Quarterly report pursuant to Section 13 or 15(d)


6 Months Ended
Jun. 30, 2014
Debt Disclosure [Abstract]  

Note 4 – Borrowings


The Company’s borrowings consisted of the following at:











June 30, 2014


December 31, 2013

Principal components:







Senior secured revolving credit facility







Second lien term loan facility






13% Senior Notes, principal






Total principal outstanding







13% Senior Notes unamortized deferred credit






Total carrying value of borrowings








Senior secured revolving credit facility (the “Credit Facility”)


On March 11, 2014, the Company entered into the Fifth Amended and Restated Credit Agreement to the Credit Facility with a maturity date of March 11, 2019.  JPMorgan Chase Bank, N.A. is Administrative Agent, and participating lenders include Regions Bank, Citibank, N.A., Capital One, N.A., KeyBank, N.A., Whitney Bank, IberiaBank, N.A., OneWest Bank, N.A., SunTrust Bank and Royal Bank of Canada. The total notional amount available under the Credit Facility is $500,000. Amounts borrowed under the Credit Facility may not exceed the borrowing base, which is generally reviewed on a semi-annual basis. In June 2014, the Credit Facility’s borrowing base was increased to $155,000 following a redetermination based upon a May 1, 2014 internally estimated reserve report. Subsequent redeterminations are scheduled to occur at six month intervals beginning on September 1, 2014. The Credit Facility is secured by first preferred mortgages covering the Company’s major producing properties.


As of June 30, 2014, the balance outstanding on the Credit Facility was $84,000 with a weighted-average interest rate of 2.43%, calculated as the LIBOR plus a tiered rate ranging from 1.75% to 2.75%, which is determined based on utilization of the facility. In addition, the Credit Facility carries a commitment fee of 0.5% per annum, payable quarterly, on the unused portion of the borrowing base.


Second lien term loan facility (the “Second Lien Facility”)


In connection with the Credit Facility, the Company also entered into the Second Lien Facility in an aggregate amount of up to $125,000, including initial commitments of $100,000 and additional availability of $25,000 subject to the consent of two-thirds of the lenders and compliance with financial covenants after giving effect to such increase. The Second Lien Facility matures on September 11, 2019, and is not subject to mandatory prepayments unless new debt or preferred stock is issued. The Second Lien Facility may be prepaid at the Company’s option, subject to a prepayment premium. The prepayment amount is (i) 102% if the prepayment event occurs prior to March 11, 2015, and (ii) 101% if the prepayment event occurs on or after March 15, 2015 but before March 15, 2016, and (iii) 100% for prepayments made on or after March 15, 2016. The Second Lien Facility is secured by junior liens on properties mortgaged under the Credit Facility, subject to an intercreditor agreement.


On April 10, 2014, the Company drew an initial amount of $62,500 with an original issue discount of 1.0%. Subsequent draws, allowable during the first year, are subject to the same 1.0% original issue discount on the drawn amount, applied on the date such draw is funded. In addition, the Second Lien Facility carries a commitment fee of 0.5% per annum, payable quarterly, on the unused portion of the initial commitment amount until March 11, 2015. As of June 30, 2014, the balance outstanding on the Second Lien Facility was $82,500 with an interest rate of 8.75%, calculated at a rate of LIBOR (subject to a floor rate of 1.0%) plus 7.75% per annum.


13% senior notes due 2016 (“Senior Notes”) and deferred credit


On April 11, 2014, the Company completed a full redemption of the remaining $48,481 principal amount of outstanding Senior Notes using proceeds from the Second Lien Facility. The redemption resulted in a net $3,205 gain on the early extinguishment of debt (including $4,780 of accelerated deferred credit amortization). The gain represents the difference between the $50,057 paid for the redemption of the Senior Notes ($1,576 of redemption costs, primarily the call premium) and the carrying value of the remaining Senior Notes of $53,261 (inclusive of $4,780 of deferred credit). The Company also paid $193 in accrued interest through the redemption date. Upon the redemption, the indenture governing the Senior Notes was discharged in accordance with its terms.


Restrictive covenants


The Company’s Credit Facility and Second Lien Facility contain various covenants including restrictions on additional indebtedness, payment of cash dividends and maintenance of certain financial ratios. The Company was in compliance with these covenants at June 30, 2014