South Bow Corp. (SOBO.TO): Scoping Prairie Connector as Canada Oil Pipeline Project Competition Increases

Research evidence excerpt

South Bow Corp. (SOBO.TO): Scoping Prairie Connector as Canada Oil Pipeline Project Competition Increases

balance the overall JV at

roughly 50/50. We also assume SOBO contributes more existing assets to the

partnership, and thus will bring less cash to the table - accordingly, we estimate capex

net to SOBO’s at ~$3.1b.

Exhibit 2: We estimate SOBO’s net cash capex at ~$3.1b, assuming a roughly 50/50 overall joint venture with Bridger

where SOBO’s greater contribution of existing assets reduces its cash requirements

Prairie Connector / Bridger Expansion / Liberty Pipeline GSe Capital Assumptions

Assets Contributed ($m) Cash Required ($m) Total Capital Commitment ($m) Implied Ownership (%)

SOBO Bridger Total SOBO Bridger Total SOBO Bridger Total SOBO Bridger Total

Prairie Con. 1,000 - 1,000 875 625 1,500 1,875 625 2,500 75% 25% 100%

Bridger Exp. - 250 250 813 2,188 3,000 813 2,438 3,250 25% 75% 100%

Liberty 75 75 150 1,438 1,063 2,500 1,513 1,138 2,650 57% 43% 100%

Total 1,075 325 1,400 3,125 3,875 7,000 4,200 4,200 8,400 50% 50% 100%

Source: Goldman Sachs Global Investment Research

PC funding in focus. We note the ultimate cash contribution between the partners

could vary depending on the value determined for the assets contributed to the JV. We

believe this update will drive investor questions on 1) how the company plans to support

this potential higher net outlay and if the company would consider adding a financial

partner, and 2) the incrementally higher regulatory and permitting burden compared to

a brownfield expansion of an existing pipe such as Tallgrass’s Pony Express (Liberty is

currently permitted as a 24in pipe and will need to be up-sized to a 36in pipe). Taken

together, and consistent with our unchanged core view, we continue to believe several