Oracle Warns Blue Owl It May Defer Payments if Its Data Center Is Late
Thursday, September 248 Min Read
Oracle sent a force majeure notice to Blue Owl's Stack Infrastructure unit, reserving the right to defer payments if the $165B Project Jupiter campus in New Mexico misses its 2028 opening. The delay traces to a gas pipeline the state twice rejected, and the project's $18B loan was already trading near 90 cents on the dollar.
2.45 GW
Planned Power of the Campus
$165B
Potential Total Project Cost
$18B
Bank Loan Tied to the Project
170 Days
Pipeline Delay
In This Piece6 Sections
Oracle is not walking away from the project. It is putting its right to delay payment on paper.
The notice, first reported by Bloomberg on Thursday morning, covers Project Jupiter in Doña Ana County, New Mexico. It went to Stack Infrastructure, the campus developer, which is owned by Blue Owl Capital.
Oracle shares fell close to 7% intraday. At 3:58 p.m. ET they were down 6.44%.
What the Notice Says, and What It Doesn't
Force majeure is a contract clause that lets a party suspend obligations when events beyond its control intervene. Oracle has taken the first step toward invoking it.
According to reports, the goal is simple. If the campus is not open in 2028, Oracle does not want to pay for a facility that is not running.
Michael Egbert, an Oracle vice president, called such notices routine:
"They do not, by themselves, establish a project delay or change delivery expectations."
Blue Owl said the notice does not change the financial commitments to the project.
The Problem Is Power
Jupiter's electricity will come from on-site natural gas fuel cells, not the grid. The supplier is Bloom Energy.
The gas was to arrive through Energy Transfer's 17.7-mile Green Chile pipeline. New Mexico Land Commissioner Stephanie Garcia Richard twice denied its right-of-way across state land, in March and July. She cited emissions and water resources.
Energy Transfer rerouted the line across federal land. Its in-service date moved from August 15 to February 1, 2027.
The Delay Chain
- 01State land permitDenied twice
- 02Green Chile pipelineMoved to Feb. 1, 2027
- 03Bloom fuel cellsAwaiting gas and air permit
- 04Jupiter campus2028 opening target
- 05Oracle paymentsRight to defer reserved
The air quality permit is also still open. The state Supreme Court paused that process in August and let it resume on September 17. The state's decision timeline runs to November 23.
The market did not read this notice as an Oracle story.
It read it as a credit story.
Who Carries the Risk
Campuses like this are built with project finance. The developer borrows from banks and repays the debt from the tenant's rent.
With Oracle as tenant, the loan effectively rests on Oracle's promise to pay. The force majeure clause loosens the timing of that promise.
That is what the notice does. It moves delay risk from the tenant end of the chain to the financing end.
Santander and Jefferies arranged the loan, according to reports. The banks are holding more of it than planned, because the sale to outside investors stalled.
Why Oracle Is Reserving Its Rights
In the quarter ended August 31, Oracle spent $28.5B on data centers, and free cash flow turned negative in its earnings. We covered how that gap gets funded in our September 10 story.
S&P cut Oracle's rating to BBB- in July. That is the lowest investment-grade rung.
One more notch down would raise its funding costs. Every payment for a facility that is not yet open widens the cash gap.
The chart gives context only; three months of price action cannot be pinned on a single headline.
What Else Moved That Day
Thursday was not a single-story day. The 10-year Treasury yield rose 7.8 basis points to 5.19%, its highest since 2007.
Higher long-term rates cut the value of companies whose profits sit far in the future. Oracle and Bloom fit that description.
Bloom fell more than 6% intraday and Blue Owl more than 4%. The S&P 500 closed down 0.2%.
Sources do not tie the entire drop to the notice. Rates pushed in the same direction.
Timeline
- March 2026The state land office first denies the pipeline application.
- July 2026Second denial; S&P cuts Oracle to BBB-.
- August 25Energy Transfer pushes the pipeline into 2027.
- September 17The state Supreme Court lets the permit process resume.
- September 18-19The FT reports the Jupiter loan trading at 89-91 cents.
- September 24Oracle sends a force majeure notice to Blue Owl's unit.
What Comes Next
Oracle says the project remains on schedule. More than 3,600 construction workers are on site.
Two dates will set the timeline: the pipeline's February 1, 2027 target and the state's November 23 permit timeline. Neither is in Oracle's hands.
For the mechanics: What Is Cash Flow? and Rates and Bonds.
This story is based on reporting of Bloomberg's September 24 article by TechCrunch, The Next Web, Stocktwits and CNBC; statements by Oracle and Blue Owl to the press (Albuquerque Journal, Santa Fe New Mexican); state and FERC coverage of the Green Chile pipeline delay; secondary reports of the Financial Times story on the loan price; and TheStreet market data. The notice and the lease terms are not public; loan pricing and bank details come from press reports. Oracle's closing price could not be verified at publication; the figure given is as of 3:58 p.m. ET.
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