SOC
Sable Offshore CORP
NYSE
8-K: Sable Offshore Corp. Announces Restart of Oil Production at Santa Ynez Unit, Anticipates July Oil Sales
Sentiment:
Current Report on Form 8-K
19 May 2025 6:19 AM
Sable Offshore Corp. has restarted oil production at the Santa Ynez Unit and anticipates recommencing oil sales from the Las Flores Pipeline System in July 2025.
Better than expected
The updated 2H25 production guidance of 40,000-50,000 BOE/D is significantly higher than the prior guidance of 20,000-25,000 BOE/D.
Initial well tests at Harmony Platform have exceeded expectations.
Summary
- Sable Offshore Corp. announced the restart of oil production at the Santa Ynez Unit (SYU) as of May 15, 2025.
- Oil production has begun flowing to Las Flores Canyon (LFC).
- The company has completed anomaly repairs on the Las Flores Pipeline System as specified by the Consent Decree on May 18, 2025.
- Seven of the eight sections of the Onshore Pipeline have been successfully hydrotested.
- Sable expects to fill the ~540,000 barrels of crude oil storage capacity at LFC by mid-June 2025.
- Oil sales are expected to recommence in July 2025.
- Initial flow of oil production from six wells on Platform Harmony of the SYU to LFC is at a rate of ~6,000 barrels of oil per day.
- Well tests on Platform Harmony have performed consistently stronger than at the time of shut-in on May 19, 2015, when the SYU produced approximately 45,000 barrels of oil equivalent per day.
- Production from the additional 44 wells on Platform Heritage and the additional 26 wells on Platform Hondo is expected to start in July 2025 and August 2025, respectively.
- Updated 2H25 guidance projects net average daily production between 40,000 and 50,000 BOE/D.
- Cash costs are estimated at $11.00 $13.50 per BOE for lease operating expenses and $2.50 $3.50 per BOE for cash general & administrative.
- Total capex for 2H25 is projected to be $70 $90 million.
Sentiment
Score: 7
Explanation: The sentiment is positive due to the restart of production, stronger than expected well test results, and increased production guidance; however, risks related to permits and potential asset reversion temper the overall sentiment.
Positives
- Restart of oil production at the Santa Ynez Unit (SYU) has been achieved.
- Completion of anomaly repairs on the Las Flores Pipeline System.
- Stronger than expected well test results from Platform Harmony compared to the 2015 shut-in.
- Anticipated increase in net average daily production to 40,000 50,000 BOE/D for 2H25.
- Sable management has a track record of excellence as a safe and responsible steward of California's onshore and offshore resources.
Negatives
- The SYU assets have not sold commercial quantities of hydrocarbons since June 2015.
- There is no assurance that the necessary permits will be obtained to allow the Onshore Pipeline to recommence transportation and allow the SYU assets to recommence sales.
- If Restart Production is not achieved by March 1, 2026, the SYU assets could revert to EM without compensation to Sable.
Risks
- The ability to obtain necessary permits for the Onshore Pipeline to recommence transportation.
- Failure to achieve Restart Production by March 1, 2026, potentially leading to the reversion of SYU assets to EM without compensation.
- Potential deviations from anticipated timing and magnitude of assumptions impacting actual production results.
- Uncertainty regarding the amount and timing of production decline from recently opened wells.
- Commodity price volatility, global economic conditions, and regulatory changes could impact results.
Future Outlook
Sable expects to fill the ~540,000 barrels of crude oil storage capacity at LFC by the middle of June 2025 and subsequently recommence oil sales in July 2025; the company also plans to initiate production from additional wells on Platform Heritage and Platform Hondo in July and August 2025, respectively.
Management Comments
- SOC is proud to have safely and responsibly achieved first production at the Santa Ynez Unit said Jim Flores, Chairman and Chief Executive Officer.
- The impressive well tests from Platform Harmony confirm the prolific nature of the Santa Ynez Unit reservoir after being dormant for ten years.
- SOC is excited about our development plan and prospects for the future.
Industry Context
This announcement indicates a positive step for Sable Offshore in re-establishing production in the Santa Ynez Unit, a region with a history of significant oil production; the restart could position Sable as a key player in the California offshore oil market, especially given the focus on domestic energy security.
Comparison to Industry Standards
- The company's management team previously operated platforms including Irene at Point Pedernales and Hidalgo, Harvest and Hermosa at Point Arguello while at Plains Exploration & Production.
- The Santa Ynez Unit produced 45,000 boe/d rate at shut-in in 2015.
- The company is targeting long-term leverage ratios of ~1.0x to maximize flexibility for distributions and development.
Stakeholder Impact
- Shareholders: Potential for increased returns due to production restart and increased guidance.
- Employees: Positive morale boost from achieving production restart.
- Local Community: Potential for increased energy security for the State of California.
- Regulatory Bodies: Continued cooperation and partnership to ensure safe and responsible operations.
Next Steps
- Complete the final hydrotest of the Onshore Pipeline.
- Fill the ~540,000 barrels of crude oil storage capacity at LFC by the middle of June 2025.
- Recommence oil sales in July 2025.
- Initiate production from the additional 44 wells on Platform Heritage in July 2025.
- Initiate production from the additional 26 wells on Platform Hondo in August 2025.
- Continue evaluating strategy for CCS utilizing existing infrastructure and access.
Key Dates
- June 2015: SYU assets were shut in when the only Onshore Pipeline transporting hydrocarbons produced from such SYU assets to market ceased transportation.
- November 1, 2022: Date of the purchase and sale agreement (Sable-EM Purchase Agreement) between Sable Offshore Corp., Exxon Mobil Corporation (EM) and Mobil Pacific Pipeline Company.
- December 31, 2024: Date of Sable's Annual Report on Form 10-K.
- May 15, 2025: Sable restarted production at the Santa Ynez Unit (SYU) and began flowing oil production to Las Flores Canyon (LFC).
- May 18, 2025: Completion of the Gaviota State Park anomaly repairs on the Las Flores Pipeline System.
- May 19, 2025: Date of the 8-K filing and press release announcing the restart of oil production.
- July 2025: Anticipated recommencement of oil sales from the Las Flores Pipeline System and expected initiation of production from the additional 44 wells on Platform Heritage.
- August 2025: Expected initiation of production from the additional 26 wells on Platform Hondo.
- March 1, 2026: Deadline for achieving Restart Production; failure to do so could result in the SYU assets reverting to EM without compensation to Sable.
Keywords
Santa Ynez Unit, oil production, Las Flores Pipeline, Sable Offshore, restart, production, offshore, California, SYU, pipeline
SOC
Sable Offshore CORP
NYSE
Sector: Energy
Filings with Classifications
Better than expected
23 May 2025 4:07 PM
Equity Offering Update
- The offering size was increased from a previously announced $200.0 million of shares, indicating higher demand than initially anticipated.
- The underwriters fully exercised their option to purchase an additional 1,304,346 shares, demonstrating strong investor interest and confidence in the offering.
- The company successfully raised approximately $295.0 million in gross proceeds, providing significant capital for its stated corporate purposes.
Capital raise
23 May 2025 4:07 PM
Equity Offering Update
- Sable Offshore Corp. completed an upsized underwritten public offering of 10,000,000 shares of common stock.
- The shares were sold at a public offering price of $29.50 per share.
- The gross proceeds from the offering amounted to approximately $295.0 million.
- The net proceeds, estimated at $283.2 million, are intended for capital expenditures, working capital, and general corporate purposes.
- The offering included the full exercise of the underwriters' 30-day option to purchase an additional 1,304,346 shares.
Better than expected
19 May 2025 6:19 AM
Current Report on Form 8-K
- The updated 2H25 production guidance of 40,000-50,000 BOE/D is significantly higher than the prior guidance of 20,000-25,000 BOE/D.
- Initial well tests at Harmony Platform have exceeded expectations.
Worse than expected
9 May 2025 4:10 PM
Earnings Release
- The company reported a net loss of $109.5 million, indicating worse than expected financial performance.
Delay expected
9 May 2025 4:10 PM
Earnings Release
- The Santa Ynez Unit assets have been non-producing since June 2015 due to a pipeline shutdown, representing a significant delay in production.
Worse than expected
9 May 2025 4:03 PM
Quarterly Report
- The company reported a net loss of $109.5 million, indicating worse than expected financial performance.
- The company's ability to continue as a going concern is subject to substantial doubt, indicating worse than expected operational outlook.
Delay expected
17 March 2025 8:15 PM
Annual Report
- The company faces regulatory hurdles and legal proceedings that could delay or prevent the restart of production.
Worse than expected
17 March 2025 8:15 PM
Annual Report
- The company has a history of net losses and negative cash flows from operations.
- The company is not currently generating revenue from its SYU Assets.
- The company is reliant on external funding to continue operations.
Worse than expected
19 February 2025 10:14 AM
8-K Filing
- The company is facing a Cease and Desist Order from the California Coastal Commission.
- The company is involved in a lawsuit with the California Coastal Commission.
- The company's pipeline repair operations could be delayed or halted.
Delay expected
19 February 2025 10:14 AM
8-K Filing
- The dispute with the California Coastal Commission could potentially delay Sable's pipeline repair operations.
Delay expected
2 January 2025 7:35 AM
Litigation Update
- The lawsuit and subsequent remand introduce uncertainty regarding the timeline for restarting production at the Santa Ynez Unit.
- The potential for third-party interference could further delay the restart of operations.
Delay expected
14 November 2024 5:20 PM
Quarterly Report and Regulatory Update
- The California Coastal Commission asked Sable to stop all work in the Coastal Zone at the end of September, causing delays in pipeline maintenance and repair.
- The need to agree on an interim work plan with the CCC to fill open excavations is causing further delays.
Worse than expected
14 November 2024 5:20 PM
Quarterly Report and Regulatory Update
- The company reported a significant net loss of $255.6 million, which is worse than expected for a company of this size.
- The ongoing issues with the California Coastal Commission and the potential reversion of assets to ExxonMobil are also worse than expected.
Worse than expected
14 November 2024 4:14 PM
Quarterly Report
- The company reported a significant net loss, driven by high operating expenses and changes in the fair value of warrant liabilities.
- The company's assets are not currently producing, leading to a lack of revenue and substantial operating losses.
- There is substantial doubt about the company's ability to continue as a going concern.
Capital raise
14 November 2024 4:14 PM
Quarterly Report
- The company completed a second private placement of shares, raising $150 million.
- The company received $72.5 million from warrant exercises.
- The company may need to raise additional capital if its cost estimates for restarting production are insufficient.
Capital raise
11 October 2024 5:10 PM
S-1 Filing
- The document details the issuance of 7,500,000 shares of Common Stock in a private placement (Second PIPE Investment) for an aggregate purchase price of $150,000,000.
Capital raise
24 September 2024 5:27 PM
Private Placement Announcement
- Sable Offshore Corp. raised approximately $150 million through a private placement.
- The company issued approximately 7.5 million new shares of common stock to investors.
- The shares were sold at a price of $20.00 per share.
Worse than expected
13 August 2024 4:29 PM
Quarterly Report
- The company reported a significant net loss of $165.4 million, which is worse than expected for a company in the process of restarting production.
Delay expected
13 August 2024 4:29 PM
Quarterly Report
- The company has a new deadline of July 1, 2025, to implement its 2021 Risk Analysis and Implementation Plan, which is a delay from the original timeline.
- The company is facing delays in obtaining permits from the County of Santa Barbara.
Delay expected
13 August 2024 4:07 PM
Quarterly Report
- The company's restart of production is contingent on regulatory approvals and repairs, which introduces uncertainty and potential delays.
- The OSFM approved PPC's extension request for the implementation of the 2021 Plan, setting a new deadline of July 1, 2025.
Worse than expected
13 August 2024 4:07 PM
Quarterly Report
- The company reported a significant net loss of $165.4 million for the quarter and $345.5 million for the period from February 14, 2024 to June 30, 2024.
- Operating expenses were substantial at $62.2 million for the quarter and $221.4 million for the period from February 14, 2024 to June 30, 2024.
- The company recorded a large change in fair value of warrant liabilities of $81.2 million for the quarter and $79.4 million for the period from February 14, 2024 to June 30, 2024.
- There is substantial doubt about the company's ability to continue as a going concern.
Capital raise
13 August 2024 4:07 PM
Quarterly Report
- The company may need to raise additional capital if its cost estimates for restarting production are less than the actual amounts needed.
- There is no assurance that new financing will be available on commercially acceptable terms.
Delay expected
11 July 2024 9:05 AM
Current Report
- The restart of operations has been delayed and is now expected in late third quarter 2024 or early fourth quarter 2024.
Better than expected
15 May 2024 4:54 PM
Quarterly Report
- The company increased its Total Net Estimated Contingent Resources by 21% to 646 MMboe, with a PV-10 value of $10.0 billion, which is a significant improvement over previous estimates.
Worse than expected
15 May 2024 4:38 PM
Quarterly Report
- The company reported a significant net loss of $180.1 million, which is worse than expected for a company that has just completed a business combination and is preparing to restart production.
- The high general and administrative expenses, driven by a $70 million legal settlement and $46.4 million in share-based compensation, contributed to the worse than expected results.
Capital raise
15 May 2024 4:38 PM
Quarterly Report
- The company raised $440.2 million through a private placement of common stock.
- The company secured a $625 million senior secured term loan from Exxon Mobil.
Delay expected
1 April 2024 4:31 PM
Amended 8-K Filing
- The closing date of the purchase agreement was delayed from June 30, 2022, to December 31, 2022, and then to February 1, 2024, and finally closed on February 14, 2024.
- The restart of production is contingent upon regulatory approvals and the timing of ongoing construction repair efforts, which could lead to further delays.
Capital raise
1 April 2024 4:31 PM
Amended 8-K Filing
- The company raised $440.2 million through a private placement of shares at $10.00 per share.
- The company may need to raise additional capital if the costs of restarting production exceed estimates.
Worse than expected
1 April 2024 4:31 PM
Amended 8-K Filing
- The company reported a significant net loss of $1.5 billion in 2022 due to a $1.4 billion impairment, indicating worse than expected financial performance.
- The company has a going concern warning, indicating worse than expected financial stability.
Capital raise
28 March 2024 5:21 PM
Annual Report
- The company may need to raise additional capital to fund the restart of production if its current cash on hand is insufficient.
- The company may issue additional equity or debt securities in the future, which may dilute existing stockholders or introduce restrictive covenants.
Worse than expected
28 March 2024 5:21 PM
Annual Report
- The company's independent auditor has expressed substantial doubt about its ability to continue as a going concern.
- The company has a working capital deficit of $16.4 million as of December 31, 2023.
Capital raise
12 February 2024 5:30 PM
Merger Announcement
- The company initially secured a $520 million PIPE investment.
- One investor was unable to fund $125 million of their commitment.
- The company secured an additional $53 million in PIPE investments to partially offset the shortfall.
- The company will continue to seek additional investments to provide liquidity after the merger.
Capital raise
16 January 2024 4:26 PM
Merger Financing Update
- Flame Acquisition Corp. has secured $520 million in PIPE financing.
- The financing involves the sale of 52 million shares of Class A common stock at $10.00 per share.
- The PIPE includes $100 million from new Flame PIPE investors and $420 million from Holdco PIPE investors.
- The Holdco PIPE investors will purchase 34.85 million shares of Holdco Class B shares at $10.00 per share.
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