Sable Offshore Surges 15% on PHMSA Pipeline Approval: Is This the Catalyst for a New Energy Play?

Summary
• Sable Offshore (SOC) rockets 15.15% intraday to $8.75, breaking through a 52-week high of $35.
• PHMSA approves restart of Las Flores Pipeline, a critical regulatory milestone for offshore operations.
• Turnover spikes to 8.05 million shares, signaling intense short-term investor interest.

The stock’s explosive move follows a pivotal regulatory green light, with PHMSA’s approval of SOC’s pipeline restart plan removing a major operational hurdle. Traders are now weighing whether this development can catalyze a broader rebound in the energy sector, particularly as the stock trades near its 52-week low of $3.72.

PHMSA Approval Clears Pipeline Restart, Restoring Investor Confidence
Sable Offshore’s 15% intraday surge stems from the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) approving its Las Flores Pipeline System restart plan on December 22, 2025. This regulatory nod, detailed in a Form 8-K filing, allows the company to resume operations on Lines CA-324 and CA-325, critical infrastructure for its offshore California production. The approval resolves a prolonged regulatory standoff with California state authorities and reclassifies the pipeline under federal oversight, effectively bypassing local opposition. For SOC, this marks the first tangible federal endorsement of its Santa Ynez project, signaling reduced operational uncertainty and reigniting investor optimism about its ability to monetize its offshore assets.

Oil & Gas Drilling Sector Mixed as Sable Offshore Defies Weakness
While Sable Offshore’s rally outpaces its peers, the broader Oil & Gas Drilling sector remains under pressure. Transocean (RIG), the sector’s leader, fell 0.15% intraday, reflecting lingering concerns over offshore drilling demand. However, SOC’s regulatory breakthrough positions it as a standout within the sector, leveraging its federal pipeline approval to differentiate from companies grappling with state-level permitting delays. The sector’s ETFs, such as the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (GUSH), gained 0.55%, suggesting cautious optimism about energy infrastructure plays.

Options and ETFs to Capitalize on SOC’s Volatility and Sector Rotation
• 200-day average: 20.17 (well below current price)
• RSI: 71.37 (overbought territory)
• MACD: -0.13 (bearish signal) vs. Signal Line -0.70
• Bollinger Bands: Current price at 7.83 (upper band), far above middle band 5.57
• Key support/resistance: 22.62–23.19 (200D range) vs. 4.45–4.53 (30D range)

SOC’s technicals suggest a short-term bullish trend amid long-term bearish fundamentals. The stock’s 15% intraday gain has pushed it into overbought territory (RSI 71.37), but the 200-day average of 20.17 remains a critical psychological hurdle. For traders, the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (GUSH) offers 2X leverage to sector rotation, while the State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP) provides a more conservative play. The options chain reveals two high-conviction contracts:

• SOC20251226C8.5 (Call, $8.5 strike, 2025-12-26 expiry):
- IV: 193.83% (extreme volatility)
- Leverage ratio: 13.88%
- Delta: 0.50 (moderate sensitivity)
- Theta: -0.12 (rapid time decay)
- Gamma: 0.236 (high sensitivity to price swings)
- Turnover: 11,759 contracts
- Payoff (5% upside): $0.435/share (max(0, 9.19 - 8.5))
- Why it stands out: High gamma and IV make this contract ideal for aggressive bulls expecting a sharp post-approval rally.

• SOC20251226C9 (Call, $9 strike, 2025-12-26 expiry):
- IV: 236.09% (extreme volatility)
- Leverage ratio: 22.51%
- Delta: 0.426 (moderate sensitivity)
- Theta: -0.13 (rapid time decay)
- Gamma: 0.190 (high sensitivity to price swings)
- Turnover: 17,928 contracts
- Payoff (5% upside): $0.69/share (max(0, 9.19 - 9))
- Why it stands out: High liquidity and leverage ratio make this a balanced bet for traders seeking both upside potential and liquidity.

Aggressive bulls should consider SOC20251226C9 into a break above $9.10.

Backtest Sable Offshore Stock Performance
The backtest of the performance of SOC (SAP SE) after a 15% intraday increase from 2022 to the present reveals a mixed outcome. While the stock experienced a maximum return of 5.65% on day 46, the overall average return over 30 days was only 2.02%, with a 10-day return of 0.90% and a 3-day return of 0.09%. This suggests that while there were opportunities for gain, they were not consistently realized, and the stock's price tended to revert to its mean in the short term.

SOC’s Regulatory Breakthrough: A Green Light for Energy Infrastructure Plays
Sable Offshore’s PHMSA approval has ignited a short-term rally, but sustainability hinges on its ability to execute the pipeline restart and demonstrate production growth. The stock’s 15% surge has pushed it into overbought territory, yet the 200-day average of $20.17 remains a distant target. For now, traders should monitor the $9.10 intraday high as a critical resistance level. Meanwhile, sector leader Transocean (RIG) trading -0.15% offers a benchmark for broader offshore drilling sentiment. If SOC can maintain its momentum above $8.50, the SOC20251226C9 call option could deliver outsized returns. Investors should also watch for follow-up regulatory filings and production updates to validate the pipeline’s operational viability.