Sable Offshore Update: The $25B Asset That Finally Woke Up
Time is running out. No room for mistakes.
Note: This is a high-risk, high-reward special situation with significant uncertainty. Only appropriate for investors who can tolerate substantial volatility and potential permanent loss. Not investment advice.Ever since Li Lu bought Sable around $18, I have been trying to decode his thesis.
He never said it out loud, but the bet is obvious. Santa Ynez is a real, already built offshore field trading at a fraction of its intrinsic value because California kept the switch off. Li Lu was likely betting that federal authority would eventually override the state blockade. If that happens, the value of SYU can rerate the entire company in a way that makes today’s market cap look like a rounding error.
This saga is not over.
Since my original deep dive, the stock is up roughly 100%. A few things happened that changed the risk picture and forced the market to reprice the story.
Below is my original deep dive. After that, I walk through what just happened and how this could play out from here.
What changed in the last 30 days
This story is complicated. That is the point. It is hard to follow because it is not about oil underground. It is about who is allowed to turn the system on.
For years, California had the leverage. The pipeline stayed shut. If the pipeline is shut, the platforms cannot sell oil. No sales means no cash.
In late November, Sable tried to change who makes the call. They asked PHMSA to step in. PHMSA is the federal US agency that oversees pipeline safety.
PHMSA inspected the Las Flores system in early December.
The big shift came on December 17. PHMSA agreed the system should fall under federal oversight and took control of the pipeline safety process. That matters because it moved the decision away from the toughest local path.
Then on December 22, PHMSA approved a restart plan for parts of the pipeline, with strict safety conditions and monitoring. This was the first time in years the story had a clear path from paperwork to operations.
The stock reacted fast. On December 23, it jumped about 36 percent on heavy volume. The market was repricing the main risk. Permission to operate.
