SOC
Sable Offshore CORP
NYSE
8-K: Flame Acquisition Corp. Stockholders Approve Business Combination with Sable Offshore Corp.
Sentiment:
Merger Announcement
12 February 2024 5:30 PM
Flame Acquisition Corp. stockholders have approved the business combination with Sable Offshore Corp., paving the way for the combined company to begin trading on the NYSE.
Capital raise
The company initially secured a $520 million PIPE investment.
One investor was unable to fund $125 million of their commitment.
The company secured an additional $53 million in PIPE investments to partially offset the shortfall.
The company will continue to seek additional investments to provide liquidity after the merger.
Summary
- Flame Acquisition Corp. held a special meeting on February 12, 2024, where stockholders voted to approve the business combination with Sable Offshore Corp.
- All proposals related to the merger were approved, including the adoption of the merger agreement, changes to the company's charter, and the issuance of shares.
- The business combination is expected to close around February 14, 2024, with the combined company, renamed Sable Offshore Corp., expected to begin trading on the NYSE on February 15, 2024, under the ticker symbols SOC and SOC.WS.
- Flame had approximately $62.2 million in its trust account prior to the business combination.
- A PIPE investment of $520 million was initially secured, but one investor could not fund $125 million due to issues with foreign investors.
- Flame secured an additional $53 million in PIPE investments to partially offset the shortfall, including $25 million from its CEO, James C. Flores.
- The company is still seeking additional investments to provide liquidity after the merger.
- The pro forma ownership structure assumes a $437.895 million PIPE investment and 150,823 public shares redeemed.
- The pro forma ownership structure includes current stockholders, PIPE investors, merger consideration, and shares issuable upon exercise of warrants and incentive plans.
Sentiment
Score: 7
Explanation: The document conveys a generally positive sentiment due to the successful stockholder vote and the expected closing of the merger. However, the funding shortfall and the need for additional capital raise introduce some uncertainty.
Positives
- Stockholder approval was secured for the business combination, indicating strong support for the merger.
- The combined company is expected to begin trading on the NYSE, which could increase visibility and liquidity.
- The company has secured additional PIPE investments to partially offset a shortfall, demonstrating its ability to adapt to challenges.
- The company expects to have sufficient capital for its operations after the merger.
Negatives
- One PIPE investor was unable to fund $125 million of their commitment, creating a funding shortfall.
- The company may not be able to obtain additional funds on favorable terms or at all, which could reduce available capital.
- The pro forma ownership structure is based on assumptions, and actual results may differ.
Risks
- The inability to complete the business combination due to failure to obtain financing or satisfy closing conditions.
- The ability to meet stock exchange listing standards after the merger.
- The ability to recommence production of the SYU Assets and the associated costs and time.
- Commodity price volatility and low prices for oil, natural gas, and natural gas liquids.
- Global economic conditions, inflation, and increased operating costs.
- Uncertainties related to new technologies, environmental risks, and regulatory changes.
- The uncertainty inherent in estimating oil and natural gas reserves and projecting future production rates.
- Reductions in cash flow and lack of access to capital.
- Restrictions in existing or future debt agreements.
- The timing of development expenditures and the ability to manage growth and integrate acquisitions.
- The ability to recognize the anticipated benefits of the business combination.
Future Outlook
The combined company, Sable Offshore Corp., is expected to begin trading on the NYSE on February 15, 2024. The company will continue to seek additional investments to provide liquidity following the consummation of the merger.
Management Comments
- The company continues to expect to be able to satisfy the $150,000,000 Sable-EM Minimum Cash Threshold, complete the Closing on the terms set forth in the Proxy Statement, and have sufficient capital for its operations.
Industry Context
This announcement reflects a trend of special purpose acquisition companies (SPACs) merging with private companies to go public. The focus on oil and gas assets aligns with the current energy market dynamics, but also carries inherent risks related to commodity price volatility.
Comparison to Industry Standards
- The initial PIPE investment of $520 million is a significant amount, typical of SPAC mergers in the energy sector.
- The inability of one investor to fund their commitment highlights the risks associated with PIPE investments, which are common in these types of transactions.
- The pro forma ownership structure is similar to other SPAC mergers, with a significant portion of the company owned by PIPE investors and the original sponsors.
- The focus on the Santa Ynez Unit (SYU) is a specific asset acquisition, which is different from a broader company merger, and the success of the merger is dependent on the ability to recommence production of the SYU Assets.
Stakeholder Impact
- Shareholders have approved the merger, which is expected to result in the combined company trading on the NYSE.
- Employees of both Flame and Sable will be part of the new combined entity.
- Customers and suppliers of Sable will be impacted by the merger and the new company structure.
- Creditors of both companies will be impacted by the merger and the new company structure.
Next Steps
- The business combination is expected to close around February 14, 2024.
- The combined company, Sable Offshore Corp., is expected to begin trading on the NYSE on February 15, 2024.
- The company will continue to seek additional investments to provide liquidity after the merger.
Related Party Transactions
- James C. Flores, the Chairman and CEO, committed an additional $25 million to the PIPE investment.
Key Dates
- 2022-11-02: Date of the Agreement and Plan of Merger.
- 2024-01-03: Record date for the Special Meeting of stockholders.
- 2024-01-31: Flame filed a definitive proxy statement on Schedule 14A.
- 2024-02-12: Date of the Special Meeting of stockholders and announcement of voting results.
- 2024-02-14: Expected closing date of the business combination.
- 2024-02-15: Expected date for the combined company to begin trading on the NYSE.
Keywords
business combination, merger, PIPE investment, Sable Offshore Corp, Flame Acquisition Corp, stockholder approval, NYSE, oil and gas, SYU Assets, capital raise
SOC
Sable Offshore CORP
NYSE
Sector: Energy
Filings with Classifications
Better than expected
23 May 2025 4:07 PM
Equity Offering Update
- The offering size was increased from a previously announced $200.0 million of shares, indicating higher demand than initially anticipated.
- The underwriters fully exercised their option to purchase an additional 1,304,346 shares, demonstrating strong investor interest and confidence in the offering.
- The company successfully raised approximately $295.0 million in gross proceeds, providing significant capital for its stated corporate purposes.
Capital raise
23 May 2025 4:07 PM
Equity Offering Update
- Sable Offshore Corp. completed an upsized underwritten public offering of 10,000,000 shares of common stock.
- The shares were sold at a public offering price of $29.50 per share.
- The gross proceeds from the offering amounted to approximately $295.0 million.
- The net proceeds, estimated at $283.2 million, are intended for capital expenditures, working capital, and general corporate purposes.
- The offering included the full exercise of the underwriters' 30-day option to purchase an additional 1,304,346 shares.
Better than expected
19 May 2025 6:19 AM
Current Report on Form 8-K
- The updated 2H25 production guidance of 40,000-50,000 BOE/D is significantly higher than the prior guidance of 20,000-25,000 BOE/D.
- Initial well tests at Harmony Platform have exceeded expectations.
Delay expected
9 May 2025 4:10 PM
Earnings Release
- The Santa Ynez Unit assets have been non-producing since June 2015 due to a pipeline shutdown, representing a significant delay in production.
Worse than expected
9 May 2025 4:10 PM
Earnings Release
- The company reported a net loss of $109.5 million, indicating worse than expected financial performance.
Worse than expected
9 May 2025 4:03 PM
Quarterly Report
- The company reported a net loss of $109.5 million, indicating worse than expected financial performance.
- The company's ability to continue as a going concern is subject to substantial doubt, indicating worse than expected operational outlook.
Delay expected
17 March 2025 8:15 PM
Annual Report
- The company faces regulatory hurdles and legal proceedings that could delay or prevent the restart of production.
Worse than expected
17 March 2025 8:15 PM
Annual Report
- The company has a history of net losses and negative cash flows from operations.
- The company is not currently generating revenue from its SYU Assets.
- The company is reliant on external funding to continue operations.
Delay expected
19 February 2025 10:14 AM
8-K Filing
- The dispute with the California Coastal Commission could potentially delay Sable's pipeline repair operations.
Worse than expected
19 February 2025 10:14 AM
8-K Filing
- The company is facing a Cease and Desist Order from the California Coastal Commission.
- The company is involved in a lawsuit with the California Coastal Commission.
- The company's pipeline repair operations could be delayed or halted.
Delay expected
2 January 2025 7:35 AM
Litigation Update
- The lawsuit and subsequent remand introduce uncertainty regarding the timeline for restarting production at the Santa Ynez Unit.
- The potential for third-party interference could further delay the restart of operations.
Delay expected
14 November 2024 5:20 PM
Quarterly Report and Regulatory Update
- The California Coastal Commission asked Sable to stop all work in the Coastal Zone at the end of September, causing delays in pipeline maintenance and repair.
- The need to agree on an interim work plan with the CCC to fill open excavations is causing further delays.
Worse than expected
14 November 2024 5:20 PM
Quarterly Report and Regulatory Update
- The company reported a significant net loss of $255.6 million, which is worse than expected for a company of this size.
- The ongoing issues with the California Coastal Commission and the potential reversion of assets to ExxonMobil are also worse than expected.
Worse than expected
14 November 2024 4:14 PM
Quarterly Report
- The company reported a significant net loss, driven by high operating expenses and changes in the fair value of warrant liabilities.
- The company's assets are not currently producing, leading to a lack of revenue and substantial operating losses.
- There is substantial doubt about the company's ability to continue as a going concern.
Capital raise
14 November 2024 4:14 PM
Quarterly Report
- The company completed a second private placement of shares, raising $150 million.
- The company received $72.5 million from warrant exercises.
- The company may need to raise additional capital if its cost estimates for restarting production are insufficient.
Capital raise
11 October 2024 5:10 PM
S-1 Filing
- The document details the issuance of 7,500,000 shares of Common Stock in a private placement (Second PIPE Investment) for an aggregate purchase price of $150,000,000.
Capital raise
24 September 2024 5:27 PM
Private Placement Announcement
- Sable Offshore Corp. raised approximately $150 million through a private placement.
- The company issued approximately 7.5 million new shares of common stock to investors.
- The shares were sold at a price of $20.00 per share.
Worse than expected
13 August 2024 4:29 PM
Quarterly Report
- The company reported a significant net loss of $165.4 million, which is worse than expected for a company in the process of restarting production.
Delay expected
13 August 2024 4:29 PM
Quarterly Report
- The company has a new deadline of July 1, 2025, to implement its 2021 Risk Analysis and Implementation Plan, which is a delay from the original timeline.
- The company is facing delays in obtaining permits from the County of Santa Barbara.
Worse than expected
13 August 2024 4:07 PM
Quarterly Report
- The company reported a significant net loss of $165.4 million for the quarter and $345.5 million for the period from February 14, 2024 to June 30, 2024.
- Operating expenses were substantial at $62.2 million for the quarter and $221.4 million for the period from February 14, 2024 to June 30, 2024.
- The company recorded a large change in fair value of warrant liabilities of $81.2 million for the quarter and $79.4 million for the period from February 14, 2024 to June 30, 2024.
- There is substantial doubt about the company's ability to continue as a going concern.
Delay expected
13 August 2024 4:07 PM
Quarterly Report
- The company's restart of production is contingent on regulatory approvals and repairs, which introduces uncertainty and potential delays.
- The OSFM approved PPC's extension request for the implementation of the 2021 Plan, setting a new deadline of July 1, 2025.
Capital raise
13 August 2024 4:07 PM
Quarterly Report
- The company may need to raise additional capital if its cost estimates for restarting production are less than the actual amounts needed.
- There is no assurance that new financing will be available on commercially acceptable terms.
Delay expected
11 July 2024 9:05 AM
Current Report
- The restart of operations has been delayed and is now expected in late third quarter 2024 or early fourth quarter 2024.
Better than expected
15 May 2024 4:54 PM
Quarterly Report
- The company increased its Total Net Estimated Contingent Resources by 21% to 646 MMboe, with a PV-10 value of $10.0 billion, which is a significant improvement over previous estimates.
Capital raise
15 May 2024 4:38 PM
Quarterly Report
- The company raised $440.2 million through a private placement of common stock.
- The company secured a $625 million senior secured term loan from Exxon Mobil.
Worse than expected
15 May 2024 4:38 PM
Quarterly Report
- The company reported a significant net loss of $180.1 million, which is worse than expected for a company that has just completed a business combination and is preparing to restart production.
- The high general and administrative expenses, driven by a $70 million legal settlement and $46.4 million in share-based compensation, contributed to the worse than expected results.
Capital raise
1 April 2024 4:31 PM
Amended 8-K Filing
- The company raised $440.2 million through a private placement of shares at $10.00 per share.
- The company may need to raise additional capital if the costs of restarting production exceed estimates.
Delay expected
1 April 2024 4:31 PM
Amended 8-K Filing
- The closing date of the purchase agreement was delayed from June 30, 2022, to December 31, 2022, and then to February 1, 2024, and finally closed on February 14, 2024.
- The restart of production is contingent upon regulatory approvals and the timing of ongoing construction repair efforts, which could lead to further delays.
Worse than expected
1 April 2024 4:31 PM
Amended 8-K Filing
- The company reported a significant net loss of $1.5 billion in 2022 due to a $1.4 billion impairment, indicating worse than expected financial performance.
- The company has a going concern warning, indicating worse than expected financial stability.
Capital raise
28 March 2024 5:21 PM
Annual Report
- The company may need to raise additional capital to fund the restart of production if its current cash on hand is insufficient.
- The company may issue additional equity or debt securities in the future, which may dilute existing stockholders or introduce restrictive covenants.
Worse than expected
28 March 2024 5:21 PM
Annual Report
- The company's independent auditor has expressed substantial doubt about its ability to continue as a going concern.
- The company has a working capital deficit of $16.4 million as of December 31, 2023.
Capital raise
12 February 2024 5:30 PM
Merger Announcement
- The company initially secured a $520 million PIPE investment.
- One investor was unable to fund $125 million of their commitment.
- The company secured an additional $53 million in PIPE investments to partially offset the shortfall.
- The company will continue to seek additional investments to provide liquidity after the merger.
Capital raise
16 January 2024 4:26 PM
Merger Financing Update
- Flame Acquisition Corp. has secured $520 million in PIPE financing.
- The financing involves the sale of 52 million shares of Class A common stock at $10.00 per share.
- The PIPE includes $100 million from new Flame PIPE investors and $420 million from Holdco PIPE investors.
- The Holdco PIPE investors will purchase 34.85 million shares of Holdco Class B shares at $10.00 per share.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.