Yet Another Value Podcast

Kontrarian Korner's Ben Kelleran on Sable Offshore $SOC

Jun 6, 2025
Ben Kelleran from Kontrarian Korner dives into the intriguing world of Sable Offshore. He highlights the company's legal battles with California regulators, emphasizing the complexities and risks of oil drilling in the state. Discussions revolve around the potential upside if operations restart, the company's SPAC history, and refinancing strategies. Kelleran also sheds light on valuation dynamics, why Exxon divested, and the hesitancy of major oil funds to invest due to regulatory uncertainties. It’s a deep dive into navigating high-stakes investment waters!
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INSIGHT

Sable’s Premium Asset Potential

  • Sable Offshore aims to revive the Santa Ynez oil unit, potentially the best U.S. oil asset in decades.
  • It offers Saudi-like economics with long reserve life and low production costs, a rare high-quality energy asset in California.
INSIGHT

Binary Bet with Big Upside

  • The investment is a binary bet on whether Sable can restart production amid regulatory challenges.
  • Success would yield massive upside even if oil prices remain moderate around $65-$75 per barrel.
INSIGHT

Takings Claim as Downside Hedge

  • If California indefinitely blocks production, Sable can file a takings claim against the state for $7-$10 billion in damages.
  • This serves as strong downside protection valuing shares around $75-$100 even without production.
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