$SOC on deez nuts nerds!!! - Deep Value Oil Play 🚀🛢️🚀

\*\*TLDR:\*\*
Sable Offshore Corp ($SOC) is a misunderstood, high-risk / high-reward oil restart story. The market is currently pricing the company as if financing + California litigation can permanently impair the asset (which I obviously believe is incorrect).
 
The core asset (the Santa Ynez Unit offshore California) is already producing and has resumed oil sales. Sable’s latest investor presentation shows net estimated reserves of 659 million barrels of oil equivalent (worth >$48 BILLION at $73 per barrel) and 2027E midpoint guidance of roughly $1.1b revenue, $862m adjusted EBITDA, and $753m unlevered FCF. Against a current market cap of only \~$475m and EV of only \~$1.4b after today’s selloff, the math is extremely asymmetric if / when operations continue.
 
While the bear case is real (dilution / refinancing overhang, ongoing CA litigation and regulatory hostility), the bull case is MORE real: federal government support has strengthened materially, DOE / DOI leadership physically visited the asset, DOE is in active dialogue around a potential West Coast Strategic Petroleum Reserve tied to Sable, and current guidance implies the company is trading at roughly 1.6x 2027E EV / EBITDA and 1.9x 2027E EV / unlevered FCF (incredibly low multiples if that wasn’t obvious).
 
Position: 9k shares (6k added today) with additional significant short put and long call option exposure.
Proof: [https://imgur.com/a/n4YpMqB](https://imgur.com/a/n4YpMqB)

\*\*Full DD:\*\*
\*\*1. The setup\*\*
Sable Offshore owns and operates the Santa Ynez Unit, or SYU, an offshore California oil and gas asset originally developed by ExxonMobil. SYU includes 16 federal leases, three offshore platforms (Harmony, Heritage, Hondo) and related processing / pipeline infrastructure, including the Las Flores Canyon facility and the Santa Ynez Pipeline System.
 
The asset was shut in after the 2015 Refugio spill, but Sable acquired SYU and related infrastructure in 2024 and has been working through the restart (including maintenance / repairs to prevent a repeat of 2015). Sable restarted production at Platform Harmony in May 2025, resumed transportation through the pipeline system in March 2026 pursuant to a DOE Defense Production Act order, and announced first oil sales through the Santa Ynez Pipeline System to Chevron on March 29, 2026.
 
The market is focused on the downside, but at the end of day this is a large, producing, oil-heavy asset in one of the most structurally supply-constrained petroleum markets in the U.S.
 
\*\*2. Why this asset matters\*\*
California is structurally short crude. California is an “energy island” with declining refining capacity, declining in-state crude output, and increased reliance on foreign imports (laughable situation to say the least). California’s petroleum demand is \~1.5 MMBbl/d, (that’s 1.5 million barrels of oil per day for those that are regarded), and foreign oil represented 61% of California oil supply in 2025 (insane).
 
This matters because Sable’s barrels are not generic barrels. They are local California barrels feeding a market with limited pipeline connectivity to the rest of the U.S., shrinking local supply, and elevated exposure to imported crude. That is why the federal government is framing this as a national-security / energy-security issue rather than just a local oil restart. DOE’s March 2026 order specifically argued that Sable’s production could replace foreign crude and support West Coast / military fuel security.
 
California state leadership is hostile (surprise surprise), but the current federal administration has directly backed Sable through the DPA, PHMSA jurisdiction, DOJ intervention / statements, and cabinet-level site visits.
 
\*\*3. Recent catalysts / current events\*\*
\*\*Federal support is not theoretical anymore\*\*
On March 13, 2026, Energy Secretary Chris Wright directed Sable to restore operations of SYU and the Santa Ynez Pipeline System under DPA authority. Sable then resumed transportation on March 14 and began oil sales later that month.
 
In early June, Energy Secretary Chris Wright and Interior Secretary Doug Burgum visited Sable’s Las Flores Canyon facility after an aerial tour of the offshore infrastructure. That matters because Sable is not just arguing “federal support” in abstract. The federal government is visible, public, and litigating alongside / adjacent to Sable in multiple proceedings.
 
\*\*Potential West Coast Strategic Petroleum Reserve\*\*
This is one of the most interesting recent developments. The DOE is in active dialogue about creating a petroleum reserve in California, and Sable submitted a proposal for a West Coast Strategic Petroleum Reserve in response to inquiries made by the federal government. The proposal reportedly contemplated an initial 370,000 barrel storage facility and a second phase potentially up to 30 million barrels.
 
The SPR is not base case yet, but it is a meaningful call option. If a federal reserve or reserve-adjacent easement framework strengthens Sable’s ability to move oil through the pipeline system, it could materially reduce the legal / operational risk discount.
 
\*\*June 8 hearings did not produce an immediate ruling\*\*
The June 8 hearings on the DPA and Consent Decree issues did not result in immediate merits rulings. However, Jefferies released a note after the hearings that indicated that they viewed Judge Wilson’s comments positively. The major legal rulings should be announced in the coming weeks.
 
There was also a separate Sable-favorable federal result earlier this year: Judge Wilson denied California Parks’ preliminary injunction request to stop oil movement through the pipeline segment under Gaviota State Park, finding Parks failed to show irreparable harm.
 
\*\*4. Operations: this is not some pre-revenue, theoretical BS\*\*
Sable’s June 2026 investor presentation shows the company expects fully ramped production of approximately 62,000 gross Bo/d, or 52,000 net Bo/d, across their three platforms. Harmony restarted in May 2025 and Heritage restarted in April 2026; together they are currently producing >45k barrels per day. Offshore fields are performing above expectations, with Platform Hondo expected online by September 1 and current Las Flores Canyon / pipeline infrastructure supporting high production rates.
 
\*\*5. Resources, reserves and NAV: the deep value argument\*\*
Sable’s remaining resources / reserve table is the core of the bull case:
\- 1,500 MMBoe total remaining resources (worth >$100 BILLION with Brent currently trading around $73 per barrel)
\- 659 MMBoe total net estimated reserves (worth >$48 BILLION with Brent currently trading around $73 per barrel)

The market cap after today’s selloff is roughly $475m. That means the equity is trading at a large discount to even the PDP PV-10 at strip pricing, before giving much credit to PDNP, PUD, probable / possible reserves, buoy optionality, or SPR-related infrastructure value.
 
\*\*6. Financial model: why the valuation screens insanely cheap if operations continue\*\*
Sable’s June presentation provides guidance for Q2–Q4 2026E, FY2027E, and FY2028E. At midpoint, the numbers are roughly:

\*\*Q2–Q4 2026E\*\*
\- 37.5 Mboe/d
\- $797m revenue
\- $507m Adj. EBITDA (64% EBITDA margin)
\- $328m FCF (41% FCF margin)

\*\*FY2027E\*\*
\- 50 Mboe/d
\- $1.125b revenue
\- $862m Adj. EBITDA (77% EBITDA margin)
\- $753m FCF (67% FCF margin)

Using the current post-selloff equity value and corresponding $1.4b enterprise value, Sable trades at roughly:

\*\*Q2–Q4 2026E\*\*
\- 2.8x EV / Adj. EBITDA
\- 4.3x EV / Unlevered FCF
\- 69% Unlevered FCF yield to current market cap

\*\*FY2027E\*\*
\- 1.6x EV / Adj. EBITDA
\- 1.9x EV / Unlevered FCF
\- 158% Unlevered FCF yield to current market cap

Even after materially haircutting for interest expense, the 2027 cash-flow potential is ludicrous relative to the current equity value.
 
\*\*7. Peer comps\*\*
Large-cap oil / E&P companies do not trade anywhere near Sable’s implied 2027E multiples. Exxon and Chevron screen around \~10x EV / EBITDA, ConocoPhillips around \~5–6x, and OXY around \~4–6x. Sable is operationally unique and substantially riskier, but if the asset is actually running at 47.5–52.5 Mboe/d in 2027 and producing \~$750m of unlevered FCF, a <2x forward EV / cash-flow multiple is the bargain of the century.
 
\*\*8. The short squeeze angle\*\*
There is a legitimate squeeze setup, but this isn’t the whole thesis. As of yesterday (6/29), data from Robinhood shows SOC short interest approaching 29% of float, and the stock just traded enormous volume on the financing panic (91m+ shares traded vs. average volume around 3.8m) with the stock closing down \~56%.
 
The ingredients are there: high short interest, violent drawdown, legal catalysts pending, refinancing terms pending, and a retail-visible low-priced stock. The core thesis is valuation disconnect + operating restart + federal support (but the short squeeze is a nice kicker).
 
\*\*9. Catalysts to watch\*\*
\- Final terms and closing of the common stock / convertible notes / term loan refinancing package.
\- Judge Wilson ruling on the DPA preliminary injunction / stay and Consent Decree termination / modification / enforcement after supplemental briefing.
\- Any DOE / federal movement on the West Coast SPR proposal.
\- Any update on buoy / offshore marketing strategy and whether federal rights-of-way / SPR pathways reduce California permitting obstacles.
 
\*\*10. Conclusion\*\*
SOC is a uniquely volatile special situation: part E&P restart, part litigation trade, part refinancing event, and mostly federal-vs-California energy policy battle. The risks are obvious, but the current valuation appears to be pricing in a near-disaster scenario despite the asset already producing, literally selling oil, and carrying substantial federal support.
 
At these levels, the setup looks significantly asymmetric. If operations continue and refinancing closes on workable terms, the equity could rerate sharply from distressed levels. This is not a “safe” play whatsoever, but it may be one of the most compelling risk / reward deep value setups in the market currently.

\* Not financial advice – do your own DD.