Gibson Energy Sanctions Chauvin Pipeline Expansion After C$192.9 Million Record Q3 Adjusted EBITDA

Gibson Energy Inc. (TSX: GEI) reported record third-quarter earnings and sanctioned an expansion of its Chauvin crude gathering pipeline that will lift system capacity by about 50% when it enters service in the first half of 2028. The Calgary-based midstream company announced the results in a Nov. 2 news release. The sanction comes nine months after Gibson agreed to buy the system.

Third-Quarter Results at Gibson Energy

Consolidated adjusted EBITDA reached $192.9 million in the quarter ended Sept. 30, up from $147.1 million a year earlier, Gibson said. That is an increase of 31%. Net income rose to $77.0 million from $45.7 million, and distributable cash flow increased to $119.7 million from $85.6 million.

Infrastructure adjusted EBITDA, the segment that holds the pipelines and terminals, was $177.1 million compared with $154.2 million. The company attributed the gain mainly to a full quarter from the Chauvin assets and to record volumes moved onto the Trans Mountain system through Edmonton. Gibson did not publish a volume figure for those barrels.

Marketing adjusted EBITDA was $34.5 million, up from $6.7 million. Gibson credited elevated refining margins, product diversification and improved crude marketing opportunities. Our calculation shows Marketing supplied 16.3% of combined segment EBITDA in the quarter, compared with 4.2% a year earlier.

What Gibson Is Building at Chauvin

Gibson sanctioned the Chauvin pipeline expansion in the third quarter. The company said the project reflects strong commercial interest and growing production in the Mannville stack. It did not disclose a capital cost, contract terms or customer volumes.

Gibson bought the Chauvin infrastructure from Teine Energy Ltd. for $400 million in cash, according to its Feb. 10 release. The system includes about 75 kilometres of 10-inch crude gathering pipeline into Hardisty, a custom treating facility and a truck terminal. Effective capacity at the time was about 30,000 barrels per day.

A 50% increase implies capacity near 45,000 barrels per day, based on our arithmetic from the 30,000 barrel per day starting point. Gibson paid about 7.5 times expected 2026 adjusted EBITDA for the assets, which works out to roughly $53 million of annual EBITDA. The company has said it targets a build multiple of 5 to 7 times through optimization and expansion.

That target matters for how investors read the sanction. If the expansion lifts EBITDA while the purchase price stays fixed at $400 million, the effective multiple on the original acquisition falls. Gibson has not published a figure for the added earnings.

Balance Sheet and Dividend

Net debt stood at $2.50 billion at Sept. 30, or 3.9 times trailing adjusted EBITDA of $645.5 million. That ratio matched the level a year earlier. Infrastructure leverage was 4.2 times compared with 4.0 times.

Management said it expects both the dividend payout ratio and net debt to adjusted EBITDA to improve once a full 12 months of Chauvin contributions are reflected. The trailing payout ratio was 82%, down from 85%. Gibson declared a quarterly dividend of $0.45 per share, payable Jan. 15, 2027, to shareholders of record on Dec. 30.

The company also placed its Wink-to-Gateway Integration Project into service in October. Gibson said the project improves connectivity and flexibility at Gateway and positions the terminal to capture additional volumes. It did not quantify those volumes.

Chief Executive Officer Curtis Philippon said in the release: "Gibson delivered an exceptional third quarter, with record results across the business." He also said Chauvin continues to exceed expectations. Philippon described the expansion as disciplined investment supported by customers.

Trans Mountain Context

Record volumes through Edmonton onto Trans Mountain tie Gibson's results to the pipeline's commercial terms. On Sept. 28, the Canada Energy Regulator approved Trans Mountain's tolls settlement. The decision allows Trans Mountain to contract up to 90% of pipeline capacity to shippers, up from the 80% previously approved.

The decision does not set Gibson's own tariffs. It changes how much of the export line Trans Mountain can place under term contracts. Gibson did not link its Marketing result to the decision.

What Is Different From Earlier Coverage

When the Western Canadian Select discount reached its widest level since 2022, we examined what each extra dollar of discount cost heavy oil producers in our earlier analysis of the WCS discount. Gibson's quarter shows the other side of that gap: midstream operators earning on volume and on marketing margin while producers absorb the price differential.

Gibson's infrastructure results depend on throughput and contracts, not on the price of a barrel. Its Marketing earnings depend on differentials and refining margins. The Q3 split shows both contributing at once.

Next steps to watch include a disclosed cost for the Chauvin expansion, any contract details, and the 2028 in-service date. Gibson held its earnings call on Nov. 3. The webcast remains available on its investor site for 12 months.