Sable Offshore Corp. (SOC) 2026 Q3 法說會逐字稿

Hello, and welcome to Sable Offshore Corp earnings call. (Operator Instructions) Also, as a reminder, this conference is being recorded today. If you have any objections, please disconnect at this time. Harrison Breaud, you may begin.

Thank you, Ronnie. Good morning, everyone, and welcome to our third quarter 2026 earnings conference call. I am Harrison Breaud, Vice President of Finance and Investor Relations for Sable Offshore Corp. Joining me today to discuss our results are the following Sable executive committee members: Jim Flores, Chairman and Chief Executive Officer, Caldwell Flores, President and Chief Operating Officer, Gregory Patrinely, Executive Vice President and Chief Financial Officer, and Anthony Duenner, 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 today, as well as our recently filed financial statements, which will both be discussed on this call. Our executive team will be available after prepared remarks for Q&A.

Please note that we will be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions and are subject to risks 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, and in our most recent Form 10-K, Forms 10-Q, and other reports and filings with the SEC. We do not undertake any duty to update any forward-looking statement. With that, I will proceed to our prepared remarks. Sable Offshore delivered another quarter of growth and progress towards realizing the full value of the Santa Ynez Unit. The third quarter of 2026 was our second full quarter of oil sales.

As previously announced, we increased our volume sold by nearly 30% quarter-over-quarter, and we are continually working to improve our ability to unleash the full capability of the Santa Ynez Unit. Platform Harmony and Platform Heritage wells are outperforming with little to no decline in production from existing wells. Additionally, results from PERF-ADD operations remain encouraging and have performed at the upper end of management expectations at an average observed rate of over 700 barrels per day of additional production per PERF-ADD. Financially, this was our second full quarter with revenue, and we were pleased to see 13% quarter-over-quarter growth. From a balance sheet perspective, we completed our refinancing in the beginning of the quarter and began to deleverage the business with our initial amortization payment on the Term Loan B at the end of the third quarter.

We look forward to receiving our updated year-end reserve report reflecting the strong well results we have seen to date and to further optimization of our balance sheet with longer-term, cheaper debt. In Q3, our liquidity was impacted by the previously announced downstream constraints, and we prudently deployed our ATM program to bolster our working capital. Sable has not utilized the ATM thus far in the fourth quarter. We are not permitted to comment on potential ATM usage or potential lack of usage on a forward-looking basis. With that, I will turn it over to Jim Flores for an operational update.

Thank you, Harrison. The company had a great third quarter as far as progress. Still working on the sales aspect. Rolling into the fourth quarter, early October last month, Sable’s sole crude purchaser refinery began to reduce Sable SYU OCS crude purchases. After two and a half weeks without crude purchases, Sable management began remarketing our crude to the other three refineries in the Los Angeles market. Sable has now successfully entered into sales agreements with all 3 refineries. As of last week, all have resumed sales to those refineries, and all 4 of our refineries are now taking our crude. Sable expects the sales volumes to increase once each refinery understands best how to refine our Sable SYU OCS crude oil. Going forward, Sable will have a balanced sales marketing strategy with all 4 refineries, and we appreciate the cooperation from our refineries and pipeline partners.

With most of our October production inventory in the Sable onshore storage tanks and pipeline facilities, Sable management began marketing this inventory as a bulk crude sale in November. Sable’s actively in discussions with over half a dozen crude purchasers to buy up to 1.3 million barrels of Sable oil in a lump sum payment made in November, with Sable delivering that crude on agreed-upon schedule. The amount of oil we sold in October was about 160,000 barrels before we were shut in, so we had an additional 900,000 barrels as our bogey for October, but we’re putting a whole 1.3 million barrels for sale to achieve our revenue goals for October and our November check. Sable’s also working with JP Morgan on potential opportunities to utilize our $100 million unsecured loan basket permitted under our senior secured term loan agreement.

Furthermore, as a third option for additional funds if needed, we would offer a PIPE opportunity to investors to provide necessary liquidity to our company in the fourth quarter, looking forward to a strong 2027 with our SYU field on full production. Direct operations, Platform Harmony and Heritage continue to have strong production performance with no increase in gas production, along with steady oil rates and wellhead pressures. At Platform Hondo, Sable operating teams completed the reconstruction and internal operational commissioning in the third quarter. In the fourth quarter thus far, Sable submitted all the final paperwork to the Marine Minerals Administration, or MMA, reflecting all the platform upgrades. Both in-person MMA safety inspection and restart production are scheduled within the month of November, ahead of ramping up the platform and flowing all of its 15 producing wells to sales in December of this year.

We are proud of the work we’ve done on Platform Hondo, bringing it up to modern safety standards like its sister platforms, Harmony and Heritage, and preparing to safely deliver the barrels to the market. Along with the five completed PERFs, as we look forward to robust production out of our Platform Hondo. Harrison, with that, I’ll turn it over back to you in Q&A.

Ronnie, please proceed with Q&A. I believe we have Neal Dingmann from William Blair first.

(Operator Instructions) Neal Dingmann, William Blair.

Morning. Thanks for the time, Jim. My first question, just maybe on the Hondo, you gave a lot of comments on the press release. Maybe just any more color you could get. It seems like a lot of confidence that that will be coming in November. Just so I guess, call it, sort of cross the Ts, dotting the Is, and again, everything with the state and the agencies seem to be on track. But anything you can add on that just for November?

Well, the best thing about November structurally is that when you’re looking for approval from regulators and so forth, having the Thanksgiving holidays is a backstop. We fully expect to be flowing wells in the last week of November and ramped up into December. That’s going to be key for our year-end reserve report, getting 30 days of good production on those wells or close to it, so our third-party engineers can give us full credit for that. That’s really, it still achieves our target. We’re not that concerned with not having production here in November out of Hondo because we couldn’t sell the oil anyway from the standpoint of we got plenty of oil to sell. We look forward to having that crude oil in December once we have all four of our refineries all ramped up and taking all of our crude.

That’s the first available time we could take the crude for sales anyway. Unfortunately, that’s the way it all fits together.

Fantastic. Then just secondly, just on the political environment around the California SPR, Jim, any more, less confident, more confident. Just obviously given what happened with the election and all, just maybe talk about how you see the landscape going forward around the California SPR.

Yeah. I guess the underlying factor there is there’s a lot of studies going on. We hear DOE and stuff like that, trying to make sure they’re doing it the right way and everything. But remember, there’s no legislation needed for the SPR. It’s already been laws passed on the 1975 Strategic Petroleum Reserve Act, and we follow under that law and so forth. All it needs now is strictly executive action out of DOE. As long as we still have the White House support, which as late as yesterday, that got affirmed to us, they’re just trying to make sure they dot the Is and cross all the Ts. I’m sure they want to There’s other political things going on in Washington these days that, I mean, timing’s everything.

But we are still very encouraged by that, as well as additional legislation we have in Congress right now through the NDAA that we think is going to be very beneficial to our same cause.

Michael Furrow, Pickering Energy Partners.

Hey. Morning, Sable team. Can you hear me okay?

Yeah.

Okay, great. All right, look, I think we just maybe want to start with liquidity, right? I think that is probably the number one question people are trying to get answered here. Jim, appreciate the comments about the $100 million unsecured loan basket and the potential PIPE. But maybe we could just start with the 1.3 million barrels of bulk crude available for sale. Can you provide more details about where you are at in that process, and can you explain how 1.3 million barrels of crude is available, just given the storage capacity at Las Flores Canyon? I think we are trying to get an idea of what options are available and what kind of working capital tailwinds you could have from this potential sale.

Sure. Starting at the SYU inlet valve to our tanks at Las Flores Canyon, you have 540,000 barrels of tank capacity there. The sales point is upstream of those tanks. You include those tanks plus the 520,000 barrels of line fill, plus the tanks we have at Pentland and the pipeline between Pentland and Emidio, and Emidio to Line 2000. You add all that together, it is about 1.37 million barrels of total capacity. What we are doing right now, as we are flowing Heritage and Harmony, we are packing that system. We will have 1.3 million barrels in that system the whole time. At the time we do the forward sale, it would be a third-party purchase, just like our normal course of business. They will take title to the crude oil.

We will continue to provide storage services and transportation services on the crude oil to the sales point below Emidio and Line 2000. Those at 1.3 million barrels. The deficit of production that we had in October is just over 900,000 barrels. The reason why we are offering the whole 1.3 million barrels, obviously, there is going to be cost involved, and the purchaser has to make a profit, so a discount. We are looking to plug all the October revenues with the sale, revenue deficit with the sale of the oil that we have in those storage facilities all the way to below Emidio. The 1.3 is all the barrels we have there. We would sell more if we had them. Revenues are revenues, but that is the target, what everybody is working for.

We have been in touch with our refiners, our pipelines, and also traditional crude trading houses, and so forth, and we have had robust results. We got all the NDAs signed last week. They are all doing their work. We expect term sheets as early as this week, and it is just going to be price and timing, and who wants the crude oil. There is a hungry appetite market from the refining market and so forth, so it is just a back-to-back. They buy the crude, and they will resell it to the refiners there in the L.A. market. It is a simple transaction. We have also got approval from our lender, JP Morgan, to sign off on releasing the lien.

It is a true transfer of a product like we do on a daily basis with selling crude that will not have any clawback by any of the holders here at Sable Offshore. We have done this in the past, mainly with tankers internationally and that type of thing. It is the same concept, but that is where all the crude oil is, and hope I was clear on that.

Yeah. No, that makes sense. Thanks for the answer, Jim. Maybe we could follow up on kind of the sales ramp into year end. I think you disclosed 31,000 as the targeted November number. What is a reasonable sales number for that month and why? Then can you help us bridge to the 51,000 expected in December? I think any concrete details regarding what volumes have been committed with which off-takers would be helpful to the extent that you could share that.

Well, let’s start with pipeline availability. In Line 2000, it is 45,000 barrels of firm capacity that we have allocated, that we are holding onto. On top of that, there is Line M70, which is now that we are selling to PBF, we hope to by then be selling oil directly into PBF as well. That is not confirmed, but that could be another 10,000 to 15,000 barrels a day there. That is the optimum mixture of 45 on Line 2000 and 15 on Line M70 once we get everything all settled out. Do we get that done by December 1st? I hope so, but that is an unknown at this point in time, other than the 45,000 barrels on Line 2000.

David Deckelbaum, Stifel.

Thanks for taking my questions, Jim.

Sure.

I wanted to just get back to the conversation around mix. You introduced the three new refiners and the sales agreements. Can you provide any color on how that influences your differentials relative to Brent? The capacity that you are selling into, I think that you disclosed on those three refiners, look like it is just under 20,000 barrels a day. Is that capacity amongst the new refiners anticipated to grow X that Line M70?

Yes. All three of them are starter levels. They just picked different levels. For instance, Marathon picked 1,000 barrels a day. They just ran to 30,000, and we have not heard that they had any complaints or whatever, so they are coming back to us. What we pushed the three new refiners to is longer term contracts with better pricing. Right now, for the month of November, we have walk-up differentials, which are, they average around the same thing we were getting with Chevron, no improvement from a standpoint. Some are a little better, some a little worse. But when we go into hopefully term contracts and six months or a year contracts that we are trying to give to these cats, then we could see some differential improvement then, but not in November and December. Or maybe by December, but not for sure, for sure not in November.

So, I guess it seems as we walk through all of these, right, if the company is going to be approaching the mid to upper 30s on a gross basis, you should be approaching free cash neutrality without, or perhaps even some generation with upside, obviously, as you bring more barrels online. Maybe you could square how you see the progression towards free cash, and maybe add a little bit of color on what is happening on the operating cost side in the fourth quarter, because it was my understanding that 3Q would obviously be high because you are still carrying that excess crew around Hondo.

Yeah. So, just thinking about the volumes and so forth, like we talked about, the 45,000 barrels in Line 2000 plus additional sales in the M70 line to PBF now that we are selling to those guys. Those can be critical on the volumes. We will be able to hit those volumes pretty easy with all the wells. As far as LOE analysis, the LOEs in the fourth quarter will not be the lowest because of the additional Hondo commissioning that we have had to do. But by first quarter, so everything just kind of rolls over in the first quarter. When you look at the gap of production, 930,000-940,000 barrels in October, that is the revenues we are trying to plug with the bulk crude oil sales or tapping the unsecured credit, or thirdly, some equity in the PIPE.

We’re going to make sure we make it through, all the way through to the first quarter. Then you’re looking at a situation where it’s going to be volume, where we settle down between 15,000-20,000 barrels per refiner, a nice comfortable amount. They all do a lot of blending of the different barrels to get the right cocktail for their refineries, and they can all easily digest that amount. I think in the first quarter, we’re looking at a real good balanced marketing slate, and hopefully with some term contracts with some better differentials to them. That’s all going to be based on all the hard work we’re going to do here in the fourth quarter to get that kicked off.

Appreciate the color. Good luck to you guys.

Thank you.

Leo Mariani, ROTH.

Thanks. Looking at your revised guidance on sales for the second half of 2026, it is still a very wide range here. Can you just provide a little bit of color around that range? I guess presumably at the lower end, perhaps you cannot make the bulk sale, and maybe just provide a little bit more insight on that would be great.

Well, you take the sales in our projection here, what is it, 20-something, Harrison, that we have in the presentation?

20 to 30 for-

20 to 30. You can add about 14,000 barrels a day, which is about 1.2 million, 1.3 million in the bulk sale on a per-day basis, and you end up with 35,000-38,000 barrels a day for the fourth quarter, not including any kind of ramp in December. Include the ramp in December, we could be at 38,000-40,000, as far as guidance in the fourth quarter.

Okay, so that 20 to 30 is not assumed in the bulk sale?

That is correct, Leo. The 20 to 30 does not include the bulk sale, and also it includes the impact of the third quarter, third-party midstream production and sales constraints.

Got it. Okay. I guess just presumably, you obviously have not executed the bulk sale yet, but just wanted to be a little clearer on the diffs. Should we assume kind of a similar diff in 4Q versus third quarter, which I guess was around $30 last quarter? Is that reasonable, or do you think it could be a little worse this quarter?

Yeah, I have said that earlier. That is the right diff, though.

Yeah, well.

Okay.

Yeah, this is Gregory Patrinely. We are in active negotiations on longer-term contracts, so we will update the market when it is appropriate on the diffs.

Got it. Okay.

Charles Meade, Johnson Rice.

Yes, good morning, Jim, to you and your whole team there at Sable. I want to ask about this sales and current rate. I think you addressed this in your answer to the last question, but could you clarify the sales that you are guiding to for, I think it was slide seven, and the number was 31,000 gross. Could you tell us, how much are you selling today or this week? Just clarify, that 31,000 doesn’t include any contribution from the bulk sale?

Yeah, that’s correct, Charles. The sales, we are all sharing Line 2000. You are batching. We will sell 80,000 barrels one day, and we will sell 20,000 the next. It moves all around based on availability and pipeline schedule, refinery schedule, because they are servicing that whole L.A. basin. The aspect of that, when we put it on a per-day basis, that’s where they come out on a 30-day scale. But it moves around. That’s why keeping our midstream tanks and pipeline completely full and have as much crude ready to go is going to be real important to maximize the sales, and also for the physical delivery to the refineries, but also maximizing the proceeds on our bulk sale here toward the end of November.

Got it. Thank you. I think someone else said before, I appreciate that you outlined some of your liquidity sources. That was helpful. Can you give us an idea what are the covenants, or what are the constraints that you are focused on internally? I mean, is there a covenant, or is it really just the amortization payments on the debt? What’s really the ball to watch on that front?

Charles, it’s strictly cash needed. We have a 900,000-barrel hole in our oil sales forecast. You take the expenses, and we have to plug that hole and so forth. I will turn it over to Gregory. He can give you some of the details, but it’s that simple. It’s in and out.

Yeah, I would say, as we disclosed in our materials, you’ve got, call it, $110 million-$120 million of cash spend between OPEX, G&A, and CapEx for the fourth quarter. That is prior to the amortization and interest payments on December 31 of roughly, call it, $53 million bucks. So, you’ve got about $165 million-$175 million of cash spend in the fourth quarter. We think between the current cash balance of about $38 million bucks, the November revenue from our sales of 31,000 barrels a day, and the proceeds from this bulk sale will potentially solve this hole. If there is a need beyond that, as Jim mentioned, we’ve got options available to us under the $100 million unsecured basket to top that up, or if we need to, we could do a PIPE offering. That’s how we’re thinking about it.

Yeah. Charles, I want to put a little finer point on it. If, let’s say, we get $60 million out of the bulk sale, I’m not pricing 75, whatever the highest price is going to be, if we can make up the deficit on that with the unsecured line of credit, we’re good. If we need to top it off with a small PIPE, we’ll do it at that point in time. It’s going to roll from that standpoint. We may just do the first option, may just do the first two options, may have to do all three, but we’ll get to the objective liquidity and get into the first quarter of 2027 when we get to all our free cash flow. Appreciate it.

Noel Parks, Tuohy Brothers Investment Research.

Hi. Good morning. Can you hear me now?

Yeah.

Oh, great. I want to sort of step back a bit and just, from the perspective of perhaps somebody who is looking at the Sable story at arm’s length right now, maybe if they are not too familiar with it. On the one hand, there is the production and the resource in place that you have, well-established resource just historically, and then with the performance matching your expectations as you have brought the field back online. Then sort of separate from that, there is takeaway, marketing, the sorts of issues that have, of course, been coming and going recently. But of course, everything that is happening on that end really, to my mind, there is no comment on the geology that comes out of any of the sort of the near-term sort of marketing or delivery issues.

I guess I am just wondering to sort of help somebody along with understanding sort of the near-term variability and risk on the delivery side versus kind of what you have already established as far as the geology, oil in place productivity of the wells. I was wondering if you could just kind of help put that in perspective, sort of

All right.

I guess a more of an arm’s length view.

Right. Let’s talk about geology and production first, okay? Then we’ll go to the next one. The aspect that we have not seen the best of this field yet. We’re studying the field from the standpoint of the last 11 years being shut in and the repressurization of the field. It’s almost like you get to study the field, then if there’s any change of strategy, you get to start over with almost a brand new oil field. When we look at the large oil fields around the world and we look at oil fields like Prudhoe Bay and Ghawar and people like that, where they injected the gas, never took any of the gas out because they couldn’t sell the gas at Prudhoe, and Ghawar, they wanted to make sure they maintain the GOR reservoir pressure.

When they did that, their recoveries are in the high 50%. We’re projecting a 15% recovery in our oil field. But as we’ve seen where the gas has gone back into solution, we’re making almost all oil and very low, just enough gas to run our equipment and so forth. We’ve done our internal study when we meet with our third-party engineers to make sure they understand that we’re not going to be selling gas out of this field going forward, but we’re going to be producing a lot more oil and a lot more recovery. We expect our recoveries to as much as double from 15% to 30%. When you multiply that times 15.6 billion barrels, you get some big numbers.

The thought process there is also bound in the science, because what happens is with that gas pressurization maintenance and leaving things at the GOR the same and oil in solution, is that you get a much lower decline curve. Like right now, our decline curve, base decline is 8%. We think the decline curve under that scenario will be 4%. That’s one of the things, it’ll take a little time, maybe this year coming up as far as our third-party reservoir engineers, but when you use a 4% decline rate for a field of this size on proved reserves and PDP, and we convert it to PDNP, you get to some really big numbers. All of the production’s been robust and so forth, and the pressures have been incredibly stable, is that we haven’t seen the best of it yet.

We’re going to manage this field differently going forward with the benefit of hindsight of how the field performed when they were selling a lot of gas off the field. That’s a big upside coming on the production side. On the surface side, initially the marketing was all political, where we had to work through Santa Barbara County and all their problems and issues and do everything safely, as well as through the state of California, their requirements, then make sure we met all the requirements of the U.S. government and the Department of Transportation, PHMSA, and the Department of Energy and the Department of the Interior. We’ve done all that, and we’ve won almost all of our lawsuits there that matter, and some of them are still pending, and we’re cleaning all that up by early next year.

We continue to operate under the Defense Production Act authorization by the President of the United States, and we’ll continue to build strategies around the SPR and also legislative strategies to have enduring posture on that to where we get on with just doing our business safely and professionally producing oil and gas for all of Californians. We fill up 72 million cars a year in California, and that’s not insignificant. We’re about 22%-25% of the total in-state California. When the Department of War, we talked to them and so forth about force preparedness and force projection, we’re a cornerstone of their strategy. We continue to enjoy their support to make sure they have enough fuel to fuel the jets and stuff if anything happens in the Pacific Theater.

The eyes are wide open on how important this asset is to the United States and also California, even besides all the friction we have. Now, selling into a confined or concentrated refinery market, we had a goal of first quarter, starting to diversify our refinery customers for our crude oil. Obviously, in October, it blew up in our face, and we’re very apologetic for that. I would think after 45 years, I should know better, but I kind of fell asleep because of our cozy relationship there. Due to some tank issues at the refinery and so forth, they wanted to upgrade their tanks, and it just doesn’t fit with our timing. We’ll never get caught like that again. We’re going to get out of this liquidity squeeze right here, one way or the other, and then we’ll have a balanced sales force going forward.

We’ll have 92 wells on production, or some similar to those wells on production with high individual rates, and we’re looking forward to an outstanding 2027.

Great.

That’s a good summary.

Thanks a lot for. Thanks a lot. It’s just sort of the scope I was looking for. Thinking about the reserves coming up, and you mentioned, ideally, 30 days of production by the end of the year should be helpful as far as just input for the engineers for your reserves. I’m thinking sort of on maybe a worst case or most conservative scenario. Can you give a sense of what you are pretty confident you will be able to put forth in terms of data? Of course, 12/31 is the sort of the end date for the SEC, of course, adjustments and so forth that can be made heading into the K.

I’m just trying to get a sense of even kind of regardless of what happens with the SEC numbers, I assume you’ll have some ability to talk about updates to your reserve and play if you go down putting out 3P reserves or something. Again, just sort of independent of exactly what happens over the next month, just what sort of be able to give on reserves?

Yeah. We normally build off our PDP reserve report with Netherland, Sewell and so forth. We’ll build off that same thing to add reserves. Our goal by end of next year with our gas injection strategy to have all of our 3P reserves audited by Netherland, Sewell by the end of next year. We’ll understand what we’re doing, they’ll understand what they’re doing, and put the best foot forward. We’re still probably 13 months away from the best picture, but it’s going to be a lot better picture in the first quarter than what you saw in the first quarter last year.

David Deckelbaum, Stifel.

Yeah, sorry to sneak another one in here. Jim, I just wanted to ask, as you think about Hondo and December, once we get through approvals on the MMA side, can you remind us the uplift that you expect on the pricing for those barrels? If we were in the same environment today, would you just be curtailing more production in Heritage and Harmony and producing into Hondo at the full 10,000 a day gross so that you would see that a third of your production would be benefiting from perhaps pricing that is more analogous to Brent?

Yeah. That is what we are going to try to achieve, David. Again, it is trying to achieve and seeing the reality of it. I am just kind of hesitant there from a standpoint. We will do that. One thing that we, because these wells are outperforming, and not only outperforming the oil side, also with water production and so forth, we got to make sure that we manage that through our Las Flores Canyon processing facility, mainly on the water handling and so forth. Exxon had downsized some of the equipment. We have huge pipes. On a volumetric pipe basis, we can do a lot, but as far as the processing equipment, we do not want to overload that. So, you are going to see the emphasis be on the wells with the higher oil cut versus the lower oil cut and the higher water cut.

We will manage through that, so you should have an improvement there. What we are hoping to do is really on the term contracts, get better pricing. That is going to be the key. The other refiners are really interested in term contracts, and we are going to try to push that as far as we can. But right now, it is a tough market. You have got the Western Canada Select coming into the Pacific Rim. You have got a lot of the Venezuelan crude that used to go to China now coming to the Gulf Coast, and some of that is bouncing through the Panama Canal. So, the heavy crude market is one of these point in times where it has got ample supply, and the refiners are taking advantage of it. So, we are happy that they are taking our crude.

We are looking forward to the better pricing if we can get it, but we got to be realistic about the market we are in right now. When I first started in the L.A. Basin back in 100 years ago, we had 50% diffs, and we were lucky to be selling oil at $18. We got $9, and we are glad to get it. Then it got to the point where we got down to 3% diffs. We were selling oil to Conoco at Santa Maria out of PXP, which was onshore, and just the same heavy oil we had here. It was a premium. So, the market is going to move around. We are basically going to have to be a price taker from that standpoint. But right now, we are focused on volumes, and then we will spend all next year working on differentials. That is just another area where we can improve.

That’s what we’re looking at from here. But we can’t give you any concrete beyond where the diffs are right now.

Appreciate it, Jim. Thanks for that.

Sure.

Lloyd Byrne, Jefferies.

Hey, Jim. Can you just go back through, is there anything left with the MMA that you guys have to provide? Are there any hurdles left on their approval of Hondo? Then I have just one quick follow-up.

Yeah. Lloyd, the answer to that is not to our knowledge. The key thing about Hondo, we have tested all the valves, we have tested all the things that can go wrong, we think, from the standpoint on the deal. They have been out there personally testing. That is the critical area. If we have a problem with one of those valves, you have to go replace it, and we cannot find it turns into a three-week delay. It does not sound like much, but you can imagine in this kind of operation, it is. We have gotten over that hill and so forth. It is all with them. We have a very close relationship with everybody, the MMA, Kenny, and those guys. With the Thanksgiving holidays coming up, we think we have the right backstop to get everything through the government approval. We have heard nothing to the contrary there.

We are scheduled right now to start flowing wells the Monday after Thanksgiving.

Okay. Is there anything on the legal side that is pending that we should keep an eye out for? Any court decisions that you would highlight for people?

Yeah. What I would highlight basically is all the court decisions that we have won, they are obviously all on appeal in the Ninth Circuit and so forth, that is going through all those appeals and so forth. The Judge Wilson ruling was key, where they defended the PHMSA jurisdiction on the pipeline and so forth. As the U.S. Department of Justice and the federal government continues to iron this thing out, that it is going to be more of a cleanup all the way through middle of next year, along those lines. We do not see any obstacles there. We are continuing to work with supporting the DPA through the SPR, and that is just political timing at this point in time. There is no legislation required to get that approved. There is all the additional legislation on the NDAA that hopefully will get signed before year-end that cleans up those issues.

So, we have done everything we could there, and we will continue to monitor it. As long as we have White House support, then we are in good shape. That is where we are.

This completes the allotted time for questions. I will now turn the call back over to Jim Flores for any closing remarks.

Thank you all for participating. We are on it, and we look forward to making all our liquidity announcements and getting everybody right with the world. Thank you all for your support, and we will be back in touch. Goodbye.

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