Sable Offshore & Sacramento: Update of Our Current Thoughts on Sable's Position
How the States Misguided Energy Policy is Sending California Toward an Energy Collapse
Introduction
Following the Writ of Mandate case between the Coastal Commission and Sable Offshore, the stock has traded like death there is no question about it. As an outsider that is looking at the stock price for signal, the market is telling you this is a business that has no viable route to producing oil. That is a curious position to take, given the Writ decision has no bearing on the decision of pipeline restart or not and was centered around permitting for work completed as well as a debate over if the County of Santa Barbara “acted” which would have stripped jurisdiction away from the CCC to begin with.
My plan today is not to bore you with the legal details, as they are complex and as Judge Anderle has proven, don’t matter to him anyhow. What I am going to attempt to do in this piece is to strip away stock price volatility and get to the core of the apple – does Sable have a pathway to restart or not by answering a few fundamental questions. Is the pipeline dead? If the pipeline is dead, is the Floating Production Storage and Offtake (FPSO) route a viable option, or simply a political pressure tactic against Newsom to back him into a corner to approve the pipeline? Is federal support real and even if the FPSO route is real, how does the company bridge the gap in funding between now and first revenues in 2026?
It is our in-house belief that Sable Offshore will extract these federal assets offshore Santa Barbara one way or another. Sable is the only project in the state that can bring on this amount of production and if Newsom & Co. were to wake up and approve the pipeline, this is a project that could bring on 20% of state supply in the blink of an eye – the pipeline is ready to go whenever the state is. In the meantime, Sable’s project aligns with the Trump Administrations goals of increased domestic production and lowering energy prices for all, while also seeing energy security as a national security issue which it obviously is.
Not only does California supply critical energy sources to our military but provides a significant volume of refined products to neighboring states. California’s energy failures do not just hurt the state but weaken economies of inland western states broadly which will drive energy prices higher in those states as well. Having laid some of the framework for how we are thinking, lets dive into the specifics.
Is the Pipeline Dead?