Nissa Darbonne: Hi, thank you for joining us. I'm Nissa Darbonne, Hart Energy's executive editor-at-large. We're visiting with Carl Isaac, CEO of Sabine Oil & Gas, which is Osaka Gas’ pure play Haynesville producer. We are here at DUG Gas Haynesville 2025 in Shreveport, Louisiana. Carl, thank you so much for joining us.

Carl Isaac, CEO, Sabine Oil and Gas: Thanks for having me.

ND: Carl just spoke in the conference about many things, lots of good insider intel there. You are planning to pick up a fourth rig in your Haynesville leasehold, which is entirely in the Texas side of it. What was kind of the trigger for you? Was it a particular price that resulted in deciding to go ahead and pick up this fourth rig?

CI: It wasn't really so much price. We've had a couple projects that we've been working on and one of them reached a point where it was ready to be tested and developed, and so we're picking up a fourth rig to cover that work and we may keep that rig for the rest of the year depending on how gas prices hold up.

ND: Also too, you mentioned that you have 550 sticks undeveloped in your property at $4.50/Mcf of natural gas. We do currently have a better than $4.50 12-month strip. Is that good enough?

CI: No. Not to be thinking in terms of 550 sticks when you're only running three rigs. That's a long runway. I think what I would say at the beginning of that sentence was that we have 280 sticks at $3.30/Mcf of natural gas and that alone represents about 10 years of inventory for us running three rigs. So if gas prices do hold up, we'll start counting more sticks, but there's no way that our pace of activity would double, for example.

ND: I appreciate you pointing that out. I think that I just went from 280 to 550. I'm a little too anxious here to develop the Haynesville. One of the attendee questions further to that was concerning 10-year inventory and does anyone have 10-year inventory in the Haynesville If at $2/Mcf of gas?

CI: I would doubt it personally, at $2/Mcf of gas, that's a pretty tough measure when I think the breakevens are running about $2.75 at a minimum, so I guess you could do that for a while, but it wouldn't be too much longer before you went out of business.

ND: And your leasehold's roughly 300,000 net acres, did you mention it's 67% [undeveloped]?

CI: It's about 60% undeveloped. But 90% is held by production.

ND: I wanted to ask you about U-turn laterals. So there are at least three now in the Haynesville. GeoSouthern went first and made one very successfully. Comstock Resources has come back and has made two of them. It's a means of turning single sections stranded, if you will, Haynesville or other play leasehold into two-miler potential. What are your thoughts on making U-turns in your acreage?

CI: I think it's actually interesting because we had our geological manager raise the subject before a U-turn well had been drilled and when she raised the subject and I think my immediate response was "We're probably not going to be the first mover on that." But now that we've seen a couple of our peers succeed at it and start building a roadmap, we actually have a couple projects that we're studying right now to do the same thing.

ND: That would be for Haynesville, not for your Cotton Valley.

CI: That would be the Haynesville.

ND: Also in Panola County, [Texas], you're primarily focused on the Haynesville formation there, but west of there it's primarily Cotton Valley. Now of course there's Cotton Valley in Panola County. Chevron's leasehold is primarily producing from Cotton Valley. They only have maybe five wells landed in the Haynesville there. What is it that has resulted in you not co-developing the Cotton Valley in your Panola leasehold and is the Haynesville west of there? Do the counties adjacent to the west just simply not work or you don't have the mineral rights?

CI: It's actually a different Cotton Valley horizon. Most of our Cotton Valley activity is focused on the Cotton Valley Taylor [sandstones], which is a different horizon than what's closer over there to the state line between Texas and Louisiana. So the Cotton Valley Taylor is kind of our bread and butter.

ND: Let's talk a little bit about M&A. There is still lots of deal activity in the Haynesville since we were here just last spring in Shreveport. Southwestern, Chesapeake, Citadel, Paloma Natural Gas, Aethon, Tellurian and there have been others. You provided some thoughts during the conference to potential additional deal-making. There were two in particular. What were those?

CI: Trinity Operating and Pine Wave Energy Partners are the ones that we had heard rumors about and those are just rumors. We'll see kind of what happens with those guys. I think the bigger point is that from a consolidation standpoint, unless big publics either on the operating side or the midstream side start combining, the runway is getting short for those types of deals as there's fewer and fewer private-equity-backed players in our market.

ND: It's always surprising to me that Haynesville deal-making continues and you think that it's pretty much all wrapped up, but then there's another name that appears out there. [You think] "where did this operator come from?" There are a lot more than I think that most of us who don't pay close enough attention are aware of. At some point it always seems like the Haynesville is going to just come down to maybe five or six operators. Does Sabine want to be one of those five or six? Osaka has a long game in the play, right?

CI: Sabine will be one of those five or six. We're not going anywhere, and our business models are set with the out-years in mind.

ND: And so are you a potential bidder on any property right now.

CI: We're always a potential bidder. It'll be interesting to see how some things that haven't resolved at this point ultimately shake out.

ND: Super. Thank you. That's a poker face. Thank you, Carl. I really appreciate it.

CI: Thank you very much.

ND: And thank you for joining us. Stay tuned here at hartenergy.com for more actionable energy intelligence.

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