Hello and welcome to the Sable Offshore Corp 2Q2026 earnings call. All participants will be in listen only during the prepared remarks. We will then go into a Q&A session. Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Harrison Brough, you may begin. Thank you, Alice. Good morning, everyone, and welcome to our second quarter 2026 earnings conference call. Joining me today to discuss our results are Jim Flores, Chairman and Chief Executive Officer, Caldwell Flores President and Chief Operating Officer, Gregory Patronelli, Executive Vice President and chief financial officer, and Anthony Dunner, Executive Vice PRESIDENT, GENERAL COUNSEL, AND SECRETARY, AS WELL AS VARIOUS OTHER MEMBERS OF THE SABLE TEAM. PLEASE REFER TO OUR WEBSITE TO DOWNLOAD A COPY OF OUR NEW INVESTOR PRESENTATION POSTED YESTERDAY, AS WELL AS OUR RECENTLY FILED FINANCIAL STATEMENTS, WHICH WILL BOTH BE DISCUSSED TODAY. WE WILL ACTIVELY DISPLAY THE PRESENT ON THIS WEBCAST AND REFENCE CERTAIN ITEMS BY PAGE NUMBER and then proceed to q a we will also be making statements during this call that are forward looking these statements are based on current expectations and assumptions and are subject to risk and uncertainties actual results could differ materially from those described in the forward-looking statements because of factors discussed in our earnings release in our investor presentation in the comments made during this conference call in our in our most recent form 10k forms 10-Q, and other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statements. With that, I will turn it over to Jim Flores to begin going through the investor presentation. Jim? Thanks, Harrison, and good morning, everyone. As promised, we said we'd have a conference call at some point in time. This is our first conference call for earnings from Sable Offshore, so welcome, everyone, After looking at page three of the presentation, it's more of the summary stuff you've seen before. But page four is the milestones achieved and next steps. And we've listed them all since the beginning of this saga in 25. And then the three updated ones is restarting production with Platform Heritage in April 26, refinance the senior secure term to July 26, and commence the commodity hedging program July 26. The next steps are restart production platform Hondo, which is expected at the end of September 26. Then we get a full fourth quarter and establish full 3P reserve report expected first quarter 27. And then we refinance the senior secured term B node and convertible senior unsecured nodes and potentially install a full sales buoy at San Ynez unit and continue to legally protect Sable's vested interests and pursue all monetary damages. Those are five big milestones ahead of us, and we expect the next 12 months to achieve those. On page five, which is our corporate update, we have operations we're going to go through extensively today. The second quarter, 26 exit rate, oil sales are 40,000 barrels a day. It represents a huge growth in what our oil sales have been prior to that. we kicked off a wireline campaign now that we have all the wells open or potentially open to to mitigate uh water influx and and really try to trim up our production to wherever been as efficiently as possible and uh we're working feverishly on platform hondo platform hondo's 45 year old platform was in badly bad need of uh of uh restorations that's probably the best best word for it but we're doing we're getting great work there we've got a great team and uh and so forth and just hoping we can hit that timing in september uh and then we're working with the refineries in the downstream we brought in a large quantity of oil for the california one short uh refinery market and we're we're walking our way through that process of making sure everybody's getting comfortable with our wall the quality of it and also the volume of it and we'll go into detail on that in another slide a regulatory legal we continue to wait on uh uh u.s district court uh for their findings and also the night circuit uh uh as we we've been side by side with u.S. federal government uh uh working along uh with the justice department to be uh in a situation where all the federal regulations that we were adhering to as sable offshore are being uh are being recognized recognized through the courts we'll continue to update that as good but there's no update today from that standpoint on the finance side we uh we completed the refinancing of july 2nd 2026 proceeds were entirely the former exxon mobile senior term that was really key because they had a lot of restrictions the exxons mobile senior term note that we uh now have a little more flexibility with the current financial structure it's not optimal for us at this point but it was a big big step for us and the commodity hedging program one of the things we put in place you'll see we've got some floor protection for a significant portion of our production just in case all the volatility goes the wrong wrong direction we'll be protected and then uh and we'll look at further balance sheet optimization in 27 once all our wells are on and our our reserve reports out there and uh and and we're at full power on the uh on on page four gregory i'm gonna turn it over to you and let you uh take us through the financing overview We did in a couple of the financial slots. Yeah, sure. Thanks, Jim. So page six, the refinancing overview, like Jim just mentioned. We completed our bridge refinancing in early July. That fully satisfied and took out the ExxonMobil seller note, seller financing, the prior senior secured term loan. We did so with a series of transactions, starting with the $675 million senior secured Term Loan B. This term loan B has a maturity of December 15th, 2028, and it was structured as a fully amortizing loan through the maturity of the security itself. So that's fully amorterizing through mandatory amortization of 2.5% per quarter in the back half of this year, stepping up to 5% per quarterly beginning in 2027. It also includes a 100% excess cash flow sweep feature, which could potentially accelerate that amortization depending on the prevailing commodity prices. It does have a 1.25 times the minimum takeout, and so we'll certainly be looking to de-lever on the amortizational front and the excess cashflow sweep front. But as Jim mentioned, when we achieve our additional milestones and get a full 3P reserve report, we will be pursuing phase two of the refinancing efforts. So I think we're very happy to complete this bridge financing, satisfy our obligations with the seller note ExxonMobil. but we certainly have uh room to improve on the on the interest rate front uh interest rate reduction and we look forward to uh approaching the market here in 2027. in addition to the 675 million dollar senior secure term loan b uh we issued we issued about 345 million dollars of convertible senior unsecured notes those notes the five year five-year notes uh july one third 2031 maturity six and a half percent coupon with a four dollar per share initial conversion price so overall we lowered our weighted average cost to debt but we certainly have a room to improve and looking forward to further optimizing the balance sheet in conjunction with those debt securities we put in place a zero borrowing base 500 million dollar revolving credit facility that was designed to allow us to commence that hedging program and fulfill our obligations under the terminal indeed meet those minimum hedging requirements by hedging 100 of our neville and sewell projected pdp production we have the ability to hedge beyond those minimums and we're currently evaluating uh adding additional volumes which we'll get into slide seven is a brief overview of our updated financial guidance which includes uh you know our sales and cost guidance uh like jim mentioned we we do have slightly elevated short-term uh marketing and gp and d deducts uh reflected here for the back half of 26. we'll get into why we think these issues will be alleviated here uh in the near term but it's it's yeah part and parcel of the the california energy market with all the regulatory headwinds and constraints our capital structure as we illustrated on the prior page an enterprise value of 1.9 billion equity value of 911 million at the four hundred to the four dollars and seventy five percent share price as of August 7th our financial objectives as we mentioned we fully plan to deliver under the terms of the new senior secure term loan B and or refinance and take out that paper as soon as possible after we issue the full 3P reserve report, where we get credit for all the PDP reserves that we will bring online at Hondo here in September, and also all of our PUD locations, which were not included in the prior interim Netherlands silver report. We'll continue to optimize the balance sheet with the phase two of our refinancing, lower our cost of debt and increase our maturity runway beyond 2028. And we will certainly opportunistically manage the convertible notes to minimize any potential dilution there. We have the ability to do that with cash. We'll progress our rating agency discussions in advance of this Phase 2 global refinancing of the balance sheet and look forward to continuing those discussions as well. Long-term, we still have a one-times net debt EBITDA leveraged target, and we fully plan to hit that metric. Like I mentioned, we're going to advance the hedging strategy by adding additional floor pricing protection, likely in the $65 to $70 barrel range to protect the downside relative to our current volumes. And then long-term post, call it phase two of the global refinancing. We plan to implement our shareholder return program and focus on reducing the share count with share repurchases and instituting a dividend at the appropriate time. Slide eight is our unlevered free cash flow guidance at strip pricing. So we're basically walking through and doing a little bit of math for you here, which leads into the following slide and the value proposition that Sable Offshore creates with the free cash flow profile today. So even with all of the marketing and crude quality constraints, near-term constraints, we're still projected to generate a midpoint of $152 million of unlevered free cash flow for the back half of 2026, and into 2027, based on a Brent oil price of $75 a barrel, we're projected to generate over $500 million of unlevered free cash flow. Slide 9, we believe that the current trading valuation of Sable doesn't fully reflect the the projected earnings power, the cash flow profile, and the capital allocation of the company. And we think this analysis on slide nine illustrates that. When you take a look at our levered free cash flow per share on the top left here for estimated 2027 levered free cash per share of $2.19, and you compare that to our peer free cash low yield of relatively 14%, it's implying a share price of over $15 a share. And that represents a 220% premium to our share price as of August 7th. It's about $4.75. So we think on a basic outstanding share count basis and even on a fully diluted share count basis, which includes all of the potential shares from the convertible nuts, which we believe would be unrealistic, you still have 125% in today's price. So we think the value proposition on our shares is real. And we look forward to moving forward as we ramp up this asset. Because remember, restarting an asset of this quality and in this scale, the toughest part is it's like flying a plane. The hardest parts are takeoff and landing. Right now, we're on the cent and we're we're very much looking forward to getting into the fourth quarter and into 2027 cruising in altitude and attacking our financial objectives that are all laid out in front of us slide 10 this is our current hedging program we've uh we've layered in costless callers which we were required to uh we're required to place five days after the closing of the refinancing on july 2nd 2026. so for the for the third quarter 26 we've got uh collars heads about 26 000 barrels a day and growing to 29 000 barrels today in the fourth quarter all with 65 floor pricing so in the in the back half of this year our ceiling is about 89 89.39 on rent and 27 uh recall these are 100 percent uh pdp hedged volumes and we've got 25 000 barrels a day and in 20 20 28 uh 21 000 barrels a day we were required to layer in that 100 of pdv volumes uh per the term loan through maturity that's why we've layered in these these collars we think they give us uh solid floor pricing uh protection to the downside but also allows to participate on on the upside, and certainly with the unhedged volumes as well. Great, Greg. On the midstream of Brent crude marketing overview on page 11, a lot of moving parts here with the California market. But more importantly for us at SYU, we don't have platform Hondo on, which is our easternmost platform. And if you look at the field from west to east, The higher sulfur contents are to the west and the lower sulfur contents to the east. So once we get all the wells on and so forth, we should be able to mitigate most of the sulfur deducts that we got hit with here in the second quarter and we'll also be dealing with in the third quarter. And plus some chemical things we're trying as well that should work out well. We really appreciate all the refiners working with us because of the magnitude of the flows out of our field. uh they they were uh you know surprised and and and we're from the upside but we had to make a lot of movements around there and chevron's been over backwards trying to help us get get get all the crude moved with that we we have a plan we have plan to de-bottleneck that with chevon starting in september as well as is uh two other refineries that are looking at taking our crude and so forth so we'll have ample output in the in the los angeles refining basin going through going to the Plains Line 2000. Additionally, there's additional pipelines that we're looking at going north. Now the San Pablo Bay pipeline looks like it's going to be in service. Thanks to California Resources, we're look at being a third-party customer to those guys as well as another outlet for excess crude. We've got to solve those situations for us to put drilling rigs out here and start increasing production. We want to do that sooner rather AND LATER, SO WE WANT AS MANY MULTIPLE OUTLETS AS POSSIBLE WHEN WE HIT CAPACITY IN CERTAIN AREAS LIKE GOING SOUTH OF LINE 2000. AND THEN FINALLY, WE'RE MOVING ALONG WITH OUR LEGAL STRATEGY TOWARD GETTING AN OFFSHORE BUILDING OFF OF PLATFORM HARMONY AND SYU. IT'S PREMATURE TO DISCUSS THE INS AND OUTS OF THAT, BUT THAT'S STILL HOT ON OUR DEAL AND LOOKING FORWARD TO SOME GOOD WORK OUT OF WASHINGTON, D.C. TO GET THAT IN A POSITION where we can start working on that and get it built and funded here in 27 for 28 as a long-term potential safety valve to make sure we have the best marketing for you. So all that's in progress. We're working hard on it and so forth. And we feel like here in the third quarter, this is going to be kind of a low point on the marketing, all the demurrage charges and things of that nature. And then fourth quarter, fourth quarter one, we should be improving. It's certainly going into 27. The same thing we're hearing from our refining partners partners as well on page 12 i mentioned mentioned the buoy it's it we have an illustration where it's sitting off a platform harmony this is more of a cartoon at this point in time but you can see that the aspect it gives gives a lot of flexibility uh uh bypassing the onshore market if we you know if if we have to and and give us a better marketing opportunities here with waterborne crude and the captured uh captured california market page 13 is just mind everybody THE ASSET HAS NOT CHANGED, PRICES HAVE CHANGES, MARKETING HAS CHANGING, LEGALS CHANGE BUT THIS HAS NOT CHANGE. SAN DIEGO UNIT IS THE NUMBER ONE FIELD IN THE UNITED STATES BASED ON ESTIMATED RECOVERY RESERVES AND CUBITED PRODUCTION IT RANKS NUMER FOUR. AND PAGE 14, ONE ASPECT WE'RE WORKING ON IS OUR TOTAL RESERVED OUT HERE. WE'VE GOT A TREMENDOUS RESERVOIR THAT HAS We've only had 25% of the proof-reserved ultra-recovery taken out to 671 million barrels, or 4.3 of the total barrels produced to date. And we think we have about 10% remaining barrels, about double that amount, which gets up to about a billion 517, which is $8.99 of the primary forecast, and then our heavy oil forecast below 13 gravity oil, 9 to 13 gravity, another 618 million barrels. We have a lot of oil to get out of the ground. we're glad we're getting started finally on it well page 15 is our operating development plan going forward you see it's very light on capital because of all the wireline work and so forth caldwell and his team is uh if uh it commits the wire line work where we're doing a lot of water mitigation on hondo and human harmony and heritage some wells with the high water cut we're either sliding sleeves on it we're putting through tubing plugs trying to shut off some of the water from the from the lowest zone and allow the upper upper zone oil to flow better we're in the middle of that program and look for some really good good results and also help relieve a lot of our handling capacity issues uh uh because of all so we get 100 of the wells on production by the fourth quarter right now we're constrained for because of pump uh pump size at heritage and also we're not making enough gas at harmony and heritage to run all the compressors we have to get all the wells on so it's a chicken and egg deal so we shut off some of the water that we want to process on shore then we'll have room for these these wells to bring on more gas to get all the compressors on and with the new pumps to be able to pump it out so uh the the field is is coming on uh uh spectacularly we're still seeing no decline in our in our production volumes the wells are very strong and so forth it's just getting consistent topside and uh and unrestrained uh topside uh uh throughput which is which is the main goal going forward on page 16 we talked about the the previous uh perf ads and so fourth that we've done at about 600 barrels a day per perf ad and we've got several of those planned for 26 and also for 27 that are coming on so we're accelerating that and we look forward to having a lot of those behind us and enjoying that production starting in 27th uh page 17 as an illustration of the the massive reservoir we have covering 77 000 acres so this over 1400 feet of pay and and many places the upper solicitors hadn't even hadn't been perforated and that's that's easy stuff we're going for as well as the massive church got tremendous uh uh reserves based on development drilling and then the heavy oil stuff we haven't touched yet and that that's for that's where down the road on page page 18 is our initial uh drilling inventory just in the upper solutions you think about you have these 500 meter barrel oil fields sitting on top each other's three of them uh with the upper solutions the massive church and the uh and the heavy heavy oil and so forth and we're just in the next 20 years we'll just be drilling the wells for the upper solution so we'll have a long inventory multi-decade inventory to drill and produce but we need to make sure everything's running topside in first-class shape the page 19 you see the investment highlights you know with transition to federal oversight successfully with prime for low-cost production growth uh so forth we're able to control our costs you can see that in what our what our capex looks like going forward and their ability to maintain production if not grow it uh here in the near term we have a large development inventory once we get our our marketing uh de-bottle decks and so forth we'll be looking at putting some rigs out there and be able to develop that with our large production base shallow decline therefore our maintenance capex is very low high operational control we hold 100 and and control and operate everything and then uh linking our crude sales to brent is important we just got to get rid of the discounts our safety and stewardship is outstanding we continue to pride ourselves there and have continued to get rewarded for that going forward and we're going to continue to conservative financial policy by advertising our debt until we still refinance it everything else is in the in the appendix uh uh happy to take questions uh harris i'll turn it over to you guys and we'll get some questions and make sure we have what's going on sure thank you Jim. At this time we will now answer questions from analysts. Please use the raise hand feature in the webcast. I'll pause a moment while the queue forms. Alice, please proceed with Q&A. Thanks Harrison. As a reminder at this time if you would like to ask a question please click on the raise hand button which can be found on the black bar at the bottom of your screen. When it is your turn you'll receive a message on your screen from the host allowing you to talk and then you will hear your name called. Please accept, unmute your audio and ask your question. We will wait one moment to allow the queue to form. our first question will come from lloyd bernard jeffries please unmute your line and ask a question hey good morning um thank you for all the information guys well can you just walk through um the discounts a little bit more and then what happens when what the discount looks like when can blend the sulfur and then maybe jim also what are the other options for lowering that discount going forward and and does the spr play into that just how do we think about those on a going concern basis and i i have one quick follow-up well uh with the sulfur and uh uh and the emerge and also the the differential and the transportation totals up to 30 bucks a barrel discount okay the sulfur is about 10 bucks out of it and the in the sulfur and demurrage is about ten bucks out and we see that being mitigated as i said as we bring our platform hondo to get our our field-wide production uh down below below our penalty level as well as some of the chemical stuff we're doing uh as well demurage uh it basically we had to cover chevron's cost so they turned tankers around and and take to take our production as quick as they did so we have one more of those to do in the third quarter so i think here in the second and third quarter those costs are going to be pretty steady and then and going forward in the fourth quarter that's we'll see the relief relief from the from the uh demerge and also the sulfur get back down to around twenty dollars a barrel and that's what that's that's reflecting the guidance now the twenty dollars of barrels can be market driven because you've got three dollars of transportation and seventeen dollars worth of uh gifts at the uh refinery we're going to continue to work with refiners to see if we can't mitigate that but we're not forecasting any change at this point in time okay all right thanks and then um can you just talk a little bit about what 28's capital program looks like um i mean obviously you lowered the capital spent this year but and then raise it a little but in 27 how does 28 look and kind of the trajectory going forward there it's page 15 lloyd uh uh assume assuming we we don't we don t refinance the debt page 15 the 20 uh the 28 capital look a lot like 27 and 26 uh uh so forth so um you know it would strictly be wildlife work and so forth if we're able to successfully refinance then we'd be looking at putting some rigs out there and growing production and uh accelerating our rig program uh but it's It's all up to – it all depends on where we are financially and what our balance sheet looks like. Gregory? Yeah, Lloyd, great question. Remember, we have capital governors for 27 and 28 for the new senior secure term loan fee of $100 million a year. So beyond 2026, we're capped out without asking some waiver at $100 billion for 27th and 28th. And like Jim mentioned, if you go refinance that, we'll have some freedom to adjust the capital budget. That would be a good reason to do it. also we have a carve out of 150 million dollars for a buoy if we get get in position to build that correct okay awesome thank you guys our next question comes from michael farrow at pickering energy partners you may now unmute your audio and ask your question uh good morning to the stable team can you hear me okay yes we can all right michael great all right thanks for the confirmation uh look i think it's safe to say it's been a pretty eventful second quarter maybe we can just start with the production ramp uh we recognize there's there's no guidebook to restarting an asset like the santinez unit and this is the first for the sable team as well but the production ramp does seem to be going a little slower than expectations at least versus our expectations so i think what we and others would like is just more confirmation and clarity on what the economics and and cash flows are going to look like when the asset reaches its plateau. We appreciate the guidance update and we can kind of piece through the math, but just how confident are you in achieving the run rate operating costs of roughly 160 and 190 million next year after operating costs were nearly 95 million before considering the demerits charges in 2Q? And maybe it's just something as simple as having fewer employees and less work on the platforms once reaching a steady state. So anything you could provide detail-wise on the operations that would increase confidence and marketing guidance going forward would be helpful yeah michael great great question i think the key point here is it's not a production issue right it's a third party their third-party sales constraints that have not allowed us to sell all the barrels that we've produced the wells are performing outstanding like jim what jim laid out i think you've seen that detailed uh in our our earnings materials. We've been filling inventory in our 540,000 barrel storage tanks at Los Flores Canyon and trying to deplete that inventory and have run into short-term throughput constraints due to third parties. So that's part of it. So I feel very, very comfortable about our ability to hit our production targets. And as these short- term constraints on the throughput side, both on midstream and the downstream, get alleviated here in the short term, as in the next several weeks to month, or month by September, we feel like there won't be a disconnect between our ability to produce barrels and our ability to sell the barrels that we produce. That's one thing. The second item is on the operating costs front. Remember, we have a tremendous amount of contract labor and other labor dedicated to restarting these three platforms, which we're still in the process of in terms of platform Honda, right? We won't be in the restart phase forever. And what we're projecting here is we start coming out of that restart phase in the fourth quarter. The reason why we provided the 2027 guidance was to give you a look at what fully ramped production and sales would look like with more of a steady state operating cost posture. And so I would say 27 is a great look. What 27 doesn't include, importantly, is any type of waterborne marketing optionality, any type of additional marketing leverage. It doesn't includes potential chemical solutions that we're looking at to reduce our sulfur content, which right now we think could potentially, for every dollar you spend on the chemical, could yield a $4 cost savings. So none of that is included in our guidance. So we think there's a lot of upside ahead. And like I mentioned, we're on the ascent of this takeoff, and this is an asset of the size and the scale that we're going to do it right. We're not managing this business for the next several months. We've got a 50-plus year reserve life asset that we'RE going to take care of and make sure that we spend the capital to be safe and all the capital and what you've seen in the capital reduction between our June guidance and now here in August. We've deferred any and all capital that's not related to producing more barrel, producing and selling more barrels, maintaining safe operations, and attacking our restart at platform conduct. Right, Gregory. I'll just add a little bit more to that, you know, the aspect of unintended consequences. With the volume of the wells basically double than what we expected and so forth, it's overrun some of the pump capacity of the platforms. We've got new pumps on order to increase that. These are all great problems to have, but at the same point in time, you can't get all the wells on that you want because you can'T handle all the production through the pipeline. So we're going through that whole process and uh uh you know it's a there's also another constraint we have is it's a lot more oil than gas as the gas the gas production is low so therefore getting getting all the compressions for the gas lift restarted a challenge we're working through all those and there's solutions for it all but it's uh it's it's these are all you know great problems to have and that's what we point everybody during the financing to the fourth quarter of this year will be up. All our marketing contracts, our marketing bottlenecks will be behind us. We already have a lot of sight to that right now here in August, what we're saying by fourth quarter. And then all our production will be unconstrained and so forth. And we'll probably have some wild line results as well from there. So we're like everybody else. It's going to be a long, hot summer the rest of the summer, but we're looking at the fourth quarter and certainly into 27 uh get uh you know really be able to show the asset we have all right that's great i appreciate the clarification and detailed response uh maybe we can just follow up on that point in the waterborne marketing angle gregory uh when do you think the company be in a position to move forward with that decision to install a sales buoy uh i understand it's maybe a bit premature to discuss but ultimately you you want to try to avoid moving forward with a capital spend if the mainstream constraints are going to alleviate themselves um of course there's other considerations been going down that route so uh what market signals are you looking for the next six months and when do you think you would need to make the decision to move forward with the buoy path for a year and 28 installation it's really regulatory um it's not market signals the market signals are there it's about you know at least a 50 percent uh improvement in in in discs and so forth and and just having the flexibility out there so we're looking at the regulatory aspect that we've got a lot of things, conversations with a lot of federal authorities on what we need to get done and so forth. And they look at this as an important part of the security of the offshore barrels staying offshore. And so we're waiting here on all that. We didn't get anything done by the August recess, but this fall is going to be very active. Once we get that, we'll have about four to six months of engineering, another six to nine months of procurement. So it'll be every bit the summer 28th, getting it installed and getting it put on there. So I guess that's going to be hard to move that up at all. But under our timeline, we're right on that schedule right now. All right. Thanks for your time. Sure. Our next question comes from Leo Mariani at Roth. You may now unmute your audio and ask your question. yeah good morning here guys um why don't you just follow up on where do you think things stand uh these days with the potential uh spr uh declaration uh in california that's something you think is moving forward uh at a good pace here yeah i think it's getting it's getting wide wide uh widespread support from sippa came out with a big big 12-page report uh uh california independent producers and it just de-bottlenecks the whole californian energy onshore market pipelines and so forth it definitely needs to happen it's going to benefit all the all the producers and all the refiners and so forward keep them keep them in business is more connect more pipes more flexibility i think that's uh and and we haven't heard any headwinds in dc from it uh we just hear about mechanics and so and we're looking forward to seeing some resolution on that this fall. Okay. Appreciate that. And then also wanted to just touch base on this $500 million kind of no boring base working capital, I guess, facility put in place for the hedging. Do you see potential for there eventually to be some boring base and some ability for Sable to draw on that? Is that something that's restricted until perhaps you guys can refinance the existing term loan and or the convert? Just trying to get a sense of when you might be able to get more of a regular way sort of working capital facility. Yeah, Leo, this is Gregory. Great question. I think the way to think about increasing the borrowing base would be post pay down of the term loan, the new senior secured term loan deed. So we hope to to, you know, de-lever as quickly as possible and refinance and take that out, open up the borrowing capacity. And then also, once we bring Platform Hondo online, like I mentioned, we'll get additional PDP credit and then our PUD credit as well with the development program that we have once the term loan D capital governors are alleviated. Okay, appreciate that. And I guess Just on the more fulsome refi in 2027, which you guys certainly spoke to post the reserve report here, can you maybe give us a little bit more color on what the current thinking would be after that happens, if it's all successful, in terms of trying to return capital to shareholders? Do you guys try to get a buyback going first, then maybe a dividend comes down the road if you guys are able to reduce the share count? I just want to get management's current thinking on how that could proceed. Yeah, all of the above. The asset, I think, initially would be some type of dividend, and then, well, depending on what oil prices are on the stock buyback is what the board's thinking at this point in time. But right now, it's getting our balance sheet in good shape, and that's why amortizing the debt with the cash flows is successful at this point in time. We've got the real capital light program to keep our production maintained and so forth, and all the improvements are within our control. So I think next year or two is making sure that we're getting the balance sheet in a regular way situation where we can have those options. But right now, there's obviously going to be no cash leaving the system until we get the balance sheet under control okay thank you guys sure our last question comes from charles mead at johnson rice you may now unmute your audio and ask your question yeah so good morning jim and gregory and to the rest of the table team there um jim i'd like to go back to uh to leo's question on the str uh if i heard you correctly you said you expect some kind of resolution this fall on that and that you've got uh some enthusiasm not just from other uh producers but also uh pipeline and refinery operators in california what uh that you're looking for uh what form is that going to take it has there been any evolution um either on your side or on the government side of what of you know what the uh what the designation will look like in terms of you know assets for that sdr effort well charles you were breaking up and i think you're talking about what about the designation first first it has to be designated as spr and then with then and then you have the power of condemnation by the department of energy they can condemn whatever acreage or whatever assets they want is for the purpose of uh of supporting the sbr so that's that gives a lot of flexibility plus also be able to connect pipes that are right now inefficiently not connected and be able to relieve a lot of marketing constraints for everybody. So it's got, because you want to have as much oil going into the SBR as you want to have much oil going out of the SDR into the refinery. So it gives the federal government broad powers to make sure that the California energy sector will start being efficient and be able to maintain its current production levels. And also, more importantly for us, maintain maintain the refineries that's the big thing is support the providers are there and will that will that restart a valero venetian i don't know there's a lot of entrepreneurs around here looking at it uh uh here in houston and stuff but i mean it could it could add refinerries but for sure at least keep the ones that are there in business and we got broad support from that from everybody i think we the the department energy does so hopefully uh hopefully we'll get we'll gets that across the line sometime this uh this fall Okay, can you guys still hear me, or is it, am I gone? Yeah, you're good now. You're better now. Great. Thank you. Jim, a follow-up question on the declines you're seeing, or maybe the lack of declines, you see. Are you seeing any change in the flowing pressure of the wells? And I'm curious what impact you foresee this will have on your uh on your updated uh you know 3p report that's coming in and just i'm specifically wondering do you think that how much history are the reserve engineers going to want to see before they give you credit for a lower decline and are they going to give it to you just on the wells that you that you've been able to produce or do you think they're going to give to you more on a field-wide basis yeah we float all the wells uh charles i mean the aspect of that and we'll have enough production history on everything to whether they'll be able to do it on a field-wide basis yeah we're seeing that we're seeing no decline in the field so it's a massive field but i'm sure we'll we'll uh we'll all coalesce around a six or seven percent field-wise decline uh going forward which is which has been this historical uh you know it's made a hundred you know 671 million barrels with a seven percent decline you know it eventually that was that that will revert to that and that's that's that's where the physics is going to be we're certainly enjoying the production with with no decline rate but at some point in time and when when you get that pressure drop a little bit and the gr goes up we'll be making more gas we've got to run our compressors we'll actually build it effectively bring on more production and some wells that we that have high water cuts that we can't bring on right now because of the lack of gas so the field will actually run a little better and probably we can see a 10 to 15 percent increase in production uh volumes and also some gas sales at that point in time so uh it's it and there's there's a pool whether it's going to be uh this year or next year is whether the uh whether the the fields start to climb but it will at some point time so you can use that seven percent field wide decline and that's what we've been we've been we're been uh steady in our all of our projections i think the netherlands school pre-production decline rates on their reports like 21%, 16% the first two years, which is just protection for everybody themselves, investors and so forth. And they fully recognize the way the field's performing and looking forward to making sure we all coalesce around that field-wide decline. That's great detail. Thank you, Jim. Sure. Our last question comes from Noel Parks at TUI Brothers Investment Research. You may now unmute your audio and ask your question. Hi, good morning. I just wondered, with Platform Hondo, you mentioned that it's in a process of restoration. Could you just talk a bit more about what's entailed in that? And if any of it is in addition to what you originally anticipated the work is that you'd have to do? Well, we really anticipated a lot of work at Platform Andre, like a 45-year-old platform. And the amount of work did surprise us. I mean, we've had probably about 50% more work than we expected, a lot structural work that we didn't expect and so forth. That platform was in dire need. It wasn't near in the good of shape as Harmony and Heritage. just older and maybe less maintained from that standpoint. So we've taken it upon ourselves to basically rebuild that platform in place, and we're going to have a first-class facility. It'll probably be the most sought-after site in the whole field. It'll have a new living course, do everything from a standpoint, but also the controls had to be completely changed out, where the Harmony and Heritage Control just had to Be updated and so forth. So it's going to be a brand-new platform when we finish with it, and we're looking forward to that. And also our gas sales go through that platform as well, so we had to make sure that was in good shape. And the guys, again, have done a masterful job there. We've got so many people and contractors there. We're moving logistics and people from other platforms, staying at other platforms for that platform to do work every day. So we continue to be safe and really impressed with the work that Caldwell and Trent and their group has done. Great, thanks. And I was thinking about, in terms of geological work, sort of just what's, I guess, the first on the agenda for further testing of the upper salacious and sort of, you know, what's kind of the most economical way to go about that? I ASSUME IT'S MAYBE RECOMPLETION, UPHOLD, AND, YOU KNOW, WHAT SORT OF COST WOULD THAT BE AND WHAT SORTS OF DATA ARE YOU LOOKING FOR NEXT THERE? NEW SPEAKER Yeah, THE UPPER SOLUTION IS GOING TO BE OUR MAIN TARGET FOR ALL OF OUR REPURFS, OUR PERFADS, BASICALLY GOING UPHOLD LIKE WE SHOW IN THE ILLUSTRATION ON PAGE 17 AND ALSO TALK ABOUT IT IN 15 AND 16. the big thing on upper solutions is once we're out there and we have a position to grow volumes with driller rigs that's going to be our our main target and that showed up on page 18 which is the which is our location we have over 100 125 locations just in the upper solutions we've got another 50 locations 50 to 75 in the massive church that's been the main producer just in and the up-depth locations, and then we've got to re-drill the whole field again for the heavy oil. So the upper solutions over the next decade is going to be one of the key development deals, and several of the most recent wells have been drilled in 2015, and two of them in the upper solution are some of the more prolific producers at this point in time. So we're waiting to get our hands on it. We're certainly not going to put rigs out there until we have our marketing, our pipeline, the bottlenecks and all this stuff done and refiners all in good shape. want to take more oil and then we actually can grow production with the two driller rigs that we're going to put out there but we're looking forward to that time and then just taking these steps the steps to get there very deliberately and uh and uh in and looking forward achieving full cash flow and full production 27 so we got some options great thanks a lot sure There are no further questions on the line. This concludes today's Q&A. Thank you, everyone, for your participation in today's earnings call. We appreciate it. Goodbye.