Sable Offshore Extends Key Loan Agreement and Gains Temporary Financial Security Waiver
Sable Offshore Corp. (NYSE: SOC) has announced a significant amendment to its existing Senior Secured Term Loan Agreement with Exxon Mobil Corporation, a move designed to provide the company with additional financial flexibility as it works toward refinancing its current debt obligations. Alongside the loan amendment, Sable and Exxon have also agreed to a limited waiver under the Purchase and Sale Agreement (PSA) that temporarily eases certain financial security requirements associated with the company’s decommissioning obligations.
The agreement represents an important step in Sable Offshore’s broader financing strategy as it seeks to secure a new senior secured credit facility and explore additional capital market opportunities. The amendment extends the maturity date of the company’s existing Senior Secured Term Loan, while the waiver delays the requirement to provide certain financial security related to plugging and abandonment obligations, commonly referred to as P&A obligations.
According to the company, the amendment was executed between Sable Offshore and Exxon Mobil Corporation, one of the sellers involved in the original asset transaction that led to the creation of the company’s current financial obligations. The agreement also involves Mobil Pacific Pipeline Company (MPPC), which together with Exxon is referred to as the sellers under the PSA.
A central feature of the amendment is the extension of the maturity date for the existing Senior Secured Term Loan. Under the revised terms, the loan will now mature on the earlier of July 24, 2026, or the date on which the loan is accelerated following an event of default as defined in the loan documentation. This extension provides Sable with additional time to arrange replacement financing and execute its broader refinancing plans.
The limited waiver granted under the PSA is equally significant. Under the original terms of the agreement, Sable was required to provide P&A Financial Security within three business days following the maturity date of the existing Senior Secured Term Loan. P&A Financial Security is intended to ensure that adequate financial resources are available to meet future obligations associated with the plugging, abandonment, and decommissioning of offshore oil and gas assets.
However, under the newly agreed waiver, the sellers have temporarily suspended this requirement. The waiver will remain in effect until the earliest occurrence of one of several specified events. These include December 22, 2028, the repayment or refinancing of the new secured financing that Sable intends to obtain before the maturity of the existing loan, or the occurrence and continuation of any event of default under the Senior Secured Term Loan or related financing documents. The waiver would also terminate if Sable were to default under other contractual obligations owed to the sellers or their affiliates.
By securing this waiver, Sable gains additional flexibility in structuring its future financing arrangements. The company will not be required to immediately provide the substantial financial security that would otherwise have been triggered by the maturity of the existing loan. This relief is expected to improve the company’s ability to negotiate and complete a refinancing transaction on favorable terms.
As consideration for the amendment, Sable has agreed to pay Exxon a $30 million amendment fee. The payment is scheduled to be made on June 22, 2026. While the fee represents a significant cost, it provides the company with valuable breathing room as it pursues longer-term financing solutions and manages its debt obligations.
In addition to extending the maturity date, Exxon has agreed to suspend and waive a minimum liquidity covenant that had been introduced through a previous amendment to the loan agreement. That covenant required Sable to maintain at least $25 million in liquidity at all times. The suspension of this requirement will remain in effect until the newly amended maturity date.
The removal of the liquidity covenant offers another important benefit to Sable. Minimum liquidity requirements can place restrictions on a company’s operational flexibility by requiring cash balances to remain above predetermined levels. By waiving the covenant temporarily, Exxon has reduced a potential financial constraint that could have complicated Sable’s refinancing efforts or operational planning.
As a direct result of the limited waiver under the PSA, Sable has also adjusted its expectations regarding the size of the refinancing facility it intends to obtain. The company now plans to reduce the size of its previously announced New Senior Secured Term Loan to as much as $775 million. This represents a modification of earlier financing plans and reflects the reduced need for immediate financial security funding resulting from the waiver.
The planned New Senior Secured Term Loan remains a key component of Sable’s overall financing strategy. The company expects JPMorgan Chase Bank, N.A. to serve as the administrative agent for the proposed financing facility. JPMorgan’s anticipated involvement underscores the significance of the refinancing effort and highlights the company’s ongoing engagement with major financial institutions.
Sable intends to use proceeds from the new loan facility primarily to repay the existing Senior Secured Term Loan. In addition, funds raised through the refinancing transaction are expected to cover transaction-related fees, expenses, and other associated costs. By replacing the current facility with a new financing arrangement, the company aims to establish a more sustainable capital structure and improve its financial position going forward.
Alongside the proposed secured financing, Sable continues to evaluate and pursue additional unsecured capital markets solutions. These initiatives could include debt offerings, private placements, or other financing mechanisms designed to supplement the proceeds from the new secured facility. The combination of secured and unsecured financing is intended to provide sufficient capital to complete the refinancing while supporting the company’s broader operational and strategic objectives.
Despite the progress represented by the amendment and waiver, Sable emphasized that the refinancing process remains subject to several uncertainties. The company cautioned that there can be no assurance that its financing efforts will ultimately be successful. Market conditions, investor demand, credit availability, and other external factors could affect the company’s ability to secure the proposed financing on acceptable terms.
Furthermore, completion of the New Senior Secured Term Loan will depend on the successful negotiation and execution of definitive financing agreements. The transaction will also be subject to customary closing conditions, regulatory requirements, and lender approvals. Until those conditions are satisfied, there is no guarantee that the refinancing will be completed as currently envisioned.
The announcement reflects Sable Offshore’s continued efforts to strengthen its financial foundation while managing the complex obligations associated with offshore energy assets. By extending the maturity of its existing debt, securing temporary relief from certain financial security requirements, and obtaining flexibility regarding liquidity obligations, the company has taken meaningful steps toward achieving its refinancing objectives.
Investors and industry observers will likely monitor the company’s progress closely in the coming months as it works to finalize the new financing package and execute its capital markets strategy. The success of these efforts will play a critical role in shaping Sable’s financial outlook and supporting its long-term operational plans.
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