Sable Offshore Corp. Reports First Quarter 2024 Financial Results and Provides Operational Updates
First Quarter 2024 Financial Highlights
-
Completed business combination with
Flame Acquisition Corp (the “Business Combination”), including the acquisition of the Santa Ynez Unit (“SYU”) comprising 16 Outer Continental Shelf leases covering approximately 76,000 acres, associated pipelines, the Las Flores Canyon Processing Facility, export pipelines Line 324 and Line 325 (formerly known as Line 901 and Line 903) and associated pump stations. -
Raised aggregate PIPE investments of
$440.2 million , plus$62.2 million in trust from the initial public offering, for a total of$502.4 million to complete the Business Combination. -
Reported a net loss of
$180.1 million for the quarter, primarily attributable to the Stipulation and Agreement of Settlement (described below) and expenditures related to the Business Combination. -
Ended the quarter with outstanding debt of
$771.2 million , inclusive of paid-in-kind interest, and cash balance of$209.1 million .
First Quarter 2024 Operational Highlights
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Completed asset handover with ExxonMobil (“EM”), hired 48 former EM field employees and added 24 additional employees as of
May 15, 2024 . -
Entered into a Stipulation and Agreement of Settlement with respect to the release of certain claims related to the Sable-owned pipelines, including claims impacting the rights of way for the pipelines, which we expect will allow Sable to perform key pipeline repairs and promote cooperation from landowners for the production restart process. On
May 1, 2024 , the Court entered an order approving the settlement on a preliminary basis. A fairness hearing for final approval of the settlement has been set forSeptember 13, 2024 . -
After evaluating new data, enhancing development planning, and updating pricing, we now estimate Total Net Estimated Contingent Resources of 646 MMboe and a PV-10 value of
$10.0 billion , compared to 533 MMboe and$4.9 billion inDecember 2023 , representing a 21% increase in Total Net Estimated Contingent Resources. Updated estimates now reflect a revised Electric Submersible Pump (“ESP”) Installations Low Estimate balance of 47 MMBoe, compared toDecember 2023 balance of 29 MMBoe. Additionally, we updated the Development Drilling Program Best Estimate balance to 354 MMBoe, compared toDecember 2023 balance of 256 MMBoe.
Net Estimated Contingent Resources(1)(2)(3) | Estimated Cash Flows ($MM) | |||||||||||
Oil | Gas | NGL | Total | Capex | PV-10 | |||||||
Category | (MMBbls) | (MMcf) | (MMBbls) | (MMBoe) | ($MM) | SEC Pricing | ||||||
NSAI Adjusted Low Estimate Base Forecast (4) |
111 |
|
121 |
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2 |
|
133 |
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– |
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ESP Installations Low Estimate(5) |
41 |
|
33 |
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1 |
|
47 |
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|
1,013 |
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Total Low Estimate Contingent Resources |
151 |
|
154 |
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2 |
|
179 |
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Development Drilling Program Best Estimate(6) |
308 |
|
251 |
|
4 |
|
354 |
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Development Workover Program Best Estimate(7) |
98 |
|
80 |
|
1 |
|
113 |
|
245 |
|
1,921 |
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Total Best Estimate Contingent Resources |
406 |
|
332 |
|
5 |
|
467 |
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Total Net Estimated Contingent Resources & Blended NAV |
557 |
|
486 |
|
7 |
|
646 |
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1. |
Assumes |
2. |
Management estimates are inherently uncertain. Actual results may differ in a material amount from management estimates and projections. |
3. |
Net quantities shown herein are unrisked volumes and may represent levels of uncertainty as to their technical and commercial recovery. |
4. |
Estimated using NSAI Report Resources at SEC Brent Pricing and Sable management estimated lease operating expenses; low estimate contingent resources with 90% probability of delivering unrisked remaining recoverable volumes from field-wide individual historical well performance. Assumes the wells and facilities will resume operation under similar production and sales conditions present at the time production was suspended. |
5. |
Low estimate contingent resources with 90% probability of delivering unrisked incremental recoverable volumes from statistical field-wide historical well performance driven by the installation of ESPs. |
6. |
Best estimate contingent resources with 50% probability of delivering unrisked remaining recoverable volumes from statistical field-wide historical new drill locations in untested fault compartments or sub-accumulations within test fault compartments. |
7. |
Best estimate contingent resources with 50% probability of delivering unrisked remaining recoverable volumes from existing wellbores calculated from statistical field-wide historical work-over well performance. |
Production Restart Guidance
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We expect to restart production at SYU in
September 2024 . Upon restart, we anticipate an initial net production rate of approximately 28 MBOE/D once all wells are producing. - Additional guidance provided below:
4Q24 Guidance | ||||
Production | ||||
Net Average Daily Production (BOE/D) |
23,000 |
‒ |
28,000 |
|
Working Interest (%) |
100.0% |
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Average Net Revenue Interest (%) |
83.6% |
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Cash Costs ($ / BOE) | ||||
Lease Operating Expense |
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‒ |
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Gathering, Processing & Transportation |
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‒ |
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Cash General and Administrative |
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‒ |
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Severance and Ad Valorem Taxes (% of revenue) |
0.5% |
‒ |
1.0% |
Management Commentary
Sable’s Chairman and Chief Executive Officer,
Sable is currently contracting repair crews with expected start dates in late May or early June. We have also initiated maintenance, construction, and repairs at the Las Flores Canyon Processing Facility and offshore platforms Harmony, Hondo, and Heritage to support safe and reliable operations. Externally, we have collaboratively partnered with regulatory agencies and other stakeholders to progress towards production restart in
We’ve also initiated the planning and permitting phase of our carbon sequestration business where we intend to utilize Sable-owned infrastructure to sequester carbon offshore at SYU.”
About Sable
Forward-Looking Statements
The information in this press release include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “could,” “should,” “will,” “ may,” “ believe,” “ anticipate,” “ intend,” “ estimate,” “expect,” “project,” “continue,” “plan,” forecast,” “predict,” “potential,” “future,” “outlook,” and “target,” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements will contain such identifying words. These statements are based on the current beliefs and expectations of Sable’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those described in the forward-looking statements. Factors that could cause Sable’s actual results to differ materially from those described in the forward-looking statements include: the ability to recommence production of the SYU assets and the cost and time required therefor, production levels once recommenced; commodity price volatility; low prices for oil and/or natural gas; global economic conditions and inflation; increased operating costs; lack of availability of drilling and production equipment, supplies, services and qualified personnel; processing volumes and pipeline throughput; geographical concentration of operations; environmental and weather risks; regulatory changes and uncertainties; the uncertainty inherent in estimating oil and natural gas resources and in projecting future rates of production; reductions in cash flow and lack of access to capital; restrictions in existing or future debt agreements or structured or other financing arrangements; managing growth and integration of acquisitions, and failure to realize the expected value of acquisitions; the ability to recognize the anticipated benefits of the business combination; developments relating to our competitors and our industry; litigation, complaints and/or adverse publicity; privacy and data protection laws, privacy or data breaches, or loss of data; our ability to comply with laws and regulations applicable to our business; and other one-time events and other factors that can be found in Sable’s Annual Report on Form 10-K for the year ended
Disclaimers
Non-Producing Assets
The SYU assets have not produced commercial quantities of hydrocarbons since such assets were shut in during May of 2015 when the only pipeline transporting hydrocarbons produced from such assets to market ceased operations. We estimate in this press release that production can be recommenced the third quarter of 2024, but there can be no assurance that the necessary permits will be obtained that would allow the pipeline to recommence transportation and allow the assets to recommence production by that date or at all. If production is not recommenced by
Oil and Gas Resource Information
This press release includes information regarding estimates of oil and natural gas resources attributable to SYU. None of the oil and gas resources attributable to SYU are currently classifiable as proved or other reserves because, since the cessation of operations on the pipeline transporting production from the assets, there has been no means to deliver production from the assets to market. Sable has obtained a report (the “NSAI Report”) from
Use of Projections
This press release contains financial projections for Sable. Sable’s auditors have not audited, reviewed, compiled or performed any procedures with respect to the projections for the purpose of their inclusion in this press release, and, accordingly, no such auditors have expressed an opinion or provided any other form of assurance with respect thereto for the purpose of this press release. These projections are for illustrative purposes only and should not be relied upon as being necessarily indicative of future results. The assumptions and estimates underlying the projected information are inherently uncertain and are subject to a wide variety of significant business, regulatory, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projected information. Even if the assumptions and estimates are correct, projections are inherently uncertain due to a number of factors outside Sable’s control. Accordingly, there can be no assurance that the projected results are indicative of Sable’s future performance or that actual results will not differ materially from those presented in the projected information. Inclusion of the projected information in this press release should not be regarded as a representation by any person, including, without limitation, Sable, that the results contained in the projected information will be achieved.
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Investor Contact:
Director, Finance & Investor Relations
IR@sableoffshore.com
713-579-8111
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