Revolving Credit Facility

12 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Revolving Credit Facility

Revolving Credit Facility

On September 28, 2017, REP LLC entered into a 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. As of September 30, 2021, the revolving credit facility had a borrowing base of $135 million. Substantially all of the Company’s assets are pledged to secure the revolving credit facility.

Effective October 15, 2019, the Company amended its revolving credit facility to increase the borrowing base from $135 million to $180 million and had the ability to request an increase in its lender commitments up to the approved $200 million borrowing base amount. Effective May 7, 2020, the Company amended its revolving credit facility to decrease the

borrowing base from $180 million to $150 million. Effective August 31, 2020, the Company amended its revolving credit facility to decrease the borrowing base from $150 million to $132.5 million. Effective March 5, 2021, the Company and REP LLC entered into the Eighth Amendment to the credit facility pursuant to which the parties thereto reaffirmed the borrowing base at $135 million with total commitments increasing to $135 million.

On October 21, 2020, REP LLC entered into an amendment to its revolving credit facility to incorporate the changes in the legal structure of REP LLC upon consummation of the Merger, including the joinder of the Company as the parent guarantor thereto. The amendment was effective upon closing of the Merger. Effective August 31, 2021, the revolving credit facility was amended to among other things extend the maturity date of the facility to September 28, 2023.

The borrowing base is subject to periodic redeterminations, mandatory reductions and further adjustments from time to time. The facility currently requires semi-annual redeterminations on February 1 and August 1. During these redetermination periods, the Company’s borrowing base may be increased and may also be reduced in certain circumstances. The revolving credit facility allows for Eurodollar Loans and Base Rate Loans (each as defined in the credit agreement). The interest rate on each Eurodollar Loan will be the adjusted LIBOR for the applicable interest period plus a margin between 2.50% and 3.50% (depending on the borrowing base utilization percentage). The annual interest rate on each Base Rate Loan is (i) the greatest of (a) the administrative agent’s prime lending rate, (b) the federal funds rate plus 0.5% per annum or (c) the adjusted LIBOR determined on a daily basis for an interest period of one-month, plus 1.00% per annum, plus (ii) a margin between 1.50% and 2.50% (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 3.5 to 1.0 and (ii) a minimum current ratio of 1.0 to 1.0 as of the last day of any fiscal quarter. The credit agreement also contains a total leverage ratio for Restricted Payments after giving pro forma effect to such Restricted Payments, which includes payments to any holder of the Company's shares, would not exceed 2.75 to 1.0. The Company is also required to prepay the revolving credit facility if at any time the consolidated cash balance is in excess of the greater of $15 million or 10% of the borrowing base for five consecutive business days and the Company has not identified an approved intended use for the excess cash. The credit agreement also contains other customary affirmative and negative covenants and events of default. The Company’s minimum hedging requirement was 50% as of September 30, 2021.

In October 2021, the revolving credit facility was further amended to, among other things, increase the borrowing base to $175 million, provide for the transition away from LIBOR to an alternative reference rate and change the requirements for Restricted Payments to consider the Company's total leverage ratio and available free cash flow under certain circumstances.

The following table summarizes the Company's interest expense:

	Year Ended September 30,
	2021		2020
	(In thousands)
Interest expense	$	3,686	$	4,416
Amortization of deferred financing costs	653		648
Unused commitment fees	195		235
Total interest expense	$	4,534	$	5,299

As of September 30, 2021 and 2020, the weighted average interest rate on outstanding borrowings under the revolving credit facility was 2.83% and 4.09%, respectively.

As of September 30, 2021 and 2020, the Company was in compliance with all covenants contained in the credit agreement and had $60 million and $101 million, respectively, of outstanding borrowings and an additional $75 million and $31.5 million, respectively, available under the borrowing base.