Murphy Oil obtains commitments for $1.2 billion three-year revolver

By Tali Rackner

Norfolk, Va., Aug. 10 – Murphy Oil Corp. received commitments to enter into a $1.2 billion three-year senior unsecured revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

The facility will be automatically reduced to a minimum of $1 billion if the company makes any substantial asset sales.

Borrowings under the revolver will initially bear interest at Libor plus 450 basis points and will be subject to step-downs to Libor plus 250 bps, based on Murphy Oil’s consolidated leverage ratios.

There is a 50-bps facility fee.

Beginning in the quarter ending March 31, 2017, if the company’s total leverage ratio exceeds 3.25 times the trailing 12-month consolidated adjusted EBITDAX, the revolver will be required to become secured, subject to limitations set forth in the documents governing the company’s existing notes.

The new revolver will also contain certain financial and other covenants, including a maximum consolidated debt ratio of 3.75 times and a minimum ratio of adjusted EBITDAX to interest expense of 2.5 times. Also, as a condition to availability, Murphy Oil is required to execute at least a $400 million capital markets offering, the filing said.

In addition, under the existing 2011 credit facility, Murphy Oil will retain a total of $630 million of commitments until that credit facility expires in June 2017.

The company expects the facility to be undrawn at closing.

Murphy is an oil and gas exploration and production company based in El Dorado, Ark.

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