Q2 2026 Sable Offshore Corp Earnings Call

August 11, 2026

[Company Representative] (Sable Offshore Corp): Have the bottom line, have some wildcat results as well from there. We are like everybody else. It is going to be a long, hot summer the rest of the summer, but we are looking at Q4 and certainly into 2027, really be able to show the asset we have.

Speaker #1: Yes, while on results as well. From there, so we're— we're like everybody else, it's going to be a long, hot summer the rest of the summer, but we're looking at the fourth quarter and certainly into '27.

Speaker #1: You know, really be able to show the asset we have.

[Analyst]: All right. That is great. I appreciate the clarification and detailed response. Maybe we can just follow up on that point of the waterborne marketing angle, Gregory. When do you think the company would be in a position to move forward with that decision to install a sales buoy? I understand it is maybe a bit premature to discuss, but ultimately, you would want to try to avoid moving forward with that capital spend if the midstream constraints are going to alleviate themselves. Of course, there are other considerations when going down that route. What market signals are you looking for in the next 6 months, and when do you think you would need to make the decision to move forward with the buoy path for a year-end 2028 installation?

[Company Representative] (Sable Offshore Corp): It is really regulatory. It is not market signals. The market signals are there. It is about at least a 50% improvement in diffs and so forth, and just having the flexibility out there. We are looking at the regulatory aspect that we have got a lot of these conversations with a lot of federal authorities on what we need to have and get done and so forth. They look at this as an important part of security of the offshore barrels staying offshore. We will wait to hear on all that. We did not get anything done by the August recess, but this fall is going to be very active. Once we get that, then we will have about 4 to 6 months of engineering, another 6 to 9 months of procurement. So it will be every bit of summer 2028 getting it installed and getting it put on there.

All right, that's great. I appreciate the clarification and detailed response. Maybe we can just follow up on that point in the waterborne marketing angle, Gregory. When do you think the company would be in a position to move forward with the decision to install a sales buoy? I understand it's maybe a bit premature to discuss, but ultimately you want to try to avoid moving forward with that capital spend if the mainstream constraints are going to alleviate themselves. Of course, there are other considerations when going down that route. So, what market signals are you looking for in the next six months? And when do you think you would need to make the decision to move forward with the buoy path for a year-end 2028 installation?

It, it's really regulatory.

Um, it's not Market signals, the market signals are there. It's about, you know, at least the 50%, uh, Improvement in in, in, in depths and so forth. And, and just having the flexibility out there. So, we're looking at, uh, regulatory aspect that we, we've got a lot of things, uh, uh, conversation with a lot of federal authorities on what we need to have get done and so forth. And uh, and they look at this as an important part of uh, of of security of the of of the offshore Barrel, say it offshore. And uh, so we'll wait to hear on all that. We we didn't get anything done by the August recess but this fall is going to be very active. Once we get that.

[Company Representative] (Sable Offshore Corp): I guess that would be hard to move that up at all. Under our timeline, we are right on that schedule right now.

And we'll have about 4 to 6 months of engineering another, another 6, to 9 months procurement. So it'll be every bit of Summer 28th, getting getting it, getting it uh installed and getting to put on there. So I think that's that's that's be hard to move that up at all but under our timeline we're right. We're right on that schedule right now.

[Analyst]: All right. Thanks for your time.

[Company Representative] (Sable Offshore Corp): Sure.

All right, thanks for your time.

Operator: Our next question comes from Leo Mariani at Roth. You may now unmute your audio and ask your question.

Sure.

Our next question comes from Leo marani at Ross. You may now unmute your audio and ask your question.

Leo Mariani: Yeah, good morning here, guys. Wanted to just follow up on where you think things stand these days with the potential SPR declaration in California. Is that something you think is moving forward at a good pace here?

Yeah, good morning here guys. Um, wanted to just follow up on. Where do you think things stand uh, these days with the potential uh spr uh declaration uh in California? Is that something you think is moving forward? Uh at a good Pace here

[Company Representative] (Sable Offshore Corp): Yeah. Leo, I think it's getting widespread support from CIPA came out with a big 12-page report, California independent producers, and it just debottlenecks the whole California energy onshore market pipelines and so forth. It definitely needs to happen, and it's going to benefit all the producers and all the refiners and so forth, keep them in business. Just connect more pipes, more flexibility. We haven't heard any headwinds in DC from it. We're just here about mechanics. We're looking forward to seeing some resolution on that this fall.

Yeah. We I think it's getting it's getting wide wide uh widespread support from CIFA came out with a big big 12 page report. Uh uh, California has been producers and it just debottlenecking, um, uh, onto our Market pipelines and so forth. It it, it definitely needs to happen and it's going to benefit all the, all the producers, and all the refiners and so forth. Keep them. Keep them in business is more connect more pipes, more flexibility. I think that's, uh, and, and we, we haven't heard any headwinds in DC from it. Uh, we just need to hear about mechanics

And so, um, we're looking forward to, you know, seeing some resolution on that this fall.

Leo Mariani: Okay. Appreciate that. I also wanted to just touch base on this $500 million no borrowing base working capital facility put in place for the hedging. Do you see potential for there eventually to be some borrowing base and some ability for Sable to draw on that? Is that something that is restricted until perhaps you guys can refinance the existing Term Loan D and/or the convert? Just trying to get a sense of when you might be able to get in more of a regular way sort of a working capital facility.

Gregory D. Patrinely: Yeah, Leo, this is Gregory. Great question. I think the way to think about increasing the borrowing base would be post pay down of the Term Loan D, the new senior secured Term Loan D. So we hope to de-lever as quickly as possible and refinance and take that out, open up the borrowing capacity. Then also, once we bring Platform Hondo online, like I mentioned, we will get additional PDP credit and then our PUD credit as well with the development program that we have once the Term Loan D capital covenants are alleviated.

Okay, appreciate that. And then also wanted to just uh touch base on this 500 million. Uh kind of know, boring base, working capital uh you know I guess facility you put in place for the hedging. Do you see potential for their eventually to be some boring base and some ability for disabled to draw on that, is that something that's restricted until perhaps you guys can, uh, you know, refinance, the existing Term Loan and or the convert, just trying to get a sense of when you might be able to get more of a regular way, uh, you know, sort of working capital facility.

Yeah, Leo. This is Gregory great. Great, great question. I think the way to think about, you know, increasing the borrowing base would be post, you know, pay down as the term loans and the new senior secured Term Loan Deeds. So we we, we hope to, uh, you know, do do lever as quickly as possible and and, and refinance and take that out, open up the borrowing capacity. And then also, uh, once we bring platform Hondo online, like I mentioned we we'll get additional PDP credit and then our our, our PUD credit as well with with the development program that we have, uh, once the term loan B, capital Governors are alleviated.

Leo Mariani: Okay. Appreciate that. I guess just on the more fulsome refi in 2027, which you guys certainly spoke to post the reserve report here, could you maybe give us a little more color on what the current thinking would be after that happens if it is all successful in terms of trying to return capital to shareholders? Do you guys kind of try to get a buyback going first, then maybe a dividend comes down the road if you guys are able to reduce the share count? Just want to get management's current thinking on how that could proceed.

Okay, appreciate that. And I guess, um, just on the more wholesome refi, you know, in 2027, what you guys certainly spoke to, uh, post the Reserve report here. Could you maybe give us a little bit more color on kind of what the current thinking would be after that happens? Um, if it's all successful, in terms of trying to return capital to shareholders, do you guys try to get a buyback going first? Then maybe a dividend comes down the road if you guys are able to reduce the share count? Just want to get kind of management's current thinking on how that could proceed.

[Company Representative] (Sable Offshore Corp): Yeah, all of the above. The aspects I think initially be some type of dividend, then we will, depending on what oil prices are on the stock buyback, is where the board's thinking at this point in time. But right now it is getting our balance sheet in good shape, and that is why amortizing the debt with the cash flows is successful at this point in time. We have got the real capital light program to keep our production maintained and so forth, and all the improvements are in our control. So I think next year or 2 is making sure that getting the balance sheet in the regular way situation where we can have those options. But right now, there is obviously going to be no cash leaving the system until we get the balance sheet under control.

Yeah, all of the above. Uh, the aspect, I think,

In, in good shape. And that's why advertising. The debt with the cash flows is, is successful at this point in time, we've got we've got the real Capital like program to keep our production, uh, to maintained and so forth and and all the, all the improvements are within our in our control. So, I think next next year too, is making sure that getting the balance sheet in the in the regular way situation where we can have those options for right now. There's obviously going to be no cash leaving the system until we get get, get the balance sheet under control.

Leo Mariani: Okay. Thank you, guys.

[Company Representative] (Sable Offshore Corp): Sure.

Okay, thank you guys.

Yeah.

Operator: Our last question comes from Charles Meade at Johnson Rice. You may now unmute your audio and ask your question.

Our last question comes from Charles Me at Johnson Rice. You may now unmute your audio and ask your question.

Charles Meade: Yes. Good morning, Jim and Gregory, and to the rest of the Sable team there. Jim, I would like to go back to Leo's question on the SPR. If I heard you correctly, you said you expect some kind of resolution this fall on that, and that you have got some enthusiasm, not just from other producers, but also pipeline and refinery operators in California. What form is that going to take? Has there been any evolution, either on your side or on the government side, of what the designation will look like in terms of assets for that SPR effort?

Yes, good morning, Jim and Gregory, and to the rest of the table team there. Um, Jim, I'd like to go back to, uh, to Leo's question on the SDR. Uh, if I heard you correctly,

You said you expect some kind of resolution this fall on that and, and that you've got, uh, some enthusiasm not just for other uh, producers but also uh, Pipeline and and Refinery operators in California.

What, uh, that solution that you're looking for, what form is that going to take? And has there been any evolution, either on your side or on the government side, of what?

Do any of you know what the, uh, what the designation will look like in terms of, you know, assets for that SDR effort?

[Company Representative] (Sable Offshore Corp): Well, Charles, you were breaking up, but I think you were talking about this designation. First, it has to be designated as SPR, and then you have the power of condemnation by the Department of Energy. They can condemn whatever acreage or whatever assets they want for the purpose of supporting the SPR. That gives it a lot of flexibility, plus also to be able to connect pipes that are right now inefficiently not connected and be able to relieve a lot of marketing constraints for everybody. You want to have as much oil going into the SPR, as you want to have much oil going out of the SPR into the refineries. It gives the federal government broad powers to make sure that the California energy sector will start being efficient and be able to maintain its current production levels.

[Company Representative] (Sable Offshore Corp): And also, more importantly for us, maintain the refineries. That is the big thing, is support the refineries that are there. Will that restart of Valero Benicia? I do not know. There are a lot of entrepreneurs around here looking at it here in Houston and stuff. It could add refineries, but for sure it will at least keep the ones that are there in business. We got broad support on that from everybody. I say we, the United States Department of Energy does. Hopefully, we will get that across the line sometime this fall.

Well, Charles you were breaking up, and I think we were talking about, what about the designation first first? It has to be designated SDR. And then with then, and then you have the power of condemnation by the department of energy that can condemn, whatever acreage or whatever assets they want. That's for the purpose of uh of supporting the spr. So that's that gives you a lot of flexibility. Plus also be able to connect pipes uh uh that are right now in officially not connected and uh be able to leave a lot of marketing constraints for everybody. So that it's got so that you want to have as much oil going into the SBR as you want to have much oil coming out of the SBR into the into the refineries. So uh it gets it gives the the federal government broad power to make sure that the the California energy sector will start being efficient and be able to be able to maintain its current production levels and also make more importantly for us to maintain maintain, the refinance. That's the big thing is support, the products that are there and will that, will that restart a, a Valero Venicia. Not, I don't know. This says a lot of entrepreneurs that are out here looking at it.

Uh here in Houston and stuff. But I mean you could you could add refineries, but for sure at least keep the ones that are there in business and we got broad support from that from everybody. I say we the, the the department of energy does. So hopefully, uh, hopefully, we'll we'll get, we'll get that across the line sometime this, uh, this fall.

Charles Meade: Okay. Can you guys still hear me, or am I gone?

[Company Representative] (Sable Offshore Corp): Yeah, you are good now. You are better now.

Charles Meade: Great. Thank you. Jim, a follow-up question on the declines you are seeing or maybe the lack of declines you are seeing. Are you seeing any change in the flowing pressure of the wells? I am curious what impact you foresee this will have on your updated 3P reports coming in. I am specifically wondering, how much history are the reservists here is going to want to see before they give you credit for a lower decline? Are they going to give it to you just on the wells that you have been able to produce, or do you think they are going to give it to you more on a field-wide basis?

Okay. Uh, can you guys still hear me, or is it—uh, my God. Yeah, you're good. You're better now. Okay, great.

Thank you, thank you. Um, follow-up question on the declines you're seeing, or, or maybe, or maybe the lack of declines you're seeing.

Uh, are you, uh, are you seeing any, uh, change in the, uh, in the flowing pressure of the wells and, uh, you know, and I'm curious what impact you perceive this will have on your, uh, on your updated, uh, you know, 3P report that's coming in. I'm just specifically wondering, do you think that—how much history are the reserve engineers going to want to see before they give you credit for a lower time? And—

[Company Representative] (Sable Offshore Corp): Yeah. We flowed all the wells, Charles, so I mean, the aspect of that, and we'll have enough production history on everything to whether they'll be able to do it on a field-wide basis. Yeah, we're seeing no decline in the field. It's a massive field. I'm sure we'll all coalesce around a 6% or 7% field-wide decline going forward, which has been this historical. It's made 671 million barrels with a 7% decline. Eventually, it will revert to that, and that's where the physics is going to be. We're certainly enjoying the production with no decline rate, but at some point in time, when you get that pressure drop a little bit and the GOR goes up, we'll be making more gas. We've got to run our compressors.

Are they going to give it to you just on the wells that you—that you've been able to do so? Or do you think they're going to give it to you more on a field-wide basis?

Yeah, we we float all the wells, uh, Charles. I mean, the aspect of that and we'll have enough production industry on everything to whether to be able to do it or feel wide basis. Yeah. I it it, we're seeing it up. We're seeing no decline in in the field. So it's a massive field but I'm sure we'll, we'll we'll, uh, we'll all coalesce around a, a 6 or 7% field wide decline, uh, going forward which is, which has been this historical. Uh, you know, it's made a 100, you know, 671 million barrels with a 7% decline, you know, it eventually that that that will it will revert to that and that's that's that's where the phys.

[Company Representative] (Sable Offshore Corp): We'll actually be able to effectively bring on more production in some wells that have high water cut that we can't bring on right now because of the lack of gas. The field will actually run a little better, and probably we'd see a 10% to 15% increase in production volumes and also some gas sales at that point in time. There's a pool, whether it's going to be this year or next year, as whether the field will start to decline, but it will at some point in time. You can use that 7% field-wide decline. That's where we've been steady in all of our projections. I think the Netherland, Sewell pre-production decline rates on their reports like 21% and 16% the first 2 years, which is just protection for everybody and themselves, investors, and so forth.

[Company Representative] (Sable Offshore Corp): They fully recognize the way the field's performing and looking forward to making sure we all coalesce around that field-wide decline.

Well, the the the field started to climb but it will at some point time. So you can use that 7% to your wide Decline. And that's what we've been. We've been, we've been uh, steady in our all of our projections. I think the Netherlands School pre-production, uh, decline rates on their reports like 21%. And 16% the first 2 years, which is just protection for everybody and themselves investors so forth and they fully recognize the, uh, the the, the way the fields perform and looking forward to making sure we we all call us around that that field logic class.

Charles Meade: That's great detail. Thank you, Jim.

[Company Representative] (Sable Offshore Corp): Sure.

That's great detail. Thank you, Jim.

Operator: Our last question comes from Noel Parks at Tuohy Brothers Investment Research. You may now unmute your audio and ask your question.

Sure.

Our last question comes from no parks at 2i. Brothers investment research, you may now unmute your audio and ask your question.

Noel Parks: Hi. Good morning. I just wondered with Platform Hondo, you mentioned that it is in a process of restoration. Could you just talk a bit more about what is entailed in that and if any of it is in addition to what you originally anticipated the work is that you would have to do?

Hi, good morning. Um, I just wondered, with Platform Honda, uh, you mentioned that it's in a process of restoration. Could you just talk a bit more about what's entailed in that, and, uh, is there any of it that is, um,

Uh, in addition to what you originally anticipated, um, the work is that you'd have to do.

[Company Representative] (Sable Offshore Corp): Well, we originally anticipated a lot of work at Platform Hondo, like a 45-year-old platform. The amount of work did surprise us. We have had probably about 50% more work than we expected, a lot of structural work that we did not expect, and so forth, that the platform was in dire need. It was not nearly in as good a shape as Harmony and Heritage. It is just older and maybe less maintained from that standpoint. We have taken it upon ourselves to basically rebuild that platform in place, and we are going to have a first-class facility. It would probably be the most sought-after site in the whole field. We will have a new living quarters, new everything from that standpoint. The controls had to be completely changed out, where the Harmony and Heritage controls just had to be updated, and so forth.

well uh we originally anticipated, a lot of work at platform on there, like it was a 45 year old platform and um,

[Company Representative] (Sable Offshore Corp): It is going to be a brand-new platform when we finish with it. We are looking forward to that. Our gas sales go through that platform as well, so we had to make sure that was in good shape. The guys, again, have done a masterful job there. We have got so many people and contractors there. We are moving logistics and people from other platforms, staying at other platforms, to that platform to do work every day. We continue to be safe and really impressed with the work that Caldwell and Trent and their group has done.

Uh, and but but uh the amount of work did surprises, I mean we we've had probably about 50% more work than we. We expected a lot of structural work that we didn't expect and so forth that uh, uh the the the platform was in dire need, it wasn't near in the good of shape as Harmony inheritance, it's just older and and, and maybe less maintained from that standpoint. So we've, uh, we've taken upon ourselves to basically rebuild that platform in place and, uh, we're going to have a first class first class facility. It probably be the most, uh, sought after uh, site in the whole field of of New. Living course, do everything from the standpoint but also the the controls had to be completely changed out where where the uh, Harmony and are inheritance control. Just had to be updated and so forth. So it's it's, it's going to be a brand new platform when we finish with it. Uh, and, uh, uh, we're looking for, we're looking forward to that and because we, we got, but also, our gas sales go through that platform as well. So we had to make sure that was in good shape. Uh, and uh, the guys again.

A matchable job there and we've got we got so many people in contractors there. Um uh we're moving Logistics to people from other platforms, staying at other platforms for that platform to do work every day. So uh we continue to be safe and uh really impressed with the work that call Will and Trenton those guys and their group is not

Noel Parks: Great, thanks. I was thinking about, in terms of geological work, what is, I guess, the first on the agenda for further testing of the Upper Sisquoc, and what is the most economical way to go about that? I assume it is maybe re-completion and uphole. What sort of cost would that be, and what sort of data are you looking for next there?

Great. Thanks and um, was thinking about in terms of geological work um, sort of just what? Um,

I guess the first on the agenda for, uh, further testing of the upper siliceous and, sort of, you know, what's kind of the most economical way to go about that. I assume it's maybe recompletion and uphole, and, um, you know, what sort of cost would that be? Um, what sort of data are you looking for next there?

[Company Representative] (Sable Offshore Corp): Well, the Upper Sisquoc is going to be our main target for all of our reperfs, our perfs, basically going uphole like we show on the illustration on page 17, and also talk about in 14, 15, and 16. But the big thing on Upper Sisquoc is once we are out there and we are in a position to grow volumes with drilling rigs, that is going to be our main target. That showed up on page 18, which is our locations. We have over 100, 125 locations just in the Upper Sisquoc. We have another 50 locations, 50 to 75 in the Monterey Chert. That has been the main producer just in the upstructure location. Then we have to redrill the whole field again for the heavy oil.

Yeah. Well

Target for all of our repurposed, our perfect. Basically going to uphold, like we show these illustrations on page 17 and also talk about the important points on pages 15 and 16. But the big thing on upper siliceous is once—once.

Once we're out there and we're—we have, uh, in a position to grow volumes with driller rigs, that's going to be our main target.

And that's showed up on page 18, which is our, uh, which is our location. We have over 100, 125 locations just in the upper—

Commercial issue.

We got another 50 locations, 50 and 75. And the massive church that's in the main producer just in the updated location.

[Company Representative] (Sable Offshore Corp): The Upper Sisquoc over the next decade is going to be one of the key development deals, and several of the most recent wells they drilled in 2015, I think two of them in the Upper Sisquoc are some of the more prolific producers at this point in time. So we are just waiting to get our hands on it. We are certainly not going to put rigs out there till we have our marketing, our pipelines, debottlenecks, and all this stuff done, and refiners all in good shape and want to take more oil. Then we actually can grow production with the two drilling rigs that we are going to put out there. But we are looking forward to that time and then just taking these steps to get there very deliberately and looking forward to achieving full cash flow at full production in 2027 so we got some options.

And then we got to redraw the whole field again. So the heavy oil. So the upper split just over the next decade is going to be a 1 of the key, uh, key development deals and and it's it's several of the most recent Wells. They drilled in 2015, I think 2 of them in the upper solution, some of some more prolific producers at this point in time.

So uh, we we waiting to get our hands on it. We so so I'm not going to put rigs out there until we have our our marketing, our pipelines de bottlenecks and all that stuff, done and and refiners all in good shape, they want to take more oil and then we we actually can grow production with the with the 2 drill and rigs that we're going to put out there.

But we're looking forward to that time, and then just taking these steps, the steps to get there. Very deliberately and, uh, and uh, and, and looking forward to achieving full, cash flow and full production of 27. So we got some options.

Noel Parks: Great. Thanks a lot.

[Company Representative] (Sable Offshore Corp): Sure.

Great. Thanks a lot.

Operator: There are no further questions on the line. This concludes today's Q&A.

Sure, yeah. No further questions on the line.

Gregory D. Patrinely: Thank you everyone for your participation in today's earnings call. We appreciate it. Goodbye.

Thank you, everyone.

Thank you for your participation in today's earnings call. We appreciate it.

Goodbye.

Operator: Thank you for joining the Sable Offshore Corp. Investor Update Call. You may now disconnect.

Thank you for joining, the Sable offshore Corp, investor update call you may now. Disconnect

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