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(Bloomberg) — JPMorgan Chase & Co. is in talks with investors to refinance a nearly $1 billion loan at a 15% interest rate for Sable Offshore Corp., a Trump administration-supported oil driller, according to people familiar with the matter.
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The company, which resumed selling crude in March after over a decade-long hiatus, has a term loan from Exxon Mobil Corp. that expires on June 26. Sable’s banker, JPMorgan, has been discussing refinancing terms with potential investors at a 15% coupon with 20% amortization payments, according to the people who asked not to be identified because the information is private.
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The bank is considering offering the debt at 98% of face value, one of the people said.
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JPMorgan declined to comment. Sable didn’t respond to a request for comment.
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“You certainly don’t want a judge coming and shutting down this project before you invest,” Roth Capital Partners analyst Leo Mariani said in an interview, referencing state-level lawsuits underway challenging Sable’s right to operate. The debt terms are steep as Sable carries a fair bit of legal risk, Mariani added.
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Houston-based Sable is pumping 46,000 barrels of oil daily from a cluster of platforms off the coast of Santa Barbara after President Donald Trump invoked Cold War-era powers to override state-level opposition to the project. The platforms were previously owned by Exxon and have been essentially offline since a Plains All American LP pipeline burst in 2015, staining beaches and provoking alarm from regulators, environmentalists and local residents.
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US Department of Energy Secretary Chris Wright and US Department of the Interior Secretary Doug Burgum toured Sable’s facilities last week, holding a press briefing with Jim Flores, Sable’s chief executive officer, at the company’s onshore processing facility.
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If the state “keeps pursuing a policy of being anti-energy, as opposed to affordable, reliable, secure energy addition,” then it will continue to lose residents and will record “the lowest amount of capital coming in for the next generation’s economy,” Burgum said at the facility in Goleta, California.
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Flores was upbeat on the prospects of deal on an investor call last week.
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“There’s a lot of moving parts here, but we’re confident with our bank, JPMorgan and the group they have together as far as being able to execute on this plan with plenty of time to spare,” Flores said.
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(Updates with analyst comment and additional details starting in fifth paragraph.)
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