Why Did SOC Stock Plunge 50% Today?

Sable Offshore plans to raise money through an offering of common stock and senior convertible notes.

• The company intends to sell $100 million of stock and up to $300 million of convertible senior notes due in 2031.
• An additional $15 million in stock and $45 million in notes could be sold to cover overallotments.
• Sable restarted the Santa Ynez bloc’s pipeline system in March this year after it had been shut since May 2015 due to a massive oil spill.

Shares of Sable Offshore (SOC) sank on Tuesday after the company said it plans to raise up to $450 million through a combination of stock and notes offerings.

At the time of writing, SOC stock was down more than 50% and was on track to hit a record low.

SOC’s Offering

The company said it is working with JPMorgan on its offering, under which it intends to sell $100 million of stock and another $15 million to cover overallotments. Sable is also planning to raise $300 million via an offering of convertible senior notes due in 2031, with the potential to sell an additional $45 million in notes.

The oil and gas company will use the proceeds to repay its loan with Exxon Mobil (XOM) and for capital purposes.

According to Koyfin data, the top five institutional investors in Sable are Pilgrim Global Advisors, Continental General Insurance, Encompass Capital Advisors, BlackRock, and Vanguard.

SOC’s Santa Ynez Bloc

The Houston-based Sable's main asset is the Santa Ynez bloc in federal waters offshore California. The company restarted the bloc’s pipeline system in March this year after it had been shut since May 2015 due to a massive oil spill. The company made its first oil sales to Chevron after restarting.

The pipeline was restarted following President Donald Trump's Executive Order 14156, which declared a national emergency, determining that the “United States’ insufficient energy production, transportation, refining, and generation constitutes an unusual and extraordinary threat to our nation’s economy, national security, and foreign policy.”

In May this year, A U.S. court struck down the ​California Department of Parks and Recreation's attempt to ‌stop the company from transporting oil via the controversial pipeline system.

What Retail Traders Think About SOC

On Stocktwits, retail sentiment about the stock turned ‘bullish’ from ‘bearish’ over the past 24 hours.

SOC stock has declined more than 81% over the past 12 months, underperforming the S&P 500.

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