New York City, New York Nov 2, 2025  – In a recent analysis () , HFI Research has declared the impending collapse of Sable Offshore Corp. (NYSE: SOC), predicting a “reflexive death spiral” stemming from regulatory hurdles, ongoing mismanagement, and an undisclosed $2.5 billion capital deficit, which undermines the firm’s proposed FPSO revitalization plan. This report, named “(Idea) Sable Offshore – The End Is Near,” emerges amidst heightened investor concern, with two notable law firms—Bronstein, Gewirtz & Grossman, LLC and Faruqi & Faruqi, LLP—initiating probes into possible securities fraud allegations against Sable’s executives for deceptive statements that have already led to a 26.4% drop in the company’s stock.

HFI Research, a prominent independent energy investment firm, sold its long position in SOC last week, utilizing put hedges at an average price of $15.80 per share. The report asserts, “The pipeline route is defunct. The OSFM’s rejection today solidified this outcome,” referring to the California Office of the State Fire Marshal’s (OSFM) October 29 revelation of “shortcomings” in Sable’s adherence to State Waivers. Even though Sable issued a post-market press release declaring complete compliance, HFI-cited internal sources indicate that anomaly repairs in the coastal pipeline segment remain unfinished—repairs that were halted by a California Coastal Commission (CCC) cease-and-desist order affirmed by Judge Thomas Anderle on October 14, 2025.

Regulatory challenges are quickly escalating. To reactivate the Las Flores Pipeline System, Sable faces an unlikely series of hurdles: successfully appealing Anderle’s decision (with an unknown timeframe), winning a lawsuit with slim chances regarding Senate Bill 237’s relevance to its pipeline, finishing repairs, obtaining new OSFM approval, and passing a 10-court-day review by Judge Geck. Given a January 1, 2026, deadline if SB 237 is applicable, even the most hopeful projections suggest appeals wouldn’t conclude before early December—leaving no margin for necessary repairs or approvals. HFI cautions that “The likelihood of all these events favoring Sable is nearly zero,” interpreting Sable’s legal threats against OSFM as a clear indication of impending failure.

This complex regulatory predicament reveals a pattern of executive misrepresentation, which HFI describes as a “fake it till you make it” approach. Sable’s leadership consistently minimized the significance of the CCC case to OSFM approvals—a statement contradicted by today’s FOIA disclosures—and inaccurately claimed in a May 28, 2025, 8-K filing that all anomaly repairs had been finalized. Their post-ruling confidence, asserting the decision “would have no impact on the resumption of petroleum transportation,” now appears baseless, given that OSFM’s identified technical flaws prevent any recommencement. HFI suggests that investors banking on a $10 billion “takings” claim against regulatory bodies should disregard such expectations entirely.

The repercussions have sparked a wave of legal actions. Bronstein, Gewirtz & Grossman, LLC is investigating claims on behalf of shareholders who acquired SOC securities prior to May 21, 2025, citing potential corporate misconduct by the company’s officers and directors. The firm highlights its track record, stating, “Our firm has successfully recovered hundreds of millions for investors across the nation,” and encourages impacted individuals to visit www.bgandg.com/SOC. ()

Likewise, Faruqi & Faruqi, LLP, a leading securities litigation firm established in 1995, is looking into investor losses linked to the Anderle ruling, which stopped crucial pipeline repairs and wiped out $5.04 per share in value on October 15, with the stock closing at $27.89. ()

Reuters documented the 26.4% premarket decline, and Investing.com brought attention to delays and budget overruns resulting from unauthorized repairs stretching back to November 2024. James (Josh) Wilson, a Faruqi partner, advises, “Investors who have been affected should take swift action to safeguard their legal rights.” ()

Further exacerbating the situation, HFI dismisses Sable’s proposed FPSO (Floating Production Storage and Offloading) strategy as unrealistic. The management’s projected $100 million retrofitting cost fails to account for numerous additional expenses: $920 million to settle Exxon debt, $500 million for the OS&T acquisition, $500 million for plug-and-abandonment bonds, $350 million in lease operating expenses and G&A, $100 million in retrofitting capital expenditures, and $130 million in pre-restart interest by the close of 2027. This totals $2.5 billion. With a 6.5% interest rate, annual payments would amount to $162.5 million, resulting in negative free cash flow of $72 million at $60/bbl WTI—representing an unparalleled financial strain, even with government support.

Borrowing funds solely will be insufficient; Sable is unable to manage such a high level of leverage. HFI proposes a mixed financial approach: a federally-backed JPM credit facility for a 10% equity stake, coupled with new equity issuance. Even at a liberal $10 per share, outstanding shares would increase by 150% to 274.48 million (inclusive of 25 million Trump bonus shares), resulting in a discounted cash flow (DCF) Net Present Value (NPV) of only $5.01 per share. Under a more severe “$1.6 billion real-cost” scenario involving a $5 per share issuance, the NPV would plummet to $3.24 per share—representing a 300% dilution through 424.48 million shares. HFI asserts, “The company committed entirely to one strategy—the pipeline—and that path is now closed,” criticizing the FPSO plan as a “final attempt” devoid of sound strategy. ()

The outcome? A cascading downfall. As the OSFM news gains traction, investors are realizing the pipeline’s failure, focusing intensely on the FPSO’s actual 15-fold cost escalation. Increased selling leads to declining prices, confirming uncertainties and speeding up the descent into a “vacuum” for equity financing. Imminent pivotal events include appeals court and SB 237 decisions, both acting as significant sources of volatility for options trading. HFI predicts SOC shares will trade in the mid-single digits by mid-November, with a shift to long positions only if DOE/Federal involvement is confirmed—which is improbable without direct Trump intervention or the revelation of a loan. Even in that scenario, post-short squeeze pressure would recommence as the reality of dilution sets in.

Sable’s Santa Ynez project, which has been inactive since an Exxon spill in 2015, saw a brief period of limited operations in May 2025. However, persistent disagreements—including CCC orders in November 2024, February, and April 2025—ultimately sealed its fate. Insiders indicate that the air permit continues to be a “significant barrier,” requiring EPA intervention or the reversal of Santa Barbara County’s jurisdiction, which would likely lead to further litigation. HFI deems the projected 12-month FPSO timeline “implausible,” suggesting a more probable timeframe of 24-36 months due to expected BOEM delays.

HFI concludes by stating, “Sable’s management has consistently misled investors from the outset.” As company funds deplete and financing terms become unfavorable, the risk of irreversible harm is substantial. Shareholders are advised to get in touch with the investigating law firms without delay. For further trading insights, follow HFI Research’s platforms. Analyst disclosure: Holds long Nov 21 $13 strike puts.

(About HFI Research: HFI Research offers alternative energy investment perspectives, emphasizing undervalued assets and regulatory challenges. Its previous analyses have influenced billions in capital deployment.)

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