Sable Offshore Corp. Reports $617.3 Million Net Loss Amid Transition to Operational Status

Sable Offshore Corp. (formerly Flame Acquisition Corp.) reported significant financial developments in its recent 10-K filing, reflecting its transition from a blank check company to an operational entity following its merger with Sable Offshore Holdings LLC. For the period ending December 31, 2024, Sable recorded no revenue, consistent with its ongoing efforts to restart production from the Santa Ynez Unit (SYU) assets, which have been shut in since 2015. The company reported a net loss of $617.3 million, a substantial increase from a loss of $93.7 million in the previous fiscal year, primarily driven by high operating expenses and changes in the fair value of warrant liabilities.

Operating expenses surged to $326.8 million for the Successor period, compared to $94.5 million for the Predecessor year, marking a 245% increase. This rise was largely attributed to costs associated with restarting operations, including a significant increase in headcount and general administrative expenses, which included stock-based compensation and legal fees related to the Business Combination. The company anticipates that these expenses will continue to rise as it prepares to resume production, with estimated start-up costs of approximately $152 million.

Strategically, Sable has made notable progress in its operational developments. The company has focused on obtaining regulatory approvals and completing necessary repairs to the SYU assets, which include three offshore platforms and an onshore processing facility. As of December 31, 2024, Sable had approximately $300.4 million in cash and cash equivalents, bolstered by significant capital raised through PIPE investments totaling $590.2 million and proceeds from warrant exercises amounting to $183.5 million. However, the company faces a critical deadline to restart production by March 1, 2026, or risk losing the SYU assets to Exxon Mobil Corporation, the previous owner.

Sable's workforce has expanded to approximately 161 employees, with a focus on enhancing operational readiness and safety protocols. The company is also navigating various legal and regulatory challenges, including ongoing litigation related to environmental compliance and pipeline operations. The outcome of these legal matters could significantly impact Sable's operational timeline and financial stability.

Looking ahead, Sable's management remains optimistic about restarting production in the second quarter of 2025, contingent upon securing the necessary regulatory approvals. The company is actively working to mitigate risks associated with fluctuating commodity prices and regulatory changes, which could affect its financial performance. As Sable continues to transition into a fully operational oil and gas producer, its ability to manage costs and navigate regulatory landscapes will be crucial for its long-term success.