Sable Offshore Corp. Reports Significant Financial Developments, Net Loss, and Doubt Over Going Concern in Latest 10-Q Filing

Sable Offshore Corp. (formerly Flame Acquisition Corp.) reported significant financial developments in its latest 10-Q filing for the period ending September 30, 2024. The company, headquartered in Houston, Texas, completed its merger on February 14, 2024, and has since focused on restarting production from its Santa Ynez Unit (SYU) assets, which have been inactive since 2015 due to a pipeline leak.

As of September 30, 2024, Sable Offshore Corp. reported total assets of $1.5 billion, a substantial increase from $711.6 million at the end of 2023. Current assets surged to $344.2 million, primarily due to cash and cash equivalents of $288.2 million, a notable rise from zero in the previous period. However, total liabilities also increased significantly to $1.3 billion from $372.6 million, leading to a decrease in stockholders’ equity to $167.5 million from $339.0 million.

The company experienced a net loss of $255.6 million for the three months ended September 30, 2024, compared to a loss of $23.1 million for the same period in 2023, reflecting a dramatic increase in losses attributed to higher operating expenses and changes in fair value of warrant liabilities. Total operating expenses for the successor period reached $54.6 million, up 142.3% from $22.5 million in the prior year, driven by increased maintenance and general administrative costs, including $15 million in share-based compensation.

Sable's financial activities included two PIPE investments, raising $440.2 million from the first investment and $150 million from the second, which occurred on September 26, 2024. The company also reported cash used in operating activities of $125.5 million for the successor period, a significant increase from $22.5 million in the predecessor period.

The company’s strategic focus remains on restarting production, with management estimating capital expenditures of approximately $197 million for necessary repairs and regulatory approvals. However, there is substantial doubt regarding the company's ability to continue as a going concern due to ongoing losses and the need for regulatory approvals.

In terms of operational developments, Sable has been actively addressing legal matters, including a $70 million settlement related to the Grey Fox Matter, which has impacted general and administrative expenses. The company has also engaged in various financing activities, including warrant exercises that generated approximately $72.5 million in cash proceeds.

Overall, Sable Offshore Corp. is navigating a complex financial landscape marked by significant losses, increased liabilities, and a strategic pivot towards restarting production from its SYU assets.