per day at low incremental capital cost (only additional pumping capacity required)

• Governance & Capital Allocation

  • A planned board leadership transition was announced: Hal Quisley stepped down as board chair, and George Lewis was appointed to the role
  • The board approved a quarterly dividend of 50 cents per share, maintaining the company's commitment to returning capital to shareholders
  • Leverage ratio improved to 4.4x net debt to normalized EBITDA, progressing toward the company's target leverage range

• Full-year 2026 normalized EBITDA guidance was increased to $1.04 billion, with a 2% range around the midpoint (1% on the lower end, 2% on the upper end)
• Full-year 2026 distributable cash flow guidance was increased to $665 million, with a 2% range around the midpoint
• Full-year 2026 growth capital expenditure guidance was increased to support pre-FID development activities for Prairie Connector and Liberty Bridge
• Management expects second-half 2026 performance will be modest relative to the first half, due to low inventory levels at Hardesty and Cushing; upside to the top end of guidance could come from unplanned arbitrage opportunities and continued strong system operating performance

The only product segment with disclosed performance is the U.S. Gulf Coast segment of the Keystone pipeline system. The segment set new throughput records in Q2 2026 amid elevated demand driven by global crude oil trade disruptions, which contributed to the quarter's strong overall financial results. No additional absolute financial figures or revenue contribution percentages for individual segments were provided in the call transcript.

• Permit durability (long-term regulatory certainty for new projects spanning multiple governments and market cycles) is a core pre-condition for FID, and the company will not commit shareholder capital until this certainty is secured, to avoid exposing shareholders to uncompensated regulatory risk
• Stakeholder opposition and regulatory consultation requirements for new projects are standard, and all relevant timelines and contingencies have already been incorporated into the mid-2027 FID target schedule
• Market volatility and shifting crude oil supply and demand balances in Western Canada could impact throughput levels and the pace of production growth that underpins demand for new capacity
• New large-scale pipeline projects carry development and execution risk, which the company mitigates through a disciplined, low-risk evaluation framework and targeted risk allocation between project stakeholders

Q: Why did customers choose to commit to South Bow's project over competing pipeline proposals? / A: Customers were drawn to three core advantages: First, South Bow offered very competitive, long-term fixed tolls that deliver the highest netbacks for producers. Second, the project provides direct access to the resilient, large demand market of the U.S. Gulf Coast that customers value for long-term commitments. Third, the existing South Bow corridor offers flexibility to deliver crude to multiple exit markets, which helps customers manage their market exposure. All of these aligned well with producer needs.

Q: What does ideal permit durability look like for your new projects, and what do regulators need to see to provide this certainty? / A: Permit durability is about proper risk allocation: South Bow and its customers take on development and commodity price risk, but long-term regulatory certainty is a risk that project proponents and customers cannot fully mitigate, so we need government bodies to provide this durability. Discussions are well advanced in both the U.S. and Canada, with constructive support from both governments, and details will be shared as they are finalized. The core priority is to avoid exposing shareholders to uncompensated regulatory risk that is not within management's control.

Q: What is your approach to evaluating inorganic acquisition opportunities, and do you have bandwidth to pursue deals alongside your major organic growth projects? / A: All inorganic opportunities are evaluated under the same disciplined risk and capital allocation framework that guides all of South Bow's investments. The company has added team members and has sufficient internal capacity to evaluate complementary opportunities. Organic growth remains the top priority, as it delivers more attractive build multiples for shareholders than acquisition multiples, but there may be opportunities to add complementary assets that fit South Bow's corridor and strategy. We are seeing increased activity and value in intra-Alberta assets as production growth picks up in the basin.

Q: How do you see Western Canadian Select (WCS) production growth tracking over the next several years, and when will egress capacity become constrained again? / A: After a period of limited growth due to capital constraints and geopolitical uncertainty, the policy environment has become much more constructive, and producers are now targeting meaningful growth from their base assets. Management previously expected egress capacity to become constrained by 2027, and recent additional capacity development has only shifted that estimate slightly to mid-2027. Producers have materially lowered operating and maintenance costs, which supports ongoing growth, underpinning customer demand for Prairie Connector's new capacity.