Quarterly report pursuant to Section 13 or 15(d)

Borrowings

v2.4.0.6
Borrowings
 3 Months Ended
Mar. 31, 2012
Debt Disclosure [Abstract]  
Borrowings
Borrowings

The Company’s borrowings consisted of the following at:
 
 
March 31, 2012
 
December 31, 2011
Principal components:
 
 
 
 
Credit Facility
 
$
—

 
$
—

13% Senior Notes due 2016, principal
 
106,961

 
106,961

Total principal outstanding
 
106,961

 
106,961

Non-cash components:
 
 

 
 

13% Senior Notes due 2016 unamortized deferred credit
 
17,573

 
18,384

Total carrying value of borrowings
 
$
124,534

 
$
125,345


Senior Secured Revolving Credit Facility (the “Credit Facility”)

In January 2010, the Company amended its Credit Facility agreement to include Regions Bank as the sole arranger and administrative agent. The third amended and restated Credit Facility, which matures on September 25, 2012, provides for a $100,000 facility secured by mortgages covering the Company's major oil fields. Amounts borrowed under the Credit Facility may not exceed a borrowing base, which is generally reviewed on a semi-annual basis and is then eligible for re-determination.  The borrowing base was $45,000 at December 31, 2011.  In May 2012, the Company received a commitment letter from Regions Bank to increase the Credit Facility to $200,000 with a revised borrowing base under the facility of $60,000, representing a 33% increase over the previous $45,000 borrowing base. Additionally, the maturity of the Credit Facility will be extended to July 31, 2014 from the previous maturity date of September 25, 2012. The amended Credit Facility is subject to customary closing conditions. As of March 31, 2012, the interest rate on the facility was 3%, which is calculated as the London Interbank Offered Rate (“LIBOR”), with a minimum of 0.5%, plus a tiered rate ranging from 2.5% to 3.0%, which is based on the amount drawn on the facility.  In addition, the credit facility continues to carry a commitment fee of 0.5% per annum on the unused portion of the borrowing base, is payable quarterly.

13% Senior Notes due 2016 (“Senior Notes”) and Deferred Credit

The Senior Notes’ 13% interest coupon is payable on the last day of each quarter.  Certain of the Company’s subsidiaries guarantee the Company’s obligations under the Senior Notes.  The subsidiary guarantors are 100% owned, all of the guarantees are full and unconditional and joint and several, the parent company has no independent assets or operations and any subsidiaries of the parent company other than the subsidiary guarantors are minor. Upon issuing the Senior Notes in November 2009, the Company recorded as a deferred credit the $31,507 difference between the adjusted carrying amount of the Notes that were exchanged and the principal of the Senior Notes. This deferred credit is being amortized as a reduction of interest expense over the life of the Senior Notes at an 8.5% effective interest rate.  The following table summarizes the Company’s deferred credit balance:
Gross Carrying Amount
 
Accumulated Amortization at March 31, 2012
 
Carrying Value at March 31, 2012
 
Amortization Recorded during 2012 as a Reduction of Interest Expense
 
Estimated Amortization
Expected to be
Recorded during the Remainder of 2012
$
31,507

 
$
13,934

 
$
17,573

 
$
811

 
$
2,539


Restrictive Covenants

The Indenture governing our Senior Notes and the Company’s Credit Facility contains various covenants including restrictions on additional indebtedness and payment of cash dividends. In addition, Callon’s Credit Facility contains covenants for maintenance of certain financial ratios.  The Company was in compliance with these covenants at March 31, 2012.