LONG-TERM DEBT

Long-term debt consists of the following:



	As of December 31,
	2016			2015
	(in thousands)
Senior notes:
1.125% Convertible Notes due 2021:
Principal amount	$	200,000		$	—
Unamortized discount	(37,475		)	—
Unamortized debt issuance costs	(4,584		)	—
1.125% Convertible Notes due 2021, net of unamortized discount and debt issuance costs	157,941			—

6.125% Senior Notes due 2024:
Principal amount	400,000			—
Unamortized debt issuance costs	(7,544		)	—
6.125% Senior Notes due 2024, net of unamortized debt issuance costs	392,456			—

7.75% Senior notes due 2022:
Principal amount	500,000			500,000
Unamortized debt issuance costs	(6,443		)	(7,563		)
7.75% Senior notes due 2022, net of unamortized debt issuance costs	493,557			492,437

3.25% Convertible senior notes due 2016:
Principal amount	—			115,000
Unamortized discount	—			(1,852		)
Unamortized debt issuance costs	—			(208		)
3.25% Convertible senior notes due 2016, net of unamortized discount and debt issuance costs	—			112,940
Total senior notes	1,043,954			605,377

Revolving credit facility	—			37,000
Total debt, net of unamortized discount and debt issuance costs	1,043,954			642,377
Less current portion of long-term debt	—			112,940
Long-term debt	$	1,043,954		$	529,437

Senior Notes

2021 Convertible Notes. In September 2016, we issued $200.0 million of 1.125% convertible senior notes due 2021 in a public offering. The 2021 Convertible Notes are governed by an indenture dated September 14, 2016 between us and the U.S. Bank National Association, as trustee. The maturity for the payment of principal is September 15, 2021. Interest at the rate of 1.125% per year is payable in cash semiannually in arrears on each March 15 and September 15, commencing on March 15, 2017. The 2021 Convertible Notes are senior unsecured obligations and rank senior in right of payment to our future indebtedness that is expressly subordinated to the 2021 Convertible Notes; equal in right of payment to our existing and future indebtedness that is not so subordinated; effectively junior in right of payment to all of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our non-guarantor subsidiaries. The proceeds from the issuance of the 2021 Convertible Notes, after deducting offering expenses and underwriting discounts, were used to fund a portion of the purchase price of acquisitions in the Delaware Basin, to pay related fees and expenses, and for general corporate purposes.

The 2021 Convertible Notes are convertible prior to March 15, 2021 only upon specified events and during specified periods and, thereafter, at any time, in each case at an initial conversion rate of 11.7113 shares of our common stock per $1,000 principal amount of the 2021 Convertible Notes, which is equal to an initial conversion price of approximately $85.39 per share. The conversion rate is subject to adjustment upon certain events. Upon conversion, the 2021 Convertible Notes may be settled, at our sole election, in shares of our common stock, cash, or a combination of cash and shares of our common stock. We have initially elected a combination settlement method to satisfy our conversion obligation, which allows us to settle the principal amount of the 2021 Convertible Notes in cash and to settle the excess conversion value, if any, in shares, as well as cash in lieu of fractional shares.

We may not redeem the 2021 Convertible Notes prior to their maturity date. If we undergo a "fundamental change", as defined in the indenture for the 2021 Convertible Notes, subject to certain conditions, holders of the 2021 Convertible Notes may require us to repurchase all or part of the 2021 Convertible Notes for cash at a price equal to 100 percent of the principal amount of the 2021 Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The occurrence of a fundamental change will also result in the 2021 Convertible Notes becoming convertible.

We allocated the gross proceeds of the 2021 Convertible Notes between the liability and equity components of the debt. The initial $160.5 million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature for similar terms and priced on the same day we issued the 2021 Convertible Notes. The initial $39.5 million equity component represents the debt discount and was calculated as the difference between the fair value of the debt and the gross proceeds of the 2021 Convertible Notes. Approximately $4.8 million in costs associated with the issuance of the 2021 Convertible Notes have been capitalized as debt issuance costs and are being amortized as interest expense over the life of the notes using the effective interest method. As of December 31, 2016, the unamortized debt discount will be amortized over the remaining contractual term to maturity of the 2021 Convertible Notes using an effective interest rate of 5.8%. Based upon the December 31, 2016 stock price of $72.58 per share, the “if-converted” value of the 2021 Convertible Notes did not exceed the principal amount.

2024 Senior Notes. In September 2016, we issued $400.0 million aggregate principal amount of 6.125% senior notes due September 2024 in a private placement to qualified institutional buyers. In connection with the issuance of the 2024 Senior Notes, we entered into a registration rights agreement with the initial purchasers in which we agreed to file a registration statement with the SEC relating to an offer to exchange the 2024 Senior Notes for registered notes with substantially identical terms. In addition, we have agreed, in certain circumstances, to file a shelf registration statement covering the resale of the 2024 Senior Notes by the holders. The proceeds from the issuance of the 2024 Senior Notes, after deducting offering expenses and underwriting discounts, were used to fund a portion of the purchase price of acquisitions in the Delaware Basin (see the footnotes titled Business Combination and Properties and Equipment), to pay related fees and expenses, and for general corporate purposes.

The 2024 Senior Notes accrue interest from the date of issuance and interest is payable semi-annually in arrears on March 15 and September 15, commencing on March 15, 2017. Approximately $7.8 million in costs associated with the issuance of the 2024 Senior Notes have been capitalized as debt issuance costs and are being amortized as interest expense over the life of the notes using the effective interest method. The 2024 Senior Notes are senior unsecured obligations and rank senior in right of payment to our future indebtedness that is expressly subordinated to the notes; equal in right of payment to all our existing and future indebtedness that is not so subordinated; effectively junior in right of payment to all of our secured indebtedness to the extent of the value of the collateral securing such indebtedness, including borrowings under our revolving credit facility; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our non-guarantor subsidiaries.

The 2024 Senior Notes are redeemable after September 15, 2019, at fixed redemption prices beginning at 104.594 percent of the principal amount redeemed. At any time prior to September 15, 2019, we may redeem all or part of the 2024 Senior Notes at a make-whole price set forth in the indenture which generally approximates the present value of the redemption price at September 15, 2019, and remaining interest payments on the 2024 Senior Notes at the time of redemption.

At any time prior to September 15, 2019, we may redeem up to 35 percent of the outstanding 2024 Senior Notes with proceeds from certain equity offerings at a redemption price of 106.125 percent of the principal amount of the notes redeemed, plus accrued and unpaid interest, if at least 65 percent of the aggregate principal amount of the 2024 Senior Notes remains outstanding after each such redemption and the redemption occurs within 180 days after the closing of the equity offering.

Upon the occurrence of a "change of control," as defined in the indenture for the 2024 Senior Notes, holders will have the right to require us to repurchase all or a portion of the notes at a price equal to 101 percent of the aggregate principal amount of the notes repurchased, together with any accrued and unpaid interest to the date of purchase. In connection with certain asset sales, we may, under certain circumstances, be required to use the net cash proceeds of such asset sale to make an offer to purchase the notes at 100 percent of the principal amount, together with any accrued and unpaid interest to the date of purchase.

The indenture governing the 2024 Senior Notes contains covenants that, among other things, limit our ability and the ability of our subsidiaries to incur additional indebtedness; pay dividends or make distributions on our stock; purchase or redeem stock or subordinated indebtedness; make investments; create certain liens; enter into agreements that restrict distributions or other payments by restricted subsidiaries to us; enter into transactions with affiliates; sell assets; consolidate or merge with or into other companies or transfer all or substantially of our assets; and create unrestricted subsidiaries.

2022 Senior Notes. In October 2012, we issued $500.0 million aggregate principal amount 7.75% senior notes due October 15, 2022 in a private placement to qualified institutional buyers. The 2022 Senior Notes have been registered. The 2022 Senior Notes accrue interest from the date of issuance and interest is payable semi-annually in arrears on April 15 and October 15. Approximately $11.0 million in costs associated with the issuance of the 2022 Senior Notes have been capitalized as debt issuance costs and are being amortized as interest expense over the life of the notes using the effective interest method. The 2022 Senior Notes are senior unsecured obligations and rank senior in right of payment to any of our future indebtedness that is expressly subordinated to the notes. The 2022 Senior Notes rank equally in right of payment with all our existing and future senior indebtedness and rank effectively junior in right of payment to all of our secured indebtedness to the extent of the value of the collateral securing such indebtedness and structurally junior to all existing and future indebtedness (including trade payables) incurred by our non-guarantor subsidiaries.

At any time prior to October 15, 2017, we may redeem all or part of the 2022 Senior Notes at a make-whole price set forth in the indenture. On or after October 15, 2017, we may redeem the notes at fixed redemption prices, plus accrued and unpaid interest, if any, to the date of redemption.

Upon the occurrence of a "change of control" as defined in the indenture for the 2022 Senior Notes, holders will have the right to require us to repurchase all or a portion of the notes at a price equal to 101 percent of the aggregate principal amount of the notes repurchased, together with any accrued and unpaid interest to the date of purchase. In connection with certain asset sales, we will be required to use the net cash proceeds of the asset sale to make an offer to purchase the notes at 100 percent of the principal amount, together with any accrued and unpaid interest to the date of purchase.

The indenture governing the 2022 Senior Notes contains covenants that, among other things, limit our ability and the ability of our subsidiaries to incur additional indebtedness; pay dividends or make distributions on our stock; purchase or redeem stock or subordinated indebtedness; make certain investments; create certain liens; restrict dividends or other payments by restricted subsidiaries; enter into transactions with affiliates; sell assets; and merge or consolidate with another company.

In January 2017, pursuant to the filing of the supplemental indentures for the 2021 Convertible Notes, 2024 Senior Notes, and the 2022 Senior Notes our subsidiary, PDC Permian, Inc., became a guarantor of our obligations under the notes.

As of December 31, 2016, we were in compliance with all covenants related to the 2021 Convertible Notes, 2024 Convertible Notes and the 2022 Senior Notes, and expect to remain in compliance throughout the foreseeable future.

2016 Convertible Senior Notes. In November 2010, we issued $115.0 million aggregate principal amount of 3.25% convertible senior notes due that were due in 2016 ("2016 Convertible Notes") in a private placement. The maturity for the payment of principal was May 15, 2016, and we paid the aggregate principal amount of the 2016 Convertible Notes, plus cash for the fractional shares, totaling approximately $115.0 million. Additionally, we issued 792,406 shares of common stock for the $47.9 million excess conversion value. See the footnote titled Common Stock for more information.

Revolving Credit Facility

Revolving Credit Facility. Our revolving credit facility matures in May 2020. The revolving credit facility is available for working capital requirements, capital investments, acquisitions, general corporate purposes and to support letters of credit. The revolving credit facility provides for a maximum of $1 billion in allowable borrowing capacity, subject to the borrowing base determination and subject to limitations under the 2022 Senior Notes. The amount available under the revolving credit facility is based on, among other things, the loan value assigned to the proved reserves attributable to our crude oil and natural gas interests, excluding proved reserves attributable to our affiliated partnerships. The borrowing base is subject to a semi-annual size redetermination on November 1 and May 1 based upon quantification of our reserves at June 30 and December 31, and is also subject to a redetermination upon the occurrence of certain events. The revolving credit facility is secured by a pledge of the stock of certain of our subsidiaries, mortgages of certain producing crude oil and natural gas properties and substantially all of our and such subsidiaries' other assets. Our affiliated partnerships are not guarantors of our obligations under the revolving credit facility. The current borrowing base and aggregate commitments under the facility are $700 million.

The weighted-average borrowing rate on our revolving credit facility, exclusive of fees on the unused commitment and the letter of credit noted below, was 2.7 percent and 2.6 percent per annum for the years ended December 31, 2016 and 2015, respectively. We capitalized $8.8 million and $3.6 million of debt issuance costs as of December 31, 2016 and 2015, respectively, related to our revolving credit facility which is included in other assets on the consolidated balance sheets.

We had no outstanding balance on our revolving credit facility as of December 31, 2016 compared to $37.0 million outstanding as of December 31, 2015. The outstanding principal amount under the revolving credit facility accrues interest at a varying interest rate that fluctuates with an alternate base rate (equal to the greater of JPMorgan Chase Bank, N.A.'s prime rate, the federal funds rate plus an applicable margin and the rate for dollar deposits in the London interbank market (“LIBOR”) for one month plus a premium), or at our election, a rate equal to LIBOR for certain time periods. Additionally, commitment fees, interest margin, and other bank fees, charged as a component of interest, vary with our utilization of the facility. As of December 31, 2016, the applicable margin is 1.25 percent, and the unused commitment fee is 0.50 percent. No principal payments are generally required until the credit agreement expires in May 2020, or in the event that the borrowing base falls below the outstanding balance.

The revolving credit facility contains covenants customary for agreements of this type, with the most restrictive being certain financial tests on a quarterly basis. The financial tests, as defined per the revolving credit facility, include requirements to: (a) maintain a minimum current ratio of 1.00:1.00 and (b) not exceed a maximum leverage ratio of 4.00:1.00. Our borrowing base availability under the revolving credit facility is limited under our 2022 Senior Notes to the greater of $700 million or the calculated value under an Adjusted Consolidated Tangible Net Asset test, as defined in the applicable indenture. As of December 31, 2016, we were in compliance with all the revolving credit facility covenants and expect to remain in compliance throughout the foreseeable future. As of December 31, 2016, our calculated debt to EBITDAX ratio was 2.10 and our current ratio was 5.00.

The revolving credit facility contains restrictions as to when we can directly or indirectly retire, redeem, repurchase, or prepay in cash any part of the principal of the 2021 Convertible Notes, 2022 Senior Notes, or 2024 Senior Notes. Among other things, the restriction on redemption of the 2021 Convertible Notes requires that immediately after giving effect to any such retirement, redemption, defeasance, repurchase, settlement, or prepayment, the aggregate commitment under the revolving credit facility must exceed the aggregate credit exposure under such facility by at least an amount equal to or greater than 20 percent of such aggregate commitment.

As of December 31, 2016, RNG had issued an irrevocable standby letter of credit of approximately $11.7 million in favor of a third-party transportation service provider to secure firm transportation of the natural gas produced by third-party producers for whom we market production in the Appalachian Basin. The letter of credit currently expires in September 2017 and is automatically extended annually in accordance with the letter of credit's terms and conditions. The letter of credit reduces the amount of available funds under our revolving credit facility by an amount equal to the letter of credit. As of December 31, 2016, the available funds under our revolving credit facility, including the reduction for the $11.7 million letter of credit, was $688.3 million.