Quarterly report pursuant to Section 13 or 15(d)

Borrowings

v3.21.2
Borrowings
6 Months Ended
Jun. 30, 2021
Debt Disclosure [Abstract]  
Borrowings Borrowings
The Company’s borrowings consisted of the following:
June 30, 2021 December 31, 2020
(In thousands)
Senior Secured Revolving Credit Facility due 2024 $875,000  $985,000 
9.00% Second Lien Senior Secured Notes due 2025
516,659  516,659 
6.25% Senior Notes due 2023
542,720  542,720 
6.125% Senior Notes due 2024
460,241  460,241 
8.25% Senior Notes due 2025
187,238  187,238 
6.375% Senior Notes due 2026
320,783  320,783 
Total principal outstanding 2,902,641  3,012,641 
Unamortized discount on Second Lien Notes (36,241) (41,820)
Unamortized premium on 6.25% Senior Notes
2,454  2,917 
Unamortized premium on 6.125% Senior Notes
2,805  3,236 
Unamortized premium on 8.25% Senior Notes
2,859  3,240 
Unamortized deferred financing costs for Second Lien Notes (3,399) (3,931)
Unamortized deferred financing costs for Senior Notes (5,965) (7,019)
Total carrying value of borrowings (1)
$2,865,154  $2,969,264 
(1)    Excludes unamortized deferred financing costs related to the Company’s senior secured revolving credit facility of $20.7 million and $23.6 million as of June 30, 2021 and December 31, 2020, respectively, which are classified in “Deferred financing costs” in the consolidated balance sheets.
Senior secured revolving credit facility
The Company has a senior secured revolving credit facility with a syndicate of lenders (the “Credit Facility”) that, as of June 30, 2021, had a borrowing base and elected commitment amount of $1.6 billion, with borrowings outstanding of $875.0 million at a weighted-average interest rate of 2.61%, and letters of credit outstanding of $24.0 million. The credit agreement governing the Credit Facility provides for interest-only payments until December 20, 2024 (subject to springing maturity dates of (i) January 14, 2023 if the 6.25% Senior Notes due 2023 (the “6.25% Senior Notes”) are outstanding at such time (and which were retired in full on July 21, 2021), (ii) July 2, 2024 if the 6.125% Senior Notes due 2024 (the “6.125% Senior Notes”) are outstanding at such time, and (iii) if the 9.00% Second Lien Senior Secured Notes due 2025 (the “Second Lien Notes”) are outstanding at such time, the date which is 182 days prior to the maturity of any of the 6.25% Senior Notes or the 6.125% Senior Notes, in each case, to the extent a principal amount of more than $100.0 million with respect to each such issuance is outstanding as of such date), when the credit agreement matures and any outstanding borrowings are due. The borrowing base under the credit agreement is subject to regular redeterminations in the spring and fall of each year, as well as special redeterminations described in the credit agreement, which in each case may reduce the amount of the borrowing base. The Credit Facility is secured by first preferred mortgages covering the Company’s major producing properties.
The capitalized terms which are not defined in this description of the Credit Facility shall have the meaning given to such terms in the credit agreement.
On May 3, 2021, the Company entered into the fourth amendment to its credit agreement governing the Credit Facility. The amendment, among other things, (a) reaffirmed the borrowing base and the elected commitment amount of $1.6 billion as a result of the spring 2021 scheduled redetermination; and (b) permits the prepayment, repurchase or redemption of Junior Debt (as defined in the credit agreement governing the Credit Facility), which includes the Senior Unsecured Notes (as defined below) and the Second Lien Notes, in an aggregate amount not to exceed $100.0 million, commencing April 1, 2021, if certain liquidity and free cash flow thresholds are met.
Borrowings outstanding under the credit agreement bear interest at the Company’s option at either (i) a base rate for a base rate loan plus a margin between 1.00% to 2.00%, where the base rate is defined as the greatest of the prime rate, the federal funds rate plus 0.50% and the adjusted LIBO rate plus 1.00%, or (ii) an adjusted LIBO rate for a Eurodollar loan plus a margin between 2.00% to 3.00%. The Company also incurs commitment fees at rates ranging between 0.375% to 0.500% on the unused portion of lender commitments, which are included in “Interest expense, net of capitalized amounts” in the consolidated statements of operations.
Restrictive covenants
The Company’s credit agreement contains certain covenants including restrictions on additional indebtedness, payment of cash dividends and maintenance of certain financial ratios.
Under the credit agreement, the Company must maintain the following financial covenants determined as of the last day of the quarter: (1) a Secured Leverage Ratio of no more than 3.00 to 1.00 and (2) a Current Ratio of not less than 1.00 to 1.00. The Company was in compliance with these covenants at June 30, 2021.
The credit agreement and the indentures governing the Company’s 6.25% Senior Notes, 6.125% Senior Notes, 8.25% Senior Notes due 2025, and 6.375% Senior Notes due 2026 (together the “Senior Unsecured Notes”) also place restrictions on the Company and certain of its subsidiaries with respect to additional indebtedness, liens, dividends and other payments to shareholders, repurchases or redemptions of the Company’s common stock, redemptions of senior notes, investments, acquisitions, mergers, asset dispositions, transactions with affiliates, hedging transactions and other matters.
The credit agreement and indentures are subject to customary events of default. If an event of default occurs and is continuing, the holders or lenders may elect to accelerate amounts due (except in the case of a bankruptcy event of default, in which case such amounts will automatically become due and payable).