Sable Offshore(SOC) - 2024 Q3 - Quarterly Report

Business Combination and Financing - The Business Combination was completed on February 14, 2024, resulting in the issuance of 44,024,910 shares of Common Stock at $10.00 per share, generating gross proceeds of$440.2 million[153]. - A second PIPE Investment occurred on September 26, 2024, with 7,500,000 shares issued at $20.00 per share, raising approximately$150.0 million[154]. - The First PIPE Investment included a marketing fee of $10.1 million, recognized as an offset to the proceeds[153]. - As of November 4, 2024, 15,957,820 shares of Common Stock were issued upon the exercise of 99.8$183.5 million[170]. - Financing activities generated $618.4 million in net cash for the Successor period, including$590.2 million from PIPE investments and $72.5 million from warrant exercises[200]. Operational Status and Challenges - The Santa Ynez Unit (SYU) consists of three offshore platforms and an onshore processing facility, which have been non-operational since 2015 due to a pipeline incident[155]. - The California Coastal Commission issued a Cease and Desist Order on November 12, 2024, regarding maintenance and repair activities on the Pipelines, requiring the filling and closing of open sites[167]. - Sable has moved to intervene in a lawsuit filed against the U.S. Department of the Interior regarding the approval of an extension to resume operations associated with 16 oil and gas leases in the Santa Ynez Unit[159]. - The Company plans to implement additional surveillance and response enhancements as part of the Safety Valve Settlement Agreement with the County of Santa Barbara[164]. - The Company has maintained all 16 leases within the Santa Ynez Unit until October 9, 2025, following the completion of lease-holding activities[159]. - The company has been shut in since 2015, with no production revenues during the comparative periods, highlighting the urgency of restarting operations to generate cash flow[210]. Financial Performance - Operating and maintenance expenses for the three months ended September 30, 2024, were$25.6 million, an increase of $11.4 million or 79.8$14.3 million for the same period in 2023[178]. - General and administrative expenses for the three months ended September 30, 2024, were $26.2 million, representing an increase of$23.2 million compared to $3.0 million for the same period in 2023[180]. - Total other expense, net for the three months ended September 30, 2024, was$200.1 million, an increase of $199.6 million compared to$0.5 million for the same period in 2023[181]. - Net loss for the three months ended September 30, 2024, was $255.6 million, compared to a net loss of$23.1 million for the same period in 2023, representing an increase of $232.5 million or 1007.8$66.6 million, an increase of $23.4 million or 54.2$43.2 million for the same period in 2023[185]. - General and administrative (G&A) expenses increased to $211.6 million for the nine months ended September 30, 2024, up from$9.1 million for the same period in 2023, primarily due to a $70.0 million settlement and$82.3 million in share-based compensation[188]. - Total other expense, net rose to $305.8 million for the nine months ended September 30, 2024, compared to$0.5 million in the same period of 2023, driven by a $257.6 million increase in fair value of warrants and$48.1 million in interest expense[189]. Cash Flow and Liquidity - Cash flows from operating activities showed a net cash used of $125.5 million for the Successor period, a 170.9$222.7 million for the Successor period, primarily for the acquisition of SYU assets and capital expenditures related to restart efforts[198]. - The company has substantial liquidity needs for restarting production, with plans contingent on regulatory approvals and sufficient capital to cover estimated costs[194]. Accounting and Financial Reporting - The company is classified as an "emerging growth company" and may remain so until the last day of the fiscal year following the fifth anniversary of its IPO, unless certain revenue or market value thresholds are exceeded[219]. - The company is also a "smaller reporting company," which allows it to provide only two years of audited financial statements, remaining so until specific market value or revenue limits are surpassed[220]. - The company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks, and evaluates all financial instruments to determine their classification as derivatives[217]. - All outstanding warrants are recognized as derivative liabilities at fair value, with adjustments made at each reporting period, impacting the statement of operations[218]. - The company assesses asset impairment based on estimated undiscounted cash flows, with impairments measured by the amount the carrying value exceeds fair value[214]. - Future cash flow assessments for asset recoverability are based on management's assumptions regarding capital allocations, commodity prices, and production volumes[213]. - The company’s asset retirement obligations are recorded as liabilities on a discounted basis, reflecting future plugging and abandonment costs of oil and gas properties[216]. - There have been no changes in internal controls over financial reporting that materially affected the company's controls during the quarter[225]. - The company’s disclosure controls and procedures were evaluated as effective as of September 30, 2024, ensuring accurate financial reporting[224]. - Management does not believe that recently issued accounting standards will have a material effect on the financial statements[221].