Sable Offshore Corp. Reports Strong Second Quarter 2026 Financial and Operational Performance
Sable Offshore Corp. (“Sable” or the “Company”) (NYSE: SOC) has announced its financial and operational results for the second quarter of 2026, marking an important milestone in the company’s development as it continues to ramp up production and work toward steady-state operations across its Santa Ynez Unit (SYU) assets.
The second quarter represented Sable’s first full quarter of revenue generation and positive operating cash flow since inception. The company generated $137.1 million in total revenue and $9.4 million in positive cash flow from operating activities during the period. At the same time, Sable continued to increase oil production and sales volumes while addressing midstream constraints affecting the flow of crude oil into California’s refining market.
Average daily net sales volumes reached approximately 21,000 barrels of oil per day during the quarter. By the end of June, however, the company had significantly increased its sales volumes, exiting the quarter at approximately 40,000 net barrels of oil per day. This represented a 149% increase from the beginning of the quarter and reflected the continued progress of the company’s production restart and infrastructure efforts.
Sable reported $39.4 million in capital expenditures for the second quarter and ended the period with 154,531,910 shares of common stock outstanding.
Strong Financial Performance During First Full Revenue Quarter
Sable’s second-quarter results demonstrate the financial impact of its ongoing operational ramp-up. The company generated $137.1 million in revenue, while operating activities produced $9.4 million of positive cash flow.
The achievement is particularly significant because it represents the first complete quarter in which Sable generated both revenue and positive operating cash flow since its inception. The result provides an important foundation as the company moves toward higher production levels and seeks to improve cash generation from its assets.
During the quarter, average daily net sales volumes were approximately 21,000 barrels of oil per day. Production and sales volumes increased as Sable brought additional wells online and worked through constraints associated with its midstream infrastructure and downstream marketing arrangements.
By the end of the quarter, Sable was selling approximately 40,000 net barrels of oil per day. The substantial increase from the start of the quarter highlights the pace of the company’s production ramp and its progress toward restoring the Santa Ynez Unit to more normalized operating conditions.
Refinancing Strengthens Sable’s Capital Structure
Following the close of the second quarter, Sable completed a series of refinancing transactions on July 2, 2026. The proceeds were used to repay the company’s former EM Senior Secured Term Loan and extend its maturity runway through the end of 2028.
The refinancing included a $675 million Senior Secured Term Loan B, or TLB, due December 15, 2028. The TLB carries a 15% annual coupon and requires quarterly mandatory amortization payments of 2.5% per quarter during the second half of 2026. The mandatory amortization increases to 5% per quarter beginning in 2027. The facility also includes a 100% quarterly excess cash flow sweep.
Sable additionally issued $345 million of 6.5% Convertible Senior Notes due July 1, 2031. The notes have an initial conversion price of $4.00 per share.
As part of the refinancing transactions, Sable issued $115 million of common stock at a price of $3.08 per share.
The company also established a $500 million Senior Revolving Credit Facility designed primarily to support commodity hedging activities. The facility currently has a borrowing base of zero and matures on December 15, 2028, alongside the TLB.
The new capital structure is intended to provide Sable with greater financial flexibility as it continues to increase production, manage commodity price exposure and invest selectively in its operating assets.
Commodity Hedging Program Underway
Sable has also commenced a commodity hedging program designed to provide greater protection against potential declines in crude oil prices as production volumes increase.
The company established hedges with a $65 per barrel Brent floor price and has completed the post-closing requirements associated with its TLB. Sable expects to opportunistically hedge additional production volumes as its oil output continues to ramp.
The company also reported that no ATM equity sales had occurred during the third quarter through the date of the announcement, providing investors with additional visibility into the company’s current equity issuance activity.
Production and Well Performance Continue to Improve
Sable’s operational performance during the second quarter reflected continued progress across its offshore production platforms and associated infrastructure.
The company produced at an average rate of approximately 723 barrels of oil per day per well during the quarter, based on an average of 35 producing wells per day.
Well availability increased meaningfully during the period. Approximately 39 wells were online on average during June 2026, compared with approximately 26 wells online on average during April. This represents an increase of roughly 50% over the two-month period.
The company also continued to build crude oil inventory at its Las Flores Canyon facility. Inventory increased 49% during the quarter, rising from 212,390 barrels to 316,495 barrels. As of August 9, 2026, crude oil inventory had declined to approximately 224,000 barrels as the company continued to move volumes into the market.
Field operations also advanced at the Santa Ynez Unit, the Las Flores Canyon Midstream Processing Facility and the Santa Ynez Pipeline System. These activities are designed to support the transition toward more consistent, steady-state operations.
Sable resumed oil production from Platform Heritage in early April, adding another important source of production capacity to its operating portfolio.
Third-Quarter Production Ramp Continues
The production ramp continued into the third quarter. Sable estimates that preliminary July 2026 oil sales averaged approximately 38,000 gross barrels per day. Through August 9, August oil sales were averaging approximately 42,000 gross barrels per day.
During July, an average of approximately 47 wells at Platforms Harmony and Heritage were online. Those wells generated approximately 721 gross barrels of oil per day per well.
Sable expects to bring all 77 production wells across Platforms Harmony and Heritage online during the third quarter. Platform Hondo is also expected to return to production in September 2026.
The company began a wireline campaign in August focused on Perforation Additions, or Perf Adds, as well as producing-well optimization at Platform Harmony. These activities are intended to increase production from existing assets without requiring the level of capital associated with major infrastructure projects.
At Platform Hondo, five completed Perf Adds are expected to come online alongside the platform’s planned September restart. Each is forecast to generate approximately 600 additional gross barrels of oil per day.
Sable is also planning four additional Perf Adds at Platform Hondo. These projects are expected to be completed and brought online during early fourth quarter 2026, potentially providing another source of incremental production growth.
Midstream Constraints Affect Second-Quarter Marketing
Despite the strong operational progress, Sable faced significant challenges in transporting and marketing its crude oil during the quarter.
The company said California’s regulatory environment prevented local refineries from planning sufficiently in advance for the initial sales of crude from the Santa Ynez Unit. As a result, refiners were required to displace certain imported crude cargos during the second quarter.
The resulting logistical disruption caused Sable to incur $18.5 million in non-recurring demurrage charges during the quarter. These costs were recognized as operational expenses.
The sudden increase in Pacific Outer Continental Shelf, or Pacific OCS, crude supply also created temporary challenges for California refiners. Refiners limited their throughput of Pacific OCS crude while applying quality deductions related to sulfur content and other characteristics of the crude.
Sable expects the planned restart of Platform Hondo to help address some of these issues. Hondo is expected to produce crude with lower sulfur content, which should bring the overall sulfur content of the company’s field production closer to normal levels following the platform’s planned September restart.
The company is also evaluating chemical-based solutions that could potentially sweeten SYU crude and reduce sulfur content. Testing is expected to begin during the fourth quarter of 2026, with broader implementation anticipated in 2027 if the approach proves successful.
Throughput Constraints Expected to Ease
Beginning in July 2026, Sable was temporarily constrained by downstream partners to approximately 40,000 average gross barrels of oil per day of sales throughput.
The company expects this short-term restriction to begin easing during the second half of August.
Sable also expects California refiners to adjust their crude supply strategies beginning in September. The anticipated changes should allow refiners to accept more Pacific OCS crude from the Santa Ynez Unit while reducing their reliance on imported barrels.
If these changes occur as expected, the company believes the SYU’s current throughput constraints could be substantially alleviated.
Sable is also negotiating waterborne crude oil marketing solutions through existing marine terminals in the Los Angeles area. Such arrangements could provide additional flexibility in moving crude to market and reduce reliance on a limited number of downstream outlets.
Another potential source of marketing flexibility could emerge from the pending acquisition of the Crimson Utilities, or San Pablo Bay Pipeline, network by a third party. If the pipeline eventually resumes operations, it could provide California oil producers with access to the San Francisco refining market.
Lower Capital Spending Guidance
Sable has reduced its estimated capital expenditures for the second half of 2026 by 41%, with the midpoint of its revised guidance now at approximately $85 million.
The company said the reduction is intended to optimize cash flow and accelerate debt amortization while maintaining the investments necessary to support production and infrastructure reliability.
For the second half of 2026, Sable expects total capital expenditures of approximately $75 million to $95 million. For full-year 2027, the company expects capital expenditures of approximately $80 million to $100 million.
The company’s second-half spending priorities include maintaining asset integrity, maximizing available midstream throughput, executing high-return Perf Add projects and optimizing production from existing wells.
Sable’s current guidance does not assume any benefits from future waterborne marketing solutions, chemical treatment programs or broader improvements to California oil infrastructure. This means successful implementation of those initiatives could potentially provide additional upside beyond the company’s current projections.
Updated Production Outlook
Sable expects gross average daily sales during the second half of 2026 to range from approximately 47,500 to 52,500 barrels of oil equivalent per day. Based on an 83.6% working interest and net revenue interest, net average daily sales are expected to range from approximately 40,000 to 45,000 barrels of oil equivalent per day.
The company expects its production mix to be approximately 100% oil during the second half of 2026.
For full-year 2027, Sable expects gross average daily sales of approximately 50,000 to 55,000 barrels of oil equivalent per day, with net average daily sales projected at approximately 42,500 to 47,500 barrels of oil equivalent per day.
The company also expects its 2027 oil ratio to reach approximately 100%, up from the previous midpoint estimate of 91%. The increase is attributed to the deferral of POPCO gas plant capital items and stronger-than-expected oil production from existing wells.
Sable expects its 2027 guidance to reflect normalized operations following the completion of its restart and production ramp activities.
Cash Cost and Marketing Expectations
Sable estimates marketing and gathering, processing and transportation deductions at approximately $24 to $28 per barrel during the second half of 2026. The company expects those deductions to improve to approximately $21 to $25 per barrel in 2027.
Lease operating expenses are expected to range from $17 to $21 per net barrel during the second half of 2026, before declining to approximately $9 to $12 per net barrel in 2027 as production volumes increase and operations normalize.
Cash general and administrative costs are projected at approximately $6 to $9 per net barrel during the second half of 2026 and approximately $3.50 to $6.50 per net barrel in 2027.
Severance and ad valorem taxes are expected to remain between approximately 0.5% and 1% of revenue during both periods.
The anticipated decline in per-unit costs reflects the company’s expectation that higher production volumes will allow fixed and semi-fixed operating costs to be spread across a larger production base.
Brent Hedging Provides Downside Protection
Sable has established a Brent crude hedging program covering portions of its expected production through 2028.
For the period from July 1 through December 31, 2026, the company has hedged an average of approximately 28,000 barrels per day using costless collars tied to the NYMEX Brent benchmark. The hedges include a $65 per barrel bought put and an approximately $89.39 per barrel sold call.
For 2027, Sable has hedged an average of approximately 25,000 barrels per day. Those contracts have a $65 per barrel floor and an $80 per barrel ceiling.
For 2028, the company has hedged approximately 21,000 barrels per day, again using a $65 per barrel bought put, with a sold call at approximately $73.17 per barrel.
The hedging strategy is intended to provide a degree of cash-flow visibility while preserving some participation in higher crude oil prices.
Management Remains Focused on Production Growth
Sable Chairman and Chief Executive Officer Jim Flores highlighted the company’s progress during the second quarter and the performance of its producing wells.
Flores said the company made significant progress in ramping up operations during the quarter and was encouraged by the productivity of the wells at the Santa Ynez Unit. He noted that production has been stronger than initially expected, with minimal to no observable decline in well performance.
Management also emphasized its focus on working with midstream and downstream partners to increase the volume of domestic crude from the Santa Ynez Unit reaching California markets.
The company believes that improving the movement of SYU crude into the market could benefit both California consumers and broader domestic energy security, including supply considerations for the U.S. military and its allies.
Sable enters the second half of 2026 with several major operational initiatives underway. The company is continuing to bring production wells online, expects the restart of Platform Hondo in September and is pursuing additional production through Perf Adds and well optimization.
At the same time, management is working to resolve near-term midstream constraints, improve crude marketing flexibility and reduce the impact of quality-related deductions.
The company’s lower capital expenditure guidance reflects a more disciplined approach to spending as Sable seeks to maximize cash generation and accelerate debt reduction. Its revised production outlook, meanwhile, points to continued growth as more wells return to service and infrastructure constraints ease.
The combination of increasing oil sales, positive operating cash flow, lower planned capital spending and a strengthened maturity profile could provide Sable with a more stable financial platform as it moves toward fully ramped operations.
With additional production expected from Platforms Harmony, Heritage and Hondo, as well as further optimization opportunities across the Santa Ynez Unit, the company is positioning itself for higher volumes during the remainder of 2026 and into 2027.
Sable’s management expects that the normalization of downstream crude demand, improved midstream access and additional marketing options could further support the company’s long-term production and cash-flow objectives.
Overall, the second quarter marked a significant operational and financial milestone for Sable Offshore Corp. The company generated its first full quarter of revenue and positive operating cash flow, substantially increased oil sales volumes and continued progressing toward steady-state operations. Its focus for the coming quarters will be on completing the production ramp, managing infrastructure constraints, executing high-return projects and strengthening its balance sheet through improved cash generation and debt amortization.
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