Sable Offshore Corp 10-Q for FY2024 Q1

Sable Offshore Corp 10-Q for FY2024 Q1

About this 10-Q

About this 10-Q

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Sable Offshore Corp. (SOC)

10-Q 2024-05-15 For: 2024-03-31

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Added on April 11, 2026

Sable Offshore Corp filed this 10-Q on May 15, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).

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Delaware		85-3514078
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	SOC	The New York Stock Exchange
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share	SOC.WS	The New York Stock Exchange



		Page

PART 1 – FINANCIAL INFORMATION			1

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets		1

	Condensed Consolidated Statements of Operations		2

	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)/Parent Net Investment		3

	Condensed Consolidated Statements of Cash Flows		4

	Notes to Condensed Consolidated Financial Statements		5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		33

Item 4.	Controls and Procedures		33

PART II – OTHER INFORMATION			34

Item 1.	Legal Proceedings		34

Item 1A.	Risk Factors		34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		34

Item 3.	Defaults Upon Senior Securities		34

Item 4.	Mine Safety Disclosures		34

Item 5.	Other Information		34

Item 6.	Exhibits		35

SIGNATURES			36


	Successor			Predecessor
	March 31, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	209,100		$	—
Prepaid expenses		3,404			—
Materials and supplies		16,637			16,213

Total current assets		229,141			16,213
Oil and gas properties (Successful efforts method)
Oil and gas properties		1,060,840			4,382,289
Less: Accumulated depreciation, depletion and amortization		—			(3,693,325	)

Total oil and gas properties - net		1,060,840			688,964
Other, net		5,825			6,404

Total assets	$	1,295,806		$	711,581

Liabilities and Stockholders’ Equity/Parent Net Investment
Accounts payable and accrued expenses	$	77,985		$	5,384
Due to related party, net		—			11,370
Excise tax payable		2,308			—
Other current liabilities		1,462			1,148

Total current liabilities		81,755			17,902
Warrant liabilities		68,295			—
Asset retirement obligations		91,450			349,138
Senior Secured Term Loan including paid-in-kind interest, net		771,202			—
Deferred tax liabilities		14,632			—
Other		3,894			5,520

Total liabilities		1,031,228			372,560
Commitments and Contingencies (Note 8)
Stockholders’ Equity/Parent Net Investment
Parent net investment		—			339,021
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		—			—
Common Stock , $0.0001 par value; 500,000,000 shares authorized; 60,166,269 at March 31, 2024		6			—
Additional paid-in capital		525,695			—
Accumulated deficit		(261,123	)		—

Total Stockholders’ Equity/Parent Net Investment		264,578			339,021

Total Liabilities and Stockholders’ Equity/Parent Net Investment	$	1,295,806		$	711,581

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company


	Successor			Predecessor
	February 14, 2024— March 31, 2024			January 1, 2024— February 13, 2024			Three Months Ended March 31, 2023
Revenue
Oil and gas sales	$	—		$	—		$	—

Total revenue		—			—			—
Operating Expenses
Operations and maintenance expenses		7,318			7,320			14,796
Depletion, depreciation, amortization and accretion		1,377			2,627			5,255
General and administrative expenses		150,448			1,714			3,137

Total operating expenses		159,143			11,661			23,188

Loss from operations		(159,143	)		(11,661	)		(23,188	)
Other (income) expenses:
Change in fair value of warrant liabilities		(1,763	)		—			—
Other (income) expense		(499	)		128			5
Interest expense		9,801			—			—

Total other expense, net		7,539			128			5

Loss before income taxes		(166,682	)		(11,789	)		(23,193	)
Income tax expense		13,423			—			—

Net loss	$	(180,105	)	$	(11,789	)	$	(23,193	)

Basic and diluted net loss per Common Stock
Weighted average Common Stock outstanding, basic and diluted		60,166,269			n/a			n/a

Basic and diluted net loss per Common Stock	$	(2.99	)		n/a			n/a


	Common Stock				Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Equity (Deficit)
Successor:

For the period from February 14, 2024 to March 31, 2024
BALANCE—February 14, 2024 (prior to Business Combination)		7,187,500	$	1	$	—	$	(81,018	)	$	(81,017	)
Redeemable shares reclassified to Common Stock		5,953,859		1		61,948		—			61,949

Net effect of Business Combination		13,141,359		2		61,948		(81,018	)		(19,068	)
Private offering proceeds, net		44,024,910		4		417,367		—			417,371
Issuance of merger consideration shares		3,000,000		—		36,300		—			36,300
Shared based compensation		—		—		10,080		—			10,080
Net loss		—		—		—		(180,105	)		(180,105	)

BALANCE—March 31, 2024		60,166,269	$	6	$	525,695	$	(261,123	)	$	264,578


	Parent Net Investment
Predecessor:
For the period January 1, 2024 to February 13, 2024
BALANCE—January 1, 2024	$	339,021
Contributions from parent		22,474
Net loss		(11,789	)

BALANCE—February 13, 2024	$	349,706
BALANCE—December 31, 2022	$	362,596
Contributions from parent		19,747
Net loss		(23,193	)

BALANCE—March 31, 2023	$	359,150


	Successor		Predecessor
(in thousands)	March 31, 2024		December 31, 2023
Accounts payable and accrued expenses	$	3,363	$	3,235
Operations and maintenance		4,622		2,149
Legal settlement payable		70,000		—

Total accounts payable and accrued liabilities	$	77,985	$	5,384


	Successor			Predecessor
(dollars in thousands, except per share amounts)	February 14, 2024— March 31, 2024			January 1, 2024— February 13, 2024			Three Months Ended March 31, 2023
Net loss	$	(180,105	)	$	(11,789	)	$	(23,193	)

Weighted average shares outstanding—Basic and diluted		60,166,269			n/a			n/a

Net loss per share—Basic and diluted	$	(2.99	)		n/a			n/a


Consideration:
Purchase consideration as per Sable-EM Purchase Agreement	$	625,000
Plus:
Paid-in-kind interest from effective date to closing*		140,018
Materials and supplies*		16,637
Cash consideration paid		204,094

Preliminary adjusted purchase consideration	$	985,749

* Included in the initial principal associated with the Term Loan.


Total consideration	$	985,749
Fair value of assets acquired:
Oil and gas properties	$	1,060,523
Materials and supplies		16,637
Other assets		4,621

Amount attributable to assets acquired	$	1,081,781

Fair value of liabilities assumed:
Asset retirement obligations	$	90,073
Other current liabilities		827
Deferred tax liability		1,209
Other long term liabilities		3,923

Amounts attributable to liabilities assumed		96,032

Net assets acquired and liabilities assumed	$	985,749


(in thousands)
Senior Secured Term Loan, including paid-in-kind interest	$	772,535
Less: Debt issuance costs		(1,333	)

Total long-term debt, net	$	771,202


	Public Warrants		Private Placement Warrants		Working Capital Warrants		Total
Outstanding Warrants at February 14, 2024		14,374,971		7,750,000		—		22,124,971
Issued		—		—		3,306,370		3,306,370

Outstanding Warrants at March 31, 2024		14,374,971		7,750,000		3,306,370		25,431,341


	Shares
Public stockholders		5,953,859
Initial stockholders		7,187,500
Merger consideration shares		3,000,000
PIPE Investors		44,024,910

Total shares outstanding at close		60,166,269


	Successor
	February 14, 2024 —March 31, 2024
	Common Stock		Weighted-average grant date fair value
Non-vested, beginning of the period		—	$	—
Granted		2,758,334		12.03
Vested		—		—
Forfeited		—		—

Non-vested, end of the period		2,758,334	$	12.03


(dollars in thousands)	Public Warrants (Level 1)			Private Placement Warrants (Level 3)		Working Capital Warrants (Level 3)		Total Warrant Liabilities
Fair value as of February 14, 2024 (Successor)	$	39,962		$	19,813	$	—	$	59,775
Additions		—			—		10,283		10,283
Change in valuation inputs or other assumptions		(2,875	)		550		562		(1,763	)

Fair value as of March 31, 2024 (Successor)	$	37,087		$	20,363	$	10,845	$	68,295


Inputs	March 31, 2024
Stock price	$	10.96
Strike price	$	11.50
Term (in years)		1.9
Volatility		27.5	%
Risk-free rate		4.53	%
Dividend yield		0.00	%


Inputs	March 31, 2024
Stock price	$	10.96
Strike price	$	11.50
Term (in years)		4.88
Volatility		27.5	%
Risk-free rate		4.14	%
Dividend yield		0.00	%


	Successor			Predecessor						Increase (Decrease)
(in thousands)	February 14, 2024 - March 31, 2024			January 1, 2024 - February 13, 2024			Three Months Ended March 31, 2023			$			%
Revenue	$	—		$	—		$	—		$	—			—	%

Oil and gas sales		—			—			—			—			—	%
Operating Expenses
Operations and maintenance expenses		7,318			7,320			14,796			(158	)		(1.1	)%
Depletion, depreciation, amortization and accretion		1,377			2,627			5,255			(1,251	)		(23.8	)%
General and administrative expenses		150,448			1,714			3,137			149,025			nm

Total operating expenses		159,143			11,661			23,188			147,616			636.6	%

Loss from operations		(159,143	)		(11,661	)		(23,188	)		(147,616	)		636.6	%
Other (income) expenses:
Change in fair value of warrant liabilities		(1,763	)		—			—			(1,763	)		nm
Other (income) expense		(499	)		128			5			(376	)		nm
Interest expense		9,801			—			—			9,801			nm

Total other expense, net		7,539			128			5			7,662			nm

Loss before income taxes		(166,682	)		(11,789	)		(23,193	)		(155,278	)		669.5	%
Income tax expense		13,423			—			—			13,423			nm

Net loss	$	(180,105	)	$	(11,789	)	$	(23,193	)	$	(168,701	)		727.4	%


	Successor			Predecessor						(Decrease) Increase
(dollars in thousands)	February 14, 2024 - March 31, 2024			January 1, 2024 - February 13, 2024			Three Months Ended March 31, 2023			$			%
Cash flows (used in) provided by:
Operating activities	$	(36,129	)	$	(22,474	)	$	(19,747	)	$	(38,856	)		196.8	%
Investing activities		(204,094	)		—			—			(204,094	)		—	%
Financing activities		395,989			22,474			19,747			398,716			nm

Net change in cash and cash equivalents	$	155,766		$	—		$	—		$	155,766			—	%


No.		Description of Exhibit

3.1⁽¹⁾		Second Amended and Restated Certificate of Incorporation of Sable Offshore Corp.

3.2⁽¹⁾		Amended and Restated Bylaws of Sable Offshore Corp.

10.1⁽¹⁾		Senior Secured Term Loan Agreement, dated as of February 14, 2024 by and among Sable Offshore Corp. (f/k/a Flame Acquisition Corp.), Exxon Mobil Corporation and Alter Domus Products Corp.

10.2⁽¹⁾		Registration Rights Agreement, dated as of February 14, 2024, by and among Sable Offshore Corp. (f/k/a Flame Acquisition Corp.) and the undersigned party listed under Holder on the signature page thereto.

10.3^(1)#		Sable Offshore Corp. 2023 Incentive Award Plan.

10.4⁽¹⁾		Form of Indemnity Agreement.

10.5^(2)#		Employment Agreement by and between Sable Offshore Corp. and James C. Flores.

10.6^(2)#		Employment Agreement by and between Sable Offshore Corp. and Gregory D. Patrinely.

10.7^(2)#		Employment Agreement by and between Sable Offshore Corp. and J. Caldwell Flores.

10.8^(2)#		Employment Agreement by and between Sable Offshore Corp. and Doss R. Bourgeois.

10.9^(2)#		Employment Agreement by and between Sable Offshore Corp. and Anthony C. Duenner.

10.10⁽³⁾		Form of Holdco PIPE Subscription Agreement.

10.11⁽⁴⁾		Form of Holdco PIPE Subscription Agreement Amendment.

10.12⁽⁴⁾		Form of Additional Holdco PIPE Subscription Agreement.

10.13⁽⁴⁾		Form of Flame PIPE Subscription Agreement.

31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


	SABLE OFFSHORE CORP.

Date: May 15, 2024	By:	/s/ James C. Flores
	Name:	James C. Flores
	Title:	Chairman and Chief Executive Officer (Principal Executive Officer)

Date: May 15, 2024	By:	/s/ Gregory D. Patrinely
	Name:	Gregory D. Patrinely
	Title:	Executive Vice President and Chief Financial Officer (Principal Accounting Officer and Principal Financial Officer)