7. Long-Term Debt

Long-term debt consisted of the following: (in thousands)



	December 31,
	2016		2015
Note payable to a bank, with interest only payment until maturity.	$	2,400	$	869
Less unamortized debt issuance cost		(24)		(10)
Note payable to a financial institution, net of unamortized debt issuance cost		2,376		859

Installment notes bearing interest at the rate of 4.16% to 4.6% per annum collateralized by vehicles with monthly payments including interest, insurance and maintenance of approximately $10		102		152

Future debt payments to unrelated entities as of December 31, 2016 consisted of the following: (in thousands)



	2017		2018		Total
Bank Credit Facility	$	—	$	2,400	$	2,400
Company Vehicles	$	55	$	47	$	102
Total	$	55	$	2,447	$	2,502

At December 31, 2016, the Company had a revolving credit facility with Prosperity Bank. This is the Company’s primary source to fund working capital and future capital spending. Under the credit facility, loans and letters of credit are available to the Company on a revolving basis in an amount outstanding not to exceed the lesser of $40 million or the Company’s borrowing base in effect from time to time. As of December 31, 2016, the Company’s borrowing base was $3.0 million. The borrowing base was reduced to approximately $1.25 million with the March 16, 2017 amendment to the credit agreement. This reduction was primarily related to limiting the borrow base to a level in which the Company would be in compliance with certain credit facility covenants. The credit facility is secured by substantially all of the Company’s producing and non-producing oil and gas properties and the Company’s Manufactured Methane facilities. The credit facility includes certain covenants with which the Company is required to comply. At December 31, 2016, these covenants include leverage, interest coverage, minimum liquidity ratios, and debt to equity ratios. During the quarter ended December 31, 2016, the Company was not in compliance with the minimum liquidity ratio. After the covenant modifications and waivers included in the March 16, 2017 amendment, the Company is now in compliance with all covenants.

On March 16, 2017, the Company’s senior credit facility with Prosperity Bank after Prosperity Bank’s most recent review of the Company’s currently owned producing properties was amended to decrease the Company’s borrowing base from $3.0 million to approximately $1.25 million, and extend the term of the facility to July 31, 2018. In addition, all the covenants were removed and replaced with the following: (a) Current Ration > 1:1; (b) Funded Debt to EBITDA < 3.5x; and (c) Interest Coverage > 3.0x. The borrowing base remains subject to the existing periodic redetermination provisions in the credit facility. The interest rate remained prime plus 0.50% per annum. This rate was 4.50% at the date of the amendment. The maximum line of credit of the Company under the Prosperity Bank credit facility remained $40 million and the Company had no outstanding borrowing under the facility as of March 30, 2017.

For the quarter ended December 31, 2016, the Company was in default on compliance with the minimum liquidity ratio. On March 16, 2017, the Company received a waiver from Prosperity Bank. Although the Company was in default of the minimum liquidity covenant for the quarter ended December 31, 2016, the Company is now in compliance as a result of the waiver. In addition, the Company also received a waiver from Prosperity Bank for an anticipated default on the debt to equity covenant. Had the Company not received this waiver, it would have been in default on the debt to equity covenant for the quarter ended December 31, 2016. In February 2017, the Company paid off the credit facility using proceeds from the Company’s rights offering which closed on February 2, 2017. The Company was able to record the credit facility balance as of December 31, 2016 as a non-current liability since the Company had the ability and the intent to repay this debt using proceeds from the equity offering.

For the quarter ended December 31, 2015, the Company was in default on compliance with the Leverage Ratio covenant. On March 28, 2016, the credit facility was amended to delete the leverage ratio covenant. In addition, the amendment also added a Debt to Tangible Net Worth covenant, waived the default on the Interest Coverage ratio for the quarter ended December 31, 2015, waived the anticipated default for the quarter ended March 31, 2016, and waived compliance with the Interest Coverage ratio for all applicable periods through the maturity date. Although the Company was in default of the Leverage and Interest Coverage ratios for the quarter ended December 31, 2015, the Company was in compliance at March 28, 2016 as a result of the amendment and waivers. For the quarter ended June 30, 2016, the Company was in default on compliance with the Debt to Tangible Net Worth covenant. On August 10, 2016, the Company received a waiver of the covenant default for the quarter ended June 30, 2016 as well as a waiver for the anticipated default for the quarter ended September 30, 2016.

The total borrowing by the Company under the Prosperity Bank facility at December 31, 2016 and December 31, 2015 was $2.4 million and $869,000, respectively. The next borrowing base review will take place in July 2017.