NOTE G. Long-term Debt and Interest Expense

Long-term debt, including the effects of issuance discounts and net deferred fair value hedge losses, consisted of the following components at December 31, 2013 and 2012:



	December 31,
	2013			2012
	(in thousands)
Outstanding debt principal balances:
Pioneer credit facility	$	—		$	474,000
Pioneer Southwest credit facility	—			126,000
5.875% senior notes due 2016	455,385			455,385
6.65% senior notes due 2017	485,100			485,100
6.875 % senior notes due 2018	449,500			449,500
7.500 % senior notes due 2020	450,000			450,000
3.95% senior notes due 2022	600,000			600,000
7.20% senior notes due 2028	250,000			250,000
2.875% convertible senior notes due 2038	—			479,907
	2,689,985			3,769,892
Issuance discounts	(35,885		)	(47,309		)
Net deferred fair value hedge losses	(1,041		)	(1,390		)
Total long-term debt	$	2,653,059		$	3,721,193

Credit Facility. During December 2012, the Company entered into the First Amendment to the Second Amended and Restated 5-Year Revolving Credit Agreement (the "Credit Facility") with a syndicate of financial institutions that extended the maturity to December 20, 2017 and increased the aggregate loan commitments to $1.5 billion. As of December 31, 2013, the Company had no outstanding borrowings under the Credit Facility.

Borrowings under the Credit Facility may be in the form of revolving loans or swing line loans. Aggregate outstanding swing line loans may not exceed $150 million. Revolving loans under the Credit Facility bear interest, at the option of the Company, based on (a) a rate per annum equal to the higher of the prime rate announced from time to time by Wells Fargo Bank, National Association or the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System during the last preceding business day plus 0.5 percent plus a defined alternate base rate spread margin, which is currently 0.5 percent based on the Company's debt rating or (b) a base Eurodollar rate, substantially equal to LIBOR, plus a margin (the "Applicable Margin"), which is currently 1.50 percent and is also determined by the Company's debt rating. Swing line loans under the Credit Facility bear interest at a rate per annum equal to the "ASK" rate for Federal funds periodically published by the Dow Jones Market Service plus the Applicable Margin. Letters of credit outstanding under the Credit Facility are subject to a per annum fee, representing the Applicable Margin plus 0.125 percent. The Company also pays commitment fees on undrawn amounts under the Credit Facility that are determined by the Company's debt rating (currently 0.25 percent). Borrowings under the Credit Facility are general unsecured obligations.

The Credit Facility requires the maintenance of a ratio of total debt to book capitalization, subject to certain adjustments, not to exceed .60 to 1.0. As of December 31, 2013, the Company was in compliance with all of its debt covenants.

Upon completion of the Pioneer Southwest merger, the Company repaid the outstanding indebtedness and terminated the Pioneer Southwest $300 million Amended and Restated 5-Year Revolving Credit Agreement ("the "Pioneer Southwest Credit Facility"). Associated therewith, the Company charged $861 thousand of unamortized deferred financing fees related to the Pioneer Southwest Credit Facility to other expense in the accompanying consolidated statements of operations.

Senior notes. During June 2012, the Company issued $600 million of 3.95% Senior Notes due 2022 and received proceeds, net of $8.5 million of offering discounts and costs, of $591.5 million. The Company used the net proceeds from the issuance to reduce outstanding borrowings under the Credit Facility.

The Company's senior notes are general unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company and are senior in right of payment to all existing and future subordinated indebtedness of the Company. The Company is a holding company that conducts all of its operations through subsidiaries; consequently, the senior notes are structurally subordinated to all obligations of its subsidiaries. Interest on the Company's senior notes is payable semiannually.

Convertible senior notes. As of December 31, 2012, the Company had $479.9 million of Convertible Senior Notes outstanding. During December 2012 and March 2013, the Company's stock price met the price threshold that caused the Convertible Senior Notes to be convertible during the six months ended June 30, 2013 at the option of the holders into a combination of cash and the Company's common stock based on a formula set forth in the indenture supplement pursuant to which the Convertible Senior Notes were issued. In addition, on April 15, 2013, the Company announced that it would exercise its option to redeem all Convertible Senior Notes that had not been converted by the holders before May 16, 2013. Associated therewith, during the six months ended June 30, 2013, holders of $479.1 million principal amount of the Convertible Senior Notes exercised their right to convert their Convertible Senior Notes into cash and shares of the Company's common stock. The Company paid the tendering holders $479.1 million of cash and issued to the tendering holders 4.4 million shares of the Company's common stock during the six months ended June 30, 2013, in accordance with the terms of the Convertible Senior Notes indenture agreement. On May 16, 2013, the Company paid $845 thousand in principal and interest to redeem all Convertible Senior Notes that remained outstanding.

For the years ended December 31, 2013, 2012 and 2011, the Company recorded $9.4 million, $33.5 million and $32.3 million, respectively, of interest expense relating to the Convertible Senior Notes, which had an effective interest rate of 6.75 percent.

Principal maturities. Principal maturities of long-term debt at December 31, 2013, are as follows (in thousands):



2014	$	—
2015	$	—
2016	$	455,385
2017	$	485,100
2018	$	449,500
Thereafter	$	1,300,000

Interest expense. The following amounts have been incurred and charged to interest expense for the years ended December 31, 2013, 2012 and 2011:



	Year Ended December 31,
	2013			2012			2011
	(in thousands)
Cash payments for interest	$	182,126		$	168,665		$	165,251
Amortization of issuance discounts	11,423			27,351			25,210
Amortization of net deferred hedge losses (a)	349			2,018			573
Accretion of discount on postretirement benefit obligations	193			257			315
Amortization of capitalized loan fees	5,260			5,937			5,385
Net changes in accruals	(5,709		)	10,842			(1,768		)
Interest incurred	193,642			215,070			194,966
Less capitalized interest	(9,892		)	(10,848		)	(13,362		)
Total interest expense	$	183,750		$	204,222		$	181,604

_______________


(a)	Includes interest rate derivative hedges of $1.7 million and $282 thousand for the periods ended December 31, 2012 and 2011, respectively, that were reclassified from AOCI - Hedging into earnings upon expiration (see Note E).