Keeley Small Cap Fund on Sable Offshore Corp.
Thesis
Sable owns offshore California assets with potential production of 45,000 to 60,000 barrels per day. Legal disputes with California have prevented normal extraction and marketing, leaving the shares at a large discount to underlying asset value. Despite dilution from new equity and convertible notes, Keeley believes the valuation remains compelling relative to the risks.
“we believe the company trades at a compelling valuation relative to its risks.”
Key risks
- Legal disputes with the State of California
- Dilution from equity and convertible notes