Oracle Issues Force Majeure Notice to Blue Owl Capital for New Mexico Data Center Project
Bloomberg reports that Oracle has issued a force majeure notice to the developer of a large data center project in New Mexico, a unit under Blue Owl Capital. The purpose is not to withdraw as the main tenant, but to defer payment obligations in case the facility, codenamed Project Jupiter, cannot go live as planned in 2028, thus avoiding the accumulation of costs. After the report, Oracle's stock fell about 5%, Blue Owl's dropped about 3%, and Bloom Energy, which provides fuel cells for the facility, fell about 6%.
The project is located in the Santa Teresa area of Dona Ana County, covering approximately 1,400 acres, with plans for four data centers and an electricity capacity of about 2.5 gigawatts. In January 2026, Oracle was announced as the main tenant, with developers including Stack Infrastructure and Borderplex Digital Assets, with investment estimates mentioning up to $165 billion; the facility also secured about $18 billion in loans from a banking syndicate. After completion, Oracle will deploy AI computing power for OpenAI, and the project is included in the Stargate infrastructure narrative announced during Trump's second term.
The facility has faced delays in gas pipeline construction, water and air permit lawsuits, and local opposition. In April, Oracle announced an expansion of solid oxide fuel cells with Bloom Energy to a maximum of 2.45 gigawatts, replacing the originally planned gas turbines and diesel engines, and stated that it would use closed-loop non-evaporative cooling and a self-built microgrid, with electricity costs borne by Oracle. In July, the company stated that the project had contributed nearly $80 million in state and county taxes, employed nearly 700 New Mexico workers on-site, and had a long-term economic impact estimated at over $4.7 billion, with construction job targets raised to about 7,000 and operational jobs to about 1,500.
Oracle told Reuters that "Project Jupiter is still progressing as planned" and noted that issuing force majeure notices in large-scale developments is common to protect contractual rights, and does not itself constitute a delay in construction or a change in delivery expectations. Blue Owl stated that the notice does not alter its financial commitments to the long-term project. Bloomberg also clarified that this action may not relieve Oracle of its agreed financial obligations.
Mechanically, the risk sold is the tenant's side payment at milestones: permits, pipelines, and local politics turn the 2028 launch into a contingent event; what is bought is the developers' and lenders' expectations of rent and construction period interest. The event-driven aspect is that contract terms are activated early, not a tenant's withdrawal. Funding shifts from a certain rental cash flow expectation to "delayed or contingent"; loan collateral and the valuation of Stack under Blue Owl are first discounted; benefiting is Oracle's cash flow that has force majeure written into the lease, while developers, syndicates, and fuel cell suppliers who must continue to fund construction but may not receive timely rent are under pressure. Local tax and employment commitments remain tied to the construction period; if the timeline slips, the financial metrics will shift accordingly.
Source: Public Information
ABAB AI Insight
In the past two years, Oracle has turned cloud and AI infrastructure into a growth narrative, leasing large-scale facilities and then reselling to clients like OpenAI, using long-term computing contracts to hedge its own capital expenditures. Project Jupiter is a key node in this chain: securing tenant status in January 2026, switching power sources from gas to Bloom fuel cells in April to address local backlash against emissions and the grid, and responding to opposition in Dona Ana with tax and employment figures in July. The force majeure notice appears after delays in permits and pipelines, indicating that "force majeure" in the lease is treated as a firewall against construction delays, rather than a public withdrawal statement. Larry Ellison's contractual structure typically shifts construction risk to developers and project financing, while retaining the right to sell computing power post-launch.
The capital path is "light asset for tenants, heavy leverage for developers." Blue Owl develops data centers through Stack, using an $18 billion loan from a banking syndicate to fund ground construction and power; Oracle pays rent after launch, with no stable coupon if not launched. Issuing the notice is equivalent to informing lenders: if the 2028 milestone is missed, the rent clock may stop. Blue Owl must publicly state that commitments remain unchanged, or credit spreads will deteriorate ahead of the construction timeline. OpenAI is waiting for cabinets downstream, while the Stargate political narrative needs to commence upstream; the timelines of the three parties do not overlap. The power supplier Bloom's orders are tied to the facility's generation capacity, and uncertainty in the timeline will directly impact its delivery schedule.
This is not a typical tenant withdrawal but akin to airlines invoking force majeure against aircraft manufacturers during the pandemic, or LNG projects invoking it against general contractors: maintaining contractual relationships while freezing the payment clock. Similar large-scale facilities in Virginia and Arizona are also facing queues for power and water, but the difference with Jupiter is that it layers political symbols, local lawsuits, and trillion-dollar investment figures on the same piece of land. The industry phase has shifted from "securing land and power with long-term leases" to "leases being used to hedge against permit failures." Those who can clearly define force majeure will continue to be tenants amidst opposition without becoming funders.
Structural judgments belong to the intersection of regulatory changes and capital concentration. Permits, water, and air quality turn physical timelines into legal events, and tenants use force majeure to translate legal events back into the right to halt payments. The mechanism is: computing power demand can be signed for ten years, but substations and pipelines cannot be completed with a press release; when local regulation becomes the critical path, pricing power shifts from "who can sign OpenAI" to "who can ensure the facility is truly powered in 2028." The notice itself does not indicate a failure to complete, but it turns all loans, tax, and employment commitments into contingent liabilities.