Sable Offshore Corp.

What they do

Sable owns the Santa Ynez Unit (SYU) offshore California, including three offshore platforms (Hondo, Harmony, Heritage), the Santa Ynez Pipeline System (SYPS), and the Las Flores Canyon (LFC) onshore processing facility, acquired from Exxon Mobil in February 2024. The company restarted oil production in May 2025 and sells crude oil, mainly through the SYPS to refineries. It is currently ramping up wells across the platforms and working through midstream and marketing constraints.

Revenue drivers

• Crude oil sales — Primary revenue source; generated $137.1M in Q2 2026, its first full quarter of revenue, with average daily net sales of ~21 thousand barrels of oil per day.
• Platform production (Harmony, Heritage, Hondo) — Production from these platforms drives sales volume; in Q2 2026, average 35 producing wells per day, with plans to bring all 77 wells online on Harmony and Heritage and restart Hondo in September 2026.
• Midstream and storage (LFC and SYPS) — LFC provides processing and storage; crude oil inventory grew 49% in Q2 to 316,495 barrels, but midstream constraints (e.g., demurrage charges) impacted revenue timing.

Recent performance

For Q2 2026 (three months ended June 30, 2026), Sable reported revenue of $137.1 million and positive operating cash flow of $9.4 million, its first full quarter of revenue and positive cash flow since inception. Average daily net sales volumes were approximately 21 thousand barrels of oil per day, exiting the quarter at ~40 thousand barrels per day. The company incurred $18.5 million in non-recurring demurrage charges related to refinery logistics. Net income was not reported in the provided extracts; annual net loss for 2025 was $410.2 million. As of June 30, 2026, total assets were $1.76 billion, total liabilities $1.37 billion, and cash was $21.6 million.

Strategy

Management is focused on ramping up production across all three platforms and increasing well counts, with plans to bring all 77 production wells online on Harmony and Heritage during Q3 2026 and restart Platform Hondo in September 2026. They are also conducting wireline campaigns (Perf Adds) to optimize well productivity, targeting incremental volumes of ~600 gross barrels of oil per day per perf add. On the financial side, Sable completed a refinancing in July 2026, issuing a $675.0 million Term Loan B due 2028, $345.0 million convertible notes due 2031, and a $500.0 million revolving credit facility with a $0 borrowing base, primarily for hedging. The company also commenced a commodity hedging program with Brent floor prices of $65 per barrel. They are working to resolve midstream constraints and reduce demurrage charges as production scales.

Risks

• Regulatory and pipeline restart risks — Resuming petroleum transportation through Pipeline Segments 324 and 325 requires satisfying conditions of a Consent Decree with federal and state agencies; no assurance of timely success.
• Permitting and clearance uncertainty — Operations require clearances and permitting, including from BOEM, which could delay production ramp-up.
• Commodity price volatility — Oil prices are volatile and a sustained decline could make the business uneconomical and lead to write-downs.
• Liquidity and debt burden — As of June 30, 2026, the company had long-term debt of $732.1 million and cash of $21.6 million; it has taken on new TLB with high coupon and excess cash flow sweep, and prior amendments required large fees.

Outlook

Management expects to bring all 77 production wells on Harmony and Heritage online during Q3 2026, and Platform Hondo to restart in September 2026, with five Perf Adds at Hondo expected to add ~600 gross barrels per day each. They also plan additional Perf Adds on Hondo in early Q4 2026. July 2026 preliminary oil sales were ~38,000 gross barrels per day, and August daily average through August 9 was ~42,000, indicating continued ramp-up. The company aims to achieve steady-state operations and manage midstream constraints while hedging additional volumes as production grows.