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Posts Tagged ‘financial responsibility’

Stunning Hunterbrook report suggests the end is near for Sable Offshore

Posted in California, decommissioning, Offshore Energy - General, tagged , , , , , , on November 19, 2025| Leave a Comment »

Excerpts from a stunning Sable update issued by Hunterbrook Media LLC (“Hunterbrook“) on November 14, 2025:

  • SEC filing reveals Sable entered October about a month from potential bankruptcy. The company had $41.6 million as of September 30, with $39.7 million in average monthly burn in 3Q25.  
  • When Sable announced its $250 million financing on November 10 at $5.50 per share, the company likely had single digit millions in the bank based on its reported burn, against over $163 million in accounts payable and accrued liabilities. Sable does not generate any revenue.
  • Sable needs to raise significantly more money: According to leaked audio of Sable’s CEO briefing for select investors, the company will require $2.3 billion to achieve commercial production of oil and gas from its three platforms off the coast of Santa Barbara.
  • That includes at least $900 million to buy out Exxon, to which Sable must pay 15% interest on debt due by March 31, 2027. By then, the loan would be about $1.1 billion, accruing $200 million in added debt.
  • One of Sable’s only known assets other than the oil and gas project is a private plane the company purchased from its CEO, Jim Flores. The plane recently flew round-trip from Houston, where Flores lives, to Louisiana, in time for a football game at the CEO’s alma mater.

Comments from Santa Barbara County Supervisor Steve Lavagnino, an oil industry supporter, that explain his opposition to the transfer of Exxon’s pipeline permit to Sable:

“The final straw for me was a Hunterbrook article, which was as disturbing as anything I’ve read. I have many friends in the oil industry and I will continue to support efforts to access our natural resources, but it has to be done responsibly by operators who put safety above profits.”

Sable’s limited response to the Hunterbrook report includes information on decommissioning financial assurance:

  • Sable’s original SYU Purchase and Sales Agreement (PSA) with Exxon required Sable to post a $350 million decommissioning bond “150 days following the resumption of production from the wells.”
  • According to Sable, production resumed on May 15, 2025. The bond would have thus been required in October. (SYU production was halted by court order on June 6, so that “resumption date” may be irrelevant. Regardless, the Oct. financial assurance deadline is immaterial given the recent update to the PSA.)
  • The PSA update extended the date for posting the decommissioning bond to three business days following the new Exxon Loan Maturity Date of March 31, 2027 or 90 days after first sales of hydrocarbons, whichever comes first. (Note the change in language from “resumption of production” to “first sales.” Brief well test production does not trigger posting of the decommissioning bond.)
  • Under certain circumstances after the bonding is in place Exxon may seek an increase in the bonding amount to $500 million.

The decommissioning obligations are moot if Sable runs out of funds or is unable to resume SYU production prior to the 3/31/2027 PSA deadline. Exxon would remain fully responsible for SYU decommissioning.

Is it time for a public statement from Exxon on the SYU and Sable?

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“Financial liabilities and environmental implications of unplugged wells for the Gulf of Mexico and coastal waters”

Posted in California, climate, decommissioning, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , on May 11, 2023| Leave a Comment »

The subject Nature Energy paper is helpful in that it contributes to the important dialogue on the financial aspects of offshore decommissioning. There have been numerous posts on that topic on this blog. The use of Federal funds to cover well abandonment expenses for OCS wells, although rather limited to date, is a major disappointment for those of us who have worked hard to prevent such an outcome.

The data in the paper appear to be reasonably accurate. However, there is one glaring error regarding Pacific operations, and the reference to the Macondo blowout in the environmental discussion is rather provocative and misleading.

Per the authors:

California wells are drilled in relatively shallow water—mostly less than 100 feet—while GoM wells can be in up to 10,000 feet of water.

California’s fault block shelf drops off very quickly, and deepwater drilling activity has been common for decades. Of the 23 platforms in Federal waters, only Platform Gina is in <100′ of water (95′). The other platforms are in water depths of 154 to 1178′. Six of the platforms are in >600′ of water and 2 are in >1000′. Platform Harmony (jacket pictured below) is one of the world’s largest and heaviest steel tower platforms. Relative to the numbers of facilities, the decommissioning challenges offshore California are more daunting and complex than those in the Gulf. This includes the financial liability aspects.

Jacket for Platform Harmony

With regard to the environmental risks, the Nature Energy paper’s reference to the Macondo blowout, while muted, is what some media outlets embraced. Per the authors:

Releases from improperly abandoned wells will probably be chronic and small compared with Macondo, but the underlying biochemical and ecological processes that influence the ecological impacts have many similarities.

The Macondo well blew out while it was being suspended in preparation for subsequent completion operations. Ill advised changes to the well suspension plan were among the primary contributing factors to the blowout (see diagram below). The Macondo well was entirely different from the depleted end-of-life wells that are the subject of the paper.

Some media outlets ran with the Macondo angle, weak as it was. This ABC news piece featured numerous Macondo pictures. Other outlets noted that Macondo was a temporarily abandoned well, which it was not. The Macondo well never got to that point.

National Commission, Chief Counsel’s Report, p. 132

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