10x or Bust: An Asymmetric Distressed Oil Company Idea in the Midst of Soaring Oil Prices
Two distressed oil companies have turned into multi-baggers in recent months. After recent key developments, this company could be next.
When a company appears headed for bankruptcy, the equity often trades for pennies on the dollar because the market assumes there is little chance of survival. But if its outlook begins to improve, even modestly, its share price can move much higher very quickly as the market reassesses the probability that the company survives.
That dynamic has recently played out in the shares of two oil companies.
The first is Battalion Oil ($BATL). In its Q3 earnings release, the company had no remaining borrowing capacity, negative working capital, and warned it could fall out of compliance with debt covenants within the next year. At the same time, a key gas-processing facility went offline, reducing production and increasing costs. The stock was effectively trading like a distressed equity with high bankruptcy risk.
Over the past few months, however, several things improved. Battalion fixed its gas-processing issue, which increased production, sold assets some assets to pay down debt, and successfully raised another $15 million of equity at $5.50 per share. The company is by no means “in the clear,” but these steps have improved liquidity and reduced near-term financial pressure.
Because Battalion is a very small company and the stock had become so depressed, these improvements resulted in BATL’s stock price moving sharply higher:
The second oil company is Sable Offshore ($SOC). Sable is essentially a one-asset story centered on restarting the Santa Ynez offshore field and related pipeline system off California.
Sable’s stock has had a choppy ride because California regulators, courts, and related permitting disputes have repeatedly delayed its asset restart path. Additionally, in November 2025, Sable raised $250 million of equity at just $5.50 per share, which signaled that the situation had become more difficult and more dilutive than expected.
The stock has since rebounded because the path to restart is looking more credible again. Federal support has improved, and within the past week the market appears to have reacted positively to a DOJ legal opinion suggesting that federal authority under the Defense Production Act could override conflicting state constraints.
In simple terms, the stock sold off when the market thought the project might be stuck and that Sable was headed for bankruptcy, and it recovered sharply when it looked more likely that the asset will still be able to move forward:
I’ve identified a third oil producer that the market currently views as financially distressed, but which I believe has a credible path to survival.
The value proposition is straightforward: the company trades at a fraction of its proved reserve value, a disconnect that’s even clearer when compared to several of its peers.
This NAV estimate, based on the company’s latest reserve report, assumes just $65 WTI oil. But with the Strait of Hormuz still closed following Iranian attacks on oil tankers, oil has already moved above $90 per barrel and may quickly move to all-time highs if the Strait remains closed.
Iranian oil infrastructure was also hit over the weekend, and with infrastructure damaged and the conflict escalating, oil prices may rise further and stay elevated for longer than the market expects. That creates enormous upside potential for an equity already trading at pennies on the dollar because investors view it as highly distressed. In a sustained higher oil price environment, the upside potential becomes far more significant:
In this article, I’ll walk through several key recent developments that I believe the market is overlooking, and one major catalyst that may be happening soon.
If this catalyst plays out like I think it will, this stock could experience a rapid equity rerating similar to Battalion or Sable as the market reassesses the equity, offering a true potential 10x boom-or-bust setup. And potentially even more if oil prices rise and stay elevated into the future.
While this may sound aggressive, risky, and perhaps a little crazy, it is the third “10x or bust” idea that I’ve shared here on Bison Insights. You can probably spot the two that I shared on the idea performance chart below - one rose by 614%, and the other by 194% from the time that I wrote about them. This time could be different.
Disclaimer: This is for informational and educational purposes only. This is not an offer, solicitation, or investment recommendation. Please consult an advisor and do your own diligence. Past performance may not be indicative.
