BREAKING: Sable Is Running Out Of Money – Till Daldrup
HunterBrook exposes Sable Offshore Corporation's critical financial crisis: $1B Exxon debt, $2.3B production funding gap, zero revenue, imminent bankruptcy risk, and unsustainable cash burn threatening offshore energy venture's survival.
Sable Offshore Corporation (SOC) is teetering on the edge of bankruptcy, burning through cash at an unsustainable rate while facing over $1 billion in escalating debt to Exxon and requiring an impossible $2.3 billion to reach production.
- Ticker: SOC
- Position Disclosure: HunterBrook maintains a short position in Sable Offshore Corporation
Thesis
Sable Offshore faces insurmountable financial challenges:
- Imminent insolvency risk - Only $41.6 million cash as of September 30 with $39.7 million monthly burn rate, providing roughly one month of runway before recent financing
- Massive capital shortfall - Requires $2.3 billion to reach commercial production while recent $250 million raise only extends runway by 10 months
- Escalating Exxon obligations - $900 million debt growing to $1.1 billion by 2027, plus $4 million monthly payments with no permit transfer in sight
- Regulatory roadblocks - Santa Barbara County voted against permit transfer, making indefinite Exxon payments likely while adding $350-500 million bonding requirements
- Governance red flags - CEO's questionable $15.2 million private jet purchase and Pilgrim Global's suspicious SEC filing amendments to avoid disclosure requirements
- Zero revenue generation - No production or income while liabilities compound, creating an unsustainable cash burn spiral
Key Findings & Insights
Investigation uncovered several concerning details about Sable's operations:
- Private jet controversy - CEO Jim Flores acquired a Cessna Citation through a 600,000 share swap worth $15.2 million during the company's cash crisis
- Pilgrim Global's "weirdest Form 4 ever" - Major investor retroactively amended filings to avoid 10% ownership disclosure, potentially concealing large share sales
- Staggering liability pyramid - Beyond Exxon debt, faces $31.9 million CalGEM bond, potential $18 million annual penalties, and $18 million California Coastal Commission fine
- FPSO vessel reality check - Single required asset costs $450 million, nearly double the entire recent financing round
- Federal funding mirage - Despite management claims, experts doubt federal support viability given senior secured loan requirements conflicting with Exxon obligations
- Accounts payable crisis - Over $163 million in unpaid bills while burning cash at unprecedented rates
FAQs
What makes Sable Offshore's financial situation so dire?
Sable had only $41.6 million in cash as of September 30 while burning $39.7 million monthly, essentially operating on a one-month runway. The recent $250 million financing only extends this to approximately 10 months while the company requires $2.3 billion to reach production.
How much does Sable owe Exxon and why is this problematic?
Sable owes over $900 million to Exxon with 15% interest, projected to reach $1.1 billion by March 2027. Additionally, the report reveals Sable must pay $4 million monthly until Exxon transfers operating permits - payments that may continue indefinitely after Santa Barbara County's opposition vote.
What are the key regulatory obstacles facing Sable?
Santa Barbara County voted against the permit transfer, CalGEM requires a $31.9 million bond with potential $50,000 daily penalties, and the California Coastal Commission imposed an $18 million fine that Sable is contesting in court.
Why is the CEO's private jet purchase controversial?
CEO Jim Flores acquired a Cessna Citation Latitude through a share swap of 600,000 shares worth approximately $15.2 million during the company's severe cash crunch, raising questions about resource allocation and corporate governance.
What's unusual about Pilgrim Global's SEC filings?
Pilgrim Global retroactively amended its SEC filings to void its status as a 10% owner, potentially allowing the major investor to trade shares without disclosure requirements. Securities experts quoted in the report called this "the weirdest Form 4 I've ever seen."
How realistic is Sable's timeline to reach production by 2026?
This timeline is highly unrealistic, requiring $2.3 billion in funding, multiple regulatory approvals from agencies that have already shown opposition, and the successful deployment of complex offshore infrastructure including a $450 million FPSO vessel.
What are the total bonding requirements Sable faces?
Sable faces a $350 million bond requirement from the Exxon agreement (potentially increasing to $500 million), plus a $31.9 million CalGEM bond, creating additional liquidity pressures beyond operational cash needs.
Could federal financing save Sable's project?
Industry experts doubt federal financing viability, noting that federal loans typically require senior secured assets that couldn't be used to pay existing obligations like the Exxon debt, making this funding avenue questionable.
This summary is based on equity research conducted by HunterBrook and does not constitute primary research. HunterBrook has disclosed maintaining a short position in Sable Offshore Corporation (SOC). All findings and conclusions referenced herein are attributed to HunterBrook's original research and analysis.
The original detailed analysis can be found at HunterBrook's Sable Runway report.
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