Long-Term Debt

Our long-term debt as of December 31, 2014 and 2013, was as follows (in thousands):



	December 31, 2014		December 31, 2013
7.125% senior notes due in 2017	$	250,000	$	250,000
8.875% senior notes due in 2020 (1)	222,775		222,446
7.875% senior notes due in 2022 (1)	404,459		404,922
Bank Borrowings	197,300		265,000
Long-Term Debt (1)	$	1,074,534	$	1,142,368
(1) Amounts are shown net of any debt discount or premium

As of December 31, 2014, our bank borrowings of $197.3 million mature in 2017. The maturities on our senior notes were $250.0 million in 2017, $225.0 million in 2020 and $400.0 million in 2022.

We have capitalized interest on our unproved properties in the amount of $5.0 million, $7.2 million and $7.9 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Bank Borrowings. On October 27, 2014, our syndicate of 11 banks reaffirmed the borrowing base of $417.6 million on our $500.0 million credit facility. The commitment amount of $417.6 million and maturity date of November 1, 2017 remained unchanged. Our next scheduled borrowing base redetermination is May 1, 2015.

The borrowing base may be affected by the performance of our oil and gas properties and changes in oil and natural gas prices. The pricing used by the banks to determine the borrowing base in future periods may be lower than the pricing used in October 2014, during our previous redetermination. The determination of the borrowing base is at the sole discretion of the administrative agent and the bank syndicate.

At December 31, 2014 and 2013, we had $197.3 million and $265.0 million in outstanding borrowings under our credit facility, respectively. The interest rate on our credit facility is either (a) the lead bank’s prime rate plus an applicable margin or (b) the Eurodollar rate plus an applicable margin. However with respect to (a), if the lead bank’s prime rate is not higher than each of the federal funds rate plus 0.5%, and the adjusted London Interbank Offered Rate (“LIBOR”) plus 1%, the greatest of these three rates will then apply. The applicable margins vary depending on the level of outstanding debt with escalating rates of 50 to 150 basis points above the Alternative Base Rate and escalating rates of 150 to 250 basis points for Eurodollar rate loans. During 2014, the lead bank’s prime rate was 3.25% and the commitment fee associated with the credit facility fluctuated between 0.38% and 0.50%.

The terms of our credit facility include, among other restrictions, a limitation on the level of cash dividends (not to exceed $15.0 million in any fiscal year), a remaining aggregate limitation on purchases of our stock of $50.0 million, and limitations on incurring other debt. In addition, our bank credit agreement contains financial covenants detailing certain minimum financial ratios that must be maintained. The first is an adjusted working capital ratio of adjusted current assets to current liabilities (as defined in the Credit Agreement) of not less than 1.0 to 1.0, which is below the Company's December 31, 2014 ratio of 1.9 to 1.0. There is also an interest coverage ratio, calculated on a trailing twelve month basis of EBITDAX to interest expense (as defined in the Credit Agreement), of no less than 2.75 to 1.0, which is below the Company's December 31, 2014 ratio of 4.9 to 1.0. Since inception, no cash dividends have been declared on our common stock. The terms of the credit facility also require us to secure at least 75% of our oil and natural gas properties. Under the terms of the credit facility, the commitment amount can be less than or equal to the total amount of the borrowing base with unanimous consent of the bank group as it might change from time to time. As of December 31, 2014, we were in compliance with the provisions of this agreement, and expect to remain in compliance throughout 2015.

Interest expense on the credit facility, including commitment fees and amortization of debt issuance costs, totaled $7.5 million, $6.0 million and $3.7 million for the years ended December 31, 2014, 2013 and 2012, respectively. The amount of commitment fees included in interest expense, net was $0.8 million, $1.1 million and $1.4 million for the years ended December 31, 2014, 2013 and 2012, respectively.

In prior periods, the Company presented the net change in its bank borrowings credit as a single line item within the financing activities section of the accompanying consolidated statements of cash flows. Beginning in 2014, the Company chose to correct this immaterial presentation error and began presenting bank borrowings and repayments on a gross basis. The financing activities section of the accompanying consolidated statements of cash flows for the 2013 and 2012 periods have been corrected for this immaterial error in presentation, which did not affect cash balances, total financing cash flows or any other subtotal on the accompanying consolidated statements of cash flows.

Senior Notes Due In 2022. These notes consist of $400.0 million of 7.875% senior notes that will mature on March 1, 2022. On November 30, 2011, we issued $250.0 million of these senior notes at a discount of $2.1 million or 99.156% of par, which equates to an effective yield to maturity of 8%. The original discount of $2.1 million is recorded in “Long-Term Debt” on our consolidated balance sheets and will be amortized over the life of the notes using the effective interest method. On October 3, 2012, we issued an additional $150.0 million of these senior notes at 105% of par, which equates to a yield to worst of 6.993%. The premium of $7.5 million is recorded in “Long-Term Debt” on our consolidated balance sheets and will be amortized over the life of the notes using the effective interest method. The notes are senior unsecured obligations that rank equally with all of our existing and future senior unsecured indebtedness, are effectively subordinated to all our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, including borrowing under our bank credit facility, and will rank senior to any future subordinated indebtedness of Swift Energy. Interest on these notes is payable semi-annually on March 1 and September 1 and commenced on March 1, 2012. On or after March 1, 2017, we may redeem some or all of these notes, with certain restrictions, at a redemption price, plus accrued and unpaid interest, of 103.938% of principal, declining in annual intervals to 100% in 2020 and thereafter. In addition, prior to March 1, 2015, we may redeem up to 35% of the principal amount of the notes with the net proceeds of qualified offerings of our equity at a redemption price of 107.875% of the principal amount of the notes, plus accrued and unpaid interest. We incurred approximately $7.5 million of debt issuance costs related to these notes, which is included in “Other Long–Term Assets” on the accompanying consolidated balance sheets and will be amortized to interest expense, net over the life of the notes using the effective interest method. In the event of certain changes in control of Swift Energy, each holder of notes will have the right to require us to repurchase all or any part of the notes at a purchase price in cash equal to 101% of the principal amount, plus accrued and unpaid interest to the date of purchase. The terms of these notes include, among other restrictions, limitations on our ability to repurchase shares, incur debt, create liens, make investments, transfer or sell assets, enter into transactions with affiliates and consolidate, merge or transfer all or substantially all of our assets. We were in compliance with the provisions of the indenture governing these senior notes as of December 31, 2014.

Interest expense on the senior notes due in 2022, including amortization of debt issuance costs and debt premium, totaled $31.6 million for the years ended December 31, 2014 and 2013, and $22.4 million for the year ended December 31, 2012.

Senior Notes Due In 2020. These notes consist of $225.0 million of 8.875% senior notes issued at 98.389% of par, which equates to an effective yield to maturity of 9.125%. The notes were issued on November 25, 2009 with an original discount of $3.6 million and will mature on January 15, 2020. The original discount of $3.6 million is recorded in “Long-Term Debt” on our consolidated balance sheets and will be amortized over the life of the notes using the effective interest method. The notes are senior unsecured obligations that rank equally with all of our existing and future senior unsecured indebtedness, are effectively subordinated to all our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, including borrowing under our bank credit facility, and will rank senior to any future subordinated indebtedness of Swift Energy. Interest on these notes is payable semi-annually on January 15 and July 15 and commenced on January 15, 2010. On or after January 15, 2015, we may redeem some or all of these notes, with certain restrictions, at a redemption price, plus accrued and unpaid interest, of 104.438% of principal, declining in annual intervals to 100% in 2018 and thereafter. We incurred approximately $5.0 million of debt issuance costs related to these notes, which is included in “Other Long–Term Assets” on the accompanying consolidated balance sheets and will be amortized to interest expense, net over the life of the notes using the effective interest method. In the event of certain changes in control of Swift Energy, each holder of notes will have the right to require us to repurchase all or any part of the notes at a purchase price in cash equal to 101% of the principal amount, plus accrued and unpaid interest to the date of purchase. The terms of these notes include, among other restrictions, limitations on our ability to repurchase shares, incur debt, create liens, make investments, transfer or sell assets, enter into transactions with affiliates and consolidate, merge or transfer all or substantially all of our assets. We were in compliance with the provisions of the indenture governing these senior notes as of December 31, 2014.

Interest expense on the senior notes due in 2020, including amortization of debt issuance costs and debt discount, totaled $20.8 million, $20.7 million and $20.6 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Senior Notes Due In 2017. These notes consist of $250.0 million of 7.125% senior notes due in 2017, which were issued on June 1, 2007 at 100% of the principal amount and will mature on June 1, 2017. The notes are senior unsecured obligations that rank equally with all of our existing and future senior unsecured indebtedness, are effectively subordinated to all our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, including borrowing under our bank credit facility, and will rank senior to any future subordinated indebtedness of Swift Energy. Interest on these notes is payable semi-annually on June 1 and December 1, and commenced on December 1, 2007. As of December 31, 2014, we may redeem some or all of these notes, with certain restrictions, at a redemption price of 101.188% of the principal, plus accrued and unpaid interest, declining to 100% at June 1, 2015. We incurred approximately $4.2 million of debt issuance costs related to these notes, which is included in “Other Long-Term Assets” on the accompanying consolidated balance sheets and will be amortized to interest expense, net over the life of the notes using the effective interest method. In the event of certain changes in control of Swift Energy, each holder of notes will have the right to require us to repurchase all or any part of the notes at a purchase price in cash equal to 101% of the principal amount, plus accrued and unpaid interest to the date of purchase. The terms of these notes include, among other restrictions, limitations on our ability to repurchase shares, incur debt, create liens, make investments, transfer or sell assets, enter into transactions with affiliates and consolidate, merge or transfer all or substantially all of our assets. We were in compliance with the provisions of the indenture governing these senior notes as of December 31, 2014.

Interest expense on the senior notes due in 2017, including amortization of debt issuance costs, totaled $18.3 million for the years ended December 31, 2014 and 2013, and $18.2 million for the year ended December 31, 2012.