8-K: Sable Offshore Corp. Announces Restart of Oil Production at Santa Ynez Unit, Anticipates July Oil Sales

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.

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

Keywords

Santa Ynez Unit, oil production, Las Flores Pipeline, Sable Offshore, restart, production, offshore, California, SYU, pipeline