Our Final Public Sable Offshore Update

Sable Offshore, The State of California Energy, What We Got Wrong

Introduction

Wins and losses in the investment business are determined by most of the market as percentage drawdowns at a single point in time. Stocks are attached to a living, breathing entity that has no set end date. Since businesses live on for some time, we think that the idea of being right or wrong on an investment idea should ultimately be determined by the detailed thesis laid out that can go on for longer than investor attention on a name might seemingly last. This has been the case for Sable Offshore.

Almost everyone I know has thrown in the towel on the name and more than that, longs want to get as far away from the name as they possibly can because let’s face it, losing money and facing these kinds of drawdowns is a miserable feeling. Rather than run from these paper losses or blame the losses on an exogenous event like a crooked management team, we will own it and more than that, rub our noses in the position so that we can understand what we got wrong and prepare ourselves to be better on the next decision.

In the case of Sable Offshore, what we have been wrong about has been the timing of production restart, full stop. We spent a great deal of time on the legal and regulatory background of California and brain damage aside we thought we had a good grasp of the regulatory path.

In this piece we will go into detail on the state of California Energy, Sable’s role in that process, some notes on what we got wrong and where we think it goes from here. We have a great book of businesses today and it is important to note Sable is simply a part of that book, not the whole book. With that said this will be our last public update on Sable Offshore as we want to spend time focusing on a number of other ideas we have that add value for you our readers, as well as our personal and client accounts.