Gibson Energy's Share Buyback Strategy: A Strategic Move to Enhance Shareholder Value?

Gibson Energy's recent renewal of its Normal Course Issuer Bid (NCIB) has reignited discussions about its capital allocation strategy and its implications for shareholder value. The company announced on September 16, 2025, that it will repurchase up to 7.5% (10,182,288 shares) of its public float over the next 12 months, subject to a daily limit of 164,279 shares Gibson Energy Announces Renewal of Normal Course Issuer Bid^[1]. This move, approved by the Toronto Stock Exchange and Gibson's Board of Directors, underscores the company's commitment to returning capital to shareholders while aligning with its broader infrastructure growth ambitions. But does this strategy signal confidence in cash flow stability and long-term demand, or does it risk overleveraging amid sector-specific challenges?

Financial Rationale: Balancing Buybacks and Growth

Gibson's 2025 financial performance reveals a mixed picture. The infrastructure segment, which accounts for 90% of segment profit, delivered record Adjusted EBITDA of $155 million in Q1 2025 and $153 million in Q2 2025, driven by all-time high throughput at its Gateway and Edmonton terminals Gibson Energy Reports 2025 Second Quarter Results^[2]. These results highlight the resilience of take-or-pay contracts, which provide 75% of infrastructure revenue and insulate the company from commodity price volatility EV/EBITDA Multiple by Sector/Industry 2025 | Siblis Research^[3]. However, the marketing segment's underperformance—Adjusted EBITDA fell to $8 million in Q2 2025, down from $21 million in Q2 2024—has dragged on consolidated results, reflecting challenges in crude and refined product differentials Gibson Energy Reports 2025 Second Quarter Results^[2].

Despite these headwinds, Gibson has maintained a disciplined capital allocation approach. For 2025, the company plans to deploy $150 million in growth capital, with $100 million earmarked for the Gateway Terminal expansion and $50–$100 million allocated to share repurchases Gibson Energy Reports 2025 Second Quarter Results^[2]. This balance between reinvestment and buybacks suggests a strategic effort to enhance capital efficiency. The completion of the Gateway dredging project, which boosted throughput by 20% and secured a 30% market share in Corpus Christi, further validates the infrastructure-focused playbook Gibson Energy Reports 2025 Second Quarter Results^[2].

Valuation Metrics and Sector Comparisons

Gibson's stock valuation metrics position it as a premium play within the energy infrastructure sector. As of September 2025, the company trades at a forward P/E ratio of 18.10 and an EV/EBITDA ratio of 12.69, significantly above the sector average of 7.47 EV/EBITDA Multiple by Sector/Industry 2025 | Siblis Research^[3]. While this premium may appear steep, it reflects the quality of its infrastructure assets and long-term contract visibility. For context, the green/renewable energy sub-sector trades at an EV/EBITDA of 11.30 EV/EBITDA Multiple by Sector/Industry 2025 | Siblis Research^[3], indicating that investors are willing to pay a premium for stable cash flows—a category Gibson's infrastructure segment clearly occupies.

However, the high valuation raises questions about sustainability. With a trailing twelve-month dividend payout ratio of 83%, Gibson's reliance on buybacks and dividends to reward shareholders could strain liquidity if marketing segment performance does not normalize by mid-2026, as management anticipates Gibson Energy Reports 2025 Second Quarter Results^[2]. Morningstar DBRS's BBB (low) credit rating with a stable outlook underscores this tension, noting that the company's debt refinancing plans—such as the recent $375 million bond issuance—will be critical to maintaining flexibility Morningstar DBRS Assigns Credit Rating of BBB (low) With a Stable Trend to Gibson Energy Inc.^[4].

Strategic Alignment with Long-Term Infrastructure Demand

The NCIB renewal gains further credibility when viewed through the lens of long-term energy infrastructure demand. Global oil demand is projected to grow at 1.5% CAGR through 2030, driven by expanding exports from Western Canada, where production is expected to rise from 5.7 million barrels per day in 2023 to 6.4 million by 2030 EV/EBITDA Multiple by Sector/Industry 2025 | Siblis Research^[3]. Gibson's $1 billion growth pipeline, focused on terminal capacity expansions, aligns directly with this trend. The Gateway Terminal's post-dredging capacity to load 1.6 million barrels on Very Large Crude Carriers positions it as a key player in North American export logistics Gibson Energy Announces Renewal of Normal Course Issuer Bid^[1].

Moreover, the energy transition is creating indirect tailwinds. As data centers consume 6–8% of U.S. electricity generation today and are projected to rise to 11–15% by 2030 2025 Power and Utilities Industry Outlook - Deloitte^[5], utilities are investing heavily in grid upgrades and baseload power sources. While Gibson is not a power generator, its infrastructure assets—pipelines, terminals, and storage facilities—are essential for transporting and storing energy commodities, including those linked to renewable energy projects. For instance, the company's partnership with Baytex Energy Corp. to develop new infrastructure could diversify its cash flow streams beyond traditional oil Gibson Energy Reports 2025 Second Quarter Results^[2].

Risks and Investor Considerations

The primary risk lies in the marketing segment's volatility. Tight commodity differentials and limited storage opportunities have already eroded margins, and a prolonged downturn could force Gibson to scale back buybacks or defer growth projects. Additionally, the company's high EV/EBITDA multiple may correct if cash flow growth fails to meet expectations. Analysts have issued mixed ratings, with Atb Cap Markets upgrading FY2025 EPS estimates to $1.00 from $0.99 Morningstar DBRS Assigns Credit Rating of BBB (low) With a Stable Trend to Gibson Energy Inc.^[4], while others caution about near-term leverage risks.

For investors, the key question is whether Gibson's buyback strategy is a sign of confidence or a defensive tactic. The absence of share repurchases under the prior NCIB (September 2024–2025) suggests the company waited for favorable pricing conditions Gibson Energy Announces Renewal of Normal Course Issuer Bid^[1]. If current valuations are indeed undervalued relative to its infrastructure peers, the NCIB could enhance equity returns. However, this hinges on the successful execution of the Gateway Terminal expansion and stabilization of the marketing segment.

Conclusion: A Calculated Bet on Infrastructure Resilience

Gibson Energy's NCIB renewal is a calculated move to capitalize on its infrastructure strengths while navigating sector-specific challenges. The company's ability to generate stable cash flows from take-or-pay contracts, combined with strategic investments in terminal capacity, positions it to benefit from long-term energy export trends. However, the success of this strategy depends on the normalization of marketing segment performance and disciplined execution of its $150 million growth capital plan. For investors seeking undervalued energy infrastructure plays, Gibson offers a compelling case—but one that requires careful monitoring of both operational execution and macroeconomic shifts in the energy transition.