10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File

No. 001-40111

SABLE OFFSHORE CORP.

(Exact name of registrant as specified in its charter)


Delaware		85-3514078
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

845 Texas Avenue, Suite 2920

Houston,

77002

(Address of Principal Executive Offices, Zip Code)

(713)

579-6106

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	SOC	The New York Stock Exchange
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share	SOC.WS	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Exchange Act): Yes ☐ No ☒

As of May 14, 2024 there were

60,166,269

of Common Stock, $0.0001 par value, issued and outstanding.



		Page

PART 1 – FINANCIAL INFORMATION			1

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets		1

	Condensed Consolidated Statements of Operations		2

	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)/Parent Net Investment		3

	Condensed Consolidated Statements of Cash Flows		4

	Notes to Condensed Consolidated Financial Statements		5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		25

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		33

Item 4.	Controls and Procedures		33

PART II – OTHER INFORMATION			34

Item 1.	Legal Proceedings		34

Item 1A.	Risk Factors		34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		34

Item 3.	Defaults Upon Senior Securities		34

Item 4.	Mine Safety Disclosures		34

Item 5.	Other Information		34

Item 6.	Exhibits		35

SIGNATURES			36

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

SABLE OFFSHORE CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(dollars in thousands)


	Successor			Predecessor
	March 31, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	209,100		$	—
Prepaid expenses		3,404			—
Materials and supplies		16,637			16,213

Total current assets		229,141			16,213
Oil and gas properties (Successful efforts method)
Oil and gas properties		1,060,840			4,382,289
Less: Accumulated depreciation, depletion and amortization		—			(3,693,325	)

Total oil and gas properties - net		1,060,840			688,964
Other, net		5,825			6,404

Total assets	$	1,295,806		$	711,581

Liabilities and Stockholders’ Equity/Parent Net Investment
Accounts payable and accrued expenses	$	77,985		$	5,384
Due to related party, net		—			11,370
Excise tax payable		2,308			—
Other current liabilities		1,462			1,148

Total current liabilities		81,755			17,902
Warrant liabilities		68,295			—
Asset retirement obligations		91,450			349,138
Senior Secured Term Loan including paid-in-kind interest, net		771,202			—
Deferred tax liabilities		14,632			—
Other		3,894			5,520

Total liabilities		1,031,228			372,560
Commitments and Contingencies (Note 8)
Stockholders’ Equity/Parent Net Investment
Parent net investment		—			339,021
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		—			—
Common Stock , $0.0001 par value; 500,000,000 shares authorized; 60,166,269 at March 31, 2024		6			—
Additional paid-in capital		525,695			—
Accumulated deficit		(261,123	)		—

Total Stockholders’ Equity/Parent Net Investment		264,578			339,021

Total Liabilities and Stockholders’ Equity/Parent Net Investment	$	1,295,806		$	711,581

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

SABLE OFFSHORE CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(dollars in thousands)


	Successor			Predecessor
	February 14, 2024— March 31, 2024			January 1, 2024— February 13, 2024			Three Months Ended March 31, 2023
Revenue
Oil and gas sales	$	—		$	—		$	—

Total revenue		—			—			—
Operating Expenses
Operations and maintenance expenses		7,318			7,320			14,796
Depletion, depreciation, amortization and accretion		1,377			2,627			5,255
General and administrative expenses		150,448			1,714			3,137

Total operating expenses		159,143			11,661			23,188

Loss from operations		(159,143	)		(11,661	)		(23,188	)
Other (income) expenses:
Change in fair value of warrant liabilities		(1,763	)		—			—
Other (income) expense		(499	)		128			5
Interest expense		9,801			—			—

Total other expense, net		7,539			128			5

Loss before income taxes		(166,682	)		(11,789	)		(23,193	)
Income tax expense		13,423			—			—

Net loss	$	(180,105	)	$	(11,789	)	$	(23,193	)

Basic and diluted net loss per Common Stock
Weighted average Common Stock outstanding, basic and diluted		60,166,269			n/a			n/a

Basic and diluted net loss per Common Stock	$	(2.99	)		n/a			n/a

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

SABLE OFFSHORE CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) / PARENT NET INVESTMENT

(UNAUDITED)

(dollars in thousands)


	Common Stock				Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Equity (Deficit)
Successor:

For the period from February 14, 2024 to March 31, 2024
BALANCE—February 14, 2024 (prior to Business Combination)		7,187,500	$	1	$	—	$	(81,018	)	$	(81,017	)
Redeemable shares reclassified to Common Stock		5,953,859		1		61,948		—			61,949

Net effect of Business Combination		13,141,359		2		61,948		(81,018	)		(19,068	)
Private offering proceeds, net		44,024,910		4		417,367		—			417,371
Issuance of merger consideration shares		3,000,000		—		36,300		—			36,300
Shared based compensation		—		—		10,080		—			10,080
Net loss		—		—		—		(180,105	)		(180,105	)

BALANCE—March 31, 2024		60,166,269	$	6	$	525,695	$	(261,123	)	$	264,578


	Parent Net Investment
Predecessor:
For the period January 1, 2024 to February 13, 2024
BALANCE—January 1, 2024	$	339,021
Contributions from parent		22,474
Net loss		(11,789	)

BALANCE—February 13, 2024	$	349,706
BALANCE—December 31, 2022	$	362,596
Contributions from parent		19,747
Net loss		(23,193	)

BALANCE—March 31, 2023	$	359,150

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

SABLE OFFSHORE CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(dollars in thousands)


	Successor			Predecessor
	February 14, 2024— March 31, 2024			January 1, 2024— February 13, 2024			Three Months Ended March 31, 2023
Cash flows from operating activities:
Net loss	$	(180,105	)	$	(11,789	)	$	(23,193	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion, amortization and accretion		1,377			2,627			5,255
Stock-based compensation		46,380			—			—
Amortization of deferred financing costs		170			—			—
Paid-in-kind interest		9,631			—			—
Change in deferred tax liabilities		13,423			—			—
Change in fair value of warrant liabilities		(1,763	)		—			—
Changes in current assets and current liabilities, net of effect of acquisition:
Materials, supplies and other assets		—			5,980			247
Prepaid expenses		(2,248	)		—			—
Accounts payable and accrued expenses		77,006			(7,922	)		(1,986	)
Due to related party		—			(11,370	)		(70	)

Net cash used in operating activities		(36,129	)		(22,474	)		(19,747	)
Cash flows from investing activities:
Cash paid for acquisition		(204,094	)		—			—

Net cash used in investing activities		(204,094	)		—			—

Cash flows from financing activities:
Capital contribution from parent		—			22,474			19,747
Private offering proceeds		440,249

SEC Form 10-Q filed by Sable Offshore Corp.