Sable Offshore Corp. (SOC) Cash Flow Statement

The positive OCF in 2026Q2 appears to be a one-off inflection, as prior quarters consistently showed negative OCF with OCF/NI ratios ranging from 0.12 to 2.32, indicating poor cash conversion relative to reported losses. The gap between net income and operating cash flow is primarily attributable to large non-cash charges like D&A and SBC, which mask the underlying cash burn. Investors should monitor whether OCF can sustain positivity without relying on working capital swings, as the $24.1M WC change in 2026Q2 suggests timing benefits rather than operational efficiency.

The trajectory shows a modest improvement in 2026Q2, but FCF margins are not meaningful given pre-production status, and the company has yet to demonstrate that first oil revenue can cover ongoing capex and operating costs. The cumulative FCF deficit of roughly -$1.0B since 2024Q1, as reported, underscores the heavy investment phase, with capex peaking at $130.1M in 2025Q3. Even with $137.1M revenue in 2026Q2, FCF remains negative, suggesting that the restart is still in a capital-intensive ramp-up phase and may not reach breakeven for several quarters.

The capex pattern appears to be growth-oriented, focused on bringing the Santa Ynez Unit back online, rather than maintenance, given the assets were dormant since 2015. The sharp decline in capex to $31.5M in 2026Q2, as reported, may signal the completion of major restart projects, but the high cumulative spend suggests significant sunk costs that require sustained production to recover. Investors should assess whether future capex will normalize to maintenance levels or if additional regulatory-driven upgrades will keep capital intensity elevated.

The large positive working capital changes in 2026Q2 and 2024Q1 appear to be driven by payables management or deferred liabilities, as the company has minimal receivables without consistent revenue. The negative changes in 2025Q4 and 2025Q3 suggest cash outflows for inventory or prepaid expenses related to restart activities. Given the pre-production phase, working capital dynamics are not yet indicative of operational efficiency, but the volatility warrants monitoring as production scales and collection cycles become established.

The absence of shareholder returns is consistent with a company in a high-burn, pre-profit stage, where preserving liquidity is paramount. The $209K acquisition in 2024Q4 and $204.2M acquisition outflow in 2024Q3, as reported, indicate that capital deployment has been focused on asset acquisition and restart rather than returning cash. This suggests management is prioritizing operational milestones over shareholder distributions, which is appropriate given the binary nature of the restart risk.