Debt

12 Months Ended

Dec. 31, 2011

Revolving Credit Facility

The Company's senior secured revolving credit facility, which matures on May 13, 2016, has a current borrowing base of $1.4 billion, subject to lender commitments. On October 26, 2011, as part of the semi-annual borrowing base redetermination process, the Company entered into an amendment to the credit facility which, among other things, increased total lender commitments to $1.2 billion. Borrowings under the credit facility bear interest at either (i) LIBOR plus a margin between 1.50% and 2.50% or (ii) the prime rate plus a margin between 0.50% and 1.50%, in each case, based on the amount utilized. The annual commitment fee on the unused portion of the credit facility ranges between 0.35% and 0.50% based on the amount utilized. Total fees paid during 2011 to increase the borrowing base and lender commitments were approximately $2.2 million, and will be amortized over the remaining term of the credit facility. The Company wrote off debt issuance costs of $0.5 million during the fourth quarter associated with one lender that did not renew its commitment to the credit facility.

As of December 31, 2011, outstanding borrowings under the facility were $531.5 million (excluding $23.2 million of outstanding letters of credit), leaving $645.3 million in borrowing capacity available under the credit facility. As of December 31, 2010, there were $170.0 million in outstanding borrowings under the credit facility. The maximum amount available under the credit facility is subject to semi-annual redeterminations of the borrowing base in April and October of each year, based on the value of the Company's proved oil and natural gas reserves, in accordance with the lenders' customary procedures and practices. The Company and the lenders each have a right to one additional redetermination each year.

The credit facility contains certain covenants, which, among other things, require the maintenance of (i) an interest coverage ratio of 2.75 to 1.0 and (ii) a minimum current ratio of 1.0 to 1.0. The senior secured revolving credit facility contains other customary covenants, subject to certain agreed exceptions, including covenants restricting the Company's ability to, among other things, owe or be liable for indebtedness; create, assume or permit to exist liens; be a party to or be liable on any hedging contract; engage in mergers or consolidations; transfer, lease, exchange, alienate or dispose of the Company's material assets or properties; declare dividends on or redeem or repurchase the Company's capital stock; make any acquisitions of, capital contributions to or other investments in any entity or property; extend credit or make advances or loans; engage in transactions with affiliates; and enter into, create or allow to exist contractual obligations limiting the Company's ability to grant liens on the Company's assets to the lenders under the senior secured revolving credit facility. The Company are currently in compliance with all financial covenants and have complied with all financial covenants for all prior periods presented

Subject to certain agreed limitations, the Company granted first priority security interests over substantially all of its assets in favor of the lenders under the credit facility.

Money Market Line of Credit

The Company's senior secured uncommitted money market line of credit has a borrowing capacity of up to $40 million for a maximum of 30 days. As of December 31, 2011, there were no borrowings outstanding under the money market line of credit. Amounts borrowed under the money market line of credit bear interest at LIBOR plus a margin of approximately 1.4%. The line of credit is currently unavailable to the Company and the Company does not know when or if the line of credit will be available in the future. As of December 31, 2010 there was $5.3 million in outstanding borrowings under the line of credit. The outstanding borrowings under the line of credit at December 31, 2010 had a weighted average interest rate of 1.7%.

6.75% Senior Notes Due 2020

On November 1, 2010, the Company issued $300 million in principal amount of 2020 Notes. Interest is payable in arrears semi-annually in May and November of each year, beginning May 2011. The Company received net proceeds of $294.0 million, which were used in part to finance a November 2010 acquisition of producing properties in the Permian and the remainder was used to reduce outstanding borrowings under the credit facility. The 2020 Notes are senior unsecured obligations of the Company and rank effectively junior to all of the Company's existing and any future secured debt, to the extent of the value of the collateral securing that debt, rank equally in right of payment with the 2014 Notes and any future senior unsecured debt, and rank senior in right of payment to the Company's 8.25% senior subordinated notes due 2016 (2016 Notes) and the Company's other future subordinated debt.

The Company may redeem up to 35% of the 2020 Notes at any time prior to November 1, 2013, on one or more occasions, with the proceeds of certain equity offerings at a redemption price of 106.75%. The Company may redeem all or any part of the 2020 Notes at any time beginning on or after November 1, 2015 at the prices set forth below, expressed as percentages of the principal amount redeemed, plus accrued and unpaid interest:



2015	103.375	%
2016	102.250	%
2017	101.125	%
2018 and thereafter	100.000	%

The Company may also redeem the 2020 Notes, in whole or in part, at a price equal to 100% of the principal amount of the notes plus a "make-whole" premium, plus accrued and unpaid interest to the redemption date.

10.25% Senior Notes Due 2014

On May 27, 2009, the Company issued $325 million in principal amount of its 10.25% senior notes due 2014 (2014 Notes) at 93.546% of par resulting in a discount of $21.0 million. Interest is payable in arrears semi-annually on June 1 and December 1 of each year. The Company received net proceeds of $295.1 million, which were used to repay the $140 million second lien term loan in full and reduce outstanding borrowings under the credit facility.

On August 13, 2009, the Company issued an additional $125 million principal amount of 2014 Notes at 104.75% of par resulting in a premium of $6 million. Interest is payable in arrears semi-annually on June 1 and December 1 of each year. The Company received net proceeds of $129.1 million, which were used to reduce outstanding borrowings under the credit facility.

The 2014 Notes are treated as a single series of debt securities and are carried on the balance sheet at their combined amortized cost. The 2014 Notes are senior unsecured obligations of the Company, which rank effectively junior to all of the Company's existing and any future secured debt, to the extent of the value of the collateral securing that debt, rank equally in right of payment with the 2020 Notes and any future senior unsecured debt, and rank senior in right of payment to the 2016 Notes and the Company's other future subordinated debt.

The 2014 Notes are redeemable at the Company's option, in whole or in part, at any time at a price equal to 100% of the principal amount of the 2014 Notes plus accrued and unpaid interest, if any, plus a "make-whole" premium.

From August to October 2011, the Company repurchased $94.7 million aggregate principal amount of its 2014 Notes for an aggregate purchase price of $108.8 million, including accrued and unpaid interest. The related loss of $15.0 million recorded in extinguishment of debt consists of $11.5 million in premium paid over par and $3.5 million in write-offs of net discount and deferred financing costs. These notes were repurchased using available borrowings under the credit facility. The Company may from time to time seek to repurchase its outstanding debt, including additional 10.25% Notes, through open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, the Company's liquidity requirements, contractual restrictions and other factors. The amounts repurchased may be material.

8.25% Senior Subordinated Notes Due 2016

In 2006, the Company issued $200 million of 2016 Notes at par for proceeds of $196.0 million. Interest on the 2016 Notes is paid semiannually in May 1 and November 1 of each year. The 2016 Notes rank junior to all of the Company's existing and any future secured debt, to the extent of the value of the collateral securing that debt, junior in right of payment to the 2014 and 2020 Notes and any future senior unsecured debt, and equally in right of payment with any future senior subordinated indebtedness.

The Company may redeem the 2016 Notes at any time beginning on or after November 1, 2011 at the prices set forth below, expressed as percentages of the principal amount redeemed, plus accrued but unpaid interest:



2011	104.125	%
2012	102.750	%
2013	101.375	%
2014 and thereafter	100.000	%

The Company may also redeem the 2016 Sub Notes, in whole or in part, at a price equal to 100% of the principal amount of the notes plus accrued and unpaid interest plus a "make-whole" premium.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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