Sable Strikes Oil
Production restarting.
Disclaimer / Disclosure long SOC and AMPY.
One of three Sable (SOC) offshore units is producing oil and seven out of eight onshore pipeline sections hydrotested. They are progressing towards getting the rest operational soon. Low end of the range of production guidance doubled.
By the end of next month, they anticipate hydrotesting the last pipeline segments to check off the remaining operational condition outlined in their consent decree. Management’s plan is to aggressively return capital to shareholders via both a dividend and buying back shares. Another idea for Sable is to combine with Amplify Energy (AMPY) which just abandoned a disastrous deal but still has the directors and management that almost bankrupted their company. They just added a shareholder representative to the board (in a better world than this, all directors would represent shareholders, but one is better than the previous zero). Amplify has great assets and terrible corporate governance; Sable could better exploit the assets while upgrading management and cutting costs.
Caveat
Management intends to implement a hedging program to reduce downside risk while maintaining upside exposure through deferred premium puts and costless collars, but this company is still exposed to the oil price which has been weak over the past year.
Conclusion
This is confirmatory of the SOC thesis and could eventually confirm the AMPY thesis too.
TL; DR
Consider owning SOC for its restart.