Sable Offshore and Exxon Mobil entered into an amendment to the senior secured term loan agreement to, among other things, extend the maturity date, and agreed to a limited waiver of the company’s P&A financial security obligations in Section 11.18 (c) of the company’s Nov. 1, 2022 purchase and sale agreement (PSA) with Exxon and Mobil Pacific Pipeline (MPP).
The amendment extends the maturity date of the senior secured term loan to the earlier to occur of (a) July 24, 2026, and (b) the acceleration of the senior secured term loan following any event of default as defined therein.
The limited waiver states that the company and the sellers have agreed to temporarily waive the requirement for the company to provide P&A financial security (as defined in the PSA) within three business days of the maturity date until the earlier of (A) Dec. 22, 2028, (B) the date on which the new money secured financing to be entered into prior to the maturity date for the primary purposes of refinancing the senior secured term loan is redeemed, repaid or otherwise refinanced, or (C) the date on which any event of default has occurred and is continuing under the senior secured term loan, or any financing document (as defined in the senior secured term loan) or any breach or default under any other contractual obligation to sellers or their affiliates.
Pursuant to the amendment, the company agrees to pay Exxon a $30 million amendment fee on June 22, 2026. Additionally, Exxon agrees to suspend and waive the minimum liquidity covenant of $25 million introduced in the second amendment of the senior secured term loan until the amended maturity date.
As a result of the limited waiver under the PSA, the company intends to reduce the proposed size of the previously announced new senior secured term loan to up to $775 million. Additionally, the company still intends to pursue incremental unsecured capital markets solutions. JPMorgan Chase Bank is expected to be administrative agent under the new senior secured term loan. The company intends to use the proceeds from the new senior secured term loan, together with the proceeds of the expected additional unsecured capital markets solutions, to fund the repayment of the existing senior secured term loan and to pay transaction fees and expenses.
There can be no assurances that the company will be successful in its marketing efforts or that it will be able to enter into the new senior secured term loan. Closing of the new senior secured term loan is subject to market conditions, as well as the negotiation and execution of definitive documents and the satisfaction of customary closing conditions.
