Annual report pursuant to Section 13 and 15(d)

Long-Term Debt

v3.20.4
Long-Term Debt
12 Months Ended
Dec. 31, 2020
Debt Disclosure [Abstract]  
Long-Term Debt Long-Term Debt
The following table summarizes our long-term debt as of the dates presented:
  December 31, 2020 December 31, 2019
Principal
Unamortized Discount and Issuance Costs 1, 2
Principal
Unamortized Discount and Issuance Costs 1, 2
Credit facility $ 314,400  $ 362,400 
Second lien term loan 200,000  $ 4,903  200,000  $ 7,372 
Totals
514,400  4,903  562,400  7,372 
Less: Unamortized discount (“OID”) 2
(1,604) (2,415)
Less: Unamortized deferred issuance costs 1, 2
(3,299) (4,957)
Long-term debt, net
$ 509,497  $ 555,028 
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1 Excludes issuance costs of the Credit Facility, which represent costs attributable to the access to credit over its contractual term, have been presented as a component of Other assets (see Note 12) and are being amortized over the term of the Credit Facility using the straight-line method.
2 Discount and issuance costs of the Second Lien Facility are being amortized over the term of the underlying loan using the effective-interest method.
Credit Facility
The Credit Facility provides for a $1.0 billion revolving commitment and a $375 million borrowing base including a $25 million sublimit for the issuance of letters of credit. Availability under the Credit Facility may not exceed the lesser of the aggregate commitments or the borrowing base; however, outstanding borrowings under the Credit Facility are limited to a maximum of $350 million until the next redetermination of the borrowing base. The borrowing base under the Credit Facility is redetermined semi-annually, generally in the Spring and Fall of each year. Additionally, we and the Credit Facility lenders may, upon request, initiate a redetermination at any time during the six-month period between scheduled redeterminations. Certain minimum hedging and other conditions included in the Ninth Amendment were initially satisfied in February 2021 which allow for a borrowing base holiday until Fall 2021 assuming we continue to satisfy the conditions. The Credit Facility is available to us for general corporate purposes, including working capital. The Credit Facility is scheduled to mature in May 2024. We had $0.4 million in letters of credit outstanding as of December 31, 2020 and 2019.
In the years ended December 31, 2020 and 2019, we incurred and capitalized issue costs of $0.1 million and $2.6 million, respectively, in connection with amendments to the Credit Facility and wrote off $0.9 million of previously capitalized issue costs due to a decrease in the borrowing base associated with an amendment during the first half of 2020. We incurred and capitalized $0.4 million of issue costs in January 2021 in connection with the Ninth Amendment. In addition to the requirement to repay outstanding borrowings of $80.5 million under the Credit Facility from the proceeds of the Juniper Transactions, the Ninth Amendment provides for: (i) the aforementioned borrowing base holiday, (ii) introduces a first lien leverage ratio covenant of 2.50 times, tested quarterly and (iii) permits amortization payments of up to $1.875 million per quarter to be made under the Second Lien Facility until January 2022 if no default exists both before and after giving effect to the payments and thereafter using available free cash flow upon the satisfaction of certain conditions (including maintaining a leverage ratio of 2.00 to 1.00 and availability of at least 25% under the Credit Facility after giving pro forma effect to the payment). In addition, the Ninth Amendment provides for a minimum hedge condition that further limits the type of instruments to be utilized, the notional volume to be hedged and sets a minimum floor price for certain contracts as well as a provision for the replacement of the LIBOR interest rate upon its expiration in 2022.
The outstanding borrowings under the Credit Facility bear interest at a rate equal to, at our option, either (a) a customary reference rate plus an applicable margin ranging from 1.50% to 2.50%, determined based on the utilization level under the Credit Facility or (b) a Eurodollar rate, including LIBOR through 2021, plus an applicable margin ranging from 2.50% to 3.50%, determined based on the utilization level under the Credit Facility. Interest on reference rate borrowings is payable quarterly in arrears and is computed on the basis of a year of 365/366 days, and interest on Eurodollar borrowings is payable every one, three or six months, at the election of the borrower, and is computed on the basis of a year of 360 days. As of December 31, 2020, the actual weighted-average interest rate on the outstanding borrowings under the Credit Facility was 3.40%. Unused commitment fees are charged at a rate of 0.50%.
The Credit Facility is guaranteed by the Partnership and all of its subsidiaries (excluding the borrower subsidiary)(the “Guarantor Subsidiaries”). The guarantees under the Credit Facility are full and unconditional and joint and several. Substantially all of our consolidated assets are held by the Guarantor Subsidiaries. There are no significant restrictions on the ability of the borrower or any of the Guarantor Subsidiaries to obtain funds through dividends, advances or loans. The obligations under the Credit Facility are secured by a first priority lien on substantially all of our subsidiaries’ assets.
The Credit Facility requires us to maintain (1) a minimum current ratio (as defined in the Credit Facility, which considers the unused portion of the total commitment as a current asset), measured as of the last day of each fiscal quarter of 1.00 to 1.00, (2) a maximum leverage ratio (consolidated indebtedness to adjusted earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses, both as defined in the Credit Facility), measured as of the last day of each fiscal quarter, of 3.50 to 1.00 and (3) a maximum first lien leverage ratio (consolidated secured indebtedness to adjusted earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses, both as defined in the Credit Facility), measured as of the last day of each fiscal quarter, of 2.50 to 1.00.
The Credit Facility also contains affirmative and negative covenants, including as to compliance with laws
(including environmental laws, ERISA and anti-corruption laws), maintenance of required insurance, delivery of quarterly and
annual financial statements, oil and gas engineering reports and budgets, weekly cash balance reports, maintenance and
operation of property (including oil and gas properties), restrictions on the incurrence of liens and indebtedness, merger,
consolidation or sale of assets, payment of dividends, and transactions with affiliates and other customary covenants. In
addition, the Credit Facility contains certain anti-cash hoarding provisions, including the requirement to repay outstanding loans
and cash collateralize outstanding letters of credit on a weekly basis in the amount of any cash on the balance sheet (subject to
certain exceptions) in excess of $25 million.
The Credit Facility contains events of default and remedies. If we do not comply with the financial and other covenants
in the Credit Facility, the lenders may, subject to customary cure rights, require immediate payment of all amounts outstanding
under the Credit Facility.
As of December 31, 2020, and through the date upon which the Consolidated Financial Statements were issued, we were in compliance with all of the covenants under the Credit Facility.
Second Lien Facility
On September 29, 2017, we entered into the Second Lien Facility and the proceeds were used to fund a significant acquisition and related fees and expenses. Amounts under the Second Lien Facility were borrowed at a price of 98% with an initial interest rate of 8.34% resulting in an effective interest rate of 9.89%. As illustrated in the table above, the OID and issue costs of the Second Lien Facility are presented as reductions to the outstanding term loan. These costs are subject to amortization using the interest method over the term of the Second Lien Facility.
On November 2, 2020, we entered into the Second Lien Amendment which became effective upon the closing of the Juniper Transactions. In addition to a required prepayment of $50.0 million of outstanding advances under the Second Lien Facility, the Second Lien Amendment provides for (i) the extension of the maturity date of the Second Lien Facility to September 29, 2024, (ii) an increase to the margin applicable to advances under the Second Lien Facility; (iii) the imposition of certain limitations on capital expenditures, acquisitions and investments if the Asset Coverage Ratio (as defined therein) at the end of any fiscal quarter is less than 1.25 to 1.00, (iv) the requirement for maximum and, in certain circumstances as described therein, minimum hedging arrangements, (v) beginning in 2021, a requirement to make quarterly amortization payments equal to $1.875 million and (vi) a provision for the replacement of the LIBOR interest rate upon its expiration in 2022. On the Closing Date, we entered into the Omnibus Amendment to the Second Lien Facility (the “Omnibus Amendment”) to, among other things, effectuate the release of the Company from its guarantee of the obligations under the Second Lien Facility and its grant of a security interest in its assets. In January 2021, we incurred and capitalized $1.4 million of issue costs in connection with the Second Lien Amendment and wrote off $1.3 million of previously capitalized issue costs and OID allocable to the $50.0 million prepayment and a $1.3 million principal payment to liquidate the outstanding advances attributable to a single participant lender.
The outstanding borrowings under the Second Lien Facility bear interest at a rate equal to, at our option, either (a) a customary reference rate plus an applicable margin of 8.25% or (b) a Eurodollar rate, including LIBOR through 2021, with a floor of 1.00%, plus an applicable margin of 7.25%; provided that the applicable margin will increase to 9.25% and 8.25%, respectively, during any quarter in which the quarterly amortization payment is not made. As of December 31, 2020, the actual interest rate of outstanding borrowings under the Second Lien Facility was 8.00%. Interest on reference rate borrowings is payable quarterly in arrears and is computed on the basis of a year of 365/366 days, and interest on Eurodollar borrowings is payable every one or 3 months (including in three month intervals if we select a six-month interest period), at our election and is computed on the basis of a 360-day year.
We have the right, to the extent permitted under the Credit Facility and an intercreditor agreement between the lenders under the Credit Facility and the lenders under the Second Lien Facility, to prepay loans under the Second Lien Facility at any time, subject to the following prepayment premiums (in addition to customary “breakage” costs with respect to Eurodollar loans): from January 15, 2021 through January 14, 2022, 102% of the amount being prepaid, from January 15, 2022 through January 14, 2023, 101% of the amount being prepaid; and thereafter, no premium. The Second Lien Facility also provides for the following prepayment premiums in the event of a change in control that results in an offer of prepayment that is accepted by the lenders under the Second Lien Facility: from January 15, 2021 through January 14, 2022, 102% of the amount being prepaid, from January 15, 2023 through January 14, 2023, 101% of the amount being prepaid; and thereafter, no premium.
The Second Lien Facility is collateralized by substantially all of the Partnership’s and its subsidiaries’ assets with lien priority subordinated to the liens securing the Credit Facility. The obligations under the Second Lien Facility are guaranteed by the Partnership and the Subsidiary Guarantors.
The Second Lien Facility has no financial covenants, but contains affirmative and negative covenants, including as to compliance with laws (including environmental laws, ERISA and anti-corruption laws), maintenance of required insurance, delivery of quarterly and annual financial statements, oil and gas engineering reports and budgets, maintenance and operation of property (including oil and gas properties), limitations on capital expenditures, investments, the incurrence of liens and indebtedness, merger, consolidation or sale of assets, payment of dividends and transactions with affiliates and other customary covenants.
As of December 31, 2020, and through the date upon which the Consolidated Financial Statements were issued, we were in compliance with all of the covenants under the Second Lien Facility.