Sable Offshore (NYSE: SOC) reported $137.1 million of revenue and $9.4 million of operating cash flow for Q2 2026, its first full quarter of revenue generation and positive operating cash flow since inception. Average net sales were approximately 21,000 barrels of oil per day, while Sable exited the quarter at roughly 40,000 net barrels per day. The production ramp was accompanied by downstream constraints, higher inventory and $18.5 million of non-recurring demurrage charges.
Core financial results
The quarter marked Sable’s transition into commercial revenue generation. Operating cash flow was positive, although capital expenditures remained above internally generated cash during the period.
| Metric | Q2 2026 | Comparison or context |
|---|---|---|
| Revenue | $137.1 million | First full quarter of revenue generation |
| Operating cash flow | $9.4 million | First positive quarter since inception |
| Capital expenditures | $39.4 million | No comparable prior-period figure provided |
| Average net sales | Approximately 21,000 barrels/day | Production increased during the quarter |
| Exit net oil sales | Approximately 40,000 barrels/day | Up 149% from the first day of Q2 |
| Average production per well | 723 barrels/day | Based on an average of 35 producing wells per day |
| Crude oil inventory | 316,495 barrels | Up 49% from 212,390 barrels |
| Common shares outstanding | 154,531,910 | Quarter-end balance |
On a simple operating cash flow less capital expenditures basis, quarterly cash use was approximately $30 million. This calculation is not a company-reported free cash flow measure, but it illustrates why capital discipline and debt amortization remain important as operations ramp.
Operations continued to ramp
Sable resumed oil production from Platform Heritage in early April. The average number of wells online increased from approximately 26 in April to 39 in June, while production averaged 723 barrels per day per well across the quarter.
Post-quarter operating data showed further progress. An average of approximately 47 wells at Platforms Harmony and Heritage were online in July, producing about 721 gross barrels per day per well. Preliminary gross oil sales averaged approximately 38,000 barrels per day in July and 42,000 barrels per day through August 9.
Management expects all 77 production wells on Harmony and Heritage to be online during Q3 2026 and plans to restart Platform Hondo in September. Five perforation additions at Hondo are each forecast to contribute an estimated 600 gross barrels per day, with another four planned for early Q4. These figures remain company forecasts rather than current production.
Production gains outpaced midstream capacity
The central operating issue was the gap between increasing field output and the ability to move and market the crude. Sable said California refineries could not plan in advance for the first Santa Ynez Unit sales and had to displace imported cargoes, resulting in $18.5 million of non-recurring demurrage charges recognized in operating expenses.
The influx of Pacific Outer Continental Shelf crude also led refiners to temporarily restrict throughput and apply quality deductions for sulfur and other characteristics. Starting in July, downstream partners temporarily limited Sable to a maximum of 40,000 gross barrels per day of average sales throughput. This contributed to the quarter’s 49% increase in crude inventory, although inventory had subsequently declined to approximately 224,000 barrels as of August 9.
Sable expects the short-term throughput limit to ease in the second half of August and refinery acceptance to improve beginning in September. The planned Hondo restart should lower field-wide sulfur content, while chemical treatments are scheduled for testing in Q4 2026. The company is also negotiating potential waterborne marketing alternatives, but none of these prospective benefits are included in current guidance.
Cash flow, refinancing and hedging
After quarter-end, Sable completed refinancing transactions on July 2. The proceeds repaid the former EM senior secured term loan and extended the company’s stated maturity runway to the end of 2028.
The financing included a $675 million senior secured Term Loan B due December 15, 2028, carrying a 15% annual coupon. Mandatory quarterly amortization is 2.5% during the second half of 2026 and increases to 5% per quarter in 2027 and beyond, alongside a 100% quarterly excess cash flow sweep. Sable also issued $345 million of 6.5% convertible senior notes due in 2031 and $115 million of common stock at $3.08 per share.
Sable began a Brent hedging program with $65-per-barrel floors. Costless collars cover average volumes of 28,000 barrels per day in the second half of 2026, 25,000 in 2027 and 21,000 in 2028. The corresponding sold-call prices are $89.39, $80.00 and $73.17, respectively, providing downside protection while limiting upside on the hedged volumes.
Guidance
Sable reduced the midpoint of its second-half 2026 capital spending plan by 41% to $85 million. Management said the lower spending plan is intended to optimize cash flow and accelerate debt amortization while prioritizing asset integrity, midstream throughput and higher-return well optimization projects.
| Metric | 2H 2026E | FY 2027E | Change or context |
|---|---|---|---|
| Gross average daily sales | 47,500–52,500 Boe/day | 50,000–55,000 Boe/day | Assumes continued operational ramp |
| Net average daily sales | 40,000–45,000 Boe/day | 42,500–47,500 Boe/day | Working and net revenue interest of 83.6% |
| Oil mix | Approximately 100% | Approximately 100% | 2027 prior midpoint was 91% |
| Marketing and GP&T deduction | $24–$28/barrel | $21–$25/barrel | Expected to moderate in 2027 |
| Lease operating expense | $17–$21/net Boe | $9–$12/net Boe | Reflects expected normalization after restart |
| Cash general and administrative cost | $6–$9/net Boe | $3.50–$6.50/net Boe | Lower expected unit cost at scale |
| Capital expenditures | $75–$95 million | $80–$100 million | 2H 2026 midpoint reduced 41% to $85 million |
The increase in expected 2027 oil mix from a prior midpoint of 91% reflects the deferral of gas-plant capital projects and a stronger-than-anticipated oil cut from producing wells. Full-year 2027 guidance assumes fully ramped, post-restart operations.
Recent insider transactions
The provided six-month insider summary classified 725,000 shares across six transactions as purchases and 1,077,406 shares across six transactions as sales. That produced net sales of 352,406 shares, equal to 2% of the reported 17.56 million total insider shares held.
The latest disclosed records included three director stock awards and several executive sales. Transactions without a disclosed type or amount are excluded below.
| Date | Insider | Role | Transaction | Reported price | Reported value |
|---|---|---|---|---|---|
| May 6, 2026 | Gregory Phillip Pipkin | Director | Stock award | $0.00 | $0 |
| May 6, 2026 | Christopher Binyon Sarofim | Director | Stock award | $0.00 | $0 |
| May 6, 2026 | Michael E. Dillard | Director | Stock award | $0.00 | $0 |
| April 29, 2026 | James Caldwell Flores | President | Sale | $13.33–$13.56 | $1,076,266 |
| April 29, 2026 | Gregory D. Patrinely | CFO | Sale | $13.33–$13.56 | $1,076,266 |
| April 29, 2026 | Anthony Duenner | General Counsel | Sale | $13.33–$13.56 | $1,076,279 |
| March 31, 2026 | James Caldwell Flores | President | Sale | $16.69 | $4,657,667 |
The transaction data alone does not establish the insiders’ views on Sable’s future operating performance.
Risks investors should monitor
- Midstream and refinery constraints: Limits on throughput and crude-quality deductions can reduce sales volumes, widen realized-price discounts, increase inventory and create additional logistics costs.
- Ramp execution: Guidance depends on bringing more wells online, restarting Hondo and completing planned perforation additions on schedule.
- Debt-service requirements: The 15% Term Loan B coupon, mandatory amortization and excess cash flow sweep place substantial demands on future cash generation.
- Regulatory and geographic concentration: Sable’s operations and marketing routes are concentrated in California, where regulatory conditions have already affected refinery planning and the timing of crude sales.
Summary
Sable’s Q2 2026 results established a revenue and positive operating cash flow base as well activity and oil sales increased. The main constraint was not well productivity but the ability to move and market rising production without costly delays or quality deductions. The next phase will depend on easing downstream bottlenecks, completing the Hondo restart and converting higher sales volumes into enough cash flow to fund capital spending and meet an accelerated debt-amortization schedule.
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