Note 5. Long-Term Debt

The following long-term debt and capital lease obligations were outstanding as of December 31, 2014 and 2013:



	December 31,
In thousands	2014			2013
Bank Credit Agreement	$	395,000		$	340,000
8¼% Senior Subordinated Notes due 2020	—			996,273
6⅜% Senior Subordinated Notes due 2021	400,000			400,000
5½% Senior Subordinated Notes due 2022	1,250,000			—
4⅝% Senior Subordinated Notes due 2023	1,200,000			1,200,000
Other Senior Subordinated Notes, including premium of $11 and $16, respectively	2,746			3,823
Pipeline financings	220,583			228,167
Capital lease obligations	103,041			128,519
Total	3,571,370			3,296,782
Less: current obligations	(35,470		)	(36,157		)
Long-term debt and capital lease obligations	$	3,535,900		$	3,260,625

The ultimate parent company in our corporate structure, Denbury Resources Inc. ("DRI"), is the sole issuer of all of our outstanding senior subordinated notes. DRI has no independent assets or operations. Each of the subsidiary guarantors of such notes is 100% owned, directly or indirectly, by DRI, and the guarantees of such notes are full and unconditional and joint and several; any subsidiaries of DRI that are not subsidiary guarantors of such notes are minor subsidiaries.

Bank Credit Facility

In December 2014, we entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A. ("JPMorgan"), as administrative agent, and other lenders party thereto (the "Bank Credit Agreement") to replace our previous credit agreement that was set to mature in May 2016 (the "Previous Bank Credit Agreement"). The Bank Credit Agreement is a senior secured revolving credit facility with an initial borrowing base of $3.0 billion and aggregate lender commitments of $1.6 billion, and reduces our borrowing costs on the drawn spread. The $1.6 billion of aggregate lender commitments is consistent with the Previous Bank Credit Agreement and may be increased up to the borrowing base amount with approval and incremental commitments from the existing lenders or new lenders. Additionally, under the Bank Credit Agreement, letters of credit are available in an aggregate amount not to exceed $50 million, and short-term swingline loans are available in an aggregate amount not to exceed $25 million, each subject to the available commitments under the Bank Credit Agreement. Availability under the Bank Credit Agreement is subject to a borrowing base, which is redetermined annually beginning May 1, 2015. The borrowing base is adjusted at the lenders' discretion and is based, in part, upon external factors over which we have no control (including approval by the lenders party to the Bank Credit Agreement). The lenders may also reduce the borrowing base if between scheduled annual redeterminations we sell borrowing base properties and/or cancel commodity derivative positions with an aggregate value in excess of 10% of the then-effective borrowing base. If our outstanding debt under the Bank Credit Agreement exceeds the then-effective borrowing base, we would be required to repay the excess amount over a period not to exceed six months. Loans under the Bank Credit Agreement mature in December 2019.

Our obligations under the Bank Credit Agreement are guaranteed jointly and severally by each subsidiary of DRI that is 100% owned, directly or indirectly, by DRI. In addition, the Bank Credit Agreement is secured by (1) a significant portion of our proved oil and natural gas properties, which are held through its restricted subsidiaries; (2) the pledge of equity interests of such subsidiaries; and (3) a pledge of commodity derivative agreements of DRI and such subsidiaries (as applicable).

The Bank Credit Agreement contains several restrictive covenants including, among others:


•	a requirement to maintain a maximum permitted ratio of consolidated total net debt to consolidated EBITDAX (as defined in the Bank Credit Agreement) of DRI and its wholly-owned subsidiaries of not more than 4.25 to 1.0;


•	a requirement to maintain a current ratio, as determined under the Bank Credit Agreement, of not less than 1.0 to 1.0; and


•	a limit on our ability to, among other things, incur indebtedness; grant liens; engage in certain mergers, consolidations, liquidations and dissolutions; engage in sales of assets; make acquisitions and investments; make distributions and dividends; and enter into commodity derivative agreements, in each case subject to customary exceptions.

As of December 31, 2014, we were in compliance with all debt covenants under the Bank Credit Agreement. Under the Bank Credit Agreement, we are permitted to make unlimited distributions in the form of repurchases of Denbury common stock and payments of cash dividends on Denbury common stock, provided that (1) prior to and after making any such distribution, no event of default exists and (2) we have minimum availability of at least 10% of the "loan limit" under the Bank Credit Agreement (currently the aggregate lender commitments of $1.6 billion) on the date such distribution is made (calculated on a pro forma basis after giving effect to the making of any such distribution).

Loans under the Bank Credit Agreement are subject to varying rates of interest based on either (1) for ABR Loans, a base rate determined under the Bank Credit Agreement (the "ABR") plus an applicable margin ranging from 0.25% to 1.25% per annum, or (2) for LIBOR Loans, the LIBOR rate plus an applicable margin ranging from 1.25% to 2.25% per annum (capitalized terms as defined in the Bank Credit Agreement). The weighted average interest rate on borrowings outstanding as of December 31, 2014 under the Bank Credit Agreement was 1.9%. The undrawn portion of the aggregate lender commitments under the Bank Credit Agreement is subject to a commitment fee ranging from 0.3% to 0.375% per annum.

Senior Subordinated Notes

2014 Repurchase and Redemption of 8¼% Senior Subordinated Notes due 2020. On April 30, 2014, we completed a cash tender offer for our 8¼% Senior Subordinated Notes due 2020 (the "8¼% Notes") and purchased a total of $815.2 million principal amount of these notes. We received sufficient consents in the solicitation to amend the indenture governing the 8¼% Notes by entering into a supplemental indenture, which eliminated most of the restrictive covenants and certain events of default. The purchase under this tender offer was funded by a portion of the proceeds from the issuance of our 5½% Notes (defined below). On April 30, 2014, we issued a notice of redemption and fully funded the redemption of all of the remaining outstanding 8¼% Notes ($181.1 million principal amount) at an amount equal to 100% of their principal amount plus the required make-whole premium and accrued interest up to, but excluding, the May 30, 2014, redemption date, resulting in a satisfaction and discharge of the indenture for the 8¼% Notes.

We recognized a $113.9 million loss associated with the debt repurchases during the second quarter of 2014, which loss consists of both premium payments made to repurchase or redeem the 8¼% Notes and the elimination of unamortized debt issuance costs related to these notes. The loss is included in our Consolidated Statements of Operations under the caption "Loss on early extinguishment of debt," and premium payments made to repurchase the notes are classified as a financing cash outflow on our Consolidated Statements of Cash Flows under the caption "Premium paid on repayment of senior subordinated notes."

6⅜% Senior Subordinated Notes due 2021. In February 2011, we issued $400 million of 6⅜% Senior Subordinated Notes due 2021 (the "6⅜% Notes"). The 6⅜% Notes, which bear interest at a rate of 6.375% per annum, were sold at par.

The 6⅜% Notes mature on August 15, 2021, and interest is payable on February 15 and August 15 of each year. We may redeem the 6⅜% Notes in whole or in part at our option beginning August 15, 2016, at a redemption price of 103.188% of the principal amount, and at declining redemption prices thereafter, as specified in the indenture. Prior to August 15, 2016, we may redeem 100% of the principal amount of the 6⅜% Notes at a price equal to 100% of the principal amount plus a "make-whole" premium and accrued and unpaid interest. The 6⅜% Notes are not subject to any sinking fund requirements.

5½% Senior Subordinated Notes due 2022. In April 2014, we issued $1.25 billion of 5½% Senior Subordinated Notes due 2022 (the "5½% Notes"). The 5½% Notes, which bear interest at a rate of 5.5% per annum, were sold at par. The net proceeds, after issuance costs, of $1.23 billion were used to repurchase or redeem our outstanding 8¼% Notes, which were issued in 2010 (see 2014 Repurchase and Redemption of 8¼% Senior Subordinated Notes due 2020 above), and to pay down a portion of outstanding borrowings under our Previous Bank Credit Agreement.

The 5½% Notes mature on May 1, 2022, and interest is payable on May 1 and November 1 of each year. We may redeem the 5½% Notes in whole or in part at our option beginning May 1, 2017, at a redemption price of 104.125% of the principal amount, and at declining redemption prices thereafter, as specified in the indenture. Prior to May 1, 2017, we may at our option redeem up to an aggregate of 35% of the principal amount of the 5½% Notes at a price of 105.5% of par with the proceeds of certain equity offerings. In addition, at any time prior to May 1, 2017, we may redeem 100% of the principal amount of the 5½% Notes at a price equal to 100% of the principal amounts plus a "make-whole" premium and accrued and unpaid interest. The 5½% Notes are not subject to any sinking fund requirements.

4⅝% Senior Subordinated Notes due 2023. In February 2013, we issued $1.2 billion of 4⅝% Senior Subordinated Notes due 2023 (the "4⅝% Notes"). The 4⅝% Notes, which bear interest at a rate of 4.625% per annum, were sold at par. The net proceeds, after issuance costs, of $1.18 billion were used to repurchase or redeem our 9½% Senior Subordinated Notes due 2016 (the "9½% Notes") and 9¾% Senior Subordinated Notes due 2016 (the "9¾% Notes") (see 2013 Repurchase and Redemption of 9½% Notes and 9¾% Notes below) and to pay down a portion of outstanding borrowings under our Previous Bank Credit Agreement.

The 4⅝% Notes mature on July 15, 2023, and interest is payable on January 15 and July 15 of each year. We may redeem the 4⅝% Notes in whole or in part at our option beginning January 15, 2018, at a redemption price of 102.313% of the principal amount, and at declining redemption prices thereafter, as specified in the indenture. Prior to January 15, 2016, we may at our option redeem up to an aggregate of 35% of the principal amount of the 4⅝% Notes at a redemption price of 104.625% of par with the proceeds of certain equity offerings. In addition, at any time prior to January 15, 2018, we may redeem 100% of the principal amount of the 4⅝% Notes at a redemption price equal to 100% of the principal amount plus a "make-whole" premium and accrued and unpaid interest. The 4⅝% Notes are not subject to any sinking fund requirements.

Restrictive Covenants in Indentures for Senior Subordinated Notes. Each of the indentures for the 6⅜% Notes, 5½% Notes and 4⅝% Notes contains certain covenants that are generally consistent and that restrict our ability and the ability of our restricted subsidiaries to take or permit certain actions, including restrictions on our ability and the ability of our restricted subsidiaries to (1) incur additional debt; (2) make investments; (3) create liens on our assets or the assets of our restricted subsidiaries; (4) create restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to DRI or other restricted subsidiaries; (5) engage in transactions with our affiliates; (6) transfer or sell assets or subsidiary stock; (7) consolidate, merge or transfer all or substantially all of our assets and the assets of our restricted subsidiaries; and (8) make restricted payments (which includes paying dividends on our common stock or redeeming, repurchasing or retiring such stock or subordinated debt), provided that the restricted payments covenant in the indentures for the 5½% and 4⅝% Notes (the "5½% and 4⅝% Indentures") permits us in certain circumstances to make unlimited restricted payments so long as we maintain a ratio of total debt to EBITDA (both as defined in the 5½% and 4⅝% Indentures) of at least 2.5 to 1.0 (both before and after giving effect to any restricted payment), although we will not be able to realize the practical benefit of the restricted payment covenant flexibility in the 5½% and 4⅝% Indentures until the 6⅜% Notes have been redeemed or retired. As of December 31, 2014, we were in compliance with all debt covenants under the indentures related to our senior subordinated notes.

2013 Repurchase and Redemption of 9½% Notes and 9¾% Notes. Pursuant to cash tender offers, during 2013, we repurchased $426.4 million in principal of our 9¾% Notes and $224.9 million in principal of our 9½% Notes. We recognized a $44.7 million loss during the year ended December 31, 2013, associated with the debt repurchases, consisting of both premium payments made to repurchase or redeem the 9½% Notes and 9¾% Notes and the elimination of unamortized debt issuance costs, discounts and premiums related to these notes. The loss is included in our Consolidated Statements of Operations under the caption "Loss on early extinguishment of debt," and premium payments made to repurchase the notes are classified as a financing cash outflow on our Consolidated Statements of Cash Flows under the caption "Premium paid on repayment of senior subordinated notes."

Pipeline Financings

In May 2008, we closed two transactions with Genesis Energy, L.P. ("Genesis") involving two of our pipelines. The NEJD Pipeline system included a 20-year financing lease, and the Free State Pipeline included a long-term transportation service agreement. These transactions are both accounted for as financing leases.

Debt Issuance Costs

In connection with the issuance of our outstanding long-term debt, we have incurred debt issuance costs, which are being amortized to interest expense using the straight line or effective interest method over the term of each related facility or borrowing. Remaining unamortized debt issuance costs were $57.3 million and $58.9 million at December 31, 2014 and 2013, respectively. These balances are included in "Other assets" in our Consolidated Balance Sheets.

Indebtedness Repayment Schedule

At December 31, 2014, our indebtedness, including our capital and financing lease obligations but excluding the discount and premium on our senior subordinated debt, is payable over the next five years and thereafter as follows:



In thousands
2015	$	35,470
2016	38,517
2017	37,087
2018	33,885
2019	422,879
Thereafter	3,003,521
Total indebtedness	$	3,571,359