|9 Months Ended|
Sep. 30, 2018
Reserves-Based Revolving Credit Facility
At September 30, 2018 and December 31, 2017, the Company maintained an RBL with a borrowing base of $170.0 million . During the nine months ended September 30, 2018, the Company paid down $100.0 million of its RBL utilizing $50.0 million of available cash on hand and $50.0 million of the net proceeds from the sale of its Anadarko Basin assets. At September 30, 2018 and December 31, 2017, the Company had $28.1 million and $128.1 million, respectively, drawn on the RBL and had outstanding letters of credit obligations totaling $1.9 million. As a result, at September 30, 2018, the Company had $140.0 million of availability on the RBL.
The RBL matures on September 30, 2020, and bears interest at LIBOR plus 4.50% per annum, subject to a 1.00% LIBOR floor. At September 30, 2018, the weighted-average interest rate was 6.7%, excluding amortization expense of deferred financing costs and commitment fees. Unamortized debt issuance costs of $0.9 million and $1.2 million associated with the RBL are included in other noncurrent assets on the unaudited interim condensed consolidated balance sheets at September 30, 2018 and December 31, 2017, respectively.
In addition to interest expense, the RBL requires the payment of a commitment fee each quarter. The commitment fee is computed at the rate of 0.50% per annum based on the average daily amount by which the borrowing base exceeds outstanding borrowings during each quarter.
The RBL, as amended, includes certain financial maintenance covenants that are required to be calculated on a quarterly basis for compliance purposes. These financial maintenance covenants include EBITDA to interest expense for the trailing four fiscal quarters of not less than 2.50:1.00 and a limitation of Total Net Indebtedness (as defined in the RBL) to EBITDA for the trailing four fiscal quarters of not more than 4.00:1.00.
In addition, the RBL contains various other covenants that, among other things, may restrict the Company's ability to: (i) incur additional indebtedness or guarantee indebtedness (ii) make loans and investments; (iii) pay dividends on capital stock and make other restricted payments, including the prepayment or redemption of other indebtedness; (iv) create or incur certain liens; (v) sell, transfer or otherwise dispose of certain assets; (vi) enter into certain types of transactions with the Company's affiliates; (vii) acquire, consolidate or merge with another entity upon certain terms and conditions; (viii) sell all or substantially all of the Company's assets; (ix) prepay, redeem or repurchase certain debt; (x) alter the business the Company conducts and make amendments to the Company's organizational documents; (xi) enter into certain derivative transactions; and, (xii) enter into certain marketing agreements and take-or-pay arrangements.
The Company was in compliance with all debt covenants at September 30, 2018.
On October 24, 2018, the Company’s borrowing base was redetermined at the existing amount of $170.0 million.
The Company believes the carrying amount of the RBL at September 30, 2018, approximates, its fair value (Level 2) due to the variable nature of the RBL interest rate.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://www.xbrl.org/2003/role/presentationRef