Flame Acquisition Corp. (FLME) Merger with Sable Offshore (Private)

Research / By

November 2, 2022

  • Flame Acquisition Corp. (FLME) to acquire Sable Offshore (private) in a transaction valuing the pro forma entity at $883 million in Enterprise Value ($689 million equity value assuming no redemptions and $300 million PIPE successfully raised).
  • Sable Offshore has already raised $71.5 million that will convert into the FLME PIPE at closing (the “Sable PIPE Investment”).
  • In connection with the merger with FLME, Sable Offshore will use proceeds from a 1st Lien loan provided by ExxonMobil to purchase the Santa Ynez Field assets from ExxonMobil.
  • Jim Flores, Flame Acquisition CEO and sole owner of Sable Offshore (the target), will receive 3.0 million shares of FLME as consideration for the sale of Sable to Flame.
  • Merger agreement does include any cash closing condition.
  • No closing timeline provided for the Business combination.
  • SPAC Details:
    • Unit Structure: 1 ordinary share+ ½ warrant
    • #Cash in Trust: $287,703,046 (100.0% of Public Offering)
    • Public Shares Outstanding: 28.75 million shares
    • Private Shares Outstanding: 7.1875 million shares
    • Reported Trust Value/Share: $10.01
    • Liquidation Date: March 1, 2023
  • Name of Target: Sable Offshore
  • Description of Target: Sable Offshore is an oil & gas company that has agreed to acquire the Santa Ynez Field and associated assets from ExxonMobil. The Santa Ynez Field is an oil-weighed resource comprising of three offshore platforms located in federal waters off of Santa Barbara, California. The associated assets include wholly owned onshore production treatment facilities.
  • Announced Date: November 2, 2022
  • Expected Close: None provided
  • Press Release: https://www.sec.gov/Archives/edgar/data/1831481/000119312522275898/d403393dex991.htm
  • Transaction Terms (https://content.bamsec.com/0001193125-22-275898/g403393ex99_2p6g1.jpg )
    • Diluted Enterprise Value: $883 million 
    • Market Cap Value:  $689 million (assuming min cash condition met)
    • Target Shareholders Receive:
      • Sable common stock = 3 million FLME shares(to Jim Flores) + cash of $623 million (financed by ExxonMobile)
  • PIPE / Financing:
    • Sable Offshore has raised $71.5 million (7.15 million shares each at $10/share) which will convert to FLME PIPE at closing
    • Flame will seek to  raise up to $400 million of additional PIPE (inclusive of $71.5 million already raised) on substantially similar terms
  • Redemption Protections:
    • No Redemption Protections
  • Support Agreement:
    • No Support Agreement
  • Lock-up:
    • Target shareholders agree to 3-year lock-up (this is the 3 million shares to Jim Flores)
    • SPAC sponsor: Standard 1-year post-closing or early release at $12.00 after 150 days
  • Closing Conditions:
    • No minimum cash condition
    • Termination date: June 30, 2023
    • Sable-EM Purchase Agreement closes (the asset purchase from ExxonMobil)
    • Flame receiving certification from the Bureau of Ocean Energy Management that Flame is qualified to hold offshore oil and gas leases and rights-of-way pursuant to the Outer Continental Shelf Lands Act and applicable regulations
    • Other customary closing conditions
  • Termination:
    • Standard, no termination fee
  • Advisors:
    • Target Financial Advisors:  Cowen and Company, LLC, Intrepid Partners, LLC, and Jefferies LLC
    • SPAC Financial Advisors: Petrie Partners Securities, LLC
    • Target Legal Advisors: Bracewell LLP
    • SPAC Legal Advisors: Latham & Watkins LLP
  • Comparables (N/A):
    • No valuations provided
  • Management Equity Incentive Plan
    • No Management Equity Incentive Plan

*Denotes estimated figures by CPC

#Reported as on November 14, 2022