Sable Offshore Corp（SOC）：Kiawah评论-监管风险与资产表现

Kiawah Commentary - Regulatory Risks & AssetPerformance CEO Jim Flores, CFO Greg Patrinelly, IR Harrison Breaud & Treasurer StuartDuenner attended.Investors focused on the regulatory risks, with discussionscentered on:(1)TRO preventing OSFM from certifying the pipelines and(2)theCCC injunction;(3)Mgmt discussed next steps and remain focused on TRObeing potentially lifted on July 18th;(4)SOC highlighted asset outperformancesuggesting potential upside if / when they are permitted to resume ops. (1) TRO Litigation & OSFM Certifying Consent Decree.Two weeks ago a Santa Barbara SuperiorCourt Judge placed a temporary restraining order on the California Office of the State Fire Marshal(OSFM) from certifying SOC’s pipelines 324 & 325 are in compliance with the Consent Decree andthus can be restarted. The restraining order remains in place until at least the preliminary injunctionmeeting on July 18th, 2025. SOC mgmt remain confident in the case they are putting forward atthe meeting and view a positive outcome. While the precise legal strategy was not discussed, SOCargues there is no irreparable risk from the pipeline restart. They assert that cathodic protection isonly one of many available methods to ensure pipeline safety and in order to be granted the waivers,SOC had to meet ~67 supplemental safety conditions. SOC notes the repair work was completedon May 18th under the existing Coastal Development Permit (CDP) issued by Santa Barbara Countyand that the pipelines have an existing EIR from 1986 (as well as a CDP). (2) CCC Injunction. Investors also asked about the recent court decision in the CCC case, in whichthe Court denied SOC's objection. SOC argued that the injunction prevents the company fromcomplying with federal regulations, while the Judge's ruling states that SOC has not adequatelyidentified the conflict with federal regulations and why the company cannot re-apply for a new CDP.SOC remains confident that their existing CDP is valid for the repair and maintenance work, but atthe conference, SOC mgmt downplayed the impact from this ongoing injunction as the anomalyrepairs and hydrotesting are complete. The next hearing for this case is scheduled for mid-October. (3) Next Steps?SOC notes that it is exploring all possible avenues to address the TRO. We believeSOC will first try to win the injunction hearing on July 18th but if an injunction is put into effect,SOC may try to appeal the decision to a federal court as the US government was a signatory tothe Consent Decree and the TRO prevents the OSFM from complying with the Consent Decree. Asa result of the TRO, SOC delayed its first sales target to August 2025 (from July 2025), but workcontinues on SYU offshore and onshore at Las Flores Canyon. SOC mgmt note they are completingthe final step of installing state of the art pipeline control panels. (4) The Asset?Mgmt continues to be positive on quality / performance indicators for the SYU asset.Mgmt noted that initial well productivity is >1,000bpd, while LT production guidance was basedon the wells producing at ~500bpd (tied to resource engineer expectations). With strong initialproductivity, SOC sees an avenue to either raising production or reducing capex in '26 to maximizeFCF. Mgmt sees no infrastructure constraints, given the asset produced at this level previously andthe pipeline can support production of ~125mbpd. Mgmt did emphasize that it is early and thatdecline rates need to be monitored, and will adjust production / reserve outlook accordingly. Lloyd Byrne * | Equity Analyst(212) 323-7528 | lloyd.byrne@jefferies.com Emma Schwartz * | Equity Analyst1 (212) 336-7254 | emma.schwartz@jefferies.com John Edelman * | Equity Analyst(212) 336-7412 | jedelman@jefferies.com Sam Burwell, CFA * | Equity Analyst+1 (212) 284-2114 | sburwell@jefferies.com Tara Bleustein * | Equity Associate+1 (212) 323-7595 | tbleustein@jefferies.com Company Description Sable Offshore Corp Sable Offshore Corp. is a Houston-based independent upstream company focused on responsibly developing the prolific Santa Ynez Unit in federalwaters offshore California. Company Valuation/Risks Sable Offshore Corp Our PT is derived from a DCF in which we apply a ~10% discount rate. SOC's risks relate to the regulatory process for restarting SYU and managingoperations post-start up. If SOC is unable to restart the SYU assets and repay the Paid-In-Kind (PIK) loan by March1st 2026, XOM is permitted toexercise a reassignment option and take ownership of SYU without any compensation to SOC. We value SOC on a DCF supported by a NAV. Analyst Certification: I, Lloyd Byrne, certify that all of the views expressed in this research report accurately reflect my personal views about the subject security(ies) and subjectcompany(ies). I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressedin this research report. I, Emma Schwartz, certify that all