Bud's Offshore Energy (BOE)

Earlier this year John Smith correctly commented that a Santa Ynez Unit (SYU) production restart in 2024 was not possible. Last month, BOE reported on the regulatory “catch 22” facing Sable Offshore, the current operator under an agreement with Exxon.

An assessment prepared for Hunterbrook Capital draws the same conclusions regarding the prospects for production, calling the restart “a pipe dream” (presumably the pun was intended given the pipeline permitting quagmire). Hunterbrook’s chart (pasted below) illustrates the regulatory labyrinth facing Sable.

Hunterbrook has also flagged Sable’s ability to continue as a “going concern.” That may be a valid concern, but Sable’s success is very much in Exxon’s best interest. Exxon must have evaluated Sable and been comfortable with their management. Otherwise, they wouldn’t have made the deal.

Does Exxon want the massive SYU headache to revert back to their portfolio, as provided for in their agreement with Sable, if production doesn’t restart by January 1, 2026? Unless Exxon thinks they have a better option than Sable, they will presumably be flexible about the deadline.

Meanwhile, a judge denied the temporary restraining order requested by Sable to prohibit release of redacted portions of their oil spill contingency plan. Sable had argued that revealing “trade secrets” and specific locations and vulnerabilities of the pipelines could pose a “threat to national security.”

The Santa Barbara Independent also alludes to “pending litigation with Santa Barbara County over automatic shut-off valve permits.” Although litigation would seem likely if the County continues to deny permits for valves required by the Fire Marshall, BOE was unable to confirm any such litigation plans.