Debt

12 Months Ended

Dec. 31, 2012

Senior Secured Revolving Credit Facility

As of December 31, 2012, the Company's credit facility, which matures on May 13, 2016, had a borrowing base of $1.4 billion, subject to lender commitments. On April 13, 2012, as part of the semi-annual borrowing base redetermination process, the Company entered into a fourth amendment to its credit facility. Among other things, the fourth amendment increased the borrowing base to $1.4 billion. At December 31, 2012, lender commitments under the facility were $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.

As of December 31, 2012, outstanding borrowings under the facility were $562.9 million and $23.2 million in outstanding letters of credit, leaving $613.9 million in borrowing capacity available under the credit facility. As of December 31, 2011, there were $531.5 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 semi-annual redetermination in October 2012 did not result in any changes to the borrowing base, lender commitments, or other terms of the credit facility.

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 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 credit facility. The Company is currently in compliance with all financial covenants and has 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, which has a borrowing capacity of up to $40.0 million for a maximum of 30 days, has been unavailable to the Company since the fourth quarter of 2011.

6.375% Senior Notes Due 2022

On March 9, 2012, the Company issued $600 million aggregate principal amount of its 6.375% Senior notes due 2022 (2022 Notes) for net proceeds of $589.5 million. Interest is payable in arrears semi-annually in March and September of each year. The 2022 Notes are senior unsecured obligations of the Company, which rank effectively junior in right of payment to all of the Company's existing and any future secured debt, to the extent of the value of the collateral securing that debt, equally in right of payment with the Company's 10.25% Senior notes due 2014 (2014 Notes) and 2020 Notes, and senior in right of payment to any of the Company's future subordinated debt.

On and after March 15, 2017, the Company may redeem all or, from time to time, a part of the 2022 Notes upon not less than 30 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount of notes to be redeemed), plus accrued and unpaid interest, if any, to the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period beginning on March 15 of the years indicated below:



2017	103.188	%
2018	102.125	%
2019	101.063	%
2020 and thereafter	100.000	%

In addition, before March 15, 2015, the Company may, at its option, on any one or more occasions redeem up to 35% of the aggregate principal amount of the 2022 Notes with the net cash proceeds of certain equity offerings and if certain conditions are met as described in the indenture governing the 2022 Notes, at a redemption price of 106.375% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to March 15, 2017, the Company may also redeem all or part of the 2022 Notes at a redemption price equal to 100% of the principal amount of the notes redeemed plus a “make-whole” premium described in the indenture, plus accrued and unpaid interest, if any, to the redemption date.

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. 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, with the remainder used to reduce outstanding borrowings under the credit facility. The 2020 Notes are senior unsecured obligations of the Company, which rank effectively junior in right of payment to all of the Company's existing and any future secured debt, to the extent of the value of the collateral securing that debt, equally in right of payment with the 2014 Notes, 2022 Notes and any future senior unsecured debt, and senior in right of payment to any of the Company's 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 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 $140.0 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 $6.0 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 in right of payment 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, 2022 Notes and any future senior unsecured debt, and rank senior in right of payment to any of the Company's 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.

On April 3, 2012, the Company repurchased $150.0 million aggregate principal amount of its 2014 Notes for an aggregate purchase price of $181.5 million, including accrued and unpaid interest. A related loss of $30.9 million was recorded in extinguishment of debt, consisting of $26.4 million for premiums paid over par and $4.5 million for write-offs of net discounts and debt issuance costs. The 2014 Notes were repurchased using net proceeds from the issuance of the Company's 2022 Notes. Following the consummation of the tender offer on April 3, 2012, $205.3 million aggregate principal amount of 2014 Notes was outstanding.

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

On April 9, 2012, the Company redeemed all $200 million aggregate principal amount of its 2016 Notes for an aggregate purchase price of $215.5 million, including accrued and unpaid interest. A related loss of $10.6 million was recorded in the second quarter of 2012 consisting of $8.3 million for premiums paid over par and $2.3 million for write-offs of debt issuance costs. The 2016 Notes were redeemed using net proceeds from the issuance of the Company's 2022 Notes.

- 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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