Sable Offshore Corp. 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Sable Offshore Corp reported second quarter 2026 oil sales of 4,000 barrels per day, representing significant growth compared to prior periods.
- The company completed refinancing on July 2, 2026, replacing the ExxonMobil senior secured term note with a $675 million senior secured term loan B maturing December 15, 2028, and issued $345 million of convertible senior unsecured notes maturing July 1, 2031, with a 6.5% coupon and $4 per share initial conversion price.
- Sable Offshore Corp initiated a commodity hedging program covering 100% of projected PDP production with costless collars having a $65 floor price for the second half of 2026 and beyond.
- The company is actively working on restoring the 45-year-old platform Hondo, targeting a restart by the end of September 2026 to enable full fourth quarter production.
- Marketing challenges in the California refining market caused elevated short-term costs and discounts, including approximately $10 per barrel sulfur penalty and demurrage charges, expected to improve by fourth quarter 2026.
- The Santa Ynez Unit remains the number one field in the United States by estimated reserves and cumulative production, with a large remaining reserve base including approximately 1.5 billion barrels of primary forecast reserves and 618 million barrels of heavy oil.
- Capital expenditures are planned to remain light in 2026 through 2028, focused on wireline work and water mitigation, with potential for increased drilling activity contingent on refinancing and marketing improvements.
- Management highlighted a strong free cash flow profile, projecting midpoint unlevered free cash flow of $152 million for the second half of 2026 and over $500 million for 2027 at $70-$75 Brent prices.
- The company aims to optimize its balance sheet in 2027 through a phase two refinancing after issuing a full £0.03 reserve report, with plans to reduce cost of debt, extend maturity, and potentially initiate shareholder returns via dividends and share repurchases.
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Transcript
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Hello, and welcome to the Sable Offshore Corp Investor Update Call. All participants will be in listen only during the prepared remarks. We will then go into a Q&A session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Harrison Bro, you may begin.
Thank you, Alice. Good morning, everyone, and welcome to our second quarter 2026 earnings conference call. Joining me today to discuss our results are Jim Flores, Chairman and Chief Executive Officer, Caldwell Flores, President and Chief Operating Officer, Gregory Patrinely, Executive Vice President and Chief Financial Officer, and Anthony Duenner, Executive Vice President, General Counsel, and Secretary, as well as various other members of the Sable team. Please refer to our website to download a copy of our new investor presentation posted yesterday, as well as our recently filed financial statements, which will both be discussed today. We will actively display the presentation on this webcast and reference certain items by page number, and then proceed to Q&A. We will also be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions and are subject to risk and uncertainties.
Actual results could differ materially from those described in the forward-looking statements because of factors discussed in our earnings release, in our investor presentation, in the comments made during this conference call, in our most recent Form 10-K, Forms 10-Q, and other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statements. With that, I will turn it over to Jim Flores to begin going through the investor presentation.
Jim? Thanks, Harrison, and good morning, everyone.
As promised, we said we'd have a conference call at some point in time. This is our first conference call for earnings from Sable Offshore, so welcome, everyone. After looking at page 3 of the presentation, it's more of the summary stuff you've seen before, but page 4 is the milestones achieved, the next steps. We've listed them all since the beginning of this saga in 2025. Then the three updated ones, restarting production with Platform Heritage in April 2026, refinance the senior secured term note July of 2026, and commence the commodity hedging program July 2026. The next steps are restart production at Platform Hondo, which is expected at the end of September 2026.
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