Sable Offshore Corp. 10-Q Summary: Q2 2026
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Sable Offshore Corp. is an independent oil and gas company focused on the Santa Ynez Unit (SYU) offshore California and the associated Santa Ynez Pipeline System (SYPS). Following a Defense Production Act (DPA) Order issued in March 2026, the Company resumed oil transportation and initiated sales on March 29, 2026. The Company is classified as an emerging growth company and a smaller reporting company.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Total Revenue | $137.1 million | $138.4 million |
| Net Loss | $(64.2) million | $(261.2) million |
| Net Loss Per Share (Basic/Diluted) | $(0.42) | $(1.76) |
| Operating Cash Flow | Not provided for quarter | $(72.8) million (Used) |
| Cash and Cash Equivalents | $21.6 million (as of June 30, 2026) | |
| Total Debt (Net) | $968.8 million (Includes $236.7M current, $732.1M non-current) | |
| Stockholders' Equity | $395.0 million |
Note: Revenue and operating expenses increased significantly compared to the prior year due to the commencement of oil sales in March 2026. The prior year periods had zero revenue.
Material Changes vs. Prior Period
- Revenue Generation: The Company recognized $138.4 million in revenue for the six months ended June 30, 2026, compared to $0 in the same period in 2025, driven by the resumption of oil sales.
- Operating Expenses: Operations and maintenance expenses rose to $181.5 million (six months 2026) from $84.8 million (six months 2025), primarily due to restart activities, platform commissioning, and demurrage charges.
- Debt Structure: Interest expense increased to $77.7 million (six months 2026) from $42.0 million (six months 2025) due to a rate increase from 10% to 15% and amortization of debt issuance costs.
- Warrant Liability: A non-cash gain of $27.9 million was recognized from the change in fair value of warrant liabilities, reducing the net loss.
Outlook, Risks, and Subsequent Events
Subsequent Refinancing (July 2, 2026): The Company consummated a major refinancing transaction to alleviate going concern doubts. This included:
- Issuance of $345.0 million in 6.5% Convertible Senior Notes due 2031.
- Issuance of 37.3 million shares of Common Stock for ~$107.0 million net proceeds.
- Entry into a $675.0 million Term Loan B and a $500.0 million Senior Revolver.
- Full repayment of the existing Senior Secured Term Loan.
Operational Outlook: Management expects to bring all 77 production wells on Platforms Harmony and Heritage online in Q3 2026, with Platform Hondo commencing production in September 2026. The Company has entered into costless collar hedging arrangements for 2026-2028 production.
Material Risks and Contingencies:
- Legal Challenges: The State of California has challenged the DPA Order in federal court. The Company is also involved in litigation with the California Coastal Commission regarding pipeline permits and an $18.0 million administrative penalty (which the Company disputes and has not accrued).
- Regulatory: Ongoing disputes with CalGEM regarding a $57.3 million bond requirement and various environmental permits.
- Going Concern: While substantial doubt existed as of March 31, 2026, management concluded that the July 2026 refinancing alleviated these concerns.
Investor Verification Checklist
- Refinancing Terms: Verify the specific covenants, amortization schedules, and interest rates of the new Term Loan B and Convertible Notes issued in July 2026.
- Legal Status of DPA Order: Monitor the status of State of California v. Chris Wright and the potential for a preliminary injunction that could halt pipeline operations.
- Coastal Commission Penalty: Confirm the outcome of the appeal regarding the $18.0 million penalty and the status of the preliminary injunction discharge.
- Production Ramp-Up: Validate the timeline for bringing Platform Hondo online and the actual production rates versus the estimated 720 barrels per day per well.
- Liquidity Position: Assess the Company's cash burn rate post-refinancing and the sufficiency of the new credit facilities to fund operations through 2028.