What Gibson Energy (GEI) Said on Its Q3 Earnings Call

Key Points

• Gibson posted record third-quarter results: Infrastructure adjusted EBITDA reached CAD 177 million and consolidated adjusted EBITDA hit CAD 193 million, supported by Chauvin, higher Canadian terminal utilization and record volumes to Trans Mountain.
• Marketing outperformed expectations: Adjusted EBITDA rose to CAD 35 million from CAD 7 million a year earlier, and Gibson now expects about CAD 80 million for 2026, driven largely by strong Moose Jaw refining margins.
• Growth and balance-sheet priorities remain in focus: Gibson plans a Chauvin expansion that would lift capacity about 50%, targets a return to its 3–3.5x leverage range in early 2027, and expects to prioritize infrastructure investment over share repurchases.

Gibson Energy TSE: GEI reported record third-quarter infrastructure and consolidated adjusted EBITDA, supported by contributions from its Chauvin pipeline system, higher utilization at Canadian terminals and strong refining margins at Moose Jaw.

President and Chief Executive Officer Curtis Philippon said the company completed the operational integration of Chauvin and brought the final components of its Wink-to-Gateway project into service during the quarter. The project included twinning the Harvest connection to Gateway and placing a new 100,000-barrel tank at Wink into service, completing integration and debottlenecking work between the assets.

“We had a great third quarter with record infrastructure and consolidated adjusted EBITDA and very strong marketing results,” Philippon said.

Record Infrastructure Results

Senior Vice President and Chief Financial Officer Riley Hicks said infrastructure adjusted EBITDA rose to a record CAD 177 million in the third quarter, compared with CAD 154 million a year earlier. The result was CAD 8 million above the company’s previous record, set in the second quarter.

The segment benefited from a full quarter of Chauvin contributions, improved utilization across Canadian terminals and record volumes moved to the Trans Mountain Expansion pipeline during the quarter, Hicks said. Gibson’s average utilization across its platforms has increased from about 85% to more than 90% during 2026, according to Philippon.

Gibson also sanctioned an expansion of the Chauvin system, which is expected to increase capacity by about 50% when completed. The company plans to advance the work through 2027. Philippon said the expansion is supported by strong commercial interest and could be followed by producer connections and laterals.

The Hardisty connection for Chauvin remains on track for completion in the first half of 2027. Philippon said Chauvin production in the Mannville remains strong and that Gibson sees opportunities to bring additional barrels into the system and eventually through Hardisty.

In response to an analyst question, Philippon said the Chauvin expansion represents a roughly CAD 20 million capital project with a build multiple below five times. Including optimization efforts, the Hardisty connection and expansion work, he said the acquisition multiple for Chauvin is expected to move into a range of six to seven times.

Marketing Strength Lifts Cash Flow

Marketing adjusted EBITDA totaled CAD 35 million, compared with CAD 7 million in the prior-year period. Hicks attributed the increase primarily to exceptionally strong refining margins at Moose Jaw, where Gibson benefited from product diversification and favorable market conditions.

Gibson expects its marketing business to generate approximately CAD 80 million of adjusted EBITDA in 2026, above the CAD 0 million to CAD 40 million range it outlined at the start of the year. Hicks said the business had already exceeded the high end of that initial range on a year-to-date basis.

The company expects the usual seasonal slowdown at Moose Jaw to partly offset favorable refined-product market conditions in the fourth quarter. Hicks said steep West Texas Intermediate backwardation and low inventory levels continue to limit traditional crude-storage opportunities, though volatility and wider heavy crude differentials may create other opportunities.

Hicks said profitable short-term heavy-crude storage requires contango in the Western Canadian Select curve to exceed backwardation in the WTI curve. Such opportunities do not currently exist, he said, although Gibson expects they may return over time.

Gibson has also hedged a portion of its distillate exposure into 2027 to provide more earnings visibility. Hicks said distillates account for more than 40% of refinery output, with roughly half of those distillates sold into the U.S. The company has hedged “quite a bit” of that portion of the business and is considering hedging 25% to 30% of feedstock costs through the year.

For 2027, Gibson did not provide guidance but said it expects continued strength in refined products amid strong crack spreads and wide WCS differentials. Hicks said the company’s marketing operation has generated an average of CAD 80 million annually over the past five years and management expects the same average over the next five years, although annual results may vary.

Gateway Navigates Freight Disruption

Philippon said Gateway continues to operate in a difficult export market shaped by historically high tanker rates and disrupted global crude-shipping flows. While Gateway was designed to accommodate very large crude carriers, fewer than half of vessels using the facility during 2026 have been VLCCs, he said.

Instead, the facility has handled more Suezmax and Aframax vessels as VLCCs remain costly and scarce. Philippon said Gibson’s team has kept the terminal active despite the less-efficient vessel mix, but acknowledged that smaller ships reduce potential throughput.

He said the company has seen more term-contracting activity over the past three to six months as customers increasingly view disrupted crude flows as a potentially longer-lasting market condition. Gibson expects it will take time for VLCC freight rates to normalize, though Philippon said an eventual increase in vessel supply and normalization in geopolitics could create additional volume upside for Gateway beyond 2027.

Venezuelan crude imports into the U.S. Gulf Coast are primarily a heavy-crude issue and are not directly affecting Gateway’s export operations, which are focused on Permian light crude, Philippon said.

Balance Sheet and Growth Priorities

Consolidated adjusted EBITDA reached a record CAD 193 million, while distributable cash flow increased to CAD 120 million from CAD 86 million a year earlier. Third-quarter general and administrative expense was CAD 18 million, including about CAD 2 million of project-development costs. Underlying G&A was about CAD 16 million, Hicks said.

• Consolidated net debt to adjusted EBITDA improved to 3.9 times from 4.2 times in the prior quarter.
• Infrastructure leverage declined to 4.2 times from 4.4 times.
• On a pro forma basis including 12 months of Chauvin contributions, consolidated leverage was 3.7 times and infrastructure-only leverage was 4.0 times.
• The trailing 12-month payout ratio improved to 82% from 88%, while the infrastructure-only payout ratio was 83%.
• Gibson ended the quarter with its CAD 1 billion revolving credit facility fully undrawn.

Hicks said the company expects to return to its long-term consolidated leverage target of three to 3.5 times in early 2027. Gibson intends to prioritize infrastructure growth projects rather than share repurchases, citing a growing backlog of organic opportunities.

Philippon reiterated the company’s Investor Day target of at least 7% average annual infrastructure adjusted EBITDA per-share growth through 2030 and said Gibson sees a path to deploy up to CAD 1 billion of growth capital across storage, pipelines, producer connections and new services.

The company is evaluating opportunities related to rising Canadian production and demand for transportation, connectivity and terminalling infrastructure. Philippon said Gibson does not need to predict which proposed major pipeline proceeds, because additional production and egress would support demand for its assets at Hardisty and Edmonton.

About Gibson Energy (TSE:GEI)

Gibson is a leading liquids Infrastructure company with its principal businesses consisting of the storage, optimization, processing, and gathering of liquids and refined products, as well as waterborne vessel loading. Headquartered in Calgary, Alberta, the Company's operations are located across North America, with core terminal assets in Hardisty and Edmonton, Alberta, Ingleside and Wink, Texas, and a facility in Moose Jaw, Saskatchewan. Gibson shares trade under the symbol GEI and are listed on the Toronto Stock Exchange.

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