Sanchez Energy amends credit agreement to lift allowed notes issuance

By Toni Weeks

San Luis Obispo, Calif., Sept. 12 - Sanchez Energy Corp. and its subsidiaries, SEP Holdings III, LLC, SN Marquis LLC and SN Cotulla Assets, LLC, amended their credit agreement on Sept. 11 with Royal Bank of Canada as administrative agent, according to an 8-K filed Thursday with the Securities and Exchange Commission.

The amendments, which were made to the amended and restated credit agreement dated May 31, 2013, lifted the aggregate principal amount of senior unsecured notes that Sanchez could issue to $600 million from $400 million.

The company also made some technical modifications to the automatic borrowing based reduction calculation provision in connection with debt issuances and incurrences, so that the reduction is now 25% of the net increase in the principal amount of certain debt rather than 25% of the net proceeds received in connection with the issuance or incurrence of such debt.

In addition, the amendment waived the borrowing base reduction that would result from the automatic borrowing based reduction provision in connection with the issuance of senior unsecured notes after Sept. 1 and before the earlier of Jan. 1, 2014 and the effective date of the borrowing based redetermined in connection with the scheduled quarterly redetermination of the borrowing base for the fourth quarter of 2013.

Finally, the amendment permits Sanchez to hedge incremental proved reserves following its acquisition of Wycross.

Houston-based Sanchez Energy is an oil and gas exploration and development company.

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