Sable Offshore(US:SOC)2025-05-09 20:03Business Combination and Financing - The Business Combination was completed on February 14, 2024, resulting in the issuance of 44,024,910 shares of Common Stock for gross proceeds of $440.2 million[169]. - A second PIPE Investment on September 26, 2024, raised approximately $150.0 million by issuing 7,500,000 shares at $20.00 per share[170]. - The company has raised approximately $440.2 million from the First PIPE Investment and $150.0 million from the Second PIPE Investment to support its capital needs[194]. - The net cash provided by financing activities for the period February 14, 2024, through March 31, 2024, was $396.0 million, contributing to a combined total of $418.5 million for the predecessor and successor periods[203]. Operational Performance - The Company has not had any substantial revenues since the shut-in, with operating expenses being the principal metrics for performance assessment[182]. - Operating and maintenance expenses for Q1 2025 were $34.4 million, an increase of $19.8 million or 135.3% compared to $7.3 million in the prior periods, primarily due to additional maintenance expenses related to restart efforts[188]. - Depletion, depreciation, amortization, and accretion for Q1 2025 were $3.0 million, a decrease of $1.0 million or 24.6% compared to $4.0 million in the prior periods, as depreciation expense was not recognized following the Business Combination[189]. - General and administrative expenses for Q1 2025 were $22.3 million, a decrease of $129.8 million compared to $152.2 million in the prior periods, mainly due to significant accrued settlements and reduced legal expenses[190][191]. - Total other expense, net for Q1 2025 was $38.9 million, an increase of $31.2 million compared to $7.7 million in the prior periods, driven by a $23.1 million increase in the fair value of warrant liabilities and $11.2 million in interest expense[192]. - Net loss for Q1 2025 was $109.5 million, a decrease of $82.4 million or 42.9% compared to a net loss of $180.1 million in the prior periods[188]. - For the three months ended March 31, 2025, the company reported a net loss of $109.5 million, which includes non-cash expenses totaling $62.2 million[200]. - The company incurred a combined net loss of $191.9 million for the periods January 1, 2024, through March 31, 2024, primarily due to operational challenges[200]. Cash Flow and Financial Position - Cash flows used in operating activities for Q1 2025 were $47.9 million, a decrease of $10.7 million or 18.2% compared to $58.6 million in the prior periods, attributed to maintenance and operational readiness activities[199]. - The net cash used in investing activities for the three months ended March 31, 2025, was $63.3 million, a decrease of 69.0% compared to the previous period[201]. - As of March 31, 2025, the company had no off-balance sheet arrangements, indicating a stable financial position[207]. - There is substantial doubt about the company's ability to continue as a going concern due to the need for regulatory approvals and potential cost overruns in restarting production[198]. Regulatory and Compliance Issues - The Coastal Commission issued a Notice of Violation regarding unpermitted development activities, which the Company is addressing through compliance measures[177]. - The Company is actively engaged in legal proceedings against the Coastal Commission regarding the authority to prohibit work authorized by existing permits[181]. - The Company has implemented enhanced integrity standards for the Pipeline as approved by the California Office of the State Fire Marshal[176]. Future Outlook - The company estimates remaining start-up expenses of approximately $44.1 million to restart production in Q2 2025, focusing on regulatory approvals and pipeline repairs[195]. - The company expects production to restart in Q2 2025, after which operating cash flows are anticipated to be sufficient to cover operating expenses and debt[194]. - Future cash flow from operations will depend on the ability to bring oil and gas production back online and prevailing commodity prices[200]. Company Classification - The company is classified as an "emerging growth company" and a "smaller reporting company," allowing for reduced public company reporting requirements[221][222]. - The company is subject to risks associated with being an emerging growth company, which may affect future performance and results[165]. Asset Management - The SYU Assets, which include three offshore platforms and an onshore processing facility, have been shut in since 2015 and are not currently producing oil and gas[172]. - The company has maintained the SYU Assets in an operation-ready state since 2015, with no depletion recorded until production restarts[213].