SABLE OFFSHORE CORP. 3Q 2026 EARNINGS CALL - SABLE OFFSHORE CORP

Explicit Guidance:

• Sales Volume (Q4 2026): Guiding to a 4th quarter sales rate of 35,000–38,000 bpd excluding December ramp; potential to reach 38,000–40,000 bpd if the December ramp is included.
• Sales Volume (November 2026): Targeting a rate of 31,000 bpd (excluding bulk sale proceeds).
• Sales Volume (December 2026): Expected ramp to 51,000 bpd (previously disclosed target).
• Cash Spend (Q4 2026): Projected cash burn of $165 million–$175 million (including $110–$120 million for opex/g&A/capex plus ~$53 million in amortization and interest).
• Reserve Reporting: Targeting 30 days of production from Platform Hondo by year-end 2026 to satisfy engineers for the year-end reserve report.

Business-Segment Outlook:

• Platform Hondo (Tejando): Full commissioning and safety upgrades to be completed; regulatory approvals (MMA) expected by late November with flow initiation the Monday after Thanksgiving (late November) and full ramp-up to 15 producing wells by December 2026.
• Production Performance: Existing wells on Harmony and Heritage platforms showing strong performance with no increase in gas production, steady oil rates, and stable wellhead pressures; base decline rate projected to reduce from 8% to 4% under new gas injection strategy.
• Recovery Estimates: Management anticipates ultimate recovery rates could double from the historical 15% to 30% of the 15.6 billion barrels in-place oil due to reservoir repressurization and gas reinjection strategies.
• Sales Mix & Pricing: Transitioning from spot "walk-up" differentials to long-term term contracts (6-month to 1-year) starting Q1 2027; targeting improved differentials relative to Brent in 2027.
• Inventory Management: Utilization of ~1.3 million barrels of total storage capacity (Las Flores Canyon, Lime Hills, Pentland, and pipeline) to facilitate bulk crude sales; targeting a "balanced sales marketing strategy" across four refineries in the Los Angeles market.

Market and Competitive Outlook:

• Refinery Diversification: Successfully executed sales agreements with three new refineries (in addition to Chevron/PBF) to mitigate past constraints; targeting a stable 15,000–20,000 bpd per refiner allocation in Q1 2027.
• Supply/Demand Dynamics: Acknowledged current heavy crude market saturation due to Western Canada Select and Venezuelan flows; anticipating market tightness and pricing improvement in 2027 as refineries adapt to Sable's specific crude blend.
• Logistics: Allocated 45,000 bpd on Line 2000; potential additional 10,000–15,000 bpd via Line M70 to PBF, contingent on settling pipeline availability by December 1, 2026.
• Market Position: Sable crude currently constitutes 22–25% of in-state California fuel supply; viewed as a cornerstone for national force projection and energy security.

Macro / Industry Outlook:

• Regulatory Landscape (SPR): Expecting strict executive action by the Department of Energy (DOE) to finalize Sable's entry into the Strategic Petroleum Reserve (SPR); citing continued White House support and potential legislative backing via the NDAA (National Defense Authorization Act) by year-end 2026.
• Legal Environment: Anticipating a "cleanup" phase of pending appeals (Ninth Circuit) and regulatory issues concluding by mid-2027; no immediate court obstacles expected.
• Operational Environment: Continued operation under the Defense Production Act (DPA) authorization; management expects political friction to subside as regulatory compliance is finalized.

Strategic Initiatives:

• Reserve Audit: Goal to have all 3P reserves audited by Netherland, Sewell & Associates by end of 2027 to reflect new gas injection recovery assumptions.
• Liquidity Management: Executing bulk crude sales of up to 1.3 million barrels in November 2026 to plug the October revenue deficit ($900k barrel hole); maintaining three liquidity backstops: (1) Bulk crude sales, (2) $100 million unsecured loan basket from J.P. Morgan, and (3) Potential PIPE offering to investors.
• Platform Upgrades: Completed reconstruction of Platform Hondo to modern safety standards; full commercial production expected in Q1 2027.
• Field Management: Implementation of a new strategy to maintain reservoir pressure by reinjecting associated gas rather than selling it, optimizing for maximum oil recovery.

Risks and Headwinds to Outlook:

• Execution Risk: Potential delays in Hondo well flow if valve failures occur during final testing, which could cause three-week delays; reliance on regulatory timing around Thanksgiving holidays.
• Market Risk: Current heavy crude differentials remain volatile and flat; inability to secure immediate term contract pricing improvements in Q4 2026.
• Operational Capacity: Processing constraints at the Lost Hills Canyon facility regarding water handling may limit the ability to ramp high-water-cut wells.
• Legal/Regulatory: Pending appeals regarding pipeline jurisdiction and FEMSA, though management views these as manageable; reliance on continued White House support for SPR and DPA status.
• Liquidity Risk: Need to fund a $165M–$175M cash burn in Q4 2026; reliance on successful bulk sale execution or debt/equity raises to bridge to Q1 2027 free cash flow.

Management Tone on the Future:

• Confidence Level: High confidence in the "outstanding" nature of 2027 once liquidity constraints are resolved and Hondo is fully online.
• Strategic Shift: Transition from a defensive liquidity preservation mode to an offensive growth and optimization mode, emphasizing "we haven't seen the best of this field yet."
• Caveats: Management explicitly hedges on 2027 pricing differentials, noting the company remains a "price taker" in the current heavy crude environment and must focus on volumes first in 2027.
• Operational Optimism: Expresses strong satisfaction with well performance (no decline) and views the gas injection strategy as a significant upside catalyst for reserves.

Miscellaneous:

• ATM Program: Sable will not utilize the At-The-Market (ATM) program in Q4 2026; cannot comment on future ATM usage.
• Balance Sheet: Already initiated deleveraging with an initial amortization payment on Term Loan B; liquidity was temporarily impacted by downstream constraints in Q3 2026.
• Q&A Highlights: Confirmed that the 20–30 k bpd Q4 guidance range excludes the bulk sale proceeds.