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What changed in Sable Offshore Corp.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Sable Offshore Corp.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+722 added−495 removedSource: 10-K (2026-02-27) vs 10-K (2025-03-17)

Top changes in Sable Offshore Corp.'s 2025 10-K

722 paragraphs added · 495 removed · 162 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

44 edited+302 added−26 removed21 unchanged
Biggest changeUnless 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) “PPC” refers to Pacific Pipeline Company, a Delaware corporation, the equity of which was transferred from MPPC to Sable on the Closing Date pursuant to the Sable-EM Purchase Agreement, and (iv) the “Pipelines” are to Pipeline Segments 324/325 (formally known as Pipeline Segments 901/903) and the other “324/325 Assets” (formally known as "901/903 Assets" and as defined in the Sable-EM Purchase Agreement). 1 Table of Contents Assets SYU Assets are comprised of three platforms located in federal waters offshore California and an onshore processing facility and pipeline assets.
Biggest changeUnless 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 “Santa Ynez Unit” or “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 “Santa Ynez Pipeline System” (or “SYPS”) refers to the interstate pipeline connecting the Santa Ynez Unit to the Pentland Station terminal, inclusive of “Pipeline Segment 324” and “Pipeline Segment 325”, or collectively referred to as “Pipeline 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 Santa Ynez Unit to LFC.
ED-24-CD-02 (the “Order”) to Sable requiring Sable to, among other requirements, prepare and submit an interim restoration plan and submit an application either to the Coastal Commission or the County to obtain a coastal development permit for the valve installation and other maintenance and repair work.
ED-24-CD-02 (the “Order”) requiring Sable to, among other requirements, prepare and submit an interim restoration plan and submit an application either to the Coastal Commission or the County to obtain a coastal development permit for the valve installation and other maintenance and repair work.
On November 2, 2022, Flame entered into that certain Agreement and Plan of Merger (the “Merger Agreement”), dated November 2, 2022 (as amended on December 22, 2022 and June 30, 2023), by and among Flame, Sable Offshore Holdings LLC, a Delaware limited liability company (“Holdco”), and Sable Offshore Corp., a Texas corporation and a wholly owned subsidiary of Holdco (“Legacy Sable”).
On November 2, 2022, Flame entered into that certain Agreement and Plan of Merger (the “Merger Agreement”), dated November 2, 2022 (amended on December 22, 2022 and June 30, 2023), by and among Flame, Sable Offshore Holdings LLC, a Delaware limited liability company (“Holdco”), and Sable Offshore Corp., a Texas corporation and a wholly owned subsidiary of Holdco (“Legacy Sable”).
The offshore position is comprised of 16 federal leases across approximately 76,000 acres and includes 100% working interest with an average 83.6% net revenue interest. The Hondo platform and the Harmony platform develop the Hondo Field, and the Heritage platform develops the Pescado and Sacate Fields.
SYU Assets The offshore position is comprised of 16 federal leases across approximately 76,000 acres and includes 100% working interest with an average 83.6% net revenue interest. The Hondo platform and the Harmony platform develop the Hondo Field, and the Heritage platform develops the Pescado and Sacate Fields.
Some or all of the contingent resources maybe reclassified as “reserves” if all of the contingencies are successfully resolved but there is no assurance that the contingencies will be resolved or resolved in a timely manner or that any of the petroleum in the SYU Assets will be recovered.
Some or all of the contingent resources may be reclassified as “reserves” if all of the contingencies are successfully resolved but there is no assurance that the contingencies will be resolved or resolved in a timely manner or that any of the petroleum in the SYU Assets will be recovered.
Line 325 (formerly known as Line 903) is a 30-inch, approximately 113 mile long crude oil pipeline that extends from the Gaviota Pump Station in Santa Barbara County, California to the 30-inch pig receiver located in Pentland Station in Kern County, California with an intermediate station at Sisquoc mile post 38.5 in San Louis Obispo, California.
Pipeline Segment 325 (formerly known as Line 903) is a 30-inch, approximately 113 mile long crude oil pipeline that extends from the Gaviota Pump Station in Santa Barbara County, California to the 30-inch pig receiver located in Pentland Station in Kern County, California with an intermediate station at Sisquoc mile post 38.5 in San Luis Obispo, California.
On February 12, 2025, the County delivered a letter to Sable confirming that certain Pipeline anomaly maintenance and repair work referenced in the Coastal Commission’s Notice of Violation V-9-24-0152 was “authorized by the existing permits (Final Development Plan, Major Conditional Use Permit, and associated Coastal Development Permits) and was analyzed in the prior Environmental Impact Report/Environmental Impact Statement (EIR/EIS).” The letter states in part that “[t]he County previously exercised its authority under its Local Coastal Program and delegated Coastal Act authority in approving the permits and the requested anomaly repair work is within the scope of those approved permits.” Sable subsequently recommenced the repair and maintenance activities which were subject to Notice of Violation V-9-24-0152.
On February 12, 2025, the County delivered a letter to Sable confirming that certain anomaly maintenance and repair work on Pipeline Segments 324 and 325, referenced in the Coastal Commission’s Notice of Violation V-9-24-0152, was “authorized by the existing permits (Final Development Plan, Major Conditional Use Permit, and associated Coastal 6 Table of Contents Development Permits) and was analyzed in the prior Environmental Impact Report/Environmental Impact Statement (EIR/EIS).” The letter states in part that “[t]he County previously exercised its authority under its Local Coastal Program and delegated Coastal Act authority in approving the permits and the requested anomaly repair work is within the scope of those approved permits.” Sable subsequently recommenced the repair and maintenance activities which were subject to Notice of Violation V-9-24-0152.
Department of Transportation, Pipeline and Hazardous Materials Safety Administration (“PHMSA”), the EPA, CDFW, the California Department of Parks and Recreation (“State Parks”), the California State Lands Commission (“SLC”), the California Department of Forestry and Fire Protection’s Office of the State Fire Marshal (“OSFM”), Central Coast Regional Water Quality Control Board (“Regional Board”), and Regents of the University of California.
Department of Transportation, Pipeline 3 Table of Contents and Hazardous Materials Safety Administration (“PHMSA”), the EPA, CDFW, the California Department of Parks and Recreation (“State Parks”), the California State Lands Commission (“SLC”), the California Department of Forestry and Fire Protection’s Office of the State Fire Marshal (“OSFM”), Central Coast Regional Water Quality Control Board (“Regional Board”), and Regents of the University of California.
Line 324 (formerly known as Line 901) is a 24-inch, approximately 10.8 mile long crude oil pipeline that extends from the Los Flores Station on the California Coast to the Gaviota Pump Station in Santa Barbara County, California.
Pipeline Segment 324 (formerly known as Line 901) is a 24-inch, approximately 10.8 mile long crude oil pipeline that extends from the Las Flores Station on the California Coast to the Gaviota Pump Station in Santa Barbara County, California.
Thus, no further application to or action by the County is required.” 5 Table of Contents On February 14, 2025, Sable submitted a written response to the Coastal Commission’s Notice of Violation V-9-24-0152 detailing that, consistent with the County’s letters, certain of the alleged unpermitted development subject to Notice of Violation V-9-24-0152 was previously approved and that no further coastal development permit is required.
Thus, no further application to or action by the County is required.” On February 14, 2025, Sable submitted a written response to the Coastal Commission’s Notice of Violation V-9-24-0152 detailing that, consistent with the County’s letters, certain of the alleged unpermitted development activities subject to the Notice of Violation were previously approved and that no further coastal development permit was required.
The onshore facilities occupy approximately 35 acres and are comprised of: • an oil treating plant with capacity of approximately 180 MBop/d where it conducts crude dehydration, crude stabilization, and gas separation and compression; • a biologic/physical water treating plant with capacity of more than 67 MBwp/d where it conducts free oil removal, degassing, and biological treatment; • POPCO gas plant with approximately 80 MMcf/d sales capacity where it conducts gas sweetening, sulfur recovery, NGL fractionation, and gas compression; • another gas processing plant where it conducts gas sweetening, sulfur recovery, and NGL fractionation, and sends fuel gas to the co-generation power plant; • an almost entirely electric co-generation power plant with a capacity of 50 MW, including a 40 MW gas turbine, a 10 MW steam turbine, and steam generation; • crude storage capacity of 540 MBbls; • a produced water pipeline, which is partially offshore; • liquified petroleum gas storage and loading; and • a transportation terminal.
The onshore facilities occupy approximately 35 acres and are comprised of: • an oil treating plant with capacity of approximately 180 MBop/d where it conducts crude dehydration, crude stabilization, and gas separation and compression; • a biologic/physical water treating plant with capacity of more than 67 MBwp/d where it conducts free oil removal, degassing, and biological treatment; • a Pacific Offshore Pipeline Company (“POPCO”) gas plant with approximately 80 MMcf/d sales capacity where it conducts gas sweetening, sulfur recovery, natural gas liquids (“NGL”) fractionation, and gas compression (the “POPCO Facility”); • another gas processing plant where it conducts gas sweetening, sulfur recovery, and NGL fractionation, and sends fuel gas to the co-generation power plant; • an almost entirely electric co-generation power plant with a capacity of 50 MW, including a 40 MW gas turbine, a 10 MW steam turbine, and steam generation; • crude storage capacity of 540 MBbls; • a produced water pipeline, which is partially offshore; • liquified petroleum gas storage and loading; and • a transportation terminal.
Sable undertook the subject repair and maintenance work , including the safety valve installation work, based on its understanding that no new coastal development permit or other Coastal Act authorization was required, consistent with the County’s practice of authorizing repair work on the pipelines since they were first permitted and built over 30 years ago.
Sable undertook the subject repair and maintenance work, including the safety valve installation work, based on its understanding that no new coastal development permit or other Coastal Act authorization was required, consistent with the County’s practice of authorizing repair work on Pipeline Segments 324 and 325 since they were first permitted and built over 30 years ago.
The County’s letter also stated that certain maintenance and repair work on the Pipelines that was referenced in the Coastal Commission’s Notice of Violation V-9-24-0152 is “authorized by the existing permits (Final Development Plan, Major Conditional Use Permit, and associated Coastal Development Permits) and was analyzed in the prior Environmental Impact Report/Environmental Impact Statement.
The County’s letter also stated that certain maintenance and repair work on Pipeline Segments 324 and 325 that was referenced in the Coastal Commission’s Notice of Violation V-9-24-0152 is “authorized by the existing permits (Final Development Plan, Major Conditional Use Permit, and associated Coastal Development Permits) and was analyzed in the prior Environmental Impact Report/Environmental Impact Statement.
Item 1. Business References in this section to “we,” “our” and “us” generally refer to Legacy Sable (as defined below) prior to the Business Combination and Sable (as defined below) after the Business Combination. Overview Sable Offshore Corp.
Item 1. Business References in this section to “we,” “our” and “us” generally refer to Legacy Sable prior to the Business Combination and Sable after the Business Combination. Overview Sable Offshore Corp.
In addition, also on February 12, 2025, the County delivered a letter to the Coastal Commission. In this letter, the County responded to a request by the Coastal Commission to consent to consolidated coastal development permit process for certain activities undertaken and planned by Sable on the Pipelines.
In addition, also on February 12, 2025, the County delivered a letter to the Coastal Commission. In this letter, the County responded to a request by the Coastal Commission to consent to a consolidated coastal development permit process for certain activities undertaken and planned by Sable on the Santa Ynez Pipeline System.
There is no assurance that any of the petroleum contained in the SYU Assets will ever be recovered or reclassified as “reserves.” The resources are contingent upon (1) approval from and/or inspection by federal, state and local regulators to restart production, (2) reestablishment of oil transportation systems to deliver production to market and (3) commitment to restart the wells and facilities.
There is no assurance that any of the petroleum contained in the SYU Assets will ever be recovered or reclassified as “reserves.” The resources are contingent upon (1) reestablishment of oil transportation systems to deliver production to market and (2) commitment to restart the remaining wells and facilities.
An average of 27 MMcf of natural gas and 29 MBbls of oil and condensate was produced per day (gross) in 2014, the last full year when the assets were online.
SYU Production History Between 1981 and 2014, the SYU produced over 671 MMBoe of oil and gas. An average of 27 MMcf of natural gas and 29 MBbls of oil and condensate was produced per day (gross) in 2014, the last full year when the assets were online.
V-9-24-0152 to Sable, which asserted that Sable’s safety valve installation work and certain maintenance and repair activities undertaken by Sable on the Pipelines in the coastal zone to address anomalies and install safety valves constituted unpermitted development activities under the California Coastal Act (Cal. Pub. Res. Code Section 30000, et seq.
V-9-24-0152 to Sable, which asserted that Sable’s safety valve installation work and certain maintenance and repair activities undertaken by Sable on Pipeline Segments 324 and 325 in the California coastal zone (the “Coastal Zone”) to address anomalies and install safety valves constituted unpermitted development activities under the California Coastal Act (Cal. Pub. Res.
There are disputes with respect to certain of the rights-of-way or other interests and any unfavorable outcomes of such disputes could require us to incur additional costs. ” Aside from the foregoing, the owners of the SYU Assets believe they have satisfactory title or other rights to all such properties in accordance with industry standards, and Sable conducted thorough diligence and title investigations in advance of the Business Combination.
There are disputes with respect to certain of the rights-of-way or other interests and any unfavorable outcomes of such disputes could require us to incur additional costs ”, the Company believes it has satisfactory title or other rights to all such properties in accordance with industry standards, and Sable conducted thorough diligence and title investigations in advance of the Business Combination.
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 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. Since the Closing Date, we have invested significant capital to safely restore production operations to SYU.
Following the release, Plains indicates that it shut down the pipeline and initiated its emergency response plan. A Unified Command, which included the U.S.
Following the release, Plains indicates that it ceased flowing oil through the pipeline segment and initiated its emergency response plan. A Unified Command, which included the U.S.
As a result of the contingencies noted above, none of the estimated petroleum quantities attributed to the SYU Assets as of December 31, 2024 meet the requirements for disclosure as reserves pursuant to the guidelines published by the SEC in Rule 4-10(a) of Regulation S-X. Pipeline 901 Incident In May 2015, Plains All American Pipeline, L.P.
As a result of the contingencies noted above, none of the estimated petroleum quantities attributed to the SYU Assets as of December 31, 2025 meet the requirements for disclosure as reserves pursuant to the guidelines published by the SEC in Rule 4-10(a) of Regulation S-X.
Operations General Sable is the owner of the SYU Assets. Prior to consummation of the Business Combination, EM was the owner and operator of the platforms and onshore processing facility and Plains was the owner and operator of the Pipelines. EM acquired the Pipelines from Plains on October 13, 2022 pursuant to the EM-Plains Purchase Agreement.
Prior to consummation of the Business Combination, EM was the owner and operator of the platforms and onshore processing facility and Plains was the owner and operator of the Pipeline Segments 324 and 325. EM acquired the Pipeline Segments 324 and 325 from Plains on October 13, 2022 pursuant to the EM-Plains Purchase Agreement.
On July 29, 2024, PPC submitted the Restart Plans to OSFM for approval. On December 17, 2024, the OSFM approved Sable’s implementation of enhanced pipeline integrity standards for the Pipelines by granting state waivers of certain regulatory requirements related to cathodic protection and seam weld corrosion for the Pipelines.
On December 17, 2024, OSFM approved Sable’s implementation of enhanced pipeline integrity standards for Pipeline Segments 324 and 325 by granting state waivers of certain regulatory requirements (“State Waivers”) related to cathodic protection and seam weld corrosion for the Pipeline Segments 324 and 325.
(“Plains”) experienced a crude oil release from the Las Flores to Gaviota Pipeline (Line 901) in Santa Barbara County, California (the “Line 901 incident”). According to Plains, a portion of the released crude oil reached the Pacific Ocean at Refugio State Beach through a drainage culvert.
Pipeline 901 Incident In May 2015, Plains experienced a crude oil release from the Pipeline Segment 324 (then known as “Line 901”) in Santa Barbara County, California (the “Line 901 incident”). According to Plains, a portion of the released crude oil reached the Pacific Ocean at Refugio State Beach through a drainage culvert.
As required by the terms of the Consent Decree, PPC assumed responsibility for compliance with the Consent Decree as it relates to the future ownership and operation of Line 901 and the Sisquoc to Pentland portion of Line 903.
As required by the terms of the Consent Decree, PPC assumed responsibility for compliance with the Consent Decree as it relates to the future ownership and operation of Pipeline Segments 324 and 325.
On February 16, 2025, the Coastal Commission sent Sable a “Notice Prior to Issuance of Executive Director Cease and Desist Order” related to certain of Sable’s Pipeline repair and maintenance activities and safety valve installation work.
The Coastal Commission proceeded to issue an Executive Director Cease and Desist Order to Sable on February 18, 2025, related to certain of Sable’s pipeline repair and maintenance activities and safety valve installation work.
In the complaint, Sable challenges the Coastal Commission’s Notice of Violation V-9-24-0152 and the Order, in addition to other claims. Sable seeks a declaration that the Coastal Commission’s actions are unlawful, an injunction prohibiting further enforcement actions by the Coastal Commission, damages for the alleged taking of property rights, and attorneys' fees and costs.
Sable seeks a declaration that the Coastal Commission’s actions are unlawful, an injunction prohibiting further enforcement actions by the Coastal Commission, damages for the alleged taking of property rights, and attorneys’ fees and costs.
(the “Coastal Act”) and the County’s Local Coastal Program (“LCP”).
Code Section 30000, et seq.) (the “Coastal Act”) and the County’s Local Coastal Program (“LCP”).
Sable also acquired the Pipelines in the Business Combination, which were owned and operated by Plains and were acquired by EM on October 13, 2022. The Pipelines were used to deliver oil to local refinery markets.
Pipeline Segments 324 and 325 and the other 324/325 Assets acquired in the Business Combination, were owned and operated by Plains and were acquired by EM on October 13, 2022. Pipeline Segments 324 and 325 were used to deliver oil to local refinery markets from the onshore processing and storage facilities.
After the Line 901 incident, the SYU platforms and facilities suspended production, the SYU Assets were shut in and the facilities were placed in a safe state as described below under “ —Pipeline 901 Incident .” SYU Contingent Resources The estimated quantities of petroleum contained in the SYU Assets are classified as “contingent resources” as of December 31, 2024 rather than “reserves” because they are subject to numerous contingencies.
SYU Contingent Resources The estimated quantities of petroleum contained in the SYU Assets are classified as “contingent resources” as of December 31, 2025 rather than “reserves” because they are subject to numerous contingencies.
In May 2015, a Plains Pipeline that transported produced oil from SYU experienced a leak, as further described below under “ —Pipeline 901 Incident. ” The SYU platforms and facilities suspended production after the Line 901 incident, the SYU Assets were shut in and the facilities were placed in a safe state.
In May 2015, Pipeline Segment 324 (then known as “Line 901”) experienced a leak while operated by Plains All American Pipeline, L.P. (“Plains”), as further described below under “— Pipeline 901 Incident .” The SYU suspended production after the Line 901 incident and the facilities were maintained in a safe state.
EM did not make rental payments for use of a right-of-way easement for the Pipelines and there is some risk the government could allege the easement has lapsed, as further described under “ Risk 6 Table of Contents Factors- We do not own all of the land on which our assets are located or all of the land that we must traverse in order to conduct our operations.
Other than as described under “ Risk Factors—We do not own all of the land on which our assets are located or all of the land that we must traverse in order to conduct our operations.
The facilities are not currently producing oil and gas; however, all equipment remains in place in an operation-ready state, requiring ongoing inspections, maintenance and surveillance. As part of these suspension efforts, all SYU equipment was drained, flushed and purged in 2016. All hydrocarbon pipelines within SYU have been placed in a safe state and remain under regular monitoring.
Prior to May 15, 2025, the SYU had not produced oil and gas since May 2015; however, all equipment remained in place in an operation-ready state, requiring ongoing inspections, maintenance and surveillance. As part of these efforts, all equipment was drained, flushed and purged in 2016.
Beginning in 1968 and over the course of 14 years, EM consolidated more than a dozen offshore federal oil leases and organized them into a streamlined production unit known as SYU. SYU consists of three offshore platforms and a wholly owned onshore processing facility located along the Gaviota Coast at Las Flores Canyon in Santa Barbara County, California.
The SYU Assets include the Santa Ynez Unit and the Santa Ynez Pipeline System. Production Restart Beginning in 1968 and over the course of 14 years, EM consolidated more than a dozen offshore federal oil leases and organized them into a streamlined production unit known as the SYU. The SYU remained in continuous operation until 2015.
Restarting Lines 324 and 325 Restarting Lines 324 and 325 requires certain regulatory approvals and other actions, such as pipeline repair and maintenance activities, that may implicate federal, state, and local regulations.
Resuming Transportation through Pipeline Segments 324 and 325 of the Santa Ynez Pipeline System Resuming transportation of oil through Pipeline Segments 324 and 325 of the Santa Ynez Pipeline System requires certain regulatory approvals and other actions that may implicate federal, state, and local regulations.
Accordingly, Sable has been undertaking pipeline repair activities for both Lines 324 and 325, including installing the sixteen safety valves required under the approved 2021 CBAT Plan. On September 27, 2024, the California Coastal Commission (the “Coastal Commission”) issued Notice of Violation No.
Accordingly, Sable has undertaken and completed required pipeline repair activities for both Pipeline Segments 324 and 325, and the installation of the sixteen safety valves required under the approved 2021 Coastal Best Available Technology Plan.
Pipeline Maintenance and Repair Work Federal regulations require Sable to “take prompt action to address all anomalous conditions in [a] pipeline that [an] operator discovers.” The Consent Decree requires Sable to comply with this and other federal regulatory requirements related to pipeline safety at heightened standards.
Repair and Maintenance Work and Resuming Petroleum Transportation through Santa Ynez Pipeline Segments 324 and 325 Federal regulations require Sable to promptly “evaluate all anomalous [pipeline] conditions and remediate those that could reduce a pipeline’s integrity.” A Consent Decree that was entered into by Plains and various government agencies in 2020 requires Plains, and, by contract, Sable, to comply with this and other applicable regulatory requirements related to pipeline safety at heightened standards.
In 2020, Plains entered into a Consent Decree, described further below under “ —Pipeline 901 Incident, ” that provides a path for a potential restart of the pipelines.
The Santa Ynez Pipeline System was maintained in a safe state and 1 Table of Contents regularly monitored. In 2020, Plains entered into a Consent Decree, described further below under “ —Pipeline 901 Incident, ” that provides a path for resuming petroleum transportation through Pipeline Segments 324 and 325, which have been maintained in an active state.
On February 17, 2025, Sable replied to the Coastal Commission with a letter stating that the “Coastal Act does not authorize the issuance of an [Executive Director Cease and Desist Order] under the present circumstances” and that “Sable intends to proceed with the anomaly repair work authorized by the County in its February 12, 2025 letter.” On February 18, 2025, Sable filed a complaint against the Coastal Commission in the Superior Court of the State of California for the County of Santa Barbara (Case No. 25CV00974).
On February 18, 2025, Sable filed a complaint against the Coastal Commission in the Superior Court of the State of California for the County of Santa Barbara (Case No. 25CV00974).
On February 11, 2025, PHMSA notified the OSFM that PHMSA does not object to the OSFM’s granting of the state waivers. Sable plans to submit updated Restart Plans and anticipates the OSFM will approve the Restart Plans following the completion and testing of the anomaly repair and maintenance work.
On February 11, 2025, the PHMSA notified OSFM that PHMSA did not object to OSFM’s granting of the State Waivers. Two lawsuits were filed against OSFM (as Defendant) and Sable and PPC (as Real Parties in Interest) challenging OSFM’s issuance of the State Waivers.
The Consent Decree also contains requirements for potentially restarting Line 901 and the Sisquoc to Pentland portion of Line 903. 3 Table of Contents On October 13, 2022, Plains sold Line 901 and the Sisquoc to Pentland portion of Line 903 to PPC.
The Consent Decree also contains requirements for resuming petroleum transportation through Pipeline Segments 324 and 325. On October 13, 2022, Plains sold Pipeline Segments 324 and 325 to Pacific Pipeline Company (“PPC”).
The wholly owned onshore processing facility is a fully integrated oil and gas processing facility with additional capacity for development. The natural gas and natural gas liquids (“NGLs”) it processed prior to the Line 901 incident were sold into the Southern California markets and the oil volumes were sold to California refineries.
From the offshore platforms in the Outer Continental Shelf (“OCS”), crude oil is transported through the Santa Ynez Pipeline System to onshore processing and storage facilities. The wholly owned onshore processing facility is a fully integrated oil and gas processing facility with additional capacity for development.
Since the Closing Date, the Company has invested significant capital to safely restore production operations to SYU. Sable began hydrotesting the Pipeline in early 2025 in advance of a potential restart of production from the Santa Ynez Unit offshore platforms and the associated Las Flores Canyon processing facilities in the second quarter of 2025.
Since the Closing Date, the Company has invested significant capital to safely restore production operations to the SYU.
Removed
SYU’s onshore facilities and the three offshore platforms remained in continuous operation until 2015.
Added
On May 19, 2025, the Company announced that as of May 15, 2025, it had restarted production at the SYU and begun flowing oil production from six wells at SYU’s Platform Harmony to the Company’s storage and processing facilities at LFC.
Removed
Following the crude oil release described further below, Plains indicated it shut down the pipeline, initiated its emergency response plan, and the Pipelines were subsequently emptied and placed in a safe state.
Added
The future operating and financial performance of the Company is expected to be driven primarily by our ability to establish a lawful, reliable, and economic pathway to market crude oil and natural gas produced from the SYU, resume sustained offshore production, and manage regulatory, legal, and commodity price risks associated with its federal offshore and California onshore and offshore assets.
Removed
On October 30, 2024, the Santa Barbara County Planning Commission (“Planning Commission”) approved the Company’s application for Change of Owner, Operator, and Guarantor for the Final Development Plan permits for the SYU, Pacific Offshore Pipeline Company Gas Plant, and the Pipelines.
Added
Sable was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification 805, Business Combinations, with such transactions being accounted for as a forward merger, and the SYU was deemed the predecessor entity for accounting purposes.
Removed
On November 5, 2024 and November 7, 2024, appeals of the Planning Commission’s October 30, 2024 approval of the permit transfers were filed. On February 25, 2025, the Santa Barbara County Board of Supervisors heard the appeals and voted 2-2 to uphold the appeals and 2-2 to deny the appeals, thus taking no action.
Added
Following a crude oil release in May 2015, Plains indicated it suspended petroleum transportation activities through Pipeline Segments 324 and 325, initiated its emergency response plan, and Pipeline Segments 324 and 325 were subsequently emptied of hydrocarbons but filled with an inert gas and maintained in a safe state. 2 Table of Contents We operate the Santa Ynez Pipeline System’s onshore processing and storage facilities and pipeline facilities, including the offshore pipeline facilities and Pipeline Segments 324 and 325, as a single pipeline system transporting crude oil from the SYU in the OCS to the Pentland Station terminal in Kern County, California.
Removed
Sable understands this to mean that the Planning Commission’s approval of the application stands, and has sought confirmation of the same understanding from Santa Barbara County. 2 Table of Contents SYU Production History Between 1981 and 2014, SYU produced over 671 MMBoe of oil and gas.
Added
After the Line 901 incident, the SYU suspended production, and the facilities were maintained in a safe, operation-ready state as described below under “ —Pipeline 901 Incident .” During the year ended December 31, 2025, the Company successfully produced barrels of crude oil from the SYU, reflecting the initial resumption and ramp-up of operations efforts following an extended period of non-production, with activities focused on asset integrity, regulatory compliance, and the phased return of offshore and onshore facilities to full service.
Removed
AB 864 Coastal Best Available Technology Pursuant to Assembly Bill (“AB”) 864, the Office of the State Fire Marshall (“OSFM”) promulgated Coastal Best Available Technologies (“CBAT”) regulations that mandates the use of the best available technology for pipelines in environmentally sensitive coastal areas to minimize oil spills.
Added
As a result, production volumes for 2025 were limited and are not indicative of expected future production levels once petroleum transportation through Pipeline Segments 324 and 325 is resumed and sustained operations commence.
Removed
In adhering to CBAT regulations, operators are required to submit a risk analysis to the OSFM for approval. If an operator identifies the best available technology to mitigate the quantity of hazardous liquid spills in case of a release, it must specify these technologies and propose their retrofitting into the pipeline.
Added
PHMSA Restart Plan Approval On December 17, 2025, PHMSA confirmed that the Santa Ynez Pipeline System is classified as an active interstate pipeline subject to federal jurisdiction under the Pipeline Safety Act.
Removed
Following the installation of these technologies, the OSFM will review the operator's records to confirm compliance with CBAT regulations. On July 13, 2022, OSFM accepted the AB 864 Risk Analysis and Initial and Supplemental Implementation Plans submitted by PPC’s predecessor in April 2021 (the “2021 CBAT Plan”).
Added
On December 22, 2025, PHMSA notified the Company that PHMSA had approved the Company’s Restart Plan (as defined below) for Pipeline Segments 324 and 325 after reviewing extensive documentation provided by Sable to PHMSA and conducting a multi-day field inspection.
Removed
On July 20, 2024, the OSFM stated that the 2021 CBAT Plan remains in effect and complies with AB-864, representing the best available technology.
Added
On December 23, 2025, the Company received an Emergency Special Permit from PHMSA related to cathodic protection and seam weld corrosion along Pipeline Segments 324 and 325. This permit requires ongoing compliance with specified operational and reporting obligations, including enhanced integrity management, inspection, testing, and monitoring requirements. The Emergency Special Permit expired on February 21, 2026.
Removed
On September 4, 2024, Santa Barbara County (the “County”) acknowledged that it does not have permit authority or jurisdiction over PPC’s installation of sixteen new safety valves in the County along the Pipelines in accordance with the 2021 CBAT Plan.
Added
By letter dated February 13, 2026 to PHMSA, the Company committed to continued compliance with the conditions of the emergency special permit until PHMSA makes a determination on the Company’s application for Special Permit (which was submitted on January 22, 2026). On December 31, 2025, the U.S.
Removed
The County’s acknowledgement was delivered pursuant to a conditional settlement agreement dated August 30, 2024 (the “Safety Valve Settlement Agreement”), among the County, PPC and the Company. Pursuant to the Safety Valve Settlement Agreement, PPC agreed to the following additional surveillance and response enhancements in the County: i.
Added
Court of Appeals for the Ninth Circuit denied a motion to stay PHMSA’s approvals of the Company’s Restart Plan and Emergency Special Permit, allowing those approvals to remain in effect during the pendency of the appeal.
Removed
PPC will create a Santa Barbara County-based Surveillance and Response Team, trained to comply with PPC’s tactical response plan, which will be responsible for timely initial incident response and equipped with key resources to deploy in early containment, particularly for those regions of the Pipeline between Gaviota and Las Flores Canyon; ii.
Added
While the appeal remains ongoing, the Company may continue to advance activities related to resuming petroleum transportation through Pipeline Segments 324 and 325, subject to satisfaction of all applicable regulatory, operational, and commercial requirements. On January 23, 2026, a second petition was filed in the U.S.
Removed
PPC will provide Santa Barbara first responders with additional training and equipment to assist in PPC’s incident response efforts; and iii. PPC will undertake the following Pipeline system enhancements: (1) install and operate and maintain primary and secondary operations control centers in Santa Barbara County, and (2) refurbish the Gaviota pump in its existing station.
Added
Court of Appeals for the Ninth Circuit by the State of California, also against the U.S. Department of Transportation; Sean Duffy, in his official capacity as Secretary of the U.S. Department of Transportation; PHMSA; and Paul Roberti, in his official capacity as Administrator of PHMSA.
Removed
PPC, the Company and the County further agreed, in the Safety Valve Settlement Agreement, to file a stipulation to dismiss the pending lawsuit, Pacific Pipeline Company and Sable Offshore Corp. v. Santa Barbara County Planning Commission and Board of Supervisors (Case No. 2:23-cv-09218-DMG-MRW) within 15 days of final installation of all sixteen underground safety valves in the County.
Added
The second petition, filed by the State of California, Attorney General and OSFM, challenges the Emergency Special Permit, but also challenges PHMSA’s assertion of jurisdiction over the Santa Ynez Pipeline System. The two petitions have been consolidated and Sable is participating in the consolidated matter. The Company cannot generate material oil sales without a functioning transportation solution.
Removed
Sable subsequently installed each of the sixteen required valves. Pursuant to the Safety Valve Settlement Agreement, Pacific Pipeline Company and Sable Offshore Corp. v. Santa Barbara County Planning Commission and Board of Supervisors was voluntarily dismissed on December 9, 2024. Refer to Pipeline Maintenance and Repair Work of Item 1.
Added
As a result, any delay, suspension, or revocation of PHMSA’s approvals, or any operational issue encountered during resuming petroleum transportation through Pipeline Segments 324 and 325, could materially delay the resumption of commercial oil sales and adversely affect future revenues and cash flows.
Removed
Business below for further discussion of regulatory developments related to the Company’s installation of safety valves. 4 Table of Contents OSFM Restart Plan Approval The Consent Decree requires OSFM approval of restart plans for each of the Pipelines (the “Restart Plans”) prior to returning Lines 324 and 325 to service.
Added
In addition, Sable was required to comply with California Assembly Bill 864’s 4 Table of Contents requirements to install certain safety valves along Pipeline Segments 324 and 325 of the Santa Ynez Pipeline System in Santa Barbara County (the “County”).
Removed
The Consent Decree prescribes what must be submitted in the Restart Plans, including a long-term plan for enhancing the existing cathodic protection system (in the form of state waivers through the OSFM) and the AB 864 risk assessment and mitigation plan (i.e., additional isolation valves or other CBAT).
Added
On April 15, 2025, the Center for Biological Diversity and the Wishtoyo Foundation filed a Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief alleging that OSFM violated federal and state pipeline safety laws and the California Environmental Quality Act (“CEQA”) in issuing the State Waivers (Case No. 25CV02244).
Removed
In addition, as discussed above in the AB 864 Coastal Best Available Technology section of Item 1. Business, Sable is required to comply with AB 864’s requirements to install certain safety valves along the Pipelines in the County.
Added
The Environmental Defense Center, Get Oil Out!, Santa Barbara County Action Network, Sierra Club, and Santa Barbara Channelkeeper also filed a Verified Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief against OSFM (as Defendant) and Sable and PPC (as Real Parties in Interest) alleging similar claims (Case No. 25CV02247).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

106 edited+75 added−53 removed184 unchanged
Biggest changeThere are disputes with respect to certain of the rights-of-way or other interests and any unfavorable outcomes of such disputes could require us to incur additional costs. 20 Table of Contents • We may be unable to Restart Production by March 2026, which would permit EM to exercise a reassignment option and take ownership of the SYU Assets without any compensation or reimbursement other than the deemed repayment in full of the principal and accrued interest outstanding under the Senior Secured Term Loan Agreement. • Restrictive covenants in the Senior Secured Term Loan Agreement or any future agreements governing our indebtedness could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests. • Under the terms of the Senior Secured Term Loan Agreement, restarting production will trigger a springing maturity date following a specified grace period, and the terms on which we will be able to refinance the Senior Secured Term Loan Agreement, if necessary, will depend on then-prevalent market conditions. • Our business plans require a significant amount of capital.
Biggest changeThere are disputes with respect to certain of the rights-of-way or other interests and any unfavorable outcomes of such disputes could require us to incur additional costs. • Under the terms of the Senior Secured Term Loan, the loans thereunder will mature on the earlier of (i) March 31, 2027 or (ii) the date falling 90 days after first sales of Hydrocarbons, and the terms on which we will be able to refinance the Senior Secured Term Loan will depend on then-prevalent market conditions. • Restrictive covenants in the Senior Secured Term Loan or any future agreements governing our indebtedness could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests. • Our business plans require a significant amount of capital.
Historically, oil and natural gas prices have been volatile and fluctuate in response to changes in supply and demand, market uncertainty, and other factors that are beyond our control, including: • the regional, domestic and foreign supply of oil, natural gas and NGLs; • the level of commodity prices and expectations about future commodity prices; 22 Table of Contents • the level of global oil and natural gas exploration and production; • localized supply and demand fundamentals, including the proximity and capacity of pipelines and other transportation facilities, and other factors that result in differentials to benchmark prices from time to time; • the cost of exploring for, developing, producing and transporting oil, natural gas and NGLs; • the price and quantity of foreign imports; • political and economic conditions in oil producing countries, including conflicts in or among the Middle East, Africa, South America and Russia; • the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; • speculative trading in crude oil and natural gas derivative contracts; • the level of consumer product demand; • weather conditions and other natural disasters; • risks associated with operating drilling rigs; • technological advances affecting exploration and production operations and overall energy consumption; • domestic and foreign governmental regulations and taxes; • the impact of energy conservation efforts; • the continued threat of terrorism and the impact of military and other action, including the Russia-Ukraine war and its destabilizing effect on the European continent and the global oil and natural gas markets; • the price and availability of competitors’ supplies of oil and natural gas and alternative fuels; and • overall domestic and global economic conditions.
Historically, oil and natural gas prices have been volatile and fluctuate in response to changes in supply and demand, market uncertainty, and other factors that are beyond our control, including: • the regional, domestic and foreign supply of oil, natural gas and NGLs; • the level of commodity prices and expectations about future commodity prices; • the level of global oil and natural gas exploration and production; • localized supply and demand fundamentals, including the proximity and capacity of pipelines and other transportation facilities, and other factors that result in differentials to benchmark prices from time to time; • the cost of exploring for, developing, producing and transporting oil, natural gas and NGLs; • the price and quantity of foreign imports; • political and economic conditions in oil producing countries, including conflicts in or among the Middle East, Africa, South America and Russia; • the ability of members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; • speculative trading in crude oil and natural gas derivative contracts; • the level of consumer product demand; • weather conditions and other natural disasters; • risks associated with operating drilling rigs; • technological advances affecting exploration and production operations and overall energy consumption; 26 Table of Contents • domestic and foreign governmental regulations and taxes; • the impact of energy conservation efforts; • the continued threat of terrorism and the impact of military and other action, including the Russia-Ukraine war and its destabilizing effect on the European continent and the global oil and natural gas markets; • the price and availability of competitors’ supplies of oil and natural gas and alternative fuels; and • overall domestic and global economic conditions.
Our development and production operations may be curtailed, delayed, canceled or otherwise negatively impacted as a result of many factors, including: • high costs, shortages or delivery delays of rigs, equipment, labor, electrical power or other services; • unusual or unexpected geological formations; • composition of sour natural gas, including sulfur, carbon dioxide and other diluent content; • unexpected operational events and conditions; • failure of down hole equipment and tubulars; • loss of wellbore mechanical integrity; • failure, unavailability or shortage of capacity of gathering and transportation pipelines, or other transportation facilities; • human errors, facility or equipment malfunctions and equipment failures or accidents, including acceleration of deterioration of our facilities and equipment due to the highly corrosive nature of sour natural gas; • excessive wall loss or other loss of pipeline integrity; • title problems; 24 Table of Contents • litigation, including landowner lawsuits; • loss of drilling fluid circulation; • hydrocarbon or oilfield chemical spills; • fires, blowouts, surface craterings and explosions; • surface spills or underground migration due to uncontrollable flows of oil, natural gas, formation water or well fluids; • delays imposed by or resulting from compliance with environmental and other governmental or regulatory requirements; • delays due to operations in environmentally sensitive areas; and • adverse weather conditions and natural disasters.
Our development and production operations may be curtailed, delayed, canceled or otherwise negatively impacted as a result of many factors, including: • high costs, shortages or delivery delays of rigs, equipment, labor, electrical power or other services; • unusual or unexpected geological formations; • composition of sour natural gas, including sulfur, carbon dioxide and other diluent content; • unexpected operational events and conditions; • failure of down hole equipment and tubulars; • loss of wellbore mechanical integrity; • failure, unavailability or shortage of capacity of gathering and transportation pipelines, or other transportation facilities; • human errors, facility or equipment malfunctions and equipment failures or accidents, including acceleration of deterioration of our facilities and equipment due to the highly corrosive nature of sour natural gas; • excessive wall loss or other loss of pipeline integrity; • title problems; • litigation, including landowner lawsuits; • loss of drilling fluid circulation; • hydrocarbon or oilfield chemical spills; • fires, blowouts, surface craterings and explosions; • surface spills or underground migration due to uncontrollable flows of oil, natural gas, formation water or well fluids; • delays imposed by or resulting from compliance with environmental and other governmental or regulatory requirements; • delays due to operations in environmentally sensitive areas; and 28 Table of Contents • adverse weather conditions and natural disasters.
The outstanding principal amount under our Senior Secured Term Loan Agreement bears interest at a fixed rate and we have the option of capitalizing the interest onto the principal rather than paying cash interest, but we may in the future refinance our existing indebtedness or incur new indebtedness with variable rates and mandatory cash interest payments, which would expose us to interest rate risk and additional liquidity burdens.
The outstanding principal amount under our Senior Secured Term Loan bears interest at a fixed rate and we have the option of capitalizing the interest onto the principal rather than paying cash interest, but we may in the future refinance our existing indebtedness or incur new indebtedness with variable rates and mandatory cash interest payments, which would expose us to interest rate risk and additional liquidity burdens.
We believe that we will have obtained sufficient right-of-way grants from public authorities (subject to receipt of certain governmental permits and consents) and private parties for us to operate our business, and obtained court approval of a settlement expressly confirming those rights with the overwhelming majority of the private landowners in September 2024 ( see Grey Fox Matter, infra ) .
We believe that we will have obtained sufficient right-of-way grants from public authorities (subject to receipt of certain governmental permits and consents) and private parties for us to operate our business, and obtained court approval of a settlement expressly confirming those rights with the overwhelming majority of the private landowners in September 2024 (see Grey Fox Settlement, infra).
There are disputes with respect to certain of the rights-of-way or other interests and any unfavorable outcomes of such disputes could require us to incur additional costs. We do not own in fee all of the land on which our assets are located or all of the land that we must traverse in order to conduct our operations.
We do not own all of the land on which our assets are located or all of the land that we must traverse in order to conduct our operations. There are disputes with respect to certain of the rights-of-way or other interests and any unfavorable outcomes of such disputes could require us to incur additional costs.
Any decline in, or sustained low levels of, oil, natural gas and NGL prices will cause a decline in our cash flow from operations, which could materially and adversely affect our business, results of operations and financial condition. • If commodity prices decline and remain depressed for a prolonged period, our business may become uneconomical and result in additional write downs of the value of our properties, which may adversely affect our financial condition and our ability to fund operations. • An increase in the differential between the NYMEX or other benchmark prices of oil and natural gas and the wellhead price we expect to receive for our future production could significantly reduce our cash flow and adversely affect our financial condition. • The estimated quantities of petroleum contained in the SYU Assets are classified as “contingent resources” rather than “reserves” because they are subject to numerous contingencies.
Any decline in, or sustained low levels of, oil, natural gas and NGL prices will cause a decline in our cash flow from operations, which could materially and adversely affect our business, results of operations and financial condition. • If commodity prices decline and remain depressed for a prolonged period, our business may become uneconomical and result in additional write downs of the value of our properties, which may adversely affect our financial condition and our ability to fund operations. • An increase in the differential between the NYMEX or other benchmark prices of oil and natural gas and the wellhead price we expect to receive for our future oil sales could significantly reduce our cash flow and adversely affect our financial condition. • The estimated quantities of petroleum contained in the SYU Assets are classified as “contingent resources” rather than “reserves” because they are subject to numerous contingencies.
Rather, many of the properties or rights are derived from surface use agreements, rights-of-way or other easement rights and, therefore, we will be subject to the possibility of more onerous terms or increased costs to retain necessary land access if we do not have valid rights-of-way or if such rights-of-way lapse or terminate.
Rather, many of the properties or rights are derived from leases, surface use agreements, rights-of-way or other easement rights and, therefore, we will be subject to the possibility of more onerous terms or increased costs to retain necessary land access if we do not have valid rights-of-way or if such rights-of-way lapse or terminate.
Restrictive covenants in the Senior Secured Term Loan Agreement impose significant operating and financial restrictions on us and our subsidiaries and we may be prevented from taking advantage of business opportunities that arise because of the limitations imposed on us by the Senior Secured Term Loan Agreement unless we gain EM’s consent.
Restrictive covenants in the Senior Secured Term Loan impose significant operating and financial restrictions on us and our subsidiaries and we may be prevented from taking advantage of business opportunities that arise because of the limitations imposed on us by the Senior Secured Term Loan unless we gain EM’s consent.
Because there are no current plans to pay cash dividends on our Common Stock for the foreseeable future, you may not receive any return on investment unless you sell your shares of our Common Stock at a price greater than what you paid for it.
Because there are no current plans to pay cash dividends on our Common Stock in the foreseeable future, you may not receive any return on investment unless you sell your shares of our Common Stock at a price greater than what you paid for it.
The prices we expect to receive for our future production are also affected by the specific characteristics of the production relative to production sold at benchmark prices. For example, California oil typically has a lower gravity, and a portion typically has higher sulfur content, than oil sold at certain benchmark prices.
The prices we expect to receive for our future sales are also affected by the specific characteristics of the production relative to production sold at benchmark prices. For example, California oil typically has a lower gravity, and a portion typically has higher sulfur content, than oil sold at certain benchmark prices.
The declaration, amount and payment of any future dividends on shares of our Common Stock will be at the sole discretion of our Board and subject to restrictions and limitations in the Senior Secured Term Loan Agreement or any other then-existing indebtedness of the Company.
The declaration, amount and payment of any future dividends on shares of our Common Stock will be at the sole discretion of our Board and subject to restrictions and limitations in the Senior Secured Term Loan or any other then‑existing indebtedness of the Company.
During the pendency of the Senior Secured Term Loan Agreement and in case of an event of default thereunder, EM may exercise all remedies at law or equity, and may foreclose upon substantially all of our assets and the assets of our subsidiaries, including, in the event of a deficiency, cash and any other assets not acquired from EM in the Business Combination to the extent constituting collateral under the applicable financing documents.
In addition, during the pendency of the Senior Secured Term Loan and in case of an event of default thereunder, EM may exercise all remedies at law or equity, and may foreclose upon substantially all of our assets and the assets of our subsidiaries, including, in the event of a deficiency, cash and any other assets not acquired from EM in the Business Combination to the extent constituting collateral under the applicable financing documents.
Our oil, natural gas, and NGLs development and production operations are also subject to stringent and complex federal, state and local laws and regulations governing the release or discharge of materials into or through the environment, worker health and safety aspects of our operations, or otherwise relating to environmental protection, resource protection, and damage to natural resources.
Our oil, natural gas, and NGLs development and production operations are also subject to stringent and complex federal, state and local laws and regulations governing the release or discharge of materials into or through the environment, worker health and safety aspects of our operations, or otherwise relating to property rights, environmental protection, resource protection, and damage to natural resources.
An increase in the differential between the NYMEX or other benchmark prices of oil and natural gas and the wellhead price we expect to receive for our future production could significantly reduce our cash flow and adversely affect our financial condition.
An increase in the differential between the NYMEX or other benchmark prices of oil and natural gas and the wellhead price we expect to receive for our future oil sales could significantly reduce our cash flow and adversely affect our financial condition.
There is no assurance that any of the petroleum contained in the SYU Assets will ever be recovered or reclassified as “reserves.” The resources are contingent upon (1) approval and/or inspection by from federal, state and local regulators to restart production, (2) reestablishment of oil transportation systems to deliver production to market and (3) commitment to restart the wells and facilities.
There is no assurance that any of the petroleum contained in the SYU Assets will ever be recovered or reclassified as “reserves.” The resources are contingent upon (1) approval and/or inspection from federal, state and local regulators to recommence oil sales, (2) reestablishment of oil transportation systems to deliver production to market and (3) commitment to restart the wells and facilities.
See “ Business—Environmental, Occupational Safety and Health Matters and Regulations ” and “ Business-Other Regulation of the Oil and Natural Gas Industry ” for a description of the laws and regulations that affect the third parties on whom we rely for transportation services. Our business depends in part on pipelines, gathering systems and processing facilities owned by us or others.
See “ Business—Environmental, Occupational Safety and Health Matters and Regulations ” and “ Business-Other Regulation of the Oil and Natural Gas Industry ” for a description of the laws and regulations that affect the third parties on whom we rely for transportation services. 30 Table of Contents Our business depends in part on pipelines, gathering systems and processing facilities owned by us or others.
The operations of the third parties on whom we rely for transportation services are subject to complex and stringent laws and regulations that require obtaining and maintaining numerous permits, approvals and certifications from various federal, 26 Table of Contents state and local government authorities. These third parties may incur substantial costs in order to comply with existing laws and regulations.
The operations of the third parties on whom we rely for transportation services are subject to complex and stringent laws and regulations that require obtaining and maintaining numerous permits, approvals and certifications from various federal, state and local government authorities. These third parties may incur substantial costs in order to comply with existing laws and regulations.
To the extent laws are enacted, or other governmental action is taken that restricts drilling, production and transportation activities, or imposes more stringent and costly operating, waste handling, disposal and cleanup requirements, our business, prospects, financial condition or results of operations could be materially adversely affected.
To the extent laws are 34 Table of Contents enacted, or other governmental action is taken that restricts drilling, production and transportation activities, or imposes more stringent and costly operating, waste handling, disposal and cleanup requirements, our business, prospects, financial condition or results of operations could be materially adversely affected.
A future natural disaster, such as a fire, mudslide or an earthquake, could cause substantial interruption and delays in our operations, damage or destroy equipment, prevent or delay transport of our products and cause us to incur additional expenses, which would adversely affect our business, financial condition and results of 34 Table of Contents operations.
A future natural disaster, such as a fire, mudslide or an earthquake, could cause substantial interruption and delays in our operations, damage or destroy equipment, prevent or delay transport of our products and cause us to incur additional expenses, which would adversely affect our business, financial condition and results of operations.
Finally, maintenance activities undertaken to reduce operational risks can be costly and can require exploration, exploitation and development operations to be curtailed while those activities are being completed. Oil and natural gas producers’ operations are substantially dependent on the availability of water and the disposal of waste, including produced water and drilling fluids.
Finally, maintenance activities undertaken to reduce operational risks can be costly and can require exploration, exploitation and development operations to be curtailed while those activities are being completed. 29 Table of Contents Oil and natural gas producers’ operations are substantially dependent on the availability of water and the disposal of waste, including produced water and drilling fluids.
The EPA, BOEM, BSEE, PHMSA, OSFM, CalGEM, Coastal Commission, CDFW, Regional Board, SLC and numerous other governmental authorities have the authority to enforce compliance with these laws and regulations and the permits issued by them, often requiring difficult and costly compliance measures or corrective actions.
The EPA, BOEM, BSEE, PHMSA, OSFM, CalGEM, Coastal Commission, CDFW, Regional Board, the SLC, State Parks and numerous other governmental authorities have the authority to enforce compliance with these laws and regulations and the permits or other authorizations issued by them, often requiring difficult and costly compliance measures or corrective actions.
Endangered Species Act and/or the California Endangered Species Act could result in increased costs, new operating restrictions, or delays in our operations, which could adversely affect our results of operations and financial condition. The U.S. Endangered Species Act (the “ ESA ”) and analogous state laws regulate activities that could have an adverse effect on threatened and endangered species.
Endangered Species Act and/or the California Endangered Species Act could result in increased costs, new operating restrictions, or delays in our operations, which could adversely affect our results of operations and financial condition. The U.S. Endangered Species Act (the “ESA”) and analogous state laws regulate activities that could have an adverse effect on threatened and endangered species.
Many of our larger competitors not only drill for and produce oil and natural gas but also carry on refining operations and market petroleum and other products on a regional, national or worldwide basis, which offers them greater access and economies of scale.
Many of our larger competitors not only drill for and produce oil and natural gas but also 33 Table of Contents carry on refining operations and market petroleum and other products on a regional, national or worldwide basis, which offers them greater access and economies of scale.
If any of these security breaches were to occur, they could lead to losses of financial assets, sensitive information, critical infrastructure or capabilities essential to our operations and could have a material adverse effect on our reputation, financial position, results of operations or cash flows.
If any of these security breaches were to occur, they could 40 Table of Contents lead to losses of financial assets, sensitive information, critical infrastructure or capabilities essential to our operations and could have a material adverse effect on our reputation, financial position, results of operations or cash flows.
As a result, you may not receive any return on an investment in our Common Stock unless you sell your shares of our Common Stock for a price greater than that which you paid for it. Item 1B. Unresolved Staff Comments Not applicable. 42 Table of Contents
As a result, you may not receive any return on an investment in our Common Stock unless you sell your shares of our Common Stock for a price greater than that which you paid for it. Item 1B. Unresolved Staff Comments Not applicable.
Negative public perception regarding us and/or our industry resulting from, among other things, concerns raised by advocacy groups about climate change, may also lead to increased litigation risk, and regulatory, legislative and judicial scrutiny, which may, in turn, lead 31 Table of Contents to new state and federal safety and environmental laws, regulations, guidelines and enforcement interpretations.
Negative public perception regarding us and/or our industry resulting from, among other things, concerns raised by advocacy groups about climate change, may also lead to increased litigation risk, and regulatory, legislative and judicial scrutiny, which may, in turn, lead to new state and federal safety and environmental laws, regulations, guidelines and enforcement interpretations.
If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even if the principal amount remained the same, and our net income and cash available for servicing our indebtedness would decrease. Our business plans require a significant amount of capital.
If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even if the principal amount remained the same, and our net income and cash available for servicing our indebtedness would decrease. 32 Table of Contents Our business plans require a significant amount of capital.
While currently none of our California operations rely on hydraulic fracturing stimulation or acidizing of wells as discussed in the Ninth Circuit decision, any restrictions on the future use of those well stimulation treatments or other forms of injection may adversely impact our operations, including causing operational delays, increased costs, and reduced production, which could adversely affect our revenues, results of operations and net cash provided by operating activities.
While currently none of our Pacific Outer Continental Shelf operations rely on hydraulic fracturing stimulation or acidizing of wells as discussed in the Ninth Circuit decision, any restrictions on the future use of those well stimulation treatments or other forms of injection may adversely impact our operations, including causing operational delays, increased costs, and reduced production, which could adversely affect our revenues, results of operations and net cash provided by operating activities.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), enacted in 2010, establishes federal oversight and regulation of, among other things, the over-the-counter derivatives market and certain participants in that market, including us.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“ Dodd-Frank Act ”), enacted in 2010, establishes federal oversight and regulation of, among other things, the over-the-counter derivatives market and certain participants in that market, including us.
The potential consequences of these hazards are particularly 25 Table of Contents severe for us because significant portions of our offshore operations are conducted in environmentally sensitive areas, including areas with significant residential populations and public and commercial infrastructure.
The potential consequences of these hazards are particularly severe for us because significant portions of our offshore operations are conducted in environmentally sensitive areas, including areas with significant residential populations and public and commercial infrastructure.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the costs associated with restarting and maintaining production and the Pipelines; • the market prices of oil, natural gas and NGL; • the success of our hedging strategy; • future accounting pronouncements or changes in our accounting policies; • macroeconomic conditions, both nationally and locally; and • any other change in the competitive landscape of our industry, including consolidation among our competitors or partners.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the costs associated with maintaining production and the Santa Ynez Pipeline System; • the market prices of oil, natural gas and NGL; • the success of our hedging strategy; • future accounting pronouncements or changes in our accounting policies; • macroeconomic conditions, both nationally and locally; and • any other change in the competitive landscape of our industry, including consolidation among our competitors or partners.
Such laws, 41 Table of Contents regulations or rules and their interpretation and application may also change from time to time and such changes could have a material adverse effect on our business, investments and results of operations.
Such laws, regulations or rules and their interpretation and application may also change from time to time and such changes could have a material adverse effect on our business, investments and results of operations.
On August 16, 2022, President Biden signed into law the Inflation Reduction Act (the “IRA”), which targets methane from oil and gas sources by imposing an applicable “waste emissions charge” on petroleum and natural gas production facilities that exceed a specified waste emissions threshold and requiring the reporting of emissions that exceed 25,000 metric tons of carbon dioxide equivalent per year.
On August 16, 2022, President Biden signed into law the IRA, which targets methane from oil and gas sources by imposing an applicable “waste emissions charge” on petroleum and natural gas production facilities that exceed a specified waste emissions threshold and requiring the reporting of emissions that exceed 25,000 metric tons of carbon dioxide equivalent per year.
If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our Common Stock could decline substantially.
If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our Common 45 Table of Contents Stock could decline substantially.
The trading price of our Common Stock will depend on many factors, including those described in this “ Risk Factors ” section, many of which are beyond our control and may not be related to our operating performance.
The trading price of our Common Stock will depend on many factors, including those described in this “Risk Factors” section, many of which are beyond our control and may not be related to our operating performance.
Environmental groups may initiate litigation and take other actions to delay or prevent us from obtaining required approvals to restart and continue production. Environmental groups have had increasing success in limiting oil and gas production by appealing to regulatory agencies, filing lawsuits and applying political pressure.
Environmental groups may initiate litigation and take other actions to delay or prevent us from obtaining or maintaining required approvals to recommence oil sales. Environmental groups have had increasing success in limiting oil and gas production by appealing to regulatory agencies, filing lawsuits and applying political pressure.
You may not be able to resell your shares at an attractive price due to a number of factors, such as the following: • actual or anticipated fluctuations in our annual financial results or the annual financial results of companies perceived to be similar to ours; 37 Table of Contents • changes in the market’s expectations about our operating results; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • speculation in the press or investment community; • actual or anticipated developments in our business, competitors’ businesses or the competitive landscape generally; • our success in satisfying permitting and other regulatory requirements to restart production; • our success in satisfying permitting and other regulatory requirements to restart the Pipelines or obtain alternate transportation; • our ability to obtain water, drilling fluids and other critical resources; • the accuracy of our assumptions and estimates regarding the total costs associated with restarting and maintaining production and the Pipelines; • the market prices of oil, natural gas and NGL; • the success of our hedging strategy; • our ability to manage the safety risks associated with offshore development and production; • our success in retaining or recruiting, or changes required in, our officers, key employees or directors; • the outcome of ratemaking proceedings with the California Public Utilities Commission; • future laws and regulations related to climate change, GHGs and ESG and administrative interpretations thereof; • changes in the future operating results of the Company; • operating and stock price performance of other companies that investors deem comparable to ours; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving the Company; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of our Common Stock available for public sale; • any major change in our Board or management; • sales of substantial amounts of our Common Stock by our directors, officers or significant stockholders or the perception that such sales could occur; and • other risk factors and other matters described or referenced under the sections “ Risk Factors ” and “ Cautionary Note Regarding Forward-Looking Statements .” Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance.
You may not be able to resell your shares at an attractive price due to a number of factors, such as the following: • actual or anticipated fluctuations in our annual or quarterly financial results or the financial results of companies perceived to be similar to ours; • changes in the market’s expectations about our operating results; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • speculation in the press or investment community; • actual or anticipated developments in our business, competitors’ businesses or the competitive landscape generally; • our success in satisfying permitting and other regulatory requirements to resume full production; • our success in satisfying permitting and other regulatory requirements to resume petroleum transportation through Pipeline Segments 324 and 325 of the Santa Ynez Pipeline System or obtain alternate transportation; • our ability to obtain water, drilling fluids and other critical resources; • the accuracy of our assumptions and estimates regarding the total costs associated with resuming and maintaining production and the Santa Ynez Pipeline System; • the market prices of oil, natural gas and NGL; • the success of our hedging strategy; • our ability to manage the safety risks associated with offshore development and production; • our success in retaining or recruiting, or changes required in, our officers, key employees or directors; • future laws and regulations related to climate change, GHGs and ESG and administrative interpretations thereof; • changes in the future operating results of the Company; • operating and stock price performance of other companies that investors deem comparable to ours; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving the Company; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; 41 Table of Contents • the volume of our Common Stock available for public sale; • any major change in our Board or management; • sales of substantial amounts of our Common Stock by our directors, officers or significant stockholders or the perception that such sales could occur; and • other risk factors and other matters described or referenced under the sections “ Risk Factors ” and “ Cautionary Note Regarding Forward‑Looking Statements .” Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance.
Item 1A. Risk Factors You should carefully consider the following risks as well as the other information included in this annual report, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes thereto.
Item 1A. Risk Factors You should carefully consider the following risks as well as the other information included in this annual report, including the section titled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and our financial statements and related notes thereto.
On January 20, 2025, President Trump signed an executive order initiating the re-withdraw of the United States from the agreement. In addition, various states and local governments have vowed to continue to enact regulations to achieve the goals of the Paris Agreement.
On January 20, 2025, President Trump signed an executive order initiating the re-withdraw of the United States from the agreement, and the United States’ exit became effective in January 2026. In addition, various states and local governments have vowed to continue to enact regulations to achieve the goals of the Paris Agreement.
For example, the costs of equipment, repairs and maintenance, the costs of operating personnel, the costs to obtain governmental approvals, and legal, consulting and other professional expenses could turn out to be higher than we have estimated.
In addition, the costs of equipment, repairs and maintenance, the costs of operating personnel, the costs to obtain governmental approvals, and legal, consulting and other professional expenses could turn out to be higher than we have estimated.
If we do not have sufficient cash on hand or are unable to obtain additional funding on a timely basis, we may be unable to restart production, which could materially affect our business, financial condition and results of operations.
If we do not have sufficient cash on hand or are unable to obtain additional funding on a timely basis, we may be unable to recommence oil sale, which could materially affect our business, financial condition and results of operations.
In addition, our future capital needs may require us to issue additional equity or debt securities that may dilute our stockholders or introduce covenants that may restrict our operations or ability to pay dividends. • We are subject to complex federal, state, local and other laws, regulations and permits that could adversely affect the cost, manner, ability or feasibility of conducting our operations. • Climate change legislation or regulations restricting emissions of “greenhouse gases,” or GHGs, could result in increased operating costs and reduced demand for the oil, natural gas and NGLs we expect to produce. • If engaged in intrastate common carrier operations, our financial results with respect to the Pipelines will primarily depend on the outcomes of ratemaking proceedings with the CPUC and we may not be able to earn an adequate rate of return in a timely manner or at all. • Attempts by the California state government to restrict the production of oil and gas could negatively impact our operations and result in decreased demand for fossil fuels in California. • Our assets are located exclusively onshore and offshore in California, making us vulnerable to risks associated with having operations concentrated in this geographic area. • All of our operations are conducted in areas that may be at risk of damage from fire, mudslides, earthquakes or other natural disasters. • We may be required to post cash collateral pursuant to our agreements with sureties, letter of credit providers or regulators under our existing or future bonding or other arrangements, which may have a material adverse effect on our liquidity and our ability to execute our capital expenditure plan and our asset retirement obligation plan and comply with the agreements governing our existing or future indebtedness. • Our business could be negatively affected by security threats, including cybersecurity threats, destructive forms of protest and opposition by activists and other disruptions. • The market prices of our securities could be highly volatile or may decline regardless of our operating performance.
In addition, our future capital needs may require us to issue additional equity or debt securities that may dilute our stockholders or introduce covenants that may restrict our operations or ability to pay dividends. • We are subject to complex federal, state, local and other laws, regulations and permits that could adversely affect the cost, manner, ability or feasibility of conducting our operations. • Climate change legislation or regulations restricting emissions of “greenhouse gases,” or GHGs, could result in increased operating costs and reduced demand for the oil, natural gas and NGLs we expect to produce. • Attempts by the California state government to restrict the production of oil and gas could negatively impact our operations and result in decreased demand for fossil fuels in California. • Our assets are located exclusively onshore and offshore in California, making us vulnerable to risks associated with having operations concentrated in this geographic area. • All of our operations are conducted in areas that may be at risk of damage from fire, mudslides, earthquakes or other natural disasters. • We may be required to post cash collateral pursuant to our agreements with sureties, letter of credit providers or regulators under our existing or future bonding or other arrangements, which may have a material adverse effect on our liquidity and our ability to execute our capital expenditure plan and our asset retirement obligation plan and comply with the agreements governing our existing or future indebtedness. • Our business could be negatively affected by security threats, including cybersecurity threats, destructive forms of protest and opposition by activists and other disruptions. • The market prices of our securities could be highly volatile or may decline regardless of our operating performance.
However, at least one private landowner along sections of Pipeline Segment 324 has continued to make claims that the easement agreements with it are no longer effective.
However, at least one private landowner along sectors of Pipeline Segment 324 has continued to make claims that the easement agreements with it is no longer effective.
Many of these risks are heightened for us due to the fact that most of our equipment has been shut-in for more than nine years. • The enactment of derivatives legislation could have an adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business. • Development and production of oil, natural gas and NGLs in offshore waters have inherent and historically higher risk than similar activities onshore. • Oil and natural gas producers’ operations are substantially dependent on the availability of water and the disposal of waste, including produced water and drilling fluids.
Many of these risks are heightened for us due to the fact that some of our equipment has not been used for petroleum production or transportation for more than ten years. • The enactment of derivatives legislation could have an adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business. • Development and production of oil, natural gas and NGLs in offshore waters have inherent and historically higher risk than similar activities onshore. 23 Table of Contents • Oil and natural gas producers’ operations are substantially dependent on the availability of water and the disposal of waste, including produced water and drilling fluids.
This estimate of costs to restart production considers currently available facts and presently enacted laws and regulations, but it is subject to uncertainties associated with the assumptions that we have made.
This estimate of costs to recommence oil sales considers currently available facts and presently enacted laws and regulations, but it is subject to uncertainties associated with the assumptions that we have made.
If we do not have sufficient cash on hand to restart production, we may need to raise additional capital to continue our operations, and this capital may not be available on acceptable terms or at all.
If we do not have sufficient cash on hand to recommence oil sales, we may need to raise additional capital to continue our operations, and this capital may not be available on acceptable terms or at all.
There is no assurance that any of the petroleum contained in the SYU Assets will ever be recovered or reclassified as “reserves.” • Even if all contingencies are resolved and all facilities are restarted, the amounts recovered may be substantially less than estimated. • Developing and producing oil, natural gas and NGLs are costly and high-risk activities with many uncertainties that may result in a total loss of investment or otherwise adversely affect our business, financial condition, results of operations and cash flows.
There is no assurance that any of the petroleum contained in the SYU Assets will ever be recovered or reclassified as “reserves.” • Developing and producing oil, natural gas and NGLs are costly and high-risk activities with many uncertainties that may result in a total loss of investment or otherwise adversely affect our business, financial condition, results of operations and cash flows.
These restrictions limit our ability to, among other things: • engage in mergers, consolidations, liquidations, or dissolutions; • create or incur debt or liens; • make certain debt prepayments; • pay dividends, distributions, management fees or certain other restricted payments; • make investments, acquisitions, loans, or purchase oil and gas properties; • sell, assign, farm-out or dispose of any property; • enter into transactions with affiliates; • enter into, subject to certain exceptions, any agreement that prohibits or restricts liens securing the Senior Secured Term Loan Agreement, payments of dividends to us, or payment of debt owed to us and our subsidiaries; and • change the nature of our business. 28 Table of Contents The Senior Secured Term Loan Agreement also contains representations and warranties, affirmative covenants, additional negative covenants and events of default (including a change of control).
These restrictions limit our ability to, among other things: • engage in mergers, consolidations, liquidations, or dissolutions; • create or incur debt or liens; • make certain debt prepayments; • pay dividends, distributions, management fees or certain other restricted payments; • make investments, acquisitions, loans, or purchase oil and gas properties; • sell, assign, farm-out or dispose of any property; • enter into transactions with affiliates; • enter into, subject to certain exceptions, any agreement that prohibits or restricts liens securing the Senior Secured Term Loan, payments of dividends to us, or payment of debt owed to us and our subsidiaries; and • change the nature of our business.
We intend to retain future earnings, if any, for future operations, expansion and debt repayment and there are no current plans (at least until the restart of production of the SYU Assets and the repayment or refinancing of the Senior Secured Term Loan Agreement) to pay any cash dividends for the foreseeable future.
We intend to retain future earnings, if any, for future operations, expansion and debt repayment and there are no current plans (at least until the resumption of full production at SYU and the repayment or refinancing of the Senior Secured Term Loan) to pay any cash dividends in the near term.
To conduct our operations in compliance with these laws and regulations, we must obtain and maintain numerous permits, approvals and certificates from various federal, state and local governmental authorities. We may incur substantial costs in order to maintain compliance with these existing laws and regulations.
To conduct our operations in compliance with these laws and regulations, we must obtain and maintain numerous permits, approvals and certificates from various federal, state and local governmental authorities.
The executive order also directed CalGEM to finish its review of public health and safety concerns from the impacts of oil extraction activities and propose significantly strengthened regulations. • In October 2020, the California Governor issued an executive order that established a state goal to conserve at least 30% of California’s land and coastal waters by 2030 and directed state agencies to implement other measures to mitigate climate change and strengthen biodiversity.
The executive order also directed CalGEM to finish its review of public health and safety concerns from the impacts of oil extraction activities and propose significantly strengthened regulations. • In October 2020, the California Governor issued an executive order that established a state goal to conserve at least 30% of California’s land and coastal waters by 2030 and directed state agencies to implement other measures to mitigate climate change and strengthen biodiversity. • On July 1, 2025, amendments to the Low Carbon Fuel Standard (“LCFS”) Regulation took effect.
The injunction was the result of lawsuits filed by the State of California, the California Coastal Commission and environmental groups alleging that federal agencies violated environmental laws when they authorized unconventional drilling methods on offshore California platforms before the unconventional drilling methods had been fully reviewed.
The injunction was the result of lawsuits filed by the State of California, the California Coastal Commission and environmental groups alleging that federal agencies violated environmental laws when they authorized unconventional drilling methods from offshore California platforms.
The prices that we expect to receive for our future oil and natural gas production will often reflect a regional discount, based on the location of production, to the relevant benchmark prices, such as NYMEX or ICE, that are used for 23 Table of Contents calculating hedge positions.
The prices that we expect to receive for our future sales will often reflect a regional discount, based on the location of production, to the relevant benchmark prices, such as NYMEX or ICE, that are used for calculating hedge positions.
See “ Risk Factors—Risks Related to the Restart of Production .” Restrictive covenants in the Senior Secured Term Loan Agreement or any future agreements governing our indebtedness could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests.
Restrictive covenants in the Senior Secured Term Loan or any future agreements governing our indebtedness could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests.
Accordingly, our assumptions and estimates may change in future periods based on future events and total costs may materially increase; therefore, we can provide no assurance that we will not have to incur additional costs in future periods significantly higher than our estimated costs for the restart of production.
Accordingly, our assumptions and estimates may change in future periods based on future events and total costs may materially increase. Therefore, we can provide no assurance that we will not have to incur additional costs in future periods that are significantly higher than our estimated costs to recommence oil sales.
Our loss of any of these surface use agreements, rights-of-way or other easement rights through lapse or failure to satisfy or maintain certain conditions could require us to cease operations on the affected land or find alternative locations for our operations at increased costs, any of which could have a material adverse effect on our business, financial condition and results of operations.
Sable is also working with State Parks on the terms of a long-term easement agreement Our loss of any of these surface use agreements, rights-of-way or other 31 Table of Contents easement rights through lapse or failure to satisfy or maintain certain conditions could require us to cease operations on the affected land or find alternative locations for our operations at increased costs, any of which could have a material adverse effect on our business, financial condition and results of operations.
While we have done extensive title diligence in advance of the Business Combination and typically obtain title opinions prior to commencing drilling operations on a lease or in a unit, the failure of title or other defects or deficiencies may not be discovered until after a well is drilled, in which case we may lose the lease and the right to produce all or a portion of the minerals under the property. 27 Table of Contents We do not own all of the land on which our assets are located or all of the land that we must traverse in order to conduct our operations.
While we have done extensive title diligence in advance of the Business Combination and typically obtain title opinions prior to commencing drilling operations on a lease or in a unit, the failure of title or other defects or deficiencies may not be discovered until after a well is drilled, in which case we may lose the lease and the right to produce all or a portion of the minerals under the property.
The insurance we maintain against earthquakes, mudslides, fires and other natural disasters would not be adequate to cover a total loss of our facilities, may not be adequate to cover our losses in any particular case and may not continue to be available to us on acceptable terms, or at all.
The insurance we maintain against earthquakes, mudslides, fires and other natural disasters would not be adequate to cover a total loss of our facilities, may not be adequate to cover our losses in any particular case and may not continue to be available to us on acceptable terms, or at all. 38 Table of Contents Increasing attention to environmental, social and governance (“ESG”) matters may impact our business.
We may not be insured for, or our insurance may be inadequate to protect us against, these risks. Expenses not covered by our insurance could have a material adverse effect on our financial position and results of operations.
We may incur substantial losses and be subject to substantial liability claims as a result of catastrophic events. We may not be insured for, or our insurance may be inadequate to protect us against, these risks. Expenses not covered by our insurance could have a material adverse effect on our financial position and results of operations.
These laws and regulations may impose numerous obligations applicable to our operations, 30 Table of Contents including the ability to obtain a permit before conducting our operations, including regulated drilling activities; the restriction of types, quantities and concentrations of materials that can be released or discharged into or through the environment; the limitation or prohibition of drilling, production and transportation activities on certain lands lying within wilderness, wetlands, seismically active areas and other protected or preserved areas; the application of specific health and safety criteria addressing worker protection; and the imposition of substantial liabilities for pollution and natural resources damages potentially resulting from our operations.
These laws and regulations may impose numerous obligations applicable to our operations, including regulated drilling activities; operation of the Santa Ynez Pipeline System; installation and use of an OS&T; the restriction of types, quantities and concentrations of materials that can be released or discharged into or through the environment; required authorizations for, or the limitation or prohibition of, drilling, production and transportation activities on certain lands lying within wilderness, wetlands, seismically active, park and recreation areas and other protected or preserved areas; the application of specific health and safety criteria addressing worker protection; and the imposition of substantial liabilities for pollution and natural resources damages potentially resulting from our operations.
We will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of our internal control over financial reporting, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting.
These additional obligations will require us to dedicate internal resources, engage outside consultants, and adopt a detailed work plan to assess and document the adequacy of internal controls over financial reporting, continue steps to improve control processes, as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal controls over financial reporting.
If any action, the subject matter of which is within the scope of the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “ foreign action ”) in the name of any holder of our warrants, such holder will be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “ enforcement action ”), and (y) having service of process made upon such Warrant Holder in any such enforcement action by service upon such Warrant Holder’s counsel in the foreign action as agent for such Warrant Holder. 40 Table of Contents This choice-of-forum provision may limit a Warrant Holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits.
Any person or entity purchasing or otherwise acquiring any interest in any of our warrants will be deemed to have notice of and to have consented to the forum provisions in our warrant agreement. 44 Table of Contents If any action, the subject matter of which is within the scope of the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “ foreign action ”) in the name of any holder of our warrants, such holder will be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “ enforcement action ”), and (y) having service of process made upon such Warrant Holder in any such enforcement action by service upon such Warrant Holder’s counsel in the foreign action as agent for such Warrant Holder.
There has been increased focus by government agencies on such transactions, and we expect that increased focus to continue, and we may be subject to increased scrutiny by the SEC and other government agencies on holders of our securities as a result, which could adversely affect the price of our Common Stock. 38 Table of Contents The NYSE may not continue to list our securities, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
There has been increased focus by government agencies on such transactions, and we expect that increased focus to continue, and we may be subject to increased scrutiny by the SEC and other government agencies on holders of our securities as a result, which could adversely affect the price of our Common Stock.
The IRA contains hundreds of billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
On August 16, 2022, President Biden signed into law the IRA. The IRA contains hundreds of billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting 39 Table of Contents infrastructure and carbon capture and sequestration, amongst other provisions.
If the NYSE delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market.
In order for our securities to remain listed on the NYSE, we must maintain certain financial, distribution and stock price levels. If the NYSE delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over‑the‑counter market.
Any limitation in the availability of those facilities could interfere with our ability to market our oil, natural gas and NGL production. • Loss of our key executive officers or other key personnel, or an inability to attract and retain such officers and personnel, could negatively affect our business and, in one instance, could cause a default under the primary agreement governing our existing indebtedness. • We may incur losses as a result of title defects or deficiencies in our properties. • We do not own all of the land on which our assets are located or all of the land that we must traverse in order to conduct our operations.
Any limitation in the availability of those facilities could interfere with our ability to market our oil, natural gas and NGL production. • We may incur losses as a result of title defects or deficiencies in our properties. • We do not own all of the land on which our assets are located or all of the land that we must traverse in order to conduct our operations.
In order to restart production we are required to obtain a series of permits or regulatory approvals from, among other agencies, OSFM. The laws and procedures governing these and other permits and regulatory approvals often allow third parties, including environmental groups, to challenge the draft permits and/or permit approvals through the relevant agencies and other administrative appeal processes.
The laws and procedures governing these and other permits and regulatory approvals often allow third parties, including environmental groups, to challenge the draft permits and/or permit approvals through the relevant agencies and other administrative appeal processes.
These groups may also file lawsuits that delay or prevent the issuance of the approvals through an injunction and/or prevailing on the legal merits. In addition, these groups may leverage the increased public attention and concern with respect to climate change and other environmental and social impacts in order to encourage government officials to withhold or delay the necessary approvals.
In addition, these groups may leverage the increased public attention and concern with respect to climate change and other environmental and social impacts in order to encourage government officials to withhold or delay the necessary approvals or require additional approvals.
Moreover, parties concerned about the potential effects of climate change have directed their attention at sources of funding for energy companies, which has resulted in certain financial institutions, funds and other sources of capital, restricting or eliminating their investment in oil and natural gas activities.
Moreover, parties concerned about the potential effects of climate change have directed their attention at sources of funding for energy companies, which has resulted in certain financial institutions, funds and other sources of capital, restricting or eliminating their investment in oil and natural gas activities. 35 Table of Contents Climate change legislation or regulations restricting emissions of “greenhouse gases,” or GHGs, could result in increased operating costs and reduced demand for the oil, natural gas and NGLs we expect to produce.
The existence of a material title deficiency can render a lease worthless and can adversely affect our results of operations and financial condition.
We may incur losses as a result of title defects or deficiencies in our properties. The existence of a material title deficiency can render a lease worthless and can adversely affect our results of operations and financial condition.
If actual decommissioning costs exceed such estimates, or we are required to provide a significant amount of collateral in cash or other security as a result of a revision to such estimates, our financial condition, results of operations and cash flows may be materially adversely affected. 36 Table of Contents We may be required to post cash collateral pursuant to our agreements with sureties, letter of credit providers or regulators under our existing or future bonding or other arrangements, which may have a material adverse effect on our liquidity and our ability to execute our capital expenditure plan and our asset retirement obligation plan and comply with the agreements governing our existing or future indebtedness.
We may be required to post cash collateral pursuant to our agreements with sureties, letter of credit providers or regulators under our existing or future bonding or other arrangements, which may have a material adverse effect on our liquidity and our ability to execute our capital expenditure plan and our asset retirement obligation plan and comply with the agreements governing our existing or future indebtedness.
New laws and regulations continue to be enacted, particularly at the state level, and, under the Biden Administration, the long-term trend of more expansive and stringent environmental legislation and regulations applied to the crude oil and natural gas industry could continue, resulting in increased costs of doing business and consequently affecting profitability.
New laws and regulations continue to be enacted, particularly at the state level, and environmental legislation and regulations applied to the crude oil and natural gas industry could continue, resulting in increased costs of doing business and consequently affecting profitability. Additionally, any changes in environmental regulations related to biodiversity protection could impose further operational constraints and costs.
Many of these risks are heightened for us due to the fact that most of our equipment has been shut-in for more than nine years.
Many of these risks are heightened for us due to the fact that some of our equipment has not been used for petroleum production or transportation for more than ten years.
Many of these risks are heightened for us due to the fact that most of our equipment has been shut-in for more than eight years.
Many of these risks are heightened for us due to the fact that some of our equipment has not been used for petroleum production or transportation for more than ten years.
In addition, any failure by us to comply with applicable laws, regulations or rules, as interpreted and applied, could have a material adverse effect on our business and results of operations. We are an “emerging growth company” and the reduced reporting and disclosure requirements applicable to emerging growth companies could make our Common Stock less attractive to investors.
In addition, any failure by us to comply with applicable laws, regulations or rules, as interpreted and applied, could have a material adverse effect on our business and results of operations. We no longer qualify as an “emerging growth company” and will be required to comply with certain provisions of the Sarbanes-Oxley Act.
Flores, our Chairman and Chief Executive Officer, remains directly and actively involved in the day-to-day management of our business, subject to the right of the holder of such indebtedness to approve his replacement, such approval not to be unreasonably withheld. We may incur losses as a result of title defects or deficiencies in our properties.
Additionally, the Senior Secured Term Loan requires that James C. Flores, our Chairman and Chief Executive Officer, remains directly and actively involved in the day-to-day management of our business, subject to the right of the holder of such indebtedness to approve his replacement, such approval not to be unreasonably withheld.
There is no guarantee that we will have sufficient cash to restart production of the SYU Assets. Until we restart production of the SYU Assets, we will not generate any revenue or cash flows from operations. We will rely on cash on hand to fund the operations necessary to restart production of the SYU Assets.
There is no guarantee that we will have sufficient cash to recommence oil sales. Until we recommence oil sales, either via the Santa Ynez Pipeline System or the OS&T Strategy, we will not generate any revenue or cash flows from operations and will rely on cash on hand to fund the operations necessary to recommence oil sales.
The terms on which we would be able to obtain any refinancing of the Senior Secured Term Loan Agreement will depend on market conditions at the time of any such refinancing.
Our ability to obtain any refinancing of the Senior Secured Term Loan, and the terms of any such refinancing, will depend on market conditions at the time of any such refinancing. There can be no assurance that we will be able to obtain such refinancing on terms commercially acceptable to us, or at all.
In addition, we could be subject to sanctions or investigations by the stock exchange on which our Common Stock is listed, the SEC and other regulatory authorities. Future sales, or the perception of future sales, of our Common Stock by us or our existing stockholders in the public market could cause the market price for our Common Stock to decline.
Future sales, or the perception of future sales, of our Common Stock by us or our existing stockholders in the public market could cause the market price for our Common Stock to decline.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeManagement will complete implementation of the action items during 2025, which we intend to test periodically for effectiveness. No Previous Material Cybersecurity Threats As of the date of this report, we are not aware of any previous cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company.
Biggest changeNo Previous Material Cybersecurity Threats As of the date of this report, we are not aware of any previous cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company. However, we acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains.
Item 1C. Cybersecurity Processes for Assessing, Identifying, and Managing Cybersecurity Risks Since the completion of the Business Combination on February 14, 2024, management has been working to create a defined cybersecurity risk management program, through the addition of enhanced applications to identify and mitigate risks.
Item 1C. Cybersecurity Processes for Assessing, Identifying, and Managing Cybersecurity Risks Since the completion of the Business Combination on February 14, 2024, Sable management has been working to create a defined cybersecurity risk management program, through the addition of enhanced applications to identify and mitigate risks.
As part of its oversight, our audit committee and certain members of the Company’s management will meet quarterly to discuss ongoing initiatives and to facilitate coordination between Company stakeholders. Annually, our Vice President of Information Technology will review the Company’s cybersecurity risk management program with our audit committee and Board.
As part of its oversight, our audit committee and certain members of the Company’s management will meet periodically to discuss ongoing initiatives and to facilitate coordination between Company stakeholders. Annually, our Vice President of Information Technology will review the Company’s cybersecurity risk management program with our audit committee and Board.
During 2024 the Company engaged and managed an experienced third party vendor, specializing in cybersecurity, to conduct a Company wide cybersecurity risk assessment. The assessment included a multi-phase approach consisting of open-source intelligence gathering, network system penetration testing of the Company's internal, external, and wireless networks, and targeted social engineering through strategic phishing, vishing, and smishing campaigns.
During 2025, the Company engaged an experienced third-party vendor, specializing in cybersecurity, to conduct a Company-wide cybersecurity risk assessment. The assessment included a multi-phase approach consisting of open-source intelligence gathering, network system penetration testing of the Company’s internal, external, and wireless networks, and targeted social engineering through strategic phishing, vishing, and smishing campaigns.
Action items and preventative recommendations were identified by management and are being incorporated into the Company’s information security incident response plan, which is designed to follow the National Institute of Standards and Technology Cybersecurity Framework 2.0 standards and practices for identifying and mitigating cybersecurity incidents.
Action items and preventative recommendations were identified by Sable management and are being incorporated into the Company’s information 46 Table of Contents security incident response plan, which is designed to follow the National Institute of Standards and Technology Cybersecurity Framework 2.0 standards and practices for identifying and mitigating cybersecurity incidents.
Risk Factors” for additional information about the risks to our business associated with a breach or compromise to our information technology systems. Board of Directors’ Oversight of Cybersecurity Risks The audit committee of our Board is responsible for the oversight of risks from cybersecurity threats.
Risk Factors ” for additional information about the risks to our business associated with a breach or compromise to our information technology systems. Board of Directors’ Oversight of Cybersecurity Risks The audit committee of our Board is responsible for the oversight of risks from cybersecurity threats.
A successful attack on our information or operational technology systems could have material consequences for the Company. While we intend to devote resources to our security measures to protect our systems and information during 2025, these measures cannot provide absolute security. See “Item 1A.
A successful attack on our information or operational technology systems could have material consequences for the Company. While we intend to devote resources to our security measures to protect our systems and information during 2026, these measures cannot provide absolute security. See “ Item 1A.
Removed
However, we acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remains.
Added
Sable management implemented phase one of the action items during 2025 and expects to complete implementation of the remaining action items during 2026. Sable management intends to test and further refine our cyber risk management program periodically for effectiveness.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe own and operate 16 federal leases and subsea pipelines, which transport crude oil, natural gas and produced water from the platforms to the onshore processing facilities along with the pipeline assets Line 324 and Line 325.
Biggest changeWe own and operate 16 federal leases and the Santa Ynez Pipeline System, which includes subsea pipelines, which transport crude oil, natural gas and produced water from the platforms to the onshore processing facilities along with the pipeline assets, Pipeline Segments 324 and 325.
Line 325 is a 30-inch, approximately 113 mile long crude oil pipeline that extends from the Gaviota Pump Station in Santa Barbara County, California to the 30-inch pig receiver located in Pentland Station in Kern County, California with an intermediate station at Sisquoc mile post 38.5 in San Louis Obispo, California.
Pipeline Segment 325 is a 30-inch, approximately 113 mile long crude oil pipeline that extends from the Gaviota Pump Station in Santa Barbara County, California to the 30-inch pig receiver located in Pentland Station in Kern County, California with an intermediate station at Sisquoc mile post 38.5 in San Louis Obispo, California.
Line 324 is a 24-inch, approximately 10.8 mile long crude oil pipeline that extends from the Los Flores Station on the California Coast to the Gaviota Pump Station in Santa Barbara County, California.
Pipeline Segment 324 is a 24-inch, approximately 10.8 mile long crude oil pipeline that extends from the Los Flores Station on the California Coast to the Gaviota Pump Station in Santa Barbara County, California.
For further information, see “ Business—Operations .” Our principal executive office is located at 845 Texas Avenue, Suite 2920, Houston, Texas 77002. We consider our current office space adequate for our current operations. 43 Table of Contents Item 3.
For further information, see “ Business—Operations .” Our principal executive office is located at 845 Texas Avenue, Suite 2800, Houston, Texas 77002. We consider our current office space adequate for our current operations.
Removed
Legal Proceedings See Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements,” Note 8 — Commitments and Contingencies for additional information regarding our legal proceedings.
Removed
Other Legal Proceedings As part of Sable’s normal business activities, it may be named as a defendant in litigation and other legal proceedings, including those arising from regulatory and environmental matters. If Sable determines that a negative outcome is probable and the amount of loss is reasonably estimable, we will accrue the estimated amount.
Removed
BSEE Matter On June 27, 2024, the Center for Biological Diversity and the Wishtoyo Foundation filed a complaint against Debra Haaland, Secretary of the U.S. Department of the Interior; BSEE; and Bruce Hesson, BSEE Pacific Regional Director in the U.S. District Court for the Central District of California (“the Court”) (Case No. 2:24-cv-05459).
Removed
Sable was not named as a party to the case, but on December 3, 2024, the Court granted Sable’s motion to intervene as a defendant to become a party to the lawsuit, and Sable vigorously contests the plaintiffs’ allegations. On January 29, 2025, the Court granted plaintiffs’ request to supplement and amend their complaint.
Removed
In the amended complaint, plaintiffs allege that BSEE: violated NEPA, OCSLA, and the APA in November 2023 by approving an extension to resume operations associated with the 16 oil and gas leases Sable holds in the SYU in federal waters offshore of California in the Santa Barbara Channel; and violated NEPA and the APA in September 2024 by approving applications for permits to modify for well reworking operations and by failing to conduct supplemental environmental analysis for oil and gas development and production in the SYU.
Removed
The complaint asks for the Court: to issue an order finding that BSEE violated NEPA, OCSLA and the APA; to vacate and remand the extension and the applications for permits to modify; order BSEE to complete NEPA analysis by a date certain; to prohibit BSEE from authorizing further extensions, applications for permits to modify, or any other authorizations for restarting production until it complies with NEPA, OCSLA and the APA; and for an award of costs and attorneys’ fees.
Removed
On December 20, 2024, the U.S. Department of Justice (in its capacity as counsel for the BSEE) filed a motion for voluntary remand without vacatur of BSEE’s November 2023 extension. Sable believes that the government’s prior extensions to resume operations were both appropriate and authorized. Moreover, under the government’s proposed remand, Sable’s operations on the SYU remain unaffected.
Removed
California Coastal Commission On September 27, 2024, the Coastal Commission issued Notice of Violation No.
Removed
V-9-24-0152 to Sable, which asserted that the safety valve installation work and certain maintenance and repair activities undertaken by Sable on the Pipelines in the Coastal Zone to address anomalies and install safety valves constituted unpermitted development activities under the Coastal Act and the County’s LCP.
Removed
Sable undertook the subject repair and maintenance work , including the safety valve installation work, based on its understanding that no new coastal development permit or other Coastal Act authorization was required, consistent with the County’s practice of authorizing certain repair work on the pipelines since they were first permitted and built over 30 years ago, as well as the County’s acknowledgement that it does not have permit authority or jurisdiction over the Company’s installation of the sixteen new safety valves in the County along the Pipelines in accordance with the 2021 CBAT Plan.
Removed
Following good faith negotiations with Coastal Commission staff, on November 12, 2024, the Coastal Commission issued Executive Director Cease and Desist Order No.
Removed
ED-24-CD-02 to Sable requiring Sable to, among other requirements, prepare and submit an Interim Restoration Plan and submit an application either to the Coastal Commission or the County to obtain a coastal development permit for the valve installation and other maintenance and repair work.
Removed
In compliance with the Order, Sable prepared, submitted, and implemented the Interim Restoration Plan as approved by Coastal Commission staff. Sable separately submitted certain applications to the County related to some of the maintenance and repair work that was subject to Notice of Violation No. V-9-24-0152. The Order expired on February 10, 2025.
Removed
Sable subsequently recommenced the repair and maintenance activities which were subject to Notice of Violation V-9-24-0152.
Removed
On February 12, 2025, the County delivered a letter to Sable confirming that certain Pipeline anomaly maintenance and repair work referenced in the Coastal Commission’s Notice of Violation V-9-24-0152 was “authorized by the existing permits (Final Development Plan, Major Conditional Use Permit, and associated Coastal Development Permits) and was analyzed in the prior Environmental Impact Report/Environmental Impact Statement (EIR/EIS).” The letter states in part that “[t]he County previously exercised its authority under its Local Coastal Program and delegated Coastal Act authority in approving the permits and the requested anomaly repair work is within the scope of those approved permits.” 44 Table of Contents In addition, also on February 12, 2025, the County delivered a letter to the Coastal Commission.
Removed
In this letter, the County responded to a request by the Coastal Commission to consent to consolidated coastal development permit process for certain activities undertaken and planned by Sable on the Pipelines.
Removed
The County’s letter also stated that certain maintenance and repair work on the Pipelines that was referenced in the Coastal Commission’s Notice of Violation V-9-24-0152 is “authorized by the existing permits (Final Development Plan, Major Conditional Use Permit, and associated Coastal Development Permits) and was analyzed in the prior Environmental Impact Report/Environmental Impact Statement.
Removed
Thus, no further application to or action by the County is required.” On February 14, 2025, Sable submitted a written response to the Coastal Commission’s Notice of Violation V-9-24-0152 detailing that, consistent with the County’s letters, certain of the alleged unpermitted development subject to the Notice of Violation was previously approved and that no further coastal development permit is required.
Removed
On February 16, 2025, the Coastal Commission sent Sable a “Notice Prior to Issuance of Executive Director Cease and Desist Order” related to certain of Sable’s Pipeline repair and maintenance activities and safety valve installation work.
Removed
On February 17, 2025, Sable replied to the Coastal Commission with a letter stating that the “Coastal Act does not authorize the issuance of an [Executive Director Cease and Desist Order] under the present circumstances” and that “Sable intends to proceed with the anomaly repair work authorized by the County in its February 12, 2025 letter.” On February 18, 2025, Sable Offshore Corp. filed a complaint against the Coastal Commission in the Superior Court of the State of California for the County of Santa Barbara (Case No. 25CV00974).
Removed
In the complaint, Sable challenges the Coastal Commission’s Notice of Violation V-9-24-0152 and Executive Director Cease and Desist Order ED-24-CD-02, in addition to other claims. Sable seeks a declaration that the Coastal Commission’s actions are unlawful, an injunction prohibiting further enforcement actions by the Coastal Commission, damages for the alleged taking of property rights, and attorneys' fees and costs.
Removed
Also on February 18, 2025, the Coastal Commission issued (i) Executive Director Cease and Desist Order No.
Removed
ED-25-CD-01 with respect to alleged unpermitted development activities located onshore along the Pipelines and (ii) a Notice of Intent to Commence Proceedings for a Commission Cease and Desist Order, Restoration Order, and Administrative Penalty Order with respect to alleged unpermitted development activities located onshore along the Pipelines and offshore at certain SYU facilities (the “EDCDO/NOI”).
Removed
On March 6, 2025, Sable submitted additional materials to the County regarding certain anomaly repair and maintenance work completed by the Company prior to its receipt of Notice of Violation V-9-24-0152. It is Sable’s understanding that such work was authorized by the Pipelines’ original environmental review, coastal development permits, and related approvals.
Removed
Sable has requested that the County confirm in writing that the previously completed work was previously approved and that no further coastal development permit is required.
Removed
On March 10, 2025, Sable submitted a Statement of Defense and written response to the EDCDO/NOI to the Coastal Commission, which detailed that all alleged unpermitted development activities located onshore along the Pipelines and offshore at certain SYU facilities as described in the EDCDO/NOI did not constitute unpermitted development or violations of the Coastal Act because such activities were previously analyzed, approved, and authorized under existing coastal development permits for the Pipelines and the SYU facilities.
Removed
As such, Sable denied that the Coastal Commission possessed the authority to issue the EDCDO/NOI or any cease and desist order, restoration order, or administrative penalty order with respect to such work.
Removed
California Regional Water Quality Control Board On December 13, 2024, the Regional Board issued three letters to Sable related to the Pipelines: (i) a Notice of Violation for an alleged unauthorized discharge of waste to waters of the state at an ephemeral stream in the County; (ii) a Directive to obtain regulatory coverage for an alleged unauthorized discharge of waste to waters of the state at the same ephemeral stream identified in item (i); and (iii) a First Notice of Non-Compliance for an alleged failure to obtain coverage under the Regional Board’s General Permit for Stormwater Discharges Associated with Industrial Activities in the County and San Luis Obispo and Kern Counties in California.
Removed
Sable believes that coverage under the Regional Board’s General Permit is not required. On January 10, 2025, Sable submitted a written response to each of the three letters to the Regional Board.
Removed
On January 22, 2025, the Regional Board issued two additional letters to the Company related to the Pipelines: (i) a Second and Final Notice of Non-Compliance for an alleged failure to obtain coverage under the Regional Board’s General Permit for Stormwater Discharges Associated with Industrial Activities in the County and San Luis Obispo and Kern Counties; and (ii) an order requiring Sable to submit a technical report responding to information requests associated with the discharge of earthen material to waters of the state.
Removed
On January 31, 2025, Sable submitted an application to the Regional Board for regulatory coverage under the Regional Board’s General Permit WQO 2004-004 for the alleged discharge waste to waters of the state, and on February 18, 2025, Sable submitted an application for CDFW for an after-the-fact Lake and Streambed Alteration Agreement (LSAA) to address the same site.
Removed
On February 21, 2025, Sable submitted to the Regional 45 Table of Contents Board, under protest, an application for coverage under the Regional Board’s General Permit for Stormwater Discharges. On March 8, 2025, Sable submitted its responses to the Regional Board’s order requiring the Company to submit a technical report.
Removed
California Department of Fish and Wildlife On December 17, 2024, CDFW issued a Notice of Potential Violation to Sable for alleged violations of the California Fish and Game Code at four separate sites within the County and San Luis Obispo County in California for alleged placement or fill of waste to waters.
Removed
On January 13, 2025, Sable submitted a written response to CDFW. Permit applications for after-the-fact permits for these four sites were submitted to the Regional Board and CDFW during the week of March 10, 2025.
Removed
Zaca Preserve Matter On October 3, 2024, plaintiff Zaca Preserve LLC filed a California state court complaint against Sable, its subsidiary PPC, Plains All American Pipeline LP, and Plains Pipeline LP. The case is captioned 24CV05483 and is pending in Santa Barbara Superior Court, Anacapa Division.
Removed
The plaintiff filed a First Amended Complaint on December 12, 2024, and served the complaint on Sable and PPC on December 18, 2024. The plaintiff was a class member of the Grey Fox litigation that was settled effective September 17, 2024, and chose to opt out of the final settlement class.
Removed
The plaintiff raises claims similar to the Grey Fox plaintiffs, namely that the pipeline easement on its property is no longer valid in light of the 2015 Refugio oil spill and the conduct of defendants.
Removed
The plaintiff brings contract and tort claims and seeks declaratory and injunctive relief determining his easement terminated and prohibiting defendants from accessing or using his easement to restart pipeline operations. The plaintiff seeks compensatory, exemplary, and statutory damages, costs, attorneys’ fees, and interest, as well as declaratory and injunctive relief.
Removed
By stipulation, Sable and PPC’s deadline to respond to the First Amended Complaint was March 4, 2025. Sable and PPC timely filed and served their Demurrer to the Plaintiff’s First Amended Complaint and Sable filed and served a Motion to Strike the First Amended Complaint. Sable and PPC intend to defend the case vigorously.
Removed
See Part II, Item 8 “Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements,” Note 8 — Commitments and Contingencies for additional information regarding this matter. Item 4. Mine Safety Disclosures Not applicable. 46 Table of Contents PART II

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

0 edited+2 added−208 removed0 unchanged
Removed
Item 3. Legal Proceedings for pending litigation concerning federal leases. Delivery Commitments Sable has no commitments to deliver a fixed and determinable quantity of its oil or natural gas production in the near future under any existing sales contracts. Derivative Activities Sable is not currently party to any commodity derivative contracts.
Added
Legal Proceedings See Part II, Item 8 “Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements,” Note 8 — Commitments and Contingencies for additional information regarding our legal proceedings. 47 Table of Contents Other Legal Proceedings As part of Sable’s normal business activities, it may be named as a defendant in litigation and other legal proceedings, including those arising from regulatory and environmental matters.
Removed
After the restart of production, Sable may enter into commodity derivative contracts with unaffiliated third parties to achieve more predictable cash flows and to reduce exposure to fluctuations in oil and natural gas prices.
Added
If Sable determines that a negative outcome is probable and the amount of loss is reasonably estimable, we will accrue the estimated amount. Item 4. Mine Safety Disclosures Not applicable. 48 Table of Contents PART II
Removed
Sable may enter into commodity derivative contracts at times and on terms desired to maintain a portfolio of commodity derivative contracts covering a specified percentage or range of its estimated production, typically over a one-to-three-year period, at any given point of time. It may, however, hedge more or less than this approximate amount from time to time.
Removed
Sable is not currently party to any interest rate swaps and substantially all of Sable’s indebtedness from the Business Combination consists of fixed-rate indebtedness. However, if Sable incurs variable rate indebtedness in the future it may periodically enter into interest rate swaps to mitigate exposure to market rate fluctuations by converting variable interest rates to fixed interest rates.
Removed
Sable will only enter into derivative contracts with creditworthy counterparties (generally, financial institutions) deemed by management as competent and competitive market makers. Those counterparties may include existing or future lenders or their affiliates. Sable will continue to evaluate the benefit of employing derivatives in the future.
Removed
Competition Sable operates in a highly competitive environment for securing trained personnel, contracting for drilling equipment, and from time to time leasing or otherwise acquiring new acreage. Many of its competitors possess and employ financial, technical and personnel resources substantially greater than Sable’s, which can be particularly important in the areas in which it operates.
Removed
As a result, Sable’s competitors may be able to pay more for productive oil and natural gas properties and exploratory prospects, as well as evaluate, bid for and purchase a greater number of properties and prospects than its financial or personnel resources permit.
Removed
Sable’s ability to acquire additional properties and to find and develop reserves and resources will depend on its ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment.
Removed
In addition, there is substantial competition for capital available for investment in the oil and natural gas industry and many of its competitors have access to capital at a lower cost than that available to Sable. Seasonality Sable’s offshore operations can be impacted by inclement weather from time to time.
Removed
The price Sable receives for natural gas production is typically impacted by seasonal fluctuations in demand for natural gas. The demand for natural gas typically peaks during the coldest months and tapers off during the milder months, with a slight increase during the summer to meet the demands of electric generators.
Removed
The weather during any particular season can affect this cyclical demand for natural gas. Seasonal anomalies such as mild winters or hot summers can lessen or intensify this fluctuation. In addition, certain natural gas users utilize natural gas storage facilities and purchase some of their anticipated winter requirements during the summer. This can also lessen seasonal demand fluctuations.
Removed
Recently there has been elevated 7 Table of Contents global demand for natural gas due to shortages exacerbated by geopolitical issues and conflicts but there is no assurance that demand will remain elevated.
Removed
Insurance In accordance with customary industry practice, Sable will maintain insurance against many, but not all, potential losses or liabilities arising from its operations and at costs that it believes to be economic. Sable will regularly review its risks of loss and the cost and availability of insurance and revise its insurance accordingly.
Removed
Its insurance will not cover every potential risk associated with its operations, including the potential loss of significant revenues. Sable can provide no assurance that its coverage will adequately protect it against liability from all potential consequences, damages and losses.
Removed
Prior to or upon the restart of production Sable expects to have insurance policies including the following: Commercial General Liability; Oil Pollution Act Liability; Primary Umbrella / Excess Liability; Pollution Legal Liability; Property; Charterer’s Legal Liability; Workers’ Compensation; Non-Owned Aircraft Liability; Employer’s Liability; Automobile Liability; Maritime Employer’s Liability; Directors & Officers Liability; U.S.
Removed
Longshore and Harbor Workers’; Employment Practices Liability; Energy Package/Control of Well; Crime; Loss of Production Income; Fiduciary Liability; and Cybersecurity. Sable monitors regulatory changes and comments and considers their impact on the insurance market, along with SYU’s overall risk profile.
Removed
As necessary, Sable expects to adjust its risk and insurance program to provide protection at a level it considers appropriate while weighing the cost of insurance against the potential and magnitude of disruption to its operations and cash flows.
Removed
Changes in laws and regulations could lead to changes in underwriting standards, limitations on scope and amount of coverage, and higher premiums, including possible increases in liability caps for claims of damages from oil spills.
Removed
Potential Opportunities for Carbon Sequestration Sable may pursue new opportunities on the Outer Continental Shelf (“OCS”) for long-term sequestration of carbon dioxide that may otherwise go into the atmosphere.
Removed
The 2021 Infrastructure Investment and Jobs Act gives the Secretary of the Interior new authority to allow the long-term sequestration of carbon dioxide on the OCS and directs the Secretary to promulgate regulations to implement the authority.
Removed
As the regulatory program is developed over time, Sable intends to evaluate the potential to leverage its infrastructure for carbon sequestration in light of the new program and applicable local, state, and federal permitting requirements.
Removed
Environmental, Occupational Safety and Health Matters and Regulations General Our oil and natural gas development and production operations are subject to stringent and complex federal, state and local laws and regulations governing the release or discharge of materials into the environment, health and safety aspects of its operations, or otherwise relating to protection of the environment and natural resources.
Removed
These laws and regulations impose numerous obligations applicable to the Company's operations, as well as future plug and abandonment and decommissioning activities, including the issuance of certain permits before conducting regulated drilling activities; the restriction of types, quantities and concentration of materials that can be released or discharged into or through the environment; the limitation or prohibition of drilling activities on certain lands lying within protected or preserved areas; the application of specific health and safety criteria addressing worker protection; and the imposition of substantial liabilities for pollution and natural resources damages potentially resulting from its operations.
Removed
Numerous governmental authorities, such as the EPA, BSEE, PHMSA, OSFM, California Department of Conservation’s Geologic Energy Management Division (“CalGEM”), Coastal Commission, CDFW, Regional Board, and the SLC, and other governmental agencies have the power to enforce compliance with these laws and regulations and the permits issued 8 Table of Contents under them, often requiring difficult and costly compliance or corrective actions.
Removed
Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative, civil or criminal penalties, the imposition of investigatory or remedial obligations, injunctive relief, the suspension or revocation of necessary permits, licenses and authorizations, the requirement that additional pollution controls be installed and in some instances, the issuance of orders limiting or prohibiting some or all of its operations.
Removed
We may also experience delays in obtaining or be unable to obtain required permits, including authorizations necessary to restart the Pipelines or maintain operations, which may delay or interrupt our operations and limit its growth and revenue. In addition, the long-term trend in environmental regulation has been to place more restrictions and limitations on activities that may affect the environment.
Removed
SYU’s costs of compliance may increase if existing laws and regulations are revised or reinterpreted, or if new laws and regulations become applicable to its operations. Changing perspectives within the Executive Branch of the U.S. federal government and environmental litigation involving the validity of certain regulatory requirements associated with exploration, development and decommissioning may materially impact our compliance costs.
Removed
Consequently, SYU’s costs of compliance may increase if existing laws and regulations are revised or reinterpreted, or if new laws and regulations become applicable to its operations.
Removed
Under certain environmental laws that impose strict as well as joint and several liability, SYU may be required to remediate contaminated properties currently or formerly owned or operated by it or facilities of third parties that received waste generated by its operations, regardless of whether such contamination resulted from its conduct or the conduct of others that was in compliance with all applicable laws at the time of such conduct.
Removed
In addition, claims for damages to persons or property, including natural resources, may result from the environmental, health and safety impacts of its operations. Moreover, public interest in the protection of the environment has increased in recent years.
Removed
New laws and regulations continue to be enacted, particularly at the state level, and the long-term trend of more expansive and stringent environmental legislation and regulations applied to the crude oil and natural gas industry could continue, resulting in increased costs of doing business and consequently affecting profitability.
Removed
To the extent new or more stringent laws are enacted or other governmental action is taken that restricts drilling or imposes more stringent and costly operating, waste handling, disposal and cleanup requirements, our business, prospects, financial condition or results of operations could be materially adversely affected.
Removed
The following is a summary of the more significant existing environmental, occupational safety and health laws and regulations to which our business operations are subject and for which compliance may have a material adverse impact on its capital expenditures, results of operations or financial position.
Removed
Offshore Operations Our oil and gas operations are conducted on offshore leases in federal waters and those operations are regulated by agencies such as the Bureau of Ocean Energy Management (“BOEM”) and BSEE, which have broad authority to regulate our oil and gas operations. BOEM is responsible for managing environmentally and economically responsible development of the nation’s offshore resources.
Removed
Its functions include offshore leasing, resource evaluation, review and administration of oil and gas exploration and development plans, renewable energy development, and National Environmental Policy Act (“NEPA”) analysis and environmental review. Lessees must obtain BOEM approval for exploration and development and production plans prior to the commencement of offshore operations.
Removed
BOEM generally requires that lessees have substantial net worth, post supplemental bonds or provide other acceptable assurances that the lease obligations will be met.
Removed
In April 2024, BOEM published a final rule that substantially revises the financial assurance requirements applicable to offshore oil and gas operations by requiring certain oil, gas, and sulfur lessees; right-of-use and easement grant holders; and pipeline right-of-way grant holders to obtain supplemental financial assurance for decommissioning activities on OCS leases, rights-of-way and rights-of-use and easements.
Removed
This rule is included in Secretary's Order 3418 implementing President Trump’s Unleashing American Energy executive order for suspension, revision or rescission. BSEE is responsible for safety and environmental oversight of offshore oil and gas operations.
Removed
Its functions include the development and enforcement of safety and environmental regulations, permitting offshore exploration, development and production, inspections, offshore regulatory programs, oil spill response and training and environmental compliance programs.
Removed
BSEE regulations require offshore production facilities and pipelines located on the OCS to meet stringent engineering and construction specifications, and BSEE has proposed and/or promulgated additional safety-related regulations concerning the design and operating procedures of these facilities and pipelines, including regulations to safeguard against or respond to well blowouts and other catastrophes.
Removed
BSEE regulations also restrict the flaring or venting of natural gas, prohibit the flaring of liquid hydrocarbons and govern the plugging and abandonment of wells located 9 Table of Contents offshore and the installation and removal of all fixed drilling and production facilities.
Removed
In April 2023, BSEE issued a final rule clarifying and providing transparency to the process by which BSEE will enforce decommissioning obligations on existing lessees and rights-of-use and easement grant holders.
Removed
BSEE’s final rule adopted new timeframes for predecessors to respond to a decommissioning order to perform accrued decommissioning obligations, and clarified that right-of-use and easement grant holders also accrue decommissioning obligations. BOEM and BSEE have adopted regulations providing for enforcement actions, including civil penalties and lease forfeiture or cancellation for failure to comply with regulatory requirements for offshore operations.
Removed
If we fail to pay royalties or comply with safety and environmental regulations, BOEM and BSEE may take action that seeks the curtailment, suspension, or termination of our operations and we may be subject to civil or criminal liability.
Removed
Additionally, delays in the approval or refusal of plans and issuance of permits by BOEM or BSEE because of staffing, economic, environmental, legal or other reasons (or other actions taken by BOEM or BSEE) could adversely affect SYU’s offshore operations. The requirements imposed by BOEM and BSEE regulations are frequently changed and subject to new interpretations.
Removed
Also, in addition to permits and approvals required by BOEM and BSEE, approvals and permits may be required from other agencies for the oil and gas operations associated with SYU’s properties, such as the U.S. Coast Guard, the EPA, U.S. Department of Transportation, U.S.
Removed
Army Corps of Engineers and state and local authorities, such as the Coastal Commission, California State Parks and the SLC. Hazardous Substances and Waste Handling Our operations are subject to environmental laws and regulations relating to the management and release of hazardous substances, solid and hazardous wastes and petroleum hydrocarbons.
Removed
These laws generally regulate the generation, storage, treatment, transportation and disposal of solid and hazardous waste and may impose strict and, in some cases, joint and several liability for the investigation and remediation of affected areas where hazardous substances may have been released or disposed.
Removed
The Comprehensive Environmental Response, Compensation and Liability Act, as amended (“CERCLA”), also referred to as the Superfund law and comparable state laws, impose liability, without regard to fault or the legality of the original conduct, on certain potentially responsible parties.
Removed
These persons include current owners or operators of the site where a release of hazardous substances occurred, prior owners or operators that owned or operated the site at the time of the release or disposal of hazardous substances and companies that disposed or arranged for the disposal of the hazardous substances found at the site.
Removed
Under CERCLA, these persons may be subject to strict and joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources and for the costs of certain health studies.
Removed
CERCLA also authorizes the EPA and, in some instances, third parties to act in response to threats to the public health or the environment and to seek to recover the costs they incur from the responsible classes of persons.
Removed
Despite the “petroleum exclusion” of Section 101(14) of CERCLA, which currently encompasses natural gas, we may nonetheless handle hazardous substances within the meaning of CERCLA, or similar state statutes, in the course of its ordinary operations and as a result, may be jointly and severally liable under CERCLA for all or part of the costs required to clean up sites at which these hazardous substances have been released into the environment.
Removed
Also, comparable state statutes may not contain a similar exemption for petroleum, and it is also not uncommon for neighboring landowners and other third parties to file common law-based claims for personal injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment.
Removed
In addition, we may have liability for releases of hazardous substances at its properties by prior owners or operators or other third parties. The Oil Pollution Act is the primary federal law imposing oil spill liability.
Removed
The Oil Pollution Act contains numerous requirements relating to the prevention of, and response to petroleum releases into waters of the United States, including the requirement that operators of offshore facilities and certain onshore facilities near or crossing waterways must maintain certain significant levels of financial assurance to cover potential environmental cleanup and restoration costs.
Removed
Under the Oil Pollution Act, strict, joint and several liability may be imposed on “responsible parties” for all containment and cleanup costs and certain other damages arising from a release, including, but not limited to, the costs of responding to a release of oil to surface waters and natural resource damages resulting from oil spills into or upon navigable waters, adjoining shorelines or in the exclusive economic zone of the United States.
Removed
A “responsible party” includes the owner or operator of an onshore facility.
Removed
The Oil Pollution Act establishes a liability limit for onshore facilities, but these liability limits may not apply if: a spill is caused by a party’s gross negligence or willful misconduct; the spill resulted from violation of a federal safety, construction or operating regulation; or a party fails to report a spill or to cooperate fully in a cleanup.
Removed
We are also subject to analogous state statutes that impose liabilities with respect to oil spills.
Removed
For example, the CDFW’s Office of Oil Spill Prevention and Response has adopted oil-spill prevention regulations that overlap with federal regulations. 10 Table of Contents We also generate solid wastes, including hazardous wastes, which are subject to the requirements of the Resource Conservation and Recovery Act, as amended (“RCRA”), and comparable state statutes.
Removed
Although RCRA regulates both solid and hazardous wastes, it imposes stringent requirements on the generation, storage, treatment, transportation and disposal of hazardous wastes. Certain petroleum production wastes are excluded from RCRA’s hazardous waste regulations. These wastes, instead, are regulated under RCRA’s less stringent solid waste provisions, state laws or other federal laws.
Removed
It is possible that these wastes, which could include wastes expected to be generated during our operations, could be designated as “hazardous wastes” in the future and, therefore, be subject to more rigorous and costly disposal requirements.
Removed
Indeed, legislation has been proposed from time to time in Congress to re-categorize certain oil and gas exploration and production wastes as “hazardous wastes.” Also, in December 2016, the EPA entered into a consent decree requiring it to review its regulation of oil and gas waste.
Removed
In April 2019, the EPA determined that revisions to the RCRA regulations were not required, concluding that any adverse effects related to oil and gas waste are more appropriately and readily addressed within the framework of existing state regulatory programs.
Removed
However, any such changes to state programs could result in an increase in our costs to manage and dispose of oil and gas waste, which could have a material adverse effect on its maintenance capital expenditures and operating expenses. It is possible that our oil and natural gas operations may require us to manage naturally occurring radioactive materials (“NORM”).
Removed
NORM is present in varying concentrations in sub-surface formations, including hydrocarbon reservoirs, and may become concentrated in scale, film and sludge in equipment that comes into contact with crude oil and natural gas production and processing streams. Some states have enacted regulations governing the handling, treatment, storage and disposal of NORM.
Removed
Administrative, civil and criminal penalties can be imposed for failure to comply with hazardous substance and waste handling requirements.
Removed
For ownership and operation of the idled SYU Assets, we believe that we are in substantial compliance with the requirements of CERCLA, Oil Pollution Act, RCRA and other applicable federal and related state and local laws and regulations, and that we hold all necessary and up-to-date permits, registrations and other authorizations required under such laws and regulations.
Removed
Although we believe that the costs of managing the Company's hazardous substances and wastes as they are presently classified are reflected in the Company's budget, any legislative or regulatory reclassification of oil and natural gas exploration and production wastes could increase its costs to manage and dispose of such wastes.
Removed
Water Discharges The Federal Water Pollution Control Act (the “ Clean Water Act ”), the Safe Drinking Water Act (“SDWA”), the Oil Pollution Act and analogous state laws, impose restrictions and strict controls with respect to the discharge of pollutants, including oil and hazardous substances, into navigable waters of the United States, as well as state waters.
Removed
The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. These laws and regulations also prohibit certain activity in wetlands unless authorized by a permit issued by the U.S. Army Corps of Engineers.
Removed
In May 2023, the Supreme Court issued an opinion in Sackett v. EPA that limited the jurisdiction of the U.S. Army Corps of Engineers to wetlands with a continuous surface connection to a permanent body of water connected to traditional navigable waters, such as streams, oceans, rivers, and lakes.
Removed
To the extent a new rule or further litigation expands the scope of the Clean Water Act’s jurisdiction or impacts available agency resources, we could face increased costs and/or delays with respect to obtaining permits for dredge and fill activities in wetland areas.
Removed
The EPA has also adopted regulations requiring certain oil and natural gas exploration and production facilities to obtain individual permits or coverage under general permits for storm water discharges.
Removed
Costs may be associated with the treatment of storm water or developing and implementing storm water pollution prevention plans, as well as for monitoring and sampling the storm water runoff from certain of our facilities. Some states also maintain groundwater protection programs that require permits or specify other requirements for discharges or operations that may impact groundwater conditions.
Removed
These same regulatory programs may also limit the total volume of water that can be discharged, hence limiting the rate of development and requiring us to incur compliance costs. Additionally, we are required to develop and implement spill prevention, control and countermeasure plans, in connection with on-site storage of significant quantities of oil.
Removed
These laws and any implementing regulations provide for administrative, civil and criminal penalties for any unauthorized discharges of oil and other substances in reportable quantities and may impose substantial potential liability for the costs of removal, remediation and damages. Additionally, obtaining permits has the potential to delay the development of natural 11 Table of Contents gas and oil projects.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Our Common Stock trades on the NYSE under the symbol “SOC”.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Our Common Stock trades on the NYSE under the symbol “SOC”. Holders On February 26, 2026, there were 41 holders of record of our Common Stock, and eight holders of record of our private placement warrants.
Removed
Recent Sales of Unregistered Securities On October 3, 2024, Sable Aviation, LLC (“Sable Aviation”), an entity controlled by our Chairman and Chief Executive Officer, and Sable entered into an Agreement of Purchase and Sale, pursuant to which Sable Aviation sold transportation assets and related equipment to Sable in exchange for 600,000 shares of Common Stock, valued at $15.2 million.
Added
Dividend Policy We have not paid any cash dividends on our Common Stock to date, and have no plans to do so until sometime after SYU sales of production resume.
Removed
Holders On March 14, 2025, there were 54 holders of record of our Common Stock, and eight holders of record of our private placement warrants. Securities Authorized for Issuance Under Equity Compensation Plans.
Added
The payment of cash dividends is subject to the discretion of our board of directors and may be affected by various factors, including our future earnings, financial condition, capital requirements, share repurchase activity, current and future planned strategic growth initiatives, levels of indebtedness, and other considerations our board of directors deem relevant.
Removed
The following table sets forth, for the periods indicated, Sable's equity incentive plans authorized activity: Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders — — — Equity compensation plans not approved by security holders — — 10,747,299 Total — — 10,747,299 In connection with the Business Combination, the Company adopted the Incentive Plan in order to facilitate the grant of cash and equity incentives to directors, employees, including named executive officers, and consultants to help attract and retain the services of these individuals.
Added
Stock Performance Graph The following performance graph compares the cumulative total stockholder return of the Company with the cumulative total returns of the Standard & Poor’s 500 Total Return Index (“S&P 500”) and the SPDR S&P Oil & Gas Exploration and Production ETF (“XOP”).
Removed
As of December 31, 2024, the aggregate number of shares of Common Stock that are available for issuance under the Incentive Plan is 10,747,299, provided that the number of shares of Common Stock authorized for issuance under the Incentive Plan is subject to an annual increase for ten years on the first day of each calendar year beginning January 1, 2024, in an amount equal to the lesser of (A) 5% of the aggregate number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares as is determined by the Board.
Added
Data for Flame is not included in the performance comparison below, as Flame was a special purpose acquisition company and did not have operating results prior to the closing of the Business Combination. Accordingly, Sable’s stock performance is presented only for periods subsequent to the closing of the Business Combination.
Added
The graph assumes an investment of $100 on December 31, 2020 for the S&P 500 and XOP, and December 31, 2023 for Sable. Item 6. [Reserved] 49 Table of Contents ITEM 7.
Added
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our consolidated financial statements and notes thereto in Item 8. Financial Statements and Supplementary Data of this report.
Added
In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions.
Added
Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those discussed in “ Cautionary Note Regarding Forward-Looking Statements ” and Part I, Item 1A.
Added
“ Risk Factors .” A discussion of the year ended December 31, 2024, compared to the year ended December 31, 2023, has been reported previously under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 17, 2025.
Added
Overview We are a Houston-based independent upstream company focused on responsibly developing the Santa Ynez Unit in federal waters offshore California. Our team has decades of experience safely operating in California and creating value for stakeholders.
Added
We have one reportable segment, the oil and gas segment, refer to Note 1 — Organization, and Business Operations and Going Concern and Note 2 — Significa nt Accounting Policies in Item 8. Financial Statements and Supplementary Data of this report for further discussion.
Added
For the purposes of this discussion, periods on or before February 13, 2024 reflect the financial position, results of operations and cash flows of SYU prior to the Business Combination, referred to herein as the “Predecessor,” and periods beginning on or after February 14, 2024 reflect the financial position, results of operations and cash flows of the Company as a result of the Business Combination, referred to herein as the “Successor.” 2025 Operational and Financial Highlights • On May 19, 2025, we announced that (i) as of May 15, 2025, we had restarted production at the Santa Ynez Unit and begun flowing oil production to Las Flores Canyon and (ii) we completed our anomaly repair program on Pipeline Segments 324 and 325 of the Santa Ynez Pipeline System as specified by the Consent Decree. • On May 23, 2025, we closed an upsized underwritten public offering of 10,000,000 shares of Common Stock at a public offering price of $29.50 per share.
Added
The gross proceeds from the offering, before deducting discounts and commissions and estimated expenses, were approximately $295.0 million. • On May 28, 2025, we announced that we successfully completed hydrotests of all segments of the Santa Ynez Pipeline System, satisfying the final operational condition to resume petroleum transportation through Pipeline Segments 324 and 325 as outlined in the Consent Decree. • As an alternative to the Santa Ynez Pipeline System, we announced that we are also pursuing an OS&T strategy to provide access to domestic and global markets via shuttle tankers for federal crude oil produced from the Santa Ynez Unit in the Pacific Outer Continental Shelf Area. • On November 10, 2025, we entered into subscription agreements to issue 45,454,546 shares of Common Stock in a private placement to institutional investors at a purchase price of $5.50 per share, raising $250.0 million in gross proceeds. • On November 24, 2025, we satisfied all conditions to effectiveness of the Second Amendment to the Senior Secured Term Loan, thereby extending the maturity date of the Senior Secured Term Loan to the earlier of (i) March 31, 2027 or (ii) the date falling 90 days after first sales of hydrocarbons.
Added
The Second Amendment increased the interest rate from ten percent (10%) per annum to fifteen percent (15%) per annum, compounded annually. • On December 17, 2025, PHMSA notified us that it concurred with our determination that the Santa Ynez Pipeline System is an interstate pipeline facility under the Pipeline Safety Act, pursuant to which PHMSA is vested with exclusive regulatory authority over interstate pipelines.
Added
In its notification, PHMSA additionally states that it considers the Santa Ynez Pipeline System to be an “active” pipeline according to PHMSA regulations. 50 Table of Contents • On December 23, 2025, PHMSA issued an emergency special permit for segments of the interstate Santa Ynez Pipeline System (specifically Pipeline Segments 324 and 325), related to cathodic protection and seam weld corrosion along Pipeline Segments 324 and 325. • We reported a net loss of $410.2 million, primarily attributable to production restart related operating expenses, general & administrative expenses, and non-cash interest expense, partially offset by a non-cash change in fair value of warrant liabilities. • We ended the year with short-term outstanding debt of $921.6 million, inclusive of paid-in-kind interest, and a cash and cash equivalents balance of $97.7 million.
Added
SYU Assets Beginning in 1968 and over the course of 14 years, EM consolidated more than a dozen offshore federal oil leases and organized them into a streamlined production unit known as the SYU. The SYU remained in continuous operation until 2015. In May 2015, Pipeline Segment 324 (then known as “Line 901”) experienced a leak while operated by Plains.
Added
The SYU suspended production after the Line 901 incident and the facilities were maintained in a safe state. On May 19, 2025, the Company announced that as of May 15, 2025, it had restarted production at the SYU and begun flowing oil production from six wells at SYU’s Platform Harmony to the Company’s storage and processing facilities at LFC.
Added
Prior to May 15, 2025, the SYU had not produced oil and gas since May 2015; however, all equipment remained in place in an operation-ready state, requiring ongoing inspections, maintenance and surveillance. As part of these efforts, all equipment was drained, flushed and purged in 2016. The Santa Ynez Pipeline System was maintained in a safe state and regularly monitored.
Added
The discussion of the results of operations for the Predecessor periods below do not include the results from the Pipeline Segments 324 and 325, and the Pipeline Segments 324 and 325 are not included in the combined financial statements of the Predecessor included in the financial statements and related notes thereto included elsewhere in this Annual Report.
Added
Financial statements of the Pipeline Segments 324 and 325 have not been included because SEC guidance provides that the financial statements of recently acquired businesses such as the Pipeline Segments 324 and 325 need not be filed unless their omission would render Predecessors combined financial statements misleading or substantially incomplete.
Added
Based upon our quantitative and qualitative analysis, we do not believe omitting the financial statements of the Pipeline Segments 324 and 325 renders the Predecessor combined financial statements misleading or substantially incomplete. The Successor financial statements include the results from the Pipeline Segments 324 and 325 and the Pipeline Segments 324 and 325 are included in the consolidated financial statements.
Added
Outlook The future operating and financial performance of the Company is expected to be driven primarily by our ability to establish a lawful, reliable, and economic pathway to market crude oil and natural gas produced from the SYU, resume sustained offshore production, and manage regulatory, legal, and commodity price risks associated with its federal offshore and California onshore and offshore assets.
Added
Recommencing Oil Sales Our near-term outlook is highly dependent on our ability to recommence oil transportation through the Santa Ynez Pipeline System. As previously noted, PHMSA confirmed that the Santa Ynez Pipeline System is classified as active interstate pipeline subject to federal jurisdiction under the Pipeline Safety Act.
Added
Additionally, we received an Emergency Special Permit from PHMSA related to cathodic protection and seam weld corrosion along Pipeline Segments 324 and 325. This permit is conditional in nature and requires ongoing compliance with specified operational and reporting obligations, including enhanced integrity management, inspection, testing, and monitoring requirements. The emergency special permit expired on February 21, 2026.
Added
By letter dated February 13, 2026 to PHMSA, the Company committed to continued compliance with the conditions of the emergency special permit until PHMSA makes a determination on the Company’s application for Special Permit (which was submitted on January 22, 2026). On December 31, 2025, the U.S.
Added
Court of Appeals for the Ninth Circuit denied a motion to stay PHMSA’s approvals of the Company’s Restart Plan and Emergency Special Permit, allowing those approvals to remain in effect during the pendency of the appeal.
Added
While the appeal remains ongoing, the Company may continue to advance activities related to resuming petroleum transportation through Pipeline Segments 324 and 325, subject to satisfaction of all applicable regulatory, operational, and commercial requirements. 51 Table of Contents On January 23, 2026, a second petition was filed in the U.S.
Added
Court of Appeals for the Ninth Circuit by the State of California, also against the U.S. Department of Transportation; Sean Duffy, in his official capacity as Secretary of the U.S. Department of Transportation; PHMSA; and Paul Roberti, in his official capacity as Administrator of PHMSA.
Added
The second petition, filed by the State of California, Attorney General and OSFM, challenges the Emergency Special Permit, but also challenges PHMSA’s assertion of jurisdiction over the Santa Ynez Pipeline System. We cannot generate material oil sales without a functioning transportation solution.
Added
As a result, any delay, suspension, or revocation of PHMSA’s approvals, or any operational issue encountered during commissioning Pipeline Segments 324 and 325, could materially delay the resumption of commercial oil sales and adversely affect future revenues and cash flows.
Added
“Risk Factors—We are subject to complex federal, state, local and other laws, regulations and permits that could adversely affect the cost, manner, ability or feasibility of conducting our operations.” Offshore Storage and Treating Vessel (OS&T) Alternative In parallel with pursuing oil sales via Santa Ynez Pipeline System, we continue to evaluate an OS&T vessel as a potential alternative pathway to market crude oil.
Added
Under this concept, produced fluids would be processed offshore, stored on a floating vessel, and periodically offloaded to shuttle tankers for delivery to third-party purchasers. The OS&T Strategy is significantly more capital-intensive than the Santa Ynez Pipeline System, requiring an estimated capital investment of approximately $475.0 million, inclusive of vessel acquisition, configuration, offshore integration, regulatory compliance, and related infrastructure.
Added
Based on current assessments, we do not expect to commence commercial oil sales under an OS&T Strategy until approximately the fourth quarter of 2026, assuming timely execution, regulatory approvals, and availability of capital.
Added
While the OS&T Strategy could reduce reliance on the Santa Ynez Pipeline System, which may enhance our marketing strategy going forward by providing flexibility to sell production to additional purchasers through the OS&T rather than being limited to a purchaser under a pipeline-only sales configuration, it presents substantial execution, financing, regulatory, and operational risks.
Added
These risks include vessel availability, permitting complexity, higher operating costs, exposure to marine operational risks, and uncertainty regarding the economic returns relative to pipeline transportation.
Added
We have not made a final investment decision with respect to an OS&T vessel, and there can be no assurance that such a project would be pursued, financed, or completed on acceptable terms, if at all.
Added
See “ Risk Factors—Risks Associated with Our Operations—In order to commence operations pursuant to an OS&T offtake strategy, we will require clearances and permitting, including from BOEM ” and “ Risk Factors—Risks Associated with Our Operations—Our assumptions and estimates regarding the total costs associated with recommencing oil sales may be inaccurate. ” Legal and Regulatory Environment The Company’s assets are located in California, a jurisdiction with a complex regulatory framework and heightened environmental oversight.
Added
PHMSA’s approvals related to the Santa Ynez Pipeline System have been challenged by third parties through litigation, and the outcome of such proceedings is uncertain. Adverse court rulings, including the issuance of injunctions or stays, could delay or prevent pipeline operations regardless of the Company’s technical readiness.
Added
In addition to federal oversight, the Company remains subject to state and local regulatory agencies, including the California Geologic Energy Management Division and other environmental and land-use authorities.
Added
While these agencies do not directly regulate interstate pipeline safety, their actions may affect related permits, inspections, or operational approvals, which could influence the timing, cost, or feasibility of both pipeline and OS&T-based solutions.
Added
We are involved in various legal and regulatory proceedings, including matters related to our pipeline operations and permitting activities, which are at various stages of resolution; while these matters are subject to inherent uncertainty, we currently believe that the outcomes are not probable of resulting in a material loss and, accordingly, no litigation-related accruals have been recorded as of the reporting date.
Added
Refer to Part II, Item 8, “ Financial Statements and Supplementary Data – Notes to the Consolidated Financial Statements, Note 8 — Commitments and Contingencies ” for further information regarding ongoing litigation.
Added
Production Ramp-Up and Operational Execution Assuming a transportation solution is established, our future performance will depend on our ability to safely ramp up offshore production, manage operating costs, and maintain asset integrity following an extended period of curtailed operations.
Added
Restarting production from offshore facilities involves inherent operational risks, including mechanical failures, unplanned downtime, and higher-than-expected maintenance or remediation costs, any of which could adversely affect production volumes and operating margins. 52 Table of Contents Capital and Financing Requirements Until sustained commercial oil sales are achieved, our liquidity will depend on available cash balances, access to raise additional capital from investors, and the timing of expenditures related to regulatory compliance, litigation, offshore facility maintenance, and potential alternative transportation solutions.
Added
The OS&T vessel alternative, in particular, would require substantial external financing or strategic arrangements and could materially increase our leverage or dilution. There can be no assurance that such financing would be available on acceptable terms, or at all. Capital Expenditures.
Added
During 2025, we funded $417.6 million in development and other property, plant and equipment expenditures primarily by utilizing net cash provided by our financing activities and cash on hand. We currently estimate no remaining start-up expenses to recommence oil sales via the Santa Ynez Pipeline System, other than applicable legal expenses.
Added
Upon resuming petroleum transportation through the Santa Ynez Pipeline System, we anticipate approximately $100.0 million to $200.0 million in additional post-sales capital expenditures for 2026, primarily related to facilities, pipeline ramp-up activities, and other property, plant and equipment, depending on timing and excluding any OS&T-related capital expenditures.
Added
Alternatively, if we elect to pursue the OS&T Strategy, total anticipated 2026 capital expenditures are estimated to be approximately $475.0 million, including costs to acquire and purchase the vessel in addition to incremental investments associated with related infrastructure.
Added
Depending on the timing and outcome of regulatory approvals and the execution of commercial arrangements, we could incur capital expenditures beyond these ranges.
Added
We cannot provide any assurances that our assumptions used to estimate our liquidity requirements, our anticipated cost savings or reductions, or the costs required to achieve operations under the OS&T Strategy will be correct, as we have not previously undertaken such actions and as a consequence, our ability to predict such amounts is uncertain and may be impacted by factors outside of our control.
Added
Debt Financing. As of December 31, 2025, we had gross indebtedness of $921.6 million outstanding under the Senior Secured Term Loan, (refer to Note 6 — Debt to the consolidated financial statements).
Added
On November 3, 2025, we entered into the Second Debt Amendment, which became effective on November 24, 2025 following the completion of the Third PIPE Investment and satisfaction of all conditions to effectiveness.
Added
Pursuant to the Second Debt Amendment, the maturity date of the Senior Secured Term Loan was extended to the earlier of (i) March 31, 2027 or (ii) 90 days after the Company’s first sales of hydrocarbons.
Added
In connection with the Second Debt Amendment, the interest rate on the Senior Secured Term Loan increased from ten percent (10.0%) per annum to fifteen percent (15.0%) per annum, computed on a 360-day year, compounded annually, and payable in arrears on January 1 of each year.
Added
Notwithstanding the maturity extension, the Senior Secured Term Loan is classified as a current liability on the Company’s consolidated balance sheet as of December 31, 2025 due to management’s expected maturity date based on anticipated first sales from SYU.
Added
After we are able to recommence oil sales and improve our operating cash flows, we expect to pursue a refinancing of the Senior Secured Term Loan, which may include a new credit facility, term notes, or other debt capital market transactions.
Added
We believe that demonstrating sustained oil sales and cash flow generation in the future could improve our access to financing and potentially reduce our overall cost of capital. Any refinancing would be subject to market conditions, lender requirements, regulatory developments, and other factors outside our control.
Added
There can be no assurance that such a refinancing will be completed on favorable terms, or at all. Components of Results of Operations Revenue The Company has not had any substantial revenues since its inception. The Company’s various operating expenses are the principal metrics used to assess its performance. Operating Expenses • Operations and maintenance.
Added
The Company’s most significant costs to operate and maintain its assets are direct labor and supervision, power, repair and maintenance expenses, and equipment rentals. Fluctuations in commodity prices impact operating cost elements both directly and indirectly.
Added
For example, commodity prices directly impact costs such as power and fuel, which are expenses that increase (or decrease) in line with changes in commodity prices. Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as labor and equipment rentals. • Depreciation, depletion, amortization, and accretion.
Added
Depreciation, depletion and amortization are primarily determined under either the unit-of-production method or the straight-line method, which is based on estimated asset service life taking obsolescence into consideration. Since 2015 when production temporarily ceased, no depletion has been expensed for the Successor periods presented.
Added
However, depletion associated 53 Table of Contents with the current production has been capitalized to Inventory for produced barrels in storage at SYU (see further discussion in Note 2 — Significant Accounting Policies to the consolidated financial statements). An immaterial amount of depreciation was reflected for idle plants in the historical Predecessor financial statements.
Added
Also included in the Successor and Predecessor financial statements is the accretion associated with the Company’s estimated asset retirement obligations (“ARO”).
Added
The ARO liabilities are initially recorded at their fair value and then are accreted using the Company’s applicable discount rate over the period for the change in their present value until the estimated retirement of the asset. • General and administrative. General and administrative (“G&A”) costs are comprised of overhead expenditures directly and indirectly associated with operating the assets.
Added
These support services include information technology, risk management, corporate planning, accounting, cash management, human resources, and other general corporate services. For the Predecessor period, any general and administrative expenses that were not specifically identifiable to SYU were allocated to SYU for the period from January 1, 2024 to February 13, 2024.
Added
To calculate a reasonable allocation, aggregated historical benchmarking data from comparable companies with similar operated upstream assets was used to identify general and administrative expenses as a proportion of operating expenses. Increased general and administrative services may be required in the future, commensurate with planned operations activity levels. • Taxes other than income.
Added
Management anticipates future increases in ad valorem taxes, in line with the projected restarting sales of production volumes.
Added
Results of Operations This section discusses certain year-to-year comparisons between year ended December 31, 2025 (Successor) vs. the periods from January 1, 2024 through February 13, 2024 (Predecessor) and February 14, 2024 through December 31, 2024 (Successor), which should be read in conjunction with the consolidated financial statements and notes thereto in Item 8.
Added
Financial Statements and Supplementary Data of this report. The following table presents selected consolidated financial results of operations for the Successor and Predecessor periods presented. 54 Table of Contents Year Ended December 31, 2025 (Successor) vs. the periods from January 1, 2024 through February 13, 2024 (Predecessor) and February 14, 2024 through December 31, 2024 (Successor).
Added
The following table presents selected consolidated financial results of operations for the Successor and Predecessor periods presented.
Added
Successor Predecessor Increase (Decrease) (in thousands) Year Ended December 31, 2025 February 14—December 31, 2024 January 1—February 13, 2024 $ % Revenue Oil and gas sales $ — $ — $ — $ — — Total Revenue — — — — — Operating Expenses Operations and maintenance expenses 219,198 87,877 7,320 124,001 130 % Depletion, depreciation, amortization and accretion 12,888 9,734 2,627 527 4 % General and administrative expenses 176,197 229,140 1,714 (54,657) (24) % Total operating expenses 408,283 326,751 11,661 69,871 21 % Loss from operations (408,283) (326,751) (11,661) (69,871) 21 % Other (income) expenses: Change in fair value of warrant liabilities (89,203) 227,454 — (316,657) nm Other (income) expense (8,834) (4,193) 128 (4,769) nm Interest expense 88,245 67,314 — 20,931 nm Total other (income) expense, net (9,792) 290,575 128 (300,495) nm Loss before income taxes (398,491) (617,326) (11,789) 230,624 (37) % Income tax expense (benefit) 11,671 (48) — 11,719 nm Net loss $ (410,162) $ (617,278) $ (11,789) $ 218,905 (35) % nm: not meaningful Operating and maintenance expenses.
Added
Operating and maintenance expenses were $219.2 million for the year ended December 31, 2025, representing an increase of $124.0 million, or 130%, compared to $7.3 million for the period from January 1, 2024 through February 13, 2024 (Predecessor) and $87.9 million for the period February 14, 2024 through December 31, 2024 (Successor), respectively, or a combined $95.2 million.
Added
The increase in operating and maintenance expenses is primarily attributable to additional maintenance expenses incurred in connection with restart efforts, which includes a 37% increase in operations employee headcount since the prior year, $28.0 million related to operator rights expenditures, and $6.6 million related to restart incentive compensation, partially offset by $6.1 million of operating expense capitalized as Inventory on the consolidated balance sheet as of December 31, 2025.
Added
Operations and maintenance expenses are expected to remain elevated prior to our commencement of sales of production. Depletion, depreciation, amortization and accretion.
Added
Depletion, depreciation, amortization and accretion was $12.9 million for the year ended December 31, 2025, representing an increase of $0.5 million, or 4%, compared to $2.6 million for the period January 1, 2024 through February 13, 2024 (Predecessor) and $9.7 million for the period February 14, 2024 through December 31, 2024 (Successor), respectively, or a combined $12.4 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Removed
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item. 56 Table of Contents
Added
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Regulatory Risk The Company’s operations are subject to extensive regulation by federal, state, and local authorities, including regulatory oversight by BOEM, BSEE, and PHMSA. Additionally, California maintains a complex regulatory framework governing offshore and onshore oil and gas operations, pipeline transportation, environmental compliance, and permitting.
Added
Regulatory approvals required to resume petroleum transportation through or modify infrastructure may be subject to additional conditions, delays, or legal challenge, which could increase costs or affect the timing of planned activities. Certain regulatory matters and related uncertainties are discussed in Note 8 — Commitments and Contingencies to the consolidated financial statements.
Added
While the Company cannot reasonably quantify the financial impact of future regulatory actions, delays or changes in regulatory requirements could result in incremental capital expenditures, extended periods without revenue, or reduced cash flows once operations commence, which could adversely affect the Company’s liquidity as described in Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations .
Added
Debt Refinance and Liquidity Risk The Company currently has no operating revenues, and its outstanding indebtedness consists of seller-financed debt incurred in connection with the acquisition of its assets.
Added
As a result, the Company does not currently generate cash flows to service or refinance its debt and is dependent on the successful restart of SYU operations, access to external capital, and prevailing market conditions.
Added
The Company’s ability to refinance or repay its debt will be influenced by factors including 61 Table of Contents the timing of regulatory approvals, the commencement of oil sales, commodity prices, and capital market conditions.
Added
In the absence of operating revenues, adverse developments could have a material effect on the Company’s liquidity and its ability to meet debt obligations as they become due. Commodity Price Risk Upon commencement of production and oil sales, the Company expects its financial performance to be sensitive to fluctuations in crude oil prices.
Added
Changes in oil prices could materially affect revenues, operating cash flows, capital investment decisions, and the Company’s ability to service debt. Crude oil prices are subject to significant volatility driven by global supply and demand, geopolitical events, regulatory actions, and regional market dynamics, including those specific to California.
Added
While the Company may consider risk management activities in the future, it does not currently have commodity price hedging arrangements in place. Accordingly, a sustained decline in oil prices following the commencement of sales could adversely affect the economics of production and the Company’s financial condition. 62 Table of Contents

Other SOC 10-K year-over-year comparisons