DEBT, FINANCING ARRANGEMENTS, AND LEASES

Long-Term Debt

Long-term debt, presented net of unamortized discount and unamortized debt issuance costs, consists of the following:



	December 31,
	2017			2016
	(Thousands of Dollars)
5.95% senior unsecured notes due 2017	$	—		$	185,000
6.05% senior unsecured notes due 2018	250,000			250,000
7.125% unsecured debentures due 2025	85,000			85,000
4.0% unsecured debentures due 2027	250,000			—
Debt issuance costs	(2,415		)	(624		)
Unamortized debt discount	(963		)	(216		)
Total long-term debt, including current portion	$	581,622		$	519,160
Long-term debt due within one year	249,874			184,924
Total long-term debt less current portion	$	331,748		$	334,236

As of December 31, 2017, cumulative maturities of outstanding long-term debt (at face value) for the next five years are as follows:



	(Thousands of Dollars)
2018: 6.05% senior unsecured notes	$	250,000
Total	$	250,000

There are no maturities applicable to long-term debt outstanding for the years 2019, 2020, 2021 and 2022.

No property is pledged as collateral under any of our long-term debt.

The long-term debt due within one year at December 31, 2017 is associated with our $250 million 6.05% senior unsecured notes that mature on June 15, 2018. We intend to repay this maturing note by accessing available capacity under our revolving credit facility, advances from our parent, or issuing new long-term debt. The long-term debt due within one year at December 31, 2016 is associated with our $185 million 5.95% senior unsecured notes that matured on April 15, 2017.

Restrictive Debt Covenants

At December 31, 2017, none of our debt instruments restrict the amount of distributions to our parent, provided, however, that under the credit facility described below, we are restricted from making distributions to our parent during an event of default if we have directly incurred indebtedness under the credit facility. Our debt agreements contain restrictions on our ability to incur secured debt beyond certain levels.

Issuance and Retirement of Long-Term Debt

On April 3, 2017, we issued $250 million of 4.0 percent senior unsecured notes due 2027 to investors in a private debt placement. We used the net proceeds to retire $185 million of 5.95 percent senior unsecured notes that matured on April 15, 2017, and for general corporate purposes. As part of the issuance, we entered into a registration rights agreement with the initial purchasers of the unsecured notes. Under the terms of the agreement, we were obligated to file and consummate a registration statement for an offer to exchange the notes for a new issue of substantially identical notes registered under the Securities Act of 1933, as amended, within 365 days from closing and to use commercially reasonable efforts to complete the exchange offer. We have filed the registration statement, which became effective in January 2018. The exchange offer is expected to be completed in the first quarter of 2018.

Credit Facility

On February 2, 2015, we, along with WPZ, Transco, the lenders named therein, and an administrative agent entered into the Second Amended & Restated Credit Agreement with aggregate commitments available of $3.5 billion, with up to an additional $500 million increase in aggregate commitments available under certain circumstances. In November 2017, the maturity date of the facility was extended to February 2, 2021. However, the co-borrowers may request an additional extension of the maturity date for a one year period to allow a maturity date as late as February 2, 2022, under certain circumstances. The agreement allows for swing line loans up to an aggregate amount of $150 million, subject to available capacity under the credit facility, and letters of credit commitments available to WPZ of $1.125 billion. We are able to borrow up to $500 million under this credit facility to the extent not otherwise utilized by the other co-borrowers. At December 31, 2017, no letters of credit have been issued and no loans to WPZ were outstanding under the credit facility.

Measured as of December 31, 2017, we are in compliance with our financial covenant under the credit facility.

Various covenants may limit, among other things, a borrower’s and its material subsidiaries’ ability to grant certain liens supporting indebtedness, merge or consolidate, sell all or substantially all of its assets, enter into certain affiliate transactions, make certain distributions during an event of default, enter into certain restrictive agreements, and allow any material change in the nature of its business.

If an event of default with respect to a borrower occurs under the credit facility, the lenders will be able to terminate the commitments for the respective borrowers and accelerate the maturity of any loans of the defaulting borrower under the credit facility agreement and exercise other rights and remedies.

Other than swing line loans, each time funds are borrowed, the borrower must choose whether such borrowing will be an alternate base rate borrowing or a Eurodollar borrowing. If such borrowing is an alternate base rate borrowing, interest is calculated on the basis of the greater of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus one half of 1 percent, and (c) a periodic fixed rate equal to the London Interbank Offered Rate (LIBOR) plus 1 percent, plus, in the case of each of (a), (b), and (c), an applicable margin. If the borrowing is a Eurodollar borrowing, interest is calculated on the basis of LIBOR for the relevant period plus an applicable margin. Interest on swing line loans is calculated as the sum of the alternate base rate plus an applicable margin. The borrower is required to pay a commitment fee based on the unused portion of the credit facility. The applicable margin and the commitment fee are determined for each borrower by reference to a pricing schedule based on such borrower’s senior unsecured long-term debt ratings.

WPZ participates in a commercial paper program, and WPZ management considers amounts outstanding under this program to be a reduction of available capacity under the credit facility. The program allows a maximum outstanding amount at anytime of $3 billion of unsecured commercial paper notes. At December 31, 2017, WPZ had no outstanding commercial paper.

Lease Obligations

Our leasing arrangements include mostly premise and equipment leases that are classified as operating leases.

Effective October 1, 2009, we entered into an agreement to lease office space from a third party. The agreement has an initial term of approximately 10 years, with an option to renew for an additional 5 or 10 year term.

Following are the estimated future minimum annual rental payments required under operating leases, which have initial or remaining noncancelable lease terms in excess of one year:



	(Thousands of Dollars)
2018	$	2,761
2019	2,787
Total	$	5,548

Operating lease rental expense, net of sublease revenues, amounted to $3.5 million, $2.7 million, and $2.7 million for 2017, 2016, and 2015, respectively.