Sable Offshore Stock (SOC) Gains on Finally Starting Oil Sales — Is This a Turning Point?

On Sunday, Sable Offshore (SOC) finally began its long-awaited oil sales from the Santa Ynez Pipeline System.

However, the move, which was announced on Monday, received a modest reaction, with shares up only about 2% in pre-market trading. This is even though some analysts have affirmed upside from the milestone.

The Texas-based company bought the system from ExxonMobil (XOM) in a distressed sale in February 2024 for $989 million and has faced legal troubles in restarting the system. Sable Offshore said it is kicking off oil sales by delivering crude to Chevron (CVX) via the pipeline system.

Sable Offshore Gets U.S. Backing

The company filled the line from the onshore Las Flores Canyon processing facility to the Pentland Station crude oil terminal at a rate of more than 50,000 barrels of oil per day (bpd). The milestone comes weeks after Sable Offshore resumed oil transportation through the system.

This was done under a U.S. Defense Production Act order from U.S. Energy Secretary Chris Wright despite an ongoing court investigation in the case.

Sable Pumps Crude from Offshore Platforms

Of the three oil and gas drilling platforms that constitute the Santa Ynez Unit offshore facility of the system, Sable Offshore has commenced production at Platform Harmony, which now produces about 22,000 gross barrels of oil per day. The company plans to kick off production at Platform Heritage, noting that the U.S. regulators have wrapped up their final pre-start inspection of the facility.

The facility is expected to pump crude at more than 30,000 gross bpd compared to 10,000 total bpd from Platform Hondo. This is even as Sable Offshore forecasts that it will kick off production at the latter before the end of its second quarter in June.

Jefferies Flags Gains for Sable Offshore

Ahead of the announcement, Jefferies analyst Lloyd Byrne contended that past court decisions indicate that courts “will maintain the status quo”.

Byrne called SOC a Buy and lifted his price target from $28 to $30, implying about 63% upside. Beyond its price target, the analyst sees the milestone benefiting Sable Offshore in terms of higher production levels, lower cost refinancing, and supportive forward oil prices.

Roth MKM analyst Leo Mariani also called SOC a Buy and set a price target of $24, predicting about 30% upside. Among others, Mariani pointed out that Sable Offshore will permanently refinance its ExxonMobil term loan.

Is Sable Offshore a Good Stock to Buy?

Analysts currently have a Moderate Buy consensus rating on Sable Offshore’s shares. This is based on two Buys and one Hold assigned over the past three months.

However, the average SOC price target of $24.67 implies about 34% upside.