Sable Offshore Corporation, an entity born from Exxon Mobil Corp., is currently embroiled in a significant controversy. This situation, involving alleged leaks of confidential information and urgent financial demands, led to a substantial decline in Sable's stock value on Monday. The unfolding events point to a complex interplay of corporate governance, investor relations, and public scrutiny.
The catalyst for this turmoil was a report released last Friday by Hunterbrook, which accused Sable's Chief Executive Officer, Jim Flores, of divulging critical, non-public details about the company's financial requirements and regulatory challenges concerning its offshore oil venture. These disclosures were reportedly made to a select group of investors, prominently featuring professional golfer Phil Mickelson. Such actions, if proven, could constitute a serious breach of corporate ethics and securities law.
Following these allegations, Sable Offshore held an urgent conference call for its investors on Monday morning. During this call, the company confirmed certain aspects of Hunterbrook's investigative findings, particularly the pressing need for approximately $225 million in fresh equity. This capital infusion is deemed essential to secure an extension on a loan from Exxon Mobil. Without this funding, Exxon Mobil retains the right to reclaim Sable's primary asset without any financial compensation to Sable, placing the company in a precarious position. The company also stated that this fundraising effort would lead to a dilution of existing shareholders' equity by roughly 20%, calculated based on an $8.30 per share valuation at the time.
It emerged that the plan to raise these substantial funds had not been widely disseminated prior to the Hunterbrook report. Instead, certain investors had reportedly been informed of this critical development in a private discussion held in October. Hunterbrook subsequently released an audio recording of this private call, lending further weight to its claims. In response to these escalating concerns, Sable Offshore announced the formation of a Special Committee. This committee has been tasked with thoroughly examining the allegations brought forth by Hunterbrook Media and ensuring transparency and accountability.
Despite the gravity of the situation, Phil Mickelson has vehemently denied any wrongdoing. He asserted that he did not engage in trading activities based on the allegedly leaked information, nor did he misuse it in any way, labeling the report as 'slanderous.' Meanwhile, Hunterbrook Media, through its affiliated entity Hunterbrook Capital, has taken a short position on SOC shares, indicating their belief that the stock's value will continue to decrease. As these events unfold, the financial markets are closely watching Sable Offshore, with its shares reflecting the intense pressure and uncertainty surrounding the company's future.