Sable Offshore(US:SOC)2025-11-13 21:17Business Combination and Financing - The Company completed the Business Combination on February 14, 2024, resulting in the issuance of 44,024,910 shares of Common Stock for gross proceeds of $440.2 million[210]. - The Second PIPE Investment raised approximately $150.0 million by issuing 7,500,000 shares at $20.00 per share on September 26, 2024[211]. - The Company entered into an Underwriting Agreement for the 2025 Offering, raising approximately $282.6 million in net proceeds from the sale of 10,000,000 shares at $29.50 per share[214]. - The company raised $295.0 million in gross proceeds from the sale of 10,000,000 shares of Common Stock in the 2025 Offering[280]. Production and Operations - The Company initiated oil production from six wells on Platform Harmony at SYU on May 15, 2025, with an initial production rate of approximately 6,000 barrels of oil per day[224]. - The Company plans to implement an offshore storage and treating vessel strategy, expecting to begin sales from all SYU platforms in Q4 2026, with anticipated production rates exceeding 50,000 barrels of oil per day[221]. - The Company has focused all operations on recommencing sales of production from the SYU Assets, pending necessary regulatory approvals[263]. - The company plans to recommence oil sales in the fourth quarter of 2026, contingent upon regulatory approvals[280]. Legal and Regulatory Matters - Sable submitted Restart Plans for the Pipelines to OSFM on July 29, 2024, and has conducted successful hydrotests on all segments of Line 324 and Line 325 as of May 27, 2025[226]. - On December 17, 2024, OSFM granted state waivers for enhanced pipeline integrity standards, which were later not objected to by PHMSA[227]. - Sable is facing two lawsuits challenging the issuance of State Waivers, with petitioners seeking to declare the waivers void[228]. - The Coastal Commission imposed an administrative penalty of approximately $18.0 million on Sable related to ongoing development in the Coastal Zone[237]. - Sable filed a complaint against the Coastal Commission on February 18, 2025, challenging the legality of the Notices of Violation and Cease and Desist Order[236]. - The court denied the Coastal Commission's request for a temporary restraining order against Sable on April 17, 2025[238]. - Sable's monetary damages related to the Coastal Commission's actions are quantified in excess of $347 million[240]. - The Center for Biological Diversity and the Wishtoyo Foundation filed complaints against BSEE and BOEM, alleging violations of NEPA and OCSLA related to Sable's operations[241][242]. - The Company is involved in litigation against the County of Santa Barbara regarding the transfer of Final Development Permits, with a hearing set for December 16, 2025[252]. - A putative class action complaint was filed against the Company on July 28, 2025, alleging violations of the Exchange Act and Securities Act[253]. - The Company intends to vigorously defend against claims in the Johnson class action lawsuit, with motions to dismiss due on November 24, 2025[254]. - The California Department of Conservation's CalGEM has asserted that the Company must post a bond of approximately $31.9 million and submit oil spill contingency response plans[257]. Financial Performance - The Company has not generated substantial revenues since the shut-in, with operating expenses being the primary metrics for performance assessment[259]. - Operating and maintenance expenses increased to $79.4 million for the three months ended September 30, 2025, up $53.8 million or 210% from $25.6 million in the same period of 2024[265]. - Depletion, depreciation, amortization, and accretion rose to $3.3 million for the three months ended September 30, 2025, an increase of $0.5 million or 18% compared to $2.8 million for the same period in 2024[266]. - General and administrative expenses were $36.7 million for the three months ended September 30, 2025, reflecting a $10.5 million increase or 40% from $26.2 million in the same period of 2024[267]. - Total other income (expense), net was $15.6 million for the three months ended September 30, 2025, a change of $215.7 million compared to an expense of $200.1 million for the same period in 2024[268]. - Net loss for the three months ended September 30, 2025, was $110.4 million, a decrease of $145.2 million or 57% from a net loss of $255.6 million in the same period of 2024[265]. - Operating and maintenance expenses for the nine months ended September 30, 2025, were $164.2 million, an increase of $97.7 million or 147% compared to $59.2 million for the same period in 2024[272]. - General and administrative expenses decreased to $134.4 million for the nine months ended September 30, 2025, down $77.2 million from $211.6 million for the combined periods in 2024[274]. - Total other expense, net was $14.6 million for the nine months ended September 30, 2025, a decrease of $291.2 million compared to an expense of $305.8 million for the combined periods in 2024[275]. - The net loss for the nine months ended September 30, 2025, was $348.0 million, which includes a non-cash decrease of $40.7 million in fair value of warrants and non-cash stock-based compensation of $30.0 million[289]. - Cash flows used in operating activities for the nine months ended September 30, 2025, amounted to $253.6 million, representing an increase of $105.6 million, or 71%, compared to the previous periods[288]. - Net cash used in investing activities was $323.1 million for the nine months ended September 30, 2025, an increase of $100.4 million, or 45%, compared to the previous periods[290]. - The company has an accumulated deficit of $1.0 billion as of September 30, 2025[284]. Future Expectations and Strategic Plans - The Company expects to opportunistically acquire an existing OS&T vessel in Q1 2026, with delivery anticipated in Q3 2026[221]. - The company expects to incur approximately $450.0 million in remaining start-up expenses to recommence offshore oil sales under the OS&T strategy[281]. - The effective tax rate for the three months ended September 30, 2025, was negative 6.4%, reflecting ongoing assessments of deferred tax assets[269]. - The company expects elevated operating and maintenance expenses to continue for the remainder of 2025 due to restart efforts and increased headcount[265]. - The Senior Secured Term Loan matures on January 9, 2026, but is expected to be extended to March 31, 2027, or 90 days after first sales of hydrocarbons[284]. - The company has curtailed substantially all capital expenditures relating to the Onshore Pipeline and onshore processing facility[278]. - The company has oil inventory storage capacity of 540 MBbls onshore at LFC, with inventory volumes expected to fluctuate over time to maintain optimal operational efficiencies[304]. Accounting and Compliance - 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 the IPO, unless certain revenue or market value thresholds are exceeded[312]. - The company is also classified as a "smaller reporting company," allowing it to provide only two years of audited financial statements until specific market value or revenue thresholds are met[313]. - The company will cease to be an emerging growth company or smaller reporting company as of December 31, 2025, after which it will not benefit from reduced reporting requirements[314]. - Management estimates future undiscounted cash flows of affected properties to assess recoverability, based on assumptions consistent with investment evaluation criteria[306]. - Impairment assessments are conducted whenever events indicate that the carrying amounts of assets may not be recoverable, including significant decreases in market prices or adverse changes in usage[307]. - 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[310]. - The company does not anticipate that recently issued accounting standards will have a material effect on its financial statements[315].