Business Combination and Financing - Sable Offshore Corp. completed a Business Combination 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 the issuance of 7,500,000 shares at $20.00 per share, raising approximately $150.0 million[154]. - As of September 30, 2024, warrant holders exercised 6,315,977 Warrants, resulting in approximately $72.5 million in cash proceeds[168]. - As of November 4, 2024, 15,957,820 shares of Common Stock were issued upon the exercise of 99.8% of the outstanding Public Warrants, resulting in aggregate proceeds of $183.5 million[170]. - Financing activities generated $618.4 million in net cash for the Successor period, significantly higher than $22.5 million for the Predecessor period[200]. - The Company has over $600 million of the Purchase Price seller-financed through a secured Senior Secured Term Loan[191]. Operational Status and Legal Proceedings - 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]. - Sable Offshore Corp. is currently involved in legal proceedings regarding the resumption of operations for 16 oil and gas leases in the Santa Ynez Unit, with a court complaint filed against the Bureau of Environmental Safety and Enforcement[159]. - The County of Santa Barbara has acknowledged the completion of Sable's applications for changes in ownership and operation of the SYU and associated pipelines[162]. - Sable Offshore Corp. is working with the California Coastal Commission to address maintenance and repair activities on the Pipelines, which may require additional permitting[167]. - The company plans to enhance pipeline safety through the installation of new safety valves and the establishment of a local Surveillance and Response Team[164]. 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% compared to $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]. - The net loss for the three months ended September 30, 2024, was $255.6 million, an increase of $232.5 million or 1007.8% compared to a net loss of $23.1 million for the same period in 2023[178]. - Operating and maintenance expenses for the nine months ended September 30, 2024, were $66.6 million, representing an increase of $23.4 million or 54.2% compared to $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, compared to $9.1 million for the same period in 2023, representing a $202.5 million increase[188]. - Total other expense, net rose to $305.8 million for the nine months ended September 30, 2024, up from $0.5 million in the same period in 2023, reflecting a $305.3 million increase[189]. - Income tax expense for the three months ended September 30, 2024, was $0.9 million, an increase of $0.9 million compared to zero income tax expense for the same period in 2023[183]. - Income tax expense for the Successor period was $19.4 million, compared to zero for the Predecessor period, indicating a significant increase due to deferred tax asset valuation adjustments[190]. Cash Flow and Future Projections - Cash flows from operating activities showed a net cash used of $125.5 million for the Successor period, a 170.9% increase compared to $54.6 million for the nine months ended September 30, 2023[196]. - Net cash used in investing activities was $222.7 million for the Successor period, primarily for pipeline repairs and restart efforts[198]. - The Company estimates start-up expenses of approximately $197.0 million to restart production in Q4 2024, with capital expenditures expected to be substantial[192]. - The company expects operating and maintenance expenses to increase over the next several years as production is restarted[178]. - Future cash flow from operations will depend on the ability to bring oil and gas production back online and prevailing market prices[196]. Company Classification and Accounting Policies - 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 all outstanding warrants are recognized as derivative liabilities at fair value[217][218]. - The company evaluates asset impairment based on future undiscounted cash flows, and an asset group is considered impaired if its estimated cash flows are less than its carrying value[213][214]. - The fair value of asset retirement obligations is recorded as liabilities on a discounted basis, considering factors such as legal obligations and estimated settlement amounts[216]. - Management's estimates for cash flow assessments include assumptions about future production volumes, commodity prices, and operating costs[215]. - The company does not anticipate that recently issued accounting standards will have a material effect on its financial statements[221]. Internal Controls and Reporting - 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]. - The company monitors for indicators of potential impairment throughout the year, aligned with ASC 360 and ASC 932 requirements[212].
Flame Acquisition (FLME) - 2024 Q3 - Quarterly Report