Tudor, Pickering, Holt on Friday maintained its hold rating on the shares of South Bow (SOBO.TO, SOBO) with a C$52.00 price target after the oil-pipeline company secured binding commitments from shippers for its planned Prairie Connector pipeline project.
"This morning, SOBO announced a successful open season for its proposed Prairie Connector pipeline project, securing 20-year binding commitments from Hardisty, AB to US delivery points. Management is targeting an FID by mid-2027, contingent on securing remaining permits, government assurances for permit durability, advancing execution plans, finalizing cost estimates, and securing financing. The company said it will provide additional details on pre-FID activities and associated spending as part of its Q2'26 disclosures. In our view, the successful open season clears a significant milestone, highlighting shipper interest for the project. However, with a year to go before reaching positive FID, there's still some lingering execution risk, particularly around the durability of the permits. Without assurances that a new US administration would revoke the permits in 2029, as Biden did with KXL, the project is likely to be stalled. Should things progress positively, Prairie Connector would consist of approximately 380 km of new 36-inch pipeline from Hardisty to the Canada-U.S. border, where it would connect to Bridger Pipeline LLC's downstream facilities, while also leveraging roughly 150 km of previously installed and preserved 36-inch pipe and two pump stations," analyst AJ O'Donnell wrote.
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Price: $50.25, Change: $-0.83, Percent Change: -1.62%