Business Combination and Operations - Sable Offshore Corp. completed a Business Combination on February 14, 2024, resulting in the acquisition of the Santa Ynez field and associated assets from Exxon Mobil Corporation for an aggregate PIPE investment of $440.25 million[155][159]. - Following the Business Combination, all operations will focus on restarting production of the SYU Assets, pending necessary regulatory approvals and construction repairs[171]. - The SYU Assets consist of three offshore platforms and an onshore processing facility, which have been non-operational since 2015 due to a pipeline incident[164]. - The Business Combination was structured as a forward merger, with the financial statements of the Successor now reflecting the Company's consolidated results[154]. - The Company has a lock-up agreement for Holdco Class A shares, preventing transfer for three years following the Business Combination[162]. Financial Performance - The Company has not generated substantial revenues since the shut-in of operations, with operating expenses being the primary performance metrics[168]. - Total operating expenses increased by 636.6% to $159.1 million compared to $23.2 million for the three months ended March 31, 2023[173]. - General and administrative expenses rose to $152.2 million, up from $3.1 million for the same period last year, primarily due to a $70.0 million settlement and $46.4 million in share-based compensation[177]. - Net loss for the period was $180.1 million, a significant increase of 727.4% compared to a loss of $23.2 million for the three months ended March 31, 2023[173]. - Cash used in operating activities increased by 196.8% to $36.1 million from $22.5 million in the previous period[186]. - Cash flows from investing activities amounted to $204.1 million, reflecting payments made to EM at Closing[188]. - Financing activities generated $396.0 million, primarily from PIPE Investments, net of transaction expenses[191]. Future Expectations and Concerns - The Company anticipates future increases in ad valorem taxes in line with the projected restart of production[170]. - The company estimates start-up expenses of approximately $197.0 million to restart production in Q3 2024[181]. - The company anticipates a rapid increase in operating cash flows post-production restart, contingent on regulatory approvals[180]. - There is substantial doubt about the company's ability to continue as a going concern due to the need for additional capital and regulatory approvals[184]. Regulatory and Reporting Classifications - The company has been 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[208]. - The company is also classified as a "smaller reporting company," allowing it to provide reduced disclosure obligations, including only two years of audited financial statements[209]. Accounting and Financial Reporting - The Company’s financial statements for the Predecessor periods do not include results from the Pipelines, which are now included in the Successor financial statements[166][167]. - 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[206][207]. - The company’s asset retirement obligations are primarily related to future plugging and abandonment of oil and gas properties, recorded as liabilities on a discounted basis[205]. - The company assesses asset recoverability on an ongoing basis, estimating future undiscounted cash flows to determine if carrying amounts are recoverable[203][204]. - The company capitalizes exploratory well costs when sufficient resources are found, while other exploratory expenditures are expensed as incurred[197]. - Depreciation, depletion, and amortization are primarily determined under the unit-of-production method, based on estimated asset service life[198]. - The company has maintained the SYU assets in an operation-ready state since 2015, resulting in no depletion recorded for the periods presented[201]. - The company does not believe that any recently issued accounting standards will have a material effect on its financial statements[210]. - The company monitors for indicators of potential impairment throughout the year, aligned with ASC 360 and ASC 932 requirements[202]. Interest and Other Income - The Company’s only source of non-operating income is interest income on cash and cash equivalents and changes in fair value of derivative warrant liabilities[171]. - Interest expense for the period was $9.8 million, marking a significant increase as the predecessor had no associated interest expenses[178].
Flame Acquisition (FLME) - 2024 Q1 - Quarterly Report