Canadas South Bow cuts crude trading team, focuses on contracted pipeline volumes, sources say

South Bow laid off 2 crude traders on April 4, sources say

It seeks to hike contracted volumes on its pipeline systems

South Bow sees marketing unit EBITDA down $30 million in 2025

HOUSTON, April 11 (Reuters) – Calgary-based pipeline company South Bow has cut the size of its crude trading team as it seeks to boost the volume of oil sold on contract through its pipeline systems and reduce how much crude it trades, three people told Reuters this week.

South Bow was spun out of Canadian pipeline company TC Energy in October 2024 as part of a plan to help TC reduce its debt load.

South Bow laid off two traders on April 4, the people said. TC Energy had already cut a member of the team in June last year before the spin-off. The latest layoffs have reduced the crude trading team to two from five.

A South Bow spokesperson declined to comment on employee matters for this story.

The company is seeking more stable revenues through contracted volumes shipped through its pipeline systems, the sources said, after the start up of the Trans Mountain pipeline in Canada left it with fewer trading opportunities.

South Bow expects EBITDA for its marketing unit, which includes its crude trading team, to turn negative in 2025, falling $30 million from $12 million in 2024, it said in its fourth quarter earnings report.

It, however, expects the company’s normalized overall EBITDA to be approximately $1.01 billion, versus $1.09 billion in 2024.

The projected loss from the marketing unit is in part because Canada’s highly anticipated Trans Mountain pipeline expansion has begun operations.

The Trans Mountain pipeline takes crude from Alberta to Canada’s Pacific Coast for export. The pipeline was expected to take away arbitrage opportunities from South Bow, CEO Bevin Wirzba explained during an investor call in March.

Higher overall Canadian pipeline capacity and uncertainty from potential tariffs would also weigh on marketing earnings this year, the company said in its quarterly earnings report.

South Bow expects 90% of its EBITDA in 2025 to be secured through committed arrangements.

“With a contracted strategy, those dollars of EBITDA should be worth more to shareholders given the consistency of them,” Wirzba said in the investor call.

South Bow operates the 750,000 barrel-per-day Marketlink pipeline system, which ships crude from Cushing, Oklahoma, to the U.S. Gulf Coast via the Gulf Coast extension of the Keystone pipeline.

The company will reallocate available spot capacity on Marketlink that the trading team had been using to increase contracted shipments to third-party customers, sources told Reuters.

South Bow stock was last trading at around $32.30 on Friday, according to LSEG, recovering some losses after falling to a five-month low on Tuesday at $31.10 after South Bow shut down the Keystone pipeline after an oil spill. (Reporting by Georgina McCartney in Houston; Editing by Liz Hampton and Himani Sarkar)