Sable Offshore: From 'Zombie Pipeline' to Trump Darling

Sable Offshore Corp. (NYSE:SOC) is back in the spotlight as President Donald Trump weighs using Cold War-era emergency powers to restart the company's long-idled California oil pipeline, setting up a clash between Washington, Sacramento and short sellers who have labeled the project a "zombie pipeline."

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The controversy traces back to a major 2015 spill off Santa Barbara, after which California regulators moved to shut Sable's Santa Ynez Unit and its associated pipeline system and imposed stringent new safety and environmental requirements. 

Since then, state officials and environmental groups have repeatedly argued the line remains unsafe, blocking Sable's attempts to bring offshore production back online.

The Bulls

Recently, the federal government has begun to shift the balance back in Sable's favor. 

Last week, the U.S. Department of Justice issued a formal opinion concluding that a presidential order under the Defense Production Act could preempt California laws that have kept the pipeline offline. 

Building on that opinion, Trump is now preparing to invoke those Cold War-era powers to clear permitting hurdles and restart Sable's offshore output in a bid to ease an oil supply crunch exacerbated by the Iran conflict, according to multiple reports.

The move has triggered immediate pushback from California. Attorney General Rob Bonta has filed suit against the Trump administration to block any DPA-driven restart, reinforcing the state's position that Sable's infrastructure remains too risky and that the company has struggled to meet the tougher standards imposed after the spill. 

That lawsuit sets up a direct confrontation between Washington and Sacramento over who ultimately controls the project’s fate.

The Bears

At the same time, investor and regulatory scrutiny of Sable remains intense. 

Hunterbrook Media published audio suggesting insider information was shared with selected investors, including golfer Phil Mickelson, on an October 2025 call. 

The outlet also reported leaked recordings in which CEO Jim Flores allegedly describes the California Coastal Commission as having an "eco-Nazi attitude," rhetoric that could further sour relations with local permitting bodies whose sign-off the company still needs.

Hunterbrook Media updated its investigation into the company in January, arguing Sable is "quickly running out of cash" and may never reach first oil, while affiliated fund Hunterbrook Capital has disclosed a short position in SOC. 

After Hunterbrook Media published its first report, Sable received subpoenas from the U.S. Attorney's Office for the Southern District of New York and the SEC related to allegations it selectively shared material nonpublic information with certain investors, including golfer Phil Mickelson, following a Hunterbrook report.

Sable formed a special committee of its board of directors to investigate the allegation and has warned in filings that the legal probes could lead to civil or criminal penalties, fines, and sanctions against the company and current or former officers and directors if enforcement actions are pursued. 

What It Means For Investors

For Sable Offshore shareholders, these overlapping legal, political and corporate dramas have produced extreme volatility. 

SOC shares tumbled nearly 16% to $10.43 on Friday after the latest Hunterbrook report and news of California's lawsuit, partially erasing gains notched earlier in the month when the DOJ opinion first surfaced and traders bet that a DPA order could finally unlock stranded barrels. 

Whether Trump's intervention ultimately rescues Sable's "zombie" pipeline or merely prolongs its standoff with California will determine if the stock's wild swings resolve into a durable recovery—or validate the bears' view that the project is more political flashpoint than viable asset.

SOC Price Action: According to Benzinga Pro data, Sable Offshore shares were up 2.9% at $17.06 on Thursday, after gaining more than 20% over the past five days.

Photo: James Jones Jr / Shutterstock