Revolving Credit Facility

3 Months Ended

Dec. 31, 2021

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. On October 12, 2021, the revolving credit facility was amended to, among other things, increase the borrowing base to $175 million from $135 million, provide for the transition away from LIBOR to an alternative reference rate and change the requirements for Restricted Payments (as defined in the Credit Agreement) to consider the Company's total leverage ratio and available free cash flow under certain circumstances. 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. 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 2.75% and 3.75% (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 1.75% 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 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 2.50 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 below 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 for five consecutive business days, 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. As of December 31, 2021, the Company's minimum hedging requirement was 50% of its PDP volumes on a rolling 24 month basis.

The following table summarizes the Company's interest expense:

	Three Months Ended December 31,
	2021		2020
	(In thousands)
Interest expense	$	512	$	1,041
Amortization of deferred financing costs(1)	282		155
Unused commitment fees	102		39
Total interest expense	$	896	$	1,235

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(1)Includes $0.1 million of unamortized deferred financing costs written off during the three months ended December 31, 2021 in conjunction with the amendment of the Credit Agreement in October 2021.

As of December 31, 2021 and September 30, 2021, the weighted average interest rate on outstanding borrowings under the revolving credit facility was 3.10% and 2.83%, respectively.

As of December 31, 2021 and September 30, 2021, the Company was in compliance with all covenants contained in the Credit Agreement and had $65 million and $60 million, respectively, of outstanding borrowings and an additional $110 million and $75 million, respectively, available under the borrowing base.