Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Note 2. Long-Term Debt The following long-term debt and capital lease obligations were outstanding as of the dates indicated:
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 the notes are full and unconditional and joint and several; any subsidiaries of DRI that are not subsidiary guarantors of certain 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., as administrative agent, and other lenders party thereto (the "Bank Credit Agreement"). The Bank Credit Agreement is a senior secured revolving credit facility with a current borrowing base of $2.6 billion and aggregate lender commitments of $1.6 billion. 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. The Bank Credit Agreement is secured by (1) a significant portion of our proved oil and natural gas properties, which are held through DRI's 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). Loans under the Bank Credit Agreement mature in December 2019. The weighted average interest rate on borrowings outstanding as of September 30, 2015, under the Bank Credit Agreement was 1.8%. 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. As of September 30, 2015, we were in compliance with all debt covenants under the Bank Credit Agreement. Borrowing base redeterminations under our Bank Credit Agreement occur annually, and with our last such redetermination having been completed in early-May 2015, our next scheduled redetermination is set for May 2016. The lenders are entitled, at their election, to request one interim redetermination between annual scheduled redeterminations; however, as of November 4, 2015, there has been no such request to do so. In connection with the borrowing base redetermination completed in early-May 2015, we elected to maintain our aggregate lender commitments at $1.6 billion; however, due to a reduction in oil prices used by our lenders in determining the borrowing base value of our proved reserves attributable to our oil and natural gas properties, our borrowing base was reduced from the previous level of $3.0 billion to $2.6 billion. Because we continue to maintain a significant cushion between our borrowing base and the aggregate lender commitments, and because we had significant availability with respect to our aggregate lender commitments as of September 30, 2015, the borrowing base reduction has no impact on our liquidity. In conjunction with the May 2015 redetermination, we also entered into the First Amendment to the Bank Credit Agreement (the "First Amendment") to restructure certain financial covenants in 2016, 2017, and 2018 in order to provide more flexibility in managing our balance sheet and managing the credit extended by our lenders if oil prices remain low over the next several years. The covenant changes included in the First Amendment were as follows:
The restructuring of covenants through the First Amendment was executed in consideration of a fee paid to the lenders. The First Amendment has no impact on the current ratio financial performance covenant, which will remain in place in 2015 and beyond. All of the above descriptions of financial covenants are qualified by the express language and defined terms contained in the Bank Credit Agreement. 2014 Issuance of 5½% Senior Subordinated Notes due 2022 In April 2014, we issued $1.25 billion of 5½% Senior Subordinated Notes due 2022 (the "5½% Notes"), which were sold at par. The net proceeds, after issuance costs, of $1.23 billion were used to repurchase or redeem our outstanding $996.3 million of 8¼% Senior Subordinated Notes due 2020 (the "8¼% Notes") (see 2014 Repurchase and Redemption of 8¼% Senior Subordinated Notes due 2020 below) and to pay down a portion of outstanding borrowings under our previous bank credit agreement. 2014 Repurchase and Redemption of 8¼% Senior Subordinated Notes due 2020 During the second quarter of 2014, we repurchased and redeemed the entire $996.3 million outstanding principal amount of our 8¼% Notes using a portion of the proceeds from the issuance of the 5½% 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 Unaudited Condensed 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 Unaudited Condensed Consolidated Statements of Cash Flows under the caption "Premium paid on repayment of senior subordinated notes." |