2025-06-14-Jefferies-Sable_Offshore_Corp（SOC）_Kiawah评论-监管风险与资产表现_7页_102kb

Sable Offshore Corp (SOC) Equity Research Summary

• Rating and Price: Recommended "Buy" with a price target of $38.00, representing a 67% upside from the current price of $22.78. The trading range remains $35.00 (high) to $13.66 (low), and SOC's market capitalization is $2.4 billion.
• **Regulatory Risks:**Several key legal challenges impede SOC's operations:
  • Temporary Restraining Order (TRO): A Santa Barbara Superior Court TRO prevents OSFM from certifying SOC's pipelines as compliant with a Consent Decree. A hearing on July 18, 2025, may lift the TRO; SOC argues the pipeline restart poses no irreparable risk and completed repair work under an existing Coastal Development Permit (CDP) supports restart planning.
  • Ongoing Injunction: An injunction in the Cross-Claimant Case (CCC) blocks SOC from applying for a new CDP, though management downplays immediate impact as anomalies are resolved. The next hearing is scheduled for mid-October.
    SOC is actively exploring all avenues to resolve the TRO; if unsuccessful, they may appeal to a federal court. Delays from the TRO pushed SOC's first sales target to August 2025 from the original July 2025.
• **Asset Performance:**The Santa Ynez Unit (SYU) asset shows strong initial productivity (>1000 bpd), exceeding guidance based on resource engineer expectations. Management sees potential to raise production or reduce capital expenditures in 2026 to maximize free cash flow (FCF), with infrastructure supporting up to 125 million barrels per day (mbpd). No current constraints, but production adjustments depend on monitored decline rates. SOC remains optimistic about asset quality, with no significant infrastructure issues noted.
• **Risks and Conditions:**If SOC cannot restart operations and repay the Paid-In-Kind (PIK) loan by March 1, 2026, Exxon Mobil (XOM) may exercise a reassignment option to take ownership of SYU. regulatory clearance is critical for operations; failure could lead to financial strain. The company is confident in its legal arguments.
• **Valuation:**Valuation is based on a discounted cash flow (DCF) model with a 10% discount rate, reflecting moderate risk due to regulatory hurdles. Despite challenges, the price target suggests upside potential, tied to successful resolution of regulatory issues and asset performance. Overall, SOC is viewed as having opportunities for upside if operations normalize.