Debt

The following summarizes the Company’s outstanding debt:



	December 31,
	2014		2013
	(in thousands, except percentages)

Credit facility ⁽¹⁾	$	1,173,175	$	1,173,175
10.25% senior notes due June 2014	—		205,257
6.75% senior notes due November 2020	299,970		300,000
6.375% senior notes due September 2022	599,163		600,000
Net unamortized premiums	14,644		22,729
Total debt, net	2,086,952		2,301,161
Less current maturities	—		(211,558		)
Total long-term debt, net	$	2,086,952	$	2,089,603


⁽¹⁾	Variable interest rate of 2.67% at both December 31, 2014, and December 31, 2013.

Fair Value

The Company’s debt is recorded at the carrying amount in the balance sheets. The carrying amount of the Company’s Credit Facility, as defined below, approximates fair value because the interest rate is variable and reflective of market rates. The Company uses a market approach to determine the fair value of its senior notes using estimates based on prices quoted from third-party financial institutions, which is a Level 2 fair value measurement.



	December 31, 2014				December 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)

Credit facility	$	1,173,175	$	1,173,175	$	1,173,175	$	1,173,175
Senior notes, net	913,777		699,462		1,127,986		1,128,527
Total debt, net	$	2,086,952	$	1,872,637	$	2,301,161	$	2,301,702

Credit Facility

The Company’s Second Amended and Restated Credit Agreement (“Credit Facility”) has a borrowing base of $1.4 billion, subject to lender commitments. At December 31, 2014, lender commitments under the facility were $1.2 billion but there was less than $1 million of available borrowing capacity, including outstanding letters of credit. In February 2014, the Company entered into an amendment to the Credit Facility to amend the terms of certain financial and reporting covenants, among other items. In April 2014, the Company entered into an amendment to the Credit Facility to extend the maturity date from May 2016 to April 2019 and to amend the terms of certain financial covenants and definitions, among other items.

Redetermination of the borrowing base under the Credit Facility, based primarily on reserve reports using lender commodity price expectations at such time, occurs semi-annually, in April and October. A super-majority of the lenders under the Credit Facility and Berry also have the right to request interim borrowing base redeterminations once between scheduled redeterminations. Significant declines in commodity prices may result in a decrease in the borrowing base. Berry’s obligations under the Credit Facility are secured by mortgages on its oil and natural gas properties and other personal property. Berry is required to maintain mortgages on properties representing at least 80% of the present value of its oil and natural gas proved reserves. The Company is in compliance with all financial and other covenants of the Credit Facility.

At the Company’s election, interest on borrowings under the Credit Facility is determined by reference to either the LIBOR plus an applicable margin between 1.5% and 2.5% per annum (depending on the then-current level of borrowings under the Credit Facility) or a Base Rate (as defined in the Credit Facility) plus an applicable margin between 0.5% and 1.5% per annum (depending on the then-current level of borrowings under the Credit Facility). Interest is generally payable quarterly for loans bearing interest based on the Base Rate and at the end of the applicable interest period for loans bearing interest at LIBOR. The Company is required to pay a commitment fee to the lenders under the Credit Facility, which accrues at a rate per annum between 0.375% and 0.5% (depending on the then-current level of utilization under the Credit Facility) on the average daily unused amount of the maximum commitment amount of the lenders.

The next semi-annual redetermination of the borrowing base is scheduled to occur in April 2015. Continued lower commodity prices may result in a decrease in the borrowing base at that time. In February 2015, LINN Energy and Berry entered into a parent support agreement under which LINN Energy agreed, in the event the borrowing base is reduced below the amount of borrowings outstanding, to either make principal repayments or provide additional collateral to the lenders, including through posting restricted cash on Berry’s behalf to address the shortfall, subject to LINN Energy’s credit facility.

Senior Notes Due November 2020

The Company has $300 million in aggregate principal amount of 6.75% senior notes due November 2020 (the “November 2020 Senior Notes”). The November 2020 Senior Notes were recorded at their fair value of $310 million on the acquisition date including a $10 million premium which is being amortized to interest expense over the life of the related notes.

The Company may redeem all or any part of the November 2020 Senior Notes at any time beginning on or after November 1, 2015 at the redemption 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 November 2020 Senior 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.

Senior Notes Due September 2022

The Company has $599 million in aggregate principal amount of 6.375% senior notes due September 2022 (the “September 2022 Senior Notes”). The September 2022 Senior Notes were recorded at their fair value of $607 million on the acquisition date including a $7 million premium which is being amortized to interest expense over the life of the related notes.

Prior to 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 September 2022 Senior Notes with the net cash proceeds of certain equity offerings and if certain conditions are met as described in the indenture governing the September 2022 Senior 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 September 2022 Senior 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.

On and after March 15, 2017, the Company may redeem all or, from time to time, a part of the September 2022 Senior 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	%

The November 2020 Senior Notes and September 2022 Senior 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 any of the Company’s future senior unsecured debt and rank senior in right of payment to any of the Company’s future subordinated debt.

Redemption and Repurchases of Senior Notes

In February 2014, in accordance with the indentures related to the senior notes, the Company repurchased through cash tender offers $321,000, $30,000 and $837,000 of its 10.25% senior notes due June 2014 (the “June 2014 Senior Notes”), November 2020 Senior Notes and September 2022 Senior Notes, respectively.

In April 2012, the Company redeemed all $200 million aggregate principal amount of its 8.25% senior notes due 2016 (the “2016 Senior Notes”) and repurchased $150 million aggregate principal amount of its June 2014 Senior Notes for an aggregate purchase price of approximately $215 million and $181 million, respectively, including accrued and unpaid interest. The related loss of approximately $42 million recorded in loss on extinguishment of debt consists of approximately $35 million in premiums paid over par and approximately $7 million in write-offs of debt issuance costs. These notes were redeemed and repurchased using net proceeds from the issuance of the Company’s September 2022 Senior Notes.

Payment of Senior Notes Due June 2014

On May 30, 2014, in accordance with the provisions of the indenture related to its June 2014 Senior Notes, the Company paid in full the remaining outstanding principal amount of approximately $205 million using a cash capital contribution from LINN Energy (see Note 12).

Senior Notes Covenants

The Company’s senior notes contain covenants that, among other things, may limit its ability to: (i) incur or guarantee additional indebtedness; (ii) pay distributions or dividends on its equity or redeem its subordinated debt; (iii) create certain liens; (iv) enter into agreements that restrict distributions or other payments from the Company’s restricted subsidiaries to the Company; (v) sell assets; (vi) engage in transactions with affiliates; and (vii) consolidate, merge or transfer all or substantially all of the Company’s assets. The Company is in compliance with all financial and other covenants of its senior notes.

In addition, any cash generated by the Company is currently being used by the Company to fund its activities. To the extent that the Company generates cash in excess of its needs, the indentures governing its senior notes limit the amount it may distribute to LINN Energy to the amount available under a “restricted payments basket,” and the Company may not distribute any such amounts unless it is permitted by the indentures to incur additional debt pursuant to the consolidated coverage ratio test set forth in the Company’s indentures. The Company’s restricted payments basket may be increased in accordance with the terms of the Company’s indentures by, among other things, 50% of the Company’s future net income, reductions in its indebtedness and restricted investments, and future capital contributions.

The Company may from time to time seek to repurchase its outstanding debt through open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, may be material and will depend on prevailing market conditions, the Company’s liquidity requirements, contractual restrictions and other factors.