socc-20260630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File No. 001-40111

__________________________

SABLE OFFSHORE CORP.

(Exact name of registrant as specified in its charter)

__________________________


Delaware						85-3514078
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

845 Texas Avenue, Suite 2920 Houston, TX 77002						77002
(Address of principal executive offices)						(Zip Code)

(713) 579-6161
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Common Stock, par value $0.0001 per share

SOC

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o No x

As of August 7, 2026 there were 191,869,572 shares of Common Stock, $0.0001 par value, issued and outstanding.

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TABLE OF CONTENTS


		Page
PART 1 – FINANCIAL INFORMATION (UNAUDITED)		3

Item 1.	Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Operations	4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39

Item 4.	Controls and Procedures	39

PART II – OTHER INFORMATION		40

Item 1.	Legal Proceedings	40

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

Item 3.	Defaults Upon Senior Securities	46

Item 4.	Mine Safety Disclosures	46

Item 5.	Other Information	46

Item 6.	Exhibits	47

SIGNATURES		48

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SABLE OFFSHORE CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(dollars in thousands, except par values)



	June 30, 2026		December 31, 2025
Assets
Current assets:
Cash and cash equivalents	$	21,599	$	97,684
Accounts receivable	50,115		—
Inventory	11,558		12,078
Materials and supplies	14,111		14,658
Prepaid expenses and other current assets	9,967		11,282
Total current assets	107,350		135,702
Oil and gas properties (Successful efforts method)
Oil and gas properties	1,650,903		1,567,029
Less: Accumulated depletion, depreciation and amortization	(39,495)		(5,977)
Total oil and gas properties, net	1,611,408		1,561,052
Other, net	42,885		44,068
Total assets	$	1,761,643	$	1,740,822

Liabilities and Stockholders’ Equity
Accounts payable and accrued liabilities	$	206,679	$	99,353
Term Loan—current, net	236,749		921,584
Other current liabilities	2,934		2,488
Total current liabilities	446,362		1,023,425
Term Loan—non-current, net	732,087		—
Warrant liabilities	9,839		37,738
Asset retirement obligations	119,848		113,181
Deferred tax liability	39,810		12,833
Other	18,697		19,342
Total liabilities	1,366,643		1,206,519
Commitments and Contingencies (Note 6)
Stockholders’ Equity
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at June 30, 2026 and December 31, 2025	—		—
Common Stock, $0.0001 par value; 500,000,000 shares authorized; 154,531,910 and 144,961,796 issued and outstanding at June 30, 2026 and December 31, 2025, respectively	16		15
Additional paid-in capital	1,764,684		1,642,746
Accumulated deficit	(1,369,700)		(1,108,458)
Total Stockholders’ Equity	395,000		534,303
Total Liabilities and Stockholders’ Equity	$	1,761,643	$	1,740,822

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SABLE OFFSHORE CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(dollars in thousands, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenue
Oil and natural gas liquids sales	$	136,709	$	—	$	137,980	$	—
Other	416		—		416		—
Total revenue	137,125		—		138,396		—
Operating Expenses
Operations and maintenance expenses	113,474		50,398		181,507		84,841
Depletion, depreciation, amortization and accretion	32,024		3,172		35,966		6,193
General and administrative expenses	58,521		75,318		106,571		97,650
Total operating expenses	204,019		128,888		324,044		188,684
Loss from operations	(66,894)		(128,888)		(185,648)		(188,684)
Other (income) expenses:
Change in fair value of warrant liabilities	(72,056)		(27,146)		(27,899)		(5,851)
Other income, net	(665)		(2,508)		(1,218)		(5,948)
Interest expense	43,066		21,009		77,734		42,019
Total other (income) expense, net	(29,655)		(8,645)		48,617		30,220
Loss before income taxes	(37,239)		(120,243)		(234,265)		(218,904)
Income tax expense	26,977		7,823		26,977		18,706
Net loss	$	(64,216)	$	(128,066)	$	(261,242)	$	(237,610)
Basic and diluted net loss per Common Stock
Weighted average Common Stock outstanding, basic and diluted	153,470,125		91,224,345		148,597,567		87,849,286
Basic and diluted net loss per Common Stock	$	(0.42)	$	(1.40)	$	(1.76)	$	(2.70)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SABLE OFFSHORE CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

(dollars in thousands)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
BALANCE—December 31, 2025	144,961,796	$	15	$	1,642,746	$	(1,108,458)	$	534,303
Issuance of Common Stock, net	5,359,790	1		70,757		—		70,758
Share based compensation	—	—		13,828		—		13,828
Net loss	—	—		—		(197,026)		(197,026)
BALANCE—March 31, 2026	150,321,586	16		1,727,331		(1,305,484)		421,863
Issuance of Common Stock, net	1,640,844	—		21,924		—		21,924
Share based compensation	2,569,480	—		15,429		—		15,429
Net loss	—	—		—		(64,216)		(64,216)
BALANCE—June 30, 2026	154,531,910	$	16	$	1,764,684	$	(1,369,700)	$	395,000


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
BALANCE—December 31, 2024	89,310,996	$	8	$	1,082,473	$	(698,296)	$	384,185
Share based compensation	27,362	—		6,065		—		6,065
Net loss	—	—		—		(109,544)		(109,544)
BALANCE—March 31, 2025	89,338,358	8		1,088,538		(807,840)		280,706
Issuance of Common Stock, net	10,000,000	1		282,559		—		282,560
Share based compensation	143,892	1		10,426		—		10,427
Net loss	—	—		—		(128,066)		(128,066)
BALANCE—June 30, 2025	99,482,250	$	10	$	1,381,523	$	(935,906)	$	445,627

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SABLE OFFSHORE CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Six Months Ended June 30,
(dollars in thousands)	2026		2025
Cash flows from operating activities:
Net loss	$	(261,242)	$	(237,610)
Adjustments to reconcile net loss to net cash used in operating activities:
Depletion, depreciation, amortization and accretion	35,966		6,193
Share based compensation expense	30,380		16,492
Amortization of operating lease right-of-use asset	730		820
Amortization of debt issuance costs	8,596		311
Paid-in-kind interest	69,138		41,708
Deferred tax expense	26,977		18,706
Change in fair value of warrant liabilities	(27,899)		(5,851)
Changes in current assets and current liabilities, net of effect of acquisition:
Accounts receivable	(50,115)		—
Inventory	(7,042)		(3,884)
Materials and supplies	350		426
Prepaid expenses and other assets	3,101		(2,694)
Accounts payable and accrued liabilities	98,253		22,435
Net cash used in operating activities	(72,807)		(142,948)

Cash flows from investing activities:
Payments for capital expenditures	(52,559)		(192,982)
Net cash used in investing activities	(52,559)		(192,982)

Cash flows from financing activities:
Offering proceeds	94,964		295,000
Payment of equity issuance costs	(14,998)		(12,067)
Payment of debt issuance costs	(30,685)		—
Net cash provided by financing activities	49,281		282,933
Net change in cash and cash equivalents	(76,085)		(52,997)
Cash, cash equivalents and restricted cash, beginning of the period	97,684		335,772
Cash, cash equivalents and restricted cash, end of the period	$	21,599	$	282,775

Reconciliation of cash, cash equivalents and restricted cash to the unaudited condensed consolidated balance sheets
Cash and cash equivalents	$	21,599	$	247,141
Restricted cash	—		35,634
Total cash, cash equivalents and restricted cash	$	21,599	$	282,775

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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SABLE OFFSHORE CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

JUNE 30, 2026

Note 1 — Organization, Business Operations, and Going Concern

Organization and General

Sable Offshore Corp. (“Sable,” the “Company” or “we”) (formerly known as Flame Acquisition Corp. or “Flame”) is an independent oil and gas company headquartered in Houston, Texas. Flame was initially formed as a special purpose acquisition company for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

On November 2, 2022, the Company entered into an agreement and plan of merger, dated as of November 2, 2022 (as amended, supplemented, or otherwise modified from time to time, the “Merger Agreement”), with Sable Offshore Corp., a Texas corporation (“SOC”), and Sable Offshore Holdings, LLC, a Delaware limited liability company and the parent company of SOC (“Holdco” and, together with SOC, “Legacy Sable”). Pursuant to the Merger Agreement, on February 14, 2024, (i) Holdco merged with and into Flame, with Flame surviving such merger (the “Holdco Merger”) and (ii) Legacy Sable merged with and into Flame, with Flame surviving such merger (the “SOC Merger” and, together with the Holdco Merger, the “Mergers” and, along with the other transactions contemplated by the Merger Agreement, the “Merger”).

On November 1, 2022, SOC, entered into a purchase and sale agreement (as amended, the “Sable-EM Purchase Agreement”) with Exxon Mobil Corporation (“Exxon”) and Mobil Pacific Pipeline Company (“MPPC,” and together with Exxon, “EM”) pursuant to which SOC agreed to acquire from EM certain assets constituting the Santa Ynez field in Federal waters offshore California (“SYU”) and associated onshore processing and pipeline assets (such “Assets,” as defined in the Sable-EM Purchase Agreement, collectively the “SYU Assets”). The SYU Assets include the Santa Ynez Pipeline System (“SYPS”), which is a single, integrated and continuous interstate pipeline system that transports crude oil from the SYU onshore and then inland. Specifically, the SYPS is primarily comprised of offshore pipeline segments that transport crude oil from the SYU onshore, midstream processing and storage facilities at Las Flores Canyon (“LFC”) and onshore pipeline segments that transport crude oil to Pentland Station in Kern County, CA.

On February 14, 2024 (the “Closing Date”), the Company consummated the Merger and related transactions (the “Business Combination”) contemplated by the Merger Agreement, following which Flame was renamed “Sable Offshore Corp.”. Pursuant to the terms and subject to the conditions set forth in the Sable-EM Purchase Agreement, the transactions contemplated by the Sable-EM Purchase Agreement were also consummated on February 14, 2024 (“Sable-EM Closing Date”), immediately after the Business Combination, as a result of which Sable purchased the SYU Assets, effective as of January 1, 2022. On February 15, 2024, Sable’s shares of Common Stock, par value $0.0001 per share (“Common Stock”) and warrants to purchase Common Stock at an exercise price of $11.50 per share (the “Public Warrants”) began trading on NYSE under the symbols, “SOC” and “SOC.WS,” respectively.

On March 13, 2026, the President of the United States, Donald J. Trump, signed an Executive Order to, among other things, delegate certain authorities under the Defense Production Act of 1950 (“DPA”) to the United States Secretary of Energy. Subsequently, on March 13, 2026, the United States Secretary of Energy, Chris Wright, issued an order to the Company invoking the DPA (the “DPA Order”) to immediately prioritize and allocate pipeline transportation services for hydrocarbons from the SYU through the SYPS in order to address the energy scarcity and supply disruption risks caused by California policies that have left the region and U.S. military forces dependent on foreign oil.

On March 14, 2026, the Company resumed the transportation of hydrocarbons (i.e., oil) produced at the SYU through the SYPS at the direction of the United States Secretary of Energy, Chris Wright, in compliance with the DPA Order. In doing so, the Company facilitates the supply of domestically produced crude oil through U.S. pipeline infrastructure to U.S. refineries, supporting domestic consumers and the U.S. military.

On March 29, 2026, the Company initiated oil sales upon filling the SYPS, resulting in total sales volumes of approximately 1,923 thousand barrels of oil equivalent (“Mboe”) for the six months ended June 30, 2026.

Unless otherwise noted or the context otherwise requires, references to (i) the “Company,” “Sable,” “we,” “us,” or “our” are to Sable Offshore Corp, a Delaware corporation, and its consolidated subsidiaries, following the Business Combination, (ii) “Flame” refers to Flame Acquisition Corp. prior to the Business Combination, (iii) the SYU refers to the 16 federal leases, three offshore production platforms (Hondo, Harmony, and Heritage), and associated ancillary facilities located in federal waters offshore California, and (iv) the SYPS refers to the interstate pipeline connecting the SYU to the Pentland Station terminal, inclusive of “Pipeline Segment 324” and “Pipeline Segment 325”, or collectively referred to as “Pipeline

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Segments 324 and 325” (formerly known as “901/903 Assets” and as defined in the Sable-EM Purchase Agreement), the Las Flores Canyon (“LFC”) onshore processing, storage, and related pipeline assets, and the offshore pipeline connecting the SYU to LFC. The SYU Assets include the SYU and the SYPS.

These unaudited condensed consolidated financial statements and notes should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025.

2026 Refinancing Transactions

On July 2, 2026, the Company consummated a series of transactions intended to refinance its existing indebtedness, strengthen its liquidity position, and extend its debt maturities (collectively, the “2026 Refinancing Transactions”). The 2026 Refinancing Transactions consisted of (i) the issuance of approximately $675.0 million aggregate principal amount of a Senior Secured Term Loan B (the “Term Loan B”) due December 15, 2028, (ii) the issuance of $345.0 million aggregate principal amount of 6.5% Convertible Senior Notes due 2031 (the “Convertible Notes”), (iii) an underwritten public offering of 37,337,662 shares of Common Stock for gross proceeds of approximately $115.0 million, and (iv) the entry into a new senior secured reserve-based revolving credit facility providing commitments of up to $500.0 million (the “Senior Revolver”), initially subject to a $0.0 borrowing base. The Term Loan B and the Senior Revolver are collectively referred to as the “New Senior Secured Credit Facilities.” The net proceeds from the 2026 Refinancing Transactions were used to repay the Company’s existing Senior Secured Term Loan (“Senior Secured Term Loan”) with Exxon Mobil Corporation in full (refer to No te 4 —Debt), pay related fees and expenses, and provide additional liquidity for general corporate purposes. The Senior Revolver was also entered into to support the Company’s ongoing liquidity, hedging, and cash management needs and had no borrowing availability at closing given its initial $0.0 borrowing base.

The 2026 Refinancing Transactions occurred subsequent to June 30, 2026 and, accordingly, is not reflected in the accompanying condensed consolidated balance sheets as of June 30, 2026. Refer to Note 10—Subsequent Events for additional information regarding the 2026 Refinancing Transactions and the related agreements.

Going Concern

In connection with the preparation of its unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2026, management evaluated the Company’s ability to continue as a going concern in accordance with ASC 205-40, Presentation of Financial Statements — Going Concern, and concluded that substantial doubt existed regarding the Company’s ability to continue as a going concern within one year of the date such financial statements were issued, due to the Company’s then current debt maturity profile and related liquidity considerations.

On July 2, 2026, the Company completed the 2026 Refinancing Transactions, which extended the maturity of the Company’s debt obligations and improved its liquidity position. As a result, management re-evaluated the Company’s ability to continue as a going concern and concluded that the conditions and events that previously raised substantial doubt had been alleviated. Accordingly, substantial doubt regarding the Company’s ability to continue as a going concern no longer exists as of the issuance date of the unaudited condensed consolidated financial statements contained in this Quarterly Report, which have been prepared on a basis that assumes the Company will continue as a going concern.

Note 2 — Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. Financial presentation in prior periods has been adjusted to conform with current period presentation. These unaudited condensed consolidated financial statements for the quarterly period ended June 30, 2026 may not be representative of the financial results for the full year 2026.

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Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies. The Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates made by management include, among others, allocation assumptions and the carrying amount of asset retirement obligations, which are based on the timing and cost of future abandonments, inputs utilized to fair value warrant liabilities, and assumptions used to estimate deferred taxes.

While management believes these estimates are reasonable, changes in facts and assumptions or the discovery of new information may result in revised estimates. Actual results could differ from these estimates, and it is at least reasonably possible these estimates could be revised in the near term, and these revisions could be material.

Revenue Recognition

The Company currently sells crude oil under a short-term agreement at prevailing market prices, with certain adjustments for product quality and geographic location. The Company recognizes revenue when control transfers to the purchaser at the delivery point and the customer has assumed the risk and rewards of ownership.

Accounts Receivable

Accounts receivable consist of receivables from sales of oil and natural gas liquids production delivered to purchasers. The purchasers remit payment for production directly to the Company. Most payments for production are received within one to two months after the production date.

Accounts receivable are stated at amounts due from purchasers, net of an allowance for expected losses as estimated by the Company when collection is doubtful. The Company determines its allowance for receivables utilizing the loss-rate method, which considers a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the purchaser’s current ability to pay its obligation to the Company, the condition of the general economy and the industry as a whole. At June 30, 2026, the Company’s allowances for credit losses related to sales of oil and natural gas liquids sales was $0.0.

Oil and Gas Properties

Linefill. The SYPS is an interstate pipeline that includes (among other pipeline segments and components) (i) Pipeline Segment 324, which extends from LFC to the Gaviota Pump Station in Santa Barbara County, California, and (ii) Pipeline Segment 325, which extends from the Gaviota Pump Station in Santa Barbara County, California, to Pentland Station in Kern County, California with an intermediate station at Sisquoc in San Luis Obispo, California. The Company classifies the quantity of oil used to fill Pipeline Segments 324 and 325 as linefill such that when an incremental barrel of oil is pumped into Pipeline Segments 324 and 325 it forces oil out at the Pentland Station sales point location. Pipeline Segments

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324 and 325 have a capacity of approximately 540 thousand barrels per day (“MBbls”). This linefill is accounted for at historical cost and recognized as a long term asset within Oil and gas properties on the unaudited condensed consolidated balance sheet as of June 30, 2026.

The Company capitalized costs incurred that were directly attributable to filling Pipeline Segments 324 and 325, including associated depletion, depreciation, and amortization. Linefill will not be depreciated, but is subject to impairment in accordance with Financial Accounting Standards Board (“FASB”) guidance with respect to accounting for the impairment or disposal of long-lived assets. Carrying amounts that are not expected to be recoverable through future cash flows are written down to estimated fair value.

Income Taxes

The Company accounts for income taxes under FASB Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

In accordance with ASC 740, the Company’s effective tax rate was negative 72.4% and negative 11.5% for the three and six months ended June 30, 2026, and negative 6.5% and negative 8.5% for the three and six months ended June 30, 2025. The effective tax rate for the three months ended June 30, 2026 reflects the cumulative effect of a change in the estimated annual effective tax rate, which the Company had estimated to be zero as of March 31, 2026. In accordance with ASC 740-270-35-2, the effect of a change in the estimated annual effective tax rate is recognized in the interim period in which the change occurs, resulting in a disproportionate rate for the current quarter relative to the year-to-date rate. The Company recognized a discrete tax expense of $2.2 million for the three months ended June 30, 2026, resulting from a tax shortfall on stock-based compensation vesting for which the related deduction did not fully offset the associated book expense. For the three and six months ended June 30, 2026 and the three and six months ended June 30, 2025, the effective tax rate differed from the U.S. federal statutory tax rate of 21.0% primarily due to changes in valuation allowance on the deferred tax assets and disallowed expenses.

Management’s assessment of the realizability of deferred tax assets requires significant judgment and is subject to change in future periods. Changes in these estimates could materially affect the Company’s income tax provision in the period of change.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities include obligations incurred in the ordinary operation of the business for services performed and products received, including capital expenditures that are capitalized as oil and gas properties. Accounts payable and accrued liabilities consisted of the following as of:



(in thousands)	June 30, 2026		December 31, 2025
Accounts payable	$	54,546	$	25,239
Accrued operations expenditures	55,237		23,929
Accrued general and administrative, and other	88,878		50,185
Revenue payable	8,018		—
Total accounts payable and accrued liabilities	$	206,679	$	99,353

Net Loss Per Share of Common Stock

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net loss per share of Common Stock is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding for the period.

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The following table reflects the calculation of basic and diluted net loss per share of Common Stock.


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands, except per share amounts)	2026		2025		2026		2025
Net loss	$	(64,216)	$	(128,066)	$	(261,242)	$	(237,610)
Weighted average shares outstanding—Basic and diluted	153,470,125		91,224,345		148,597,567		87,849,286
Net loss per share—Basic and diluted	$	(0.42)	$	(1.40)	$	(1.76)	$	(2.70)

The diluted net loss per share calculation excludes the anti-dilutive effect of 7,568,870 warrants, 8,842,960 restricted share units and 13,000 restricted share awards for the three and six months ended June 30, 2026, and 8,987,062 warrants and 10,460,465 restricted share units for the three and six months ended June 30, 2025.

Note 3 — Asset Retirement Obligations

The Company’s asset retirement obligations relate to the future plugging and abandonment of oil and gas properties and related facilities. The following table describes the changes to the Company’s asset retirement obligations liability as of:


(in thousands)	June 30, 2026		December 31, 2025
Beginning balance	$	113,181	$	99,683
Revision of previous estimate	—		1,436
Accretion	6,667		12,062
Ending balance	$	119,848	$	113,181

Note 4 — Debt

Senior Secured Term Loan

The Company entered into the Senior Secured Term Loan with an initial principal of $625.0 million. The initial principal balance was increased by $16.6 million for material and supplies and $140.0 million for paid-in-kind interest from the effective date through the Closing Date less an $18.8 million cash deposit (which was paid on the Closing Date). The proceeds of the Senior Secured Term Loan were deemed funded on the Closing Date in connection with consummation of the Sable-EM Purchase Agreement. The Senior Secured Term Loan was secured by first-priority liens on substantially all assets of the Company.

On November 3, 2025, the Company and Exxon entered into an amendment (the “Second Debt Amendment”) to the Senior Secured Term Loan, the effectiveness of which was contingent upon the satisfaction of certain conditions, including the Company receiving equity contributions in an amount of no less than $225.0 million, net of underwriting fees and other transaction costs and expenses, and other customary closing conditions.

On November 24, 2025, the Second Debt Amendment became effective which extended the maturity date of the Senior Secured Term Loan to the earlier of (i) March 31, 2027 or (ii) 90 days after first sales of Hydrocarbons (as defined in the Senior Secured Term Loan). The Second Debt Amendment also increased the interest rate from ten percent (10%) per annum to fifteen percent (15.0%) per annum, compounded annually (computed on a 360-day year), payable in arrears on January 1st of each year following the effective date. At the Company’s election, accrued but unpaid interest may be deemed paid on each interest payment date by adding the amount of interest owed to the outstanding principal (paid-in-kind) amount under the Senior Secured Term Loan. The Second Debt Amendment also included additional reporting covenants and a financial liquidity covenant that required the Company to have not less than $25.0 million in unrestricted cash, measured at the end of each month.

On March 29, 2026, the Company initiated oil sales upon filling the SYPS, which accelerated the maturity date of the Senior Secured Term Loan to June 26, 2026.

On June 22, 2026, the Company entered into a third amendment (the “Third Amendment”) to the Senior Secured Term Loan Agreement with Exxon, which, among other things, extended the maturity date of the Senior Secured Term Loan to the earlier of (i) July 24, 2026 or (ii) the occurrence of an event of default. In connection with the Third Amendment, the Company paid Exxon a $30.0 million amendment fee, and associated legal costs, on June 22, 2026. Approximately $8.3 million of the amendment fee and the associated legal costs were recognized as interest expense during the three

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months ended June 30, 2026, while the remaining $22.2 million was capitalized as debt issuance cost and will be amortized to interest expense through the refinancing date.

Exxon also agreed to suspend and waive, until the amended maturity date, the $25.0 million minimum liquidity covenant that had been introduced under the Second Amendment to the Senior Secured Term Loan Agreement. Additionally, in connection with the Third Amendment, the Company obtained a limited waiver (the “Limited Waiver”) from Exxon and Mobil Pacific Pipeline Company under the Sable-EM Purchase Agreement, which defers the Company’s obligation to provide plugging and abandonment financial security under Section 11.18(c) of the Sable-EM Purchase Agreement until the earlier of (i) December 22, 2028, (ii) the date on which the new money secured financing to be entered into prior to the maturity date of Term Loan B for the primary purposes of refinancing the Senior Secured Term Loan is redeemed, repaid or otherwise refinanced, or (iii) the occurrence of an event of default. The Third Amendment and Limited Waiver were entered into to provide the Company with additional time and flexibility to complete its planned refinancing while preserving liquidity. Refer to Note 10—Subsequent Events for additional information regarding the 2026 Refinancing Transactions and the related financing agreements.

The Senior Secured Term Loan permitted interest to be paid in cash or, absent a written election, accrued and compounded annually as paid-in-kind interest. The agreement also required that James C. Flores, the Company’s Chairman and Chief Executive Officer, remain directly and actively involved in the Company’s day-to-day management, subject to the lender's approval right (not to be unreasonably withheld) over any replacement.

The Senior Secured Term Loan contained restrictive covenants limiting the Company’s ability to, among other things, engage in mergers, consolidations, liquidations, or dissolutions; incur additional debt or liens; make certain debt prepayments; pay dividends, distributions, management fees, or other restricted payments; make investments, acquisitions, loans, or property purchases; sell, assign, or otherwise dispose of property; enter into affiliate transactions; or change the nature of the Company’s business, in each case without EM’s consent. The agreement also included customary representations, warranties, affirmative and negative covenants, and events of default, including change of control. As of June 30, 2026, the Company was in compliance with all covenants under the Senior Secured Term Loan. On July 2, 2026, the Senior Secured Term Loan was repaid in full in connection with the 2026 Refinancing Transaction. See Note 10—Subsequent Events for further discussion. Debt consisted of the following as of: