Gibson Energy's Strong Board Support Fuels Growth Ambitions Amid Market Challenges

Gibson Energy Inc. (TSX: GEI) has announced the results of its 2025 annual shareholder meeting, where all 10 nominees for the board of directors were elected with overwhelming support. While the results highlight investor confidence in the company’s leadership, they also come amid a backdrop of strategic initiatives aimed at capitalizing on infrastructure growth and navigating market volatility.

Voting Results Reflect Broad Shareholder Confidence

The election of Gibson’s board saw minimal resistance, with nine of the 10 nominees securing over 99% approval. The exception was James M. Estey, who received 94.68% support, though this still marked a resounding endorsement. Notably, Curtis D. Philippon, CEO and a key architect of Gibson’s infrastructure expansion, garnered the highest support (99.68%). The results underscore shareholder alignment with the company’s long-term strategy, which includes major projects like the Gateway Terminal dredging and the Baytex Energy partnership.

Strategic Priorities: Infrastructure Growth and Cost Discipline

Gibson’s 2025 priorities are anchored in three pillars: terminal expansion, cost optimization, and strategic partnerships.

1. Infrastructure Dominance:
2. The Gateway Terminal dredging project, completed in Q1 2025, has enabled the terminal to load 1.6 million-barrel VLCCs, a critical upgrade to compete with Gulf Coast rivals.
3. The Cactus II pipeline connection, set for completion in Q3 2025, will add 700,000 barrels per day of supply capacity to Gateway, bolstering its role as a premier crude export hub.

4. A $50 million partnership with Baytex Energy will expand upstream infrastructure in Alberta’s Duvernay region, securing long-term crude supply commitments.

5. Cost Savings:

6. A company-wide “We Are All Owners” initiative has already generated $18 million in savings, with a target of exceeding $25 million annually. This has reduced Distributable Cash Flow (DCF) per share by 7% year-over-year, easing pressure on the 3.7x net debt/EBITDA ratio.

7. Operational Excellence:

8. Safety metrics hit a record 9 million hours without a lost-time injury, reflecting a culture prioritizing reliability.

Financial Performance: Infrastructure Strength Offsets Marketing Weakness

Gibson’s Q1 2025 results highlighted a $155 million record Infrastructure Adjusted EBITDA, driven by strong throughput at Edmonton and Gateway terminals. However, the Marketing segment reported breakeven EBITDA due to persistent backwardation in Canadian heavy oil and high feedstock costs.

The company’s trailing 12-month Dividend Payout Ratio of 77% remains within its 70–80% target, supporting its 5.65% dividend yield. While DCF fell 21% year-over-year, cost savings and infrastructure growth are expected to stabilize cash flows.

Risks and Challenges

• Marketing Volatility: Weak crack spreads and WCS differential pressures could prolong breakeven EBITDA in the Marketing segment.
• Debt Management: The 3.7x net debt/EBITDA ratio exceeds 2024 levels, requiring disciplined capital allocation to avoid overleverage.
• Execution Risks: Delays in Cactus II or Baytex projects could disrupt revenue growth timelines.

Conclusion: A Resilient Play on Energy Infrastructure

Gibson Energy’s board election results and strategic execution signal a path to long-term growth. With Gateway’s expanded capacity, partnerships like Baytex, and cost savings exceeding targets, the company is well-positioned to capitalize on North American crude export demand.

While near-term challenges in the Marketing segment remain, Infrastructure’s record performance and the board’s strong support suggest investors are betting on Gibson’s ability to deliver on its $142 million Q1 Adjusted EBITDA and $25 million+ annual savings roadmap. For income-focused investors, the 5.65% dividend yield and consistent payout history add further appeal.

Final Take: Gibson Energy’s blend of infrastructure dominance, cost discipline, and leadership continuity makes it a compelling investment in an energy sector where reliable cash flows and strategic execution are paramount.

Data as of Q1 2025. Past performance does not guarantee future results.