Debt Obligations

6 Months Ended

Jun. 30, 2011

Debt Obligations [Abstract]

Debt Obligations

Note 3 – Debt Obligations

Our debt consisted of the following at the dates indicated:

		June 30,		December 31,
		2011		2010
Senior notes, 6% fixed rate, due 2012	$	-	$	81,250
Convertible bonds, 11.5%, due 2016		59,077		55,821
Subordinated notes, 12.0%, due 2014		41,620		51,132
Senior term loan, 15%, due 2013		163,011		161,371
		263,708		349,574
Less: debt discount		(2,670)		(4,268)
Less: current maturities		(16,600)		(21,600)
Long-term debt	$	244,438	$	323,706
Standby letters of credit outstanding for abandonment liabilities	$	33,166	$	31,726

Our outstanding credit facilities contain certain financial ratio covenants. We were in compliance with all financial and restrictive covenants of our debt obligations as of June 30, 2011 and December 31, 2010.

The fair value of our outstanding debt obligations was $270 million and $361 million at June 30, 2011 and December 31, 2010, respectively. The fair values of long-term debt were determined based upon external market quotes for our Senior Notes and discounted cash flows for other debt.

6% Senior Notes

On April 20, 2011, we redeemed all $81.25 million of our outstanding 6% Senior Notes due 2012 with a portion of the proceeds from our common stock offeringcompleted in March 2011. The redemption was made at a price of 100% of the Senior Notes' principal amount, plus accrued and unpaid interest to the redemption date.

11.5% Convertible Bonds

On March 11, 2011, we entered into an amendment to the Trust Deed with Smedvig QIF PLC related to our 11.5% Convertible Bonds due 2014. The amendment provides for:

• the amendment of the maturity date of the 11.5% Convertible Bonds from January 24, 2014 to January 24, 2016;
• the amendment of the date upon which the holders of the 11.5% Convertible Bonds may first exercise a put right, and the occurrence of the conversion price reset if such put right is not exercised, from January 24, 2012 to January 24, 2016; and
• a reduction in the interest rate payable from 11.5% to 7.5%on and after March 31, 2014.

We recorded a loss of $0.8 million in other expenses related to this amendment, representing the difference between the fair value of the debt and the book value of the debt at March 11, 2011.

Senior Term Loan

On February 6, 2011, we amended our Senior Term Loan due 2013 to increase the security reserved for potential letters of credit from $25 million to $35 million. In July 2011, we secured new letters of credit that allowed us to release the $33 million of restricted cash that served as collateral for previous letters of credit.

The Amendment of our 11.5% Convertible Bonds and the redemption of all $81.25 million of our outstanding 6% Senior Notes satisfied the two conditions precedent to extend the maturity date of the Senior Term Loan to August 16, 2013

In July 2011, we amended our Senior Term Loan to provide for an increase of $75 million in the borrowings available under the Senior Term Loan. In connection with the increase, we drew down the full additional amounts available and our quarterly scheduled amortization payments on the Senior Term Loan will increase from $400,000 to $587,500. See Note 11 “Subsequent Events” for additional discussion of these transactions.

5.5% Convertible Senior Notes

In July 2011, we issued$135 million aggregate principal amount ofour 5.5% Convertible Senior Notes due 2016. Interest on these notes will be payable semiannually at a rate of 5.5% per annum. The 5.5% Convertible Senior Notes are convertible into shares of our common stock at an initial conversion rate of 54.019 shares (equivalent to $18.51 per share) of common stock per $1,000 principal amount of the notes. See Note 11 “Subsequent Events” for additional discussion of this transaction.