Sable Offshore Corp. (SOC): A Bear Case Theory

We came across a bearish thesis on Sable Offshore Corp. on Hunterbrook’s Substack. In this article, we will summarize the bears’ thesis on SOC. Sable Offshore Corp.'s share was trading at $8.27 as of Feburary 4th. SOC’s trailing and forward P/E were 47.20 and 9.41 respectively according to Yahoo Finance.

Sable Offshore Corp. operates as an independent oil and gas company in the United States. SOC remains mired in regulatory and legal quagmires, casting serious doubt on any near-term restart of its Las Flores pipelines. Initially expected to resume in January 2024, the project has been delayed repeatedly, and as of early 2026, no oil has flowed.

CEO Jim Flores’ strategy of a stealth restart has faltered against a labyrinth of legal barriers, including federal consent decrees, multiple state and county injunctions, and the newly enacted California SB 237, which requires a fresh coastal development permit for pipelines inactive for five years or more. Even federal backing via PHMSA’s safety approvals offers limited relief, as state authorities retain control over crucial environmental and coastal approvals.

Sable also faces a severe financial crunch. Despite a $250 million equity raise, the company has already burned through substantial operating and capital expenditures, with projections now far exceeded and cash reserves dwindling. Without additional funding, the company risks running out of capital before clearing the regulatory hurdles that include easements from California State Parks, denied county permits, and pending Coastal Zone Management Act reviews. Legal experts suggest that even successful litigation in federal court would unlikely override entrenched state restrictions, leaving Sable in a precarious position.

Given these intertwined regulatory, legal, and financial challenges, Sable Offshore’s prospects appear bearish. The combination of depleted cash, repeated missed deadlines, and nearly insurmountable approvals makes a successful restart unlikely. Investors should view $SOC as highly speculative, with substantial downside risk until the company can secure the complex approvals needed to resume pipeline operations.

Previously, we covered a bullish thesis on Sable Offshore Corp. (SOC) by Kooky_Lime1793 in May 2025, which highlighted the company’s discounted acquisition of the Santa Ynez Unit, strong production potential, and projected free cash flow up to $1.65 billion. SOC’s stock price has depreciated by approximately 74.23% since our coverage. Hunterbrook shares a contrarian perspective but emphasizes the steep legal and financial challenges facing SOC.

Sable Offshore Corp. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held SOC at the end of the third quarter which was 32 in the previous quarter. While we acknowledge the potential of SOC as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.