Canadian Pipeline Firm South Bow Reduces Trading Team Amid Strategic Pivot

Calgary-based pipeline operator South Bow (SOBO) has trimmed its crude trading team, a move aligned with its strategy to prioritize contracted oil shipments and reduce reliance on spot trading, according to three sources familiar with the matter.

The company, which was spun off from TC Energy (TRP) in October 2024 to help the parent firm cut down on debt, has recently let go of two traders. These layoffs, executed on April 4, follow an earlier reduction last June—prior to the separation—bringing the crude trading desk down from five members to just two.

While a spokesperson for South Bow declined to comment on personnel decisions, sources say the restructuring is part of a broader push for more predictable, contract-based revenue. This shift comes in the wake of the long-anticipated Trans Mountain pipeline expansion, which has diminished trading opportunities for firms like South Bow.

In its Q4 earnings report, South Bow projected that its marketing division—which includes the crude trading operation—will see negative EBITDA in 2025. After generating $12 million in 2024, the unit is expected to post a $30 million loss next year. Nonetheless, the company remains confident about its overall outlook, forecasting normalized EBITDA of approximately $1.01 billion in 2025, slightly down from $1.09 billion in 2024.

CEO Bevin Wirzba, speaking to investors in March, cited increased Canadian pipeline capacity and uncertainties around tariffs as additional pressures on marketing earnings. He noted that the Trans Mountain pipeline, which transports Alberta crude to the Pacific Coast for export, has significantly curtailed arbitrage opportunities once available to South Bow.

Despite these headwinds, the company is leaning into a more secure revenue model. By 2025, it expects around 90% of its EBITDA to be underpinned by firm contractual agreements. “With a contracted strategy, those dollars of EBITDA should be worth more to shareholders given the consistency of them,” Wirzba said.

South Bow manages the Marketlink system, a major pipeline that delivers up to 750,000 barrels per day from Cushing, Oklahoma, to the U.S. Gulf Coast via the Keystone network’s Gulf Coast extension. According to sources, the firm plans to reassign the spot capacity previously used by the trading team to accommodate more third-party contract shipments.

Shares of South Bow were last seen trading around $32.30 on Friday, bouncing back slightly after dipping to a five-month low of $31.10 earlier in the week. The dip followed the temporary shutdown of the Keystone pipeline due to an oil spill.