Sitio Royalties amends and restates credit agreement

By Mary-Katherine Stinson

Lexington, Ky., Feb. 8 – Sitio Royalties Corp. reported that wholly owned subsidiary Sitio Royalties Operating Partnership, LP entered into a financing agreement on Feb. 3 which refinanced the company’s existing credit agreement in full and paid off and refinanced the Brigham credit agreement in full, according to an 8-K filing with the Securities and Exchange Commission.

According to the terms and conditions of the agreement the lenders committed to providing a credit facility totaling up to $1.5 billion.

As of closing, the credit agreement has a $750 million borrowing base and $750 million elected commitment amount, which is determined by the required number of lenders in good faith by calculating a loan value of the proved reserves of Sitio Operating Partnership and its subsidiaries and elected commitments provided by the lenders.

The agreement provides for letters of credit to be issued at the borrower’s request not to exceed $15 million. Existing letters of credit in place under the company’s prior agreement have been continued and are subject to the terms of the new agreement.

Interest will accrue at SOFR plus an applicable margin ranging from 250 basis points to 350 bps based on the borrowing base utilization percentage.

The borrower will also pay a fee based on the borrowing base utilization percentage on the actual daily unused amount of the total revolving commitments ranging from 37.5 bps to 50 bps.

The credit agreement matures in June 2027.

The borrowings under the credit agreement are secured by liens on certain assets of the borrower, Sitio Royalties GP, LLC, and certain of the borrower’s subsidiaries including the Brigham entities and are guaranteed by the borrower and its subsidiaries.

The agreement includes financial covenants limiting the ratio of total net debt to EBITDA to not more than 3.5x and consolidated current assets to consolidated current liabilities to not less than 1x in each case with certain rights to cure.

Proceeds may be used for working capital and other general company purposes including acquisitions, for payment of certain transaction fees and expenses and to repay and refinance third party-debt of the borrower and its subsidiaries existing prior to closing.

JPMorgan Chase Bank, NA is the administrative agent, issuing bank and syndication agent under the amended agreement, a changeover from Bank of America, NA in the prior existing agreement.

Also joining JPMorgan Chase Bank as joint lead arrangers and joint bookrunners are BofA Securities, Inc., Capital One, NA, Canadian Imperial Bank of Commerce, New York Branch, Citibank, NA, KeyBanc Capital Markets Inc., Mizuho Bank, Ltd., RBC Capital Markets and Truist Securities, Inc.

Sitio is a shareholder returns-driven company focused on large-scale consolidation of high-quality oil and gas mineral and royalty interests across premium basins. The borrower is based in Denver.

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