Centennial Resource amends facility to adjust leverage covenant

By Sarah Lizee

Olympia, Wash., May 4 – Centennial Resource Development, Inc. amended its credit agreement on Friday to replace the total leverage covenant with a first-lien leverage covenant, according to a press release.

Specifically, the amendments suspended the total leverage covenant through year-end 2021 and replaced it with a first-lien leverage covenant that starts at 2.75 to 1.00 and steps down to 2.5 to 1.0 during 2022.

The credit agreement amendments also permit the issuance of new senior secured notes in connection with the company’s offer to exchange its outstanding notes for up to $250 million of newly issued 8% second-lien senior secured notes due 2025 and up to $200 million of newly issued 8% third-lien senior secured notes due 2027. To the extent that the exchange offer closes, the amendments will implement a minimum availability condition to borrowing in the amount of the lesser of $100 million and 25% of the aggregate principal amount of senior secured notes outstanding at the time of borrowing.

Centennial Resource is a Denver-based oil and natural gas company with properties in the core of the Southern Delaware Basin.

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