Credit Facility

3 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Credit Facility

6.  Credit Facility

The Company has a revolving credit agreement with Bank of America, N.A. (the “Agreement”), which provides for a credit facility of $4,900,000 with no monthly commitment reductions and a borrowing base evaluated annually, currently set at $4,900,000.  Amounts borrowed under the Agreement are collateralized by the common stock of the Company’s wholly owned subsidiaries and substantially all of the Company’s oil and gas properties.  Availability of this line of credit at June 30, 2014 was $2,444,333.  No principal payments are anticipated to be required through November 30, 2015.

The Agreement was renewed seven times with seventh amendment on October 25, 2013, which revised the maturity date to November 30, 2015.  Under the original and renewed agreements, interest on the facility accrues at an annual rate equal to the British Bankers Association London Interbank Offered Rate ("BBA LIBOR") daily floating rate, plus 2.50 percentage points, which was 2.6495% on June 30, 2014.  Interest on the outstanding amount under the credit agreement is payable monthly.  In addition, the Company will pay an unused commitment fee in an amount equal to ½ of 1 percent (.5%) times the daily average of the unadvanced amount of the commitment.  The unused commitment fee is payable quarterly in arrears on the last day of each calendar quarter.

The Agreement contains customary covenants for credit facilities of this type including limitations on disposition of assets, mergers and reorganizations.  The Company is also obligated to meet certain financial covenants under the Agreement.  The Company is in compliance with all covenants as of June 30, 2014.  In addition, this Agreement prohibits the Company from paying cash dividends on its common stock.  The Agreement does grant the Company permission to enter into hedge agreements; however, the Company is under no obligation to do so.

The amended Agreement allows for up to $500,000 of the facility to be used for outstanding letters of credits.  As of June 30, 2014, two letters of credit for $50,000 and $105,667, in lieu of plugging bonds with the Texas Railroad Commission (“TRRC”) covering the properties the Company operates, are outstanding under the facility. These letters of credit renew annually.  The Company will pay a fee in an amount equal to 1 percent (1.0%) per annum of the outstanding undrawn amount of each standby letter of credit, payable monthly in arrears, on the basis of the face amount outstanding on the day the fee is calculated.

The following table is a summary of activity on the Bank of America, N.A. line of credit for the three months ended June 30, 2014:

	Principal
Balance at March 31, 2014:	$	2,425,000
Borrowings		-
Repayments		125,000
Balance at June 30, 2014:	$	2,300,000