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Revolving Credit Facility
 12 Months Ended
Dec. 31, 2022
Debt Disclosure [Abstract]  
Revolving Credit Facility Revolving Credit Facility
On September 28, 2017, REP LLC entered into a credit agreement (the "Credit Agreement") to establish a senior secured revolving credit facility with a syndicate of banks including SunTrust Bank, now Truist Bank as successor by merger, as administrative agent. The revolving credit facility had an initial borrowing base of $25 million with a maximum facility amount of $500 million. In both April and October 2022, the Company amended its Credit Agreement to, among other things, increase the borrowing base to $225 million. The Credit Agreement is set to mature in April 2026. Substantially all of the Company’s assets are pledged to secure the revolving credit facility.
The borrowing base is subject to periodic redeterminations, mandatory reductions and further adjustments from time to time. During these redetermination periods, the Company’s borrowing base may be increased or may be reduced in certain circumstances. The revolving credit facility allows for SOFR Loans and Base Rate Loans (each as defined in the Credit Agreement). The interest rate on each SOFR Loan will be the adjusted Term SOFR for the applicable interest period plus a margin between 2.75% and 3.75% (depending on the borrowing base utilization percentage). The annual interest rate on each Base Rate Loan will be the Base Rate for the applicable interest period plus a margin between 1.75% and 2.75% (depending on the borrowing base utilization percentage). The Company is also subject to an unused commitment fee of between 0.375% and 0.500% (depending on the borrowing base utilization percentage).
The Credit Agreement contains certain covenants, which, among other things, require the maintenance of (i) a total leverage ratio of not more than 3.25 to 1.0 and (ii) a minimum current ratio of not less than 1.0 to 1.0 as of the last day of any quarter. The Credit Agreement also contains a total leverage ratio for Restricted Payments, as defined in the Credit Agreement, after giving pro forma effect to such Restricted Payments, which includes payments to any holder of the Company's shares, would not exceed 2.50 to 1.0. If the Company's leverage ratio, after giving pro forma effect to such Restricted Payments (as defined in the Credit Agreement), is above 2.0 to 1.0, then an additional test of free cash flow is applied, and the Company will only be permitted to make such Restricted Payments if such payment does not exceed the Company's free cash flow. The Company is also required to limit its cash balance to less than $15 million or 10% of the borrowing base, whichever is greater. If the Company's cash balance exceeds this limit on the last business day of the month, the Company will be required to apply the excess to reduce its credit facility borrowings. The Credit Agreement also contains other customary affirmative and negative covenants and events of default. The Company's minimum hedging requirement is between 0% and 50% (depending on the borrowing base utilization percentage and leverage ratio as of the hedge evaluation date) of its proved developed producing ("PDP") volumes on a rolling 24-month basis. As of December 31, 2022, the Company's minimum hedging requirement was 0%.
The following table summarizes the Company's interest expense:
Year Ended December 31, 2022Three Months Ended December 31, 2021Year Ended September 30, 2021
(In thousands)
Interest expense(1)
$864 $512 $3,686 
Capitalized interest(1,022)$— — 
Amortization of deferred financing costs731 282 653 
Unused commitment fees517 102 195 
Total interest expense, net$1,090 $896 $4,534 
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(1)In December 2022, the Company settled the remaining open positions for the interest rate swap which resulted in a $1.5 million settlement. The Company recognizes settlements on its interest rate swaps in interest expense on the consolidated statements of operations.
As of December 31, 2022 and 2021, the weighted average interest rate on outstanding borrowings under the revolving credit facility was 7.17% and 3.10%, respectively.
As of December 31, 2022 and 2021, the Company was in compliance with all covenants contained in the Credit Agreement and had $56 million and $65 million, respectively, of outstanding borrowings and $169 million and $110 million, respectively, available under the borrowing base.