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Credit Facility
9 Months Ended
Sep. 30, 2017
Debt Disclosure [Abstract]  
Credit Facility
CREDIT FACILITY
The Partnership maintains a senior secured revolving credit agreement, as amended (the “Senior Line of Credit”). The Senior Line of Credit has a maximum credit amount of $1.0 billion. The amount of the borrowing base is derived from the value of the Partnership’s oil and natural gas properties as determined by the lender syndicate using pricing assumptions that often differ from the current market for future prices. Drawings on the Senior Line of Credit are used for the acquisition of oil and natural gas properties and for other general business purposes.
Effective April 15, 2016, the borrowing base was $450.0 million. The Partnership's fall 2016 borrowing base redetermination process resulted in an increase in the borrowing base to $500.0 million, which became effective October 31, 2016. Effective April 25, 2017, the borrowing base redetermination resulted in an increase to $550.0 million.
On November 1, 2017, the Partnership amended and restated the credit agreement to extend the maturity thereof for a term of five years, create a swingline facility and make other changes to the hedging and restrictive covenants. There was no change to the borrowing base. The Senior Line of Credit now terminates on November 1, 2022.
Prior to October 31, 2016, borrowings under the Senior Line of Credit bore interest at LIBOR plus a margin between 1.50% and 2.50%, or the Prime Rate plus a margin between 0.50% and 1.50%, with the margin depending on the borrowing base utilization percentage. The Prime Rate was determined to be the higher of the financial institution’s prime rate or the federal funds effective rate plus 0.50% per annum.
Effective October 31, 2016, borrowings under the Senior Line of Credit bore interest at LIBOR plus a margin between 2.00% and 3.00%, or the Prime rate plus a margin between 1.00% and 2.00%, with the margin depending on the borrowing base utilization.
The weighted-average interest rate of the Senior Line of Credit was 3.74% and 3.26% as of September 30, 2017 and December 31, 2016, respectively. Accrued interest is payable at the end of each calendar quarter or at the end of each interest period, unless the interest period is longer than 90 days, in which case interest is payable at the end of every 90-day period. In addition, a commitment fee is payable at the end of each calendar quarter based on either a rate of 0.375% if the borrowing base utilization percentage is less than 50%, or 0.500% per annum if the borrowing base utilization percentage is equal to or greater than 50%. The Senior Line of Credit is secured by substantially all of the Partnership’s producing oil and natural gas assets.
The Senior Line of Credit contains various limitations on future borrowings, leases, hedging, and sales of assets. Additionally, the Senior Line of Credit requires the Partnership to maintain a current ratio of not less than 1.0:1.0 and a ratio of total debt to EBITDAX (Earnings before Interest, Taxes, Depreciation, Amortization, and Exploration) of not more than 3.5:1.0. As of September 30, 2017, the Partnership was in compliance with all financial covenants for the Senior Line of Credit.
The aggregate principal balance outstanding was $362.0 million and $316.0 million at September 30, 2017 and December 31, 2016, respectively. The unused portion of the available borrowings under the Senior Line of Credit was $188.0 million and $184.0 million at September 30, 2017 and December 31, 2016, respectively.