Long-Term Debt

3 Months Ended

Mar. 31, 2020

Note 5 - Long-Term Debt

Credit Agreement

On April 29, 2020, the Company and its lenders entered into the Third Amendment to the Credit Agreement (“Third Amendment”). The Company’s Credit Agreement provides for a senior secured revolving credit facility with a maximum loan amount of $2.5 billion. Also on April 29, 2020, as a result of the regular semi-annual borrowing base redetermination, the borrowing base and aggregate lender commitments were both reduced to $1.1 billion due to a decrease in the value of proved reserves driven by decreased commodity pricing. The Third Amendment permits the Company to incur second lien debt of up to $900.0 million (“Permitted Lien Debt”) prior to the next scheduled redetermination date of October 1, 2020, provided that all principal amounts of such debt are used to redeem unsecured senior debt of the Company for less than or equal to par value. Additionally, the Third Amendment reduces the limit on the amount of dividends that the Company may declare and pay on an annual basis from $50.0 million to $12.0 million. The Third Amendment also amends certain other covenants of the Company in the Credit Agreement.

The Credit Agreement is scheduled to mature on September 28, 2023, except that, pursuant to the Third Amendment, upon the Company’s incurrence of Permitted Lien Debt to redeem the 6.125% Senior Notes due 2022 (“2022 Senior Notes”), the maturity date under the Credit Agreement will be July 2, 2023. Without regard to which maturity date is in effect, the maturity date could occur earlier on August 16, 2022, if the Company has not completed certain repurchase, redemption, or refinancing activities associated with its 2022 Senior Notes, and does not have certain unused availability for borrowing under the Credit Agreement, as outlined in the Credit

Agreement and the Third Amendment. The Company must comply with certain financial and non-financial covenants under the terms of the Credit Agreement and was in compliance with all such covenants as of March 31, 2020, and through the filing of this report.

Interest and commitment fees associated with the revolving credit facility are accrued based on a borrowing base utilization grid set forth in the Credit Agreement. The borrowing base utilization grid was amended by the Third Amendment as presented in the table below. Please refer to Note 5 - Long-Term Debt in the 2019 Form 10-K for the utilization grid in effect prior to the Third Amendment. At the Company’s election, borrowings under the Credit Agreement may be in the form of Eurodollar, Alternate Base Rate (“ABR”), or Swingline loans. Eurodollar loans accrue interest at LIBOR, plus the applicable margin from the utilization grid, and ABR and Swingline loans accrue interest at a market-based floating rate, plus the applicable margin from the utilization grid. Commitment fees are accrued on the unused portion of the aggregate lender commitment amount at rates from the utilization grid and are included in the interest expense line item on the accompanying statements of operations. Please refer to Note 5 - Long-Term Debt in the 2019 Form 10-K for additional detail on the terms of the Company’s Credit Agreement.



Borrowing Base Utilization Percentage	<25%		≥25% <50%		≥50% <75%		≥75% <90%		≥90%
Eurodollar Loans ⁽¹⁾	1.750	%	2.000	%	2.500	%	2.750	%	3.000	%
ABR Loans or Swingline Loans	0.750	%	1.000	%	1.500	%	1.750	%	2.000	%
Commitment Fee Rate	0.375	%	0.375	%	0.500	%	0.500	%	0.500	%

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⁽¹⁾

The Credit Agreement specifies that in the event that LIBOR is no longer a widely used benchmark rate, or that it is no longer used for determining interest rates for loans in the United States, a replacement interest rate that fairly reflects the cost to the lenders of funding loans shall be established by the Administrative Agent, as defined in the Credit Agreement, in consultation with the Company. Please refer to Note 1 - Summary of Significant Accounting Policies for discussion of FASB ASU 2020-04, which provides guidance related to reference rate reform.

The following table presents the outstanding balance, total amount of letters of credit outstanding, and available borrowing capacity under the Credit Agreement as of filing on April 29, 2020, March 31, 2020, and December 31, 2019:



	As of filing on April 29, 2020		As of March 31, 2020		As of December 31, 2019
	(in thousands)
Revolving credit facility ⁽¹⁾	$	93,500	$	72,000	$	122,500
Letters of credit	—		—		—
Available borrowing capacity	1,006,500		1,128,000		1,077,500
Total aggregate lender commitment amount	$	1,100,000	$	1,200,000	$	1,200,000

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⁽¹⁾	Unamortized deferred financing costs attributable to the revolving credit facility are presented as a component of the other noncurrent assets line item on the accompanying balance sheets and totaled $5.5 million and $5.9 million as of March 31, 2020, and December 31, 2019, respectively. These costs are being amortized over the term of the revolving credit facility on a straight-line basis.

Senior Notes

The Senior Notes, net of unamortized deferred financing costs line item on the accompanying balance sheets as of March 31, 2020, and December 31, 2019, consisted of the following:



	As of March 31, 2020						As of December 31, 2019
	Principal Amount		Unamortized Deferred Financing Costs		Principal Amount, Net of Unamortized Deferred Financing Costs		Principal Amount		Unamortized Deferred Financing Costs		Principal Amount, Net of Unamortized Deferred Financing Costs
	(in thousands)
6.125% Senior Notes due 2022	$	436,047	$	2,442	$	433,605	$	476,796	$	2,920	$	473,876
5.0% Senior Notes due 2024	500,000		3,535		496,465		500,000		3,766		496,234
5.625% Senior Notes due 2025	500,000		4,677		495,323		500,000		4,903		495,097
6.75% Senior Notes due 2026	500,000		5,362		494,638		500,000		5,571		494,429
6.625% Senior Notes due 2027	500,000		6,368		493,632		500,000		6,601		493,399
Total	$	2,436,047	$	22,384	$	2,413,663	$	2,476,796	$	23,761	$	2,453,035

The senior notes listed above (collectively referred to as the “Senior Notes”) are unsecured senior obligations and rank equal in right of payment with all of the Company’s existing and any future unsecured senior debt and are senior in right of payment to any

future subordinated debt. There are no subsidiary guarantors of any of the Senior Notes. The Company is subject to certain covenants under the indentures governing the Senior Notes and was in compliance with all covenants as of March 31, 2020, and through the filing of this report. The Company may redeem some or all of its Senior Notes prior to their maturity at redemption prices based on a premium, plus accrued and unpaid interest as described in the indentures governing the Senior Notes. Please refer to Note 5 - Long-Term Debt in the 2019 Form 10-K for additional detail on the Company’s Senior Notes.

During the first quarter of 2020, the Company repurchased a total of $40.7 million in aggregate principal amount of its 2022 Senior Notes in open market transactions for a total settlement amount, excluding accrued interest, of $28.3 million. In connection with the repurchase, the Company recorded a gain on extinguishment of debt of $12.2 million for the three months ended March 31, 2020. This amount included discounts realized upon repurchase of $12.4 million partially offset by approximately $235,000 of accelerated unamortized deferred financing costs. The Company canceled all repurchased 2022 Senior Notes upon cash settlement.

Senior Convertible Notes

As of March 31, 2020, the Company’s senior convertible notes consisted of $172.5 million in aggregate principal amount of 1.50% Senior Convertible Notes due July 1, 2021 (the “Senior Convertible Notes”). The Senior Convertible Notes are unsecured senior obligations and rank equal in right of payment with all of the Company’s existing and any future unsecured senior debt and are senior in right of payment to any future subordinated debt. Please refer to Note 5 - Long-Term Debt in the 2019 Form 10-K for additional detail on the Company’s Senior Convertible Notes and associated capped call transactions.

The Senior Convertible Notes were not convertible at the option of holders as of March 31, 2020, or through the filing of this report. Notwithstanding the inability to convert, the if-converted value of the Senior Convertible Notes as of March 31, 2020, did not exceed the principal amount. The debt discount and debt-related issuance costs are amortized to the principal value of the Senior Convertible Notes as interest expense through the maturity date of July 1, 2021. Interest expense recognized on the Senior Convertible Notes related to the stated interest rate and amortization of the debt discount totaled $2.9 million and $2.7 million for the three months ended March 31, 2020, and 2019, respectively.

There have been no changes to the initial net carrying amount of the equity component of the Senior Convertible Notes recorded in additional paid-in capital on the accompanying balance sheets since issuance. The Senior Convertible Notes, net of unamortized discount and deferred financing costs line on the accompanying balance sheets as of March 31, 2020, and December 31, 2019, consisted of the following:



	As of March 31, 2020			As of December 31, 2019
	(in thousands)
Principal amount of Senior Convertible Notes	$	172,500		$	172,500
Unamortized debt discount	(11,633		)	(13,861		)
Unamortized deferred financing costs	(1,146		)	(1,376		)
Senior Convertible Notes, net of unamortized discount and deferred financing costs	$	159,721		$	157,263

The Company is subject to certain covenants under the indenture governing the Senior Convertible Notes and was in compliance with all covenants as of March 31, 2020, and through the filing of this report.

Capitalized Interest

Capitalized interest costs for the three months ended March 31, 2020, and 2019, totaled $2.7 million and $4.9 million, respectively. The amount of interest the Company capitalizes generally fluctuates based on the amount borrowed, the Company’s capital program, and the timing and amount of costs associated with capital projects that are considered in progress. Capitalized interest costs are included in total costs incurred.