Long-term debt

Long-term debt at September 30, 2012 and December 31, 2011, consisted of the following:



	September 30, 2012		December 31, 2011
8.875% Senior Notes due 2017 (net of discount of $1,658 at December 31, 2011)	$	—	$	323,342
9.875% Senior Notes due 2020 (net of discount of $6,211 and $6,441 at September 30, 2012 and December 31, 2011, respectively)	293,908		293,559
8.25% Senior Notes due 2021	400,000		400,000
7.625% Senior Notes due 2022	400,000		—
Senior secured revolving credit facility	118,000		—
Real estate mortgage notes, principal and interest payable monthly, bearing interest at rates ranging from 3.50% to 5.46%, due January 2013 through December 2028; collateralized by real property	12,711		12,116
Installment notes payable, principal and interest payable monthly, bearing interest at rates ranging from 2.00% to 9.25%, due October 2012 through October 2017; collateralized by automobiles, machinery and equipment	5,800		5,546
Capital lease obligations	—		10
	1,230,419		1,034,573
Less current maturities	4,027		3,078
	$	1,226,392	$	1,031,495

Senior Notes

On May 2, 2012, we issued $400,000 aggregate principal amount of 7.625% Senior Notes maturing on November 15, 2022. We used the net proceeds from the May 2, 2012 7.625% Senior Notes issuance to consummate a tender offer for all of our 8.875% Senior Notes due 2017, to redeem the 8.875% Senior Notes not purchased in the tender offer, and for general corporate purposes. Interest is payable on the 7.625% Senior Notes semi-annually on May 15 and November 15 each year beginning November 15, 2012. On or after May 15, 2017, we may, at our option, redeem the 7.625% Senior Notes at the following redemption prices plus accrued and unpaid interest: 103.813% after May 15, 2017; 102.542% after May 15, 2018; 101.271% after May 15, 2019; and 100% after May 15, 2020. Prior to May 15, 2015, we may redeem up to 35% of the 7.625% Senior Notes with the net proceeds of one or more equity offerings at a redemption price of 107.625%, plus accrued and unpaid interest. The initial $400,000 of 7.625% Senior Notes were exchanged for registered notes effective September 28, 2012.

On November 2, 2012, we entered into a purchase agreement to issue an additional $150,000 aggregate principal amount of 7.625% Senior Notes under the same indenture covering the issuance on May 2, 2102 (the "Add-on Notes"). We expect to issue the Add-on Notes on November 15, 2012. The net proceeds from the additional 7.625% Senior Notes issuance will be used to repay the outstanding balance of the indebtedness under our senior secured revolving credit facility and for general corporate purposes. In connection with the sale of the Add-on Notes, we will enter into a registration rights agreement in which we agree to file a registration statement with the SEC related to an offer to exchange the Add-on Notes for an issue of registered notes within 270 days of the closing date (the “Target Registration Date”). If we fail to complete the exchange offer by the Target Registration Date, we will be required to pay liquidated damages equal to 0.25% per annum of the principal amount of the notes for the first 90 days after the Target Registration Date. After the first 90 days, the rate increases an additional 0.25% for each additional 90-day period, up to a maximum of 1.0% per annum.

In connection with the issuance of the May 2, 2012 7.625% Senior Notes, we capitalized approximately $8,778 of issuance costs related to underwriting and other fees that are amortized to interest expense using the effective interest method. Amortization of $134 and $226 were charged to interest expense during the three and nine months ended September 30, 2012 related to the issuance costs, and unamortized issuance costs of $8,552 were included in other assets as of September 30, 2012. We have not determined the amount of issuance costs related to the Add-on Notes that will be either capitalized, amortized or added to other assets.

During the nine months ended September 30, 2012, we recorded a $21,714 loss associated with the refinancing of our 8.875% Senior Notes, including $15,827 in repurchase or redemption-related fees and a $5,887 write off of deferred financing costs and unaccreted discount.

The Senior Notes, which as of September 30, 2012 include our 9.875% Senior Notes due 2020, our 8.25% Senior Notes due 2021, and our 7.625% Senior Notes due 2022, are our senior unsecured obligations, rank equally in right of payment with all our existing and future senior debt, and rank senior to all of our existing and future subordinated debt. The indentures governing our Senior Notes contain certain covenants which limit our ability to:


•	incur or guarantee additional debt and issue certain types of preferred stock;


•	pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated debt;


•	make investments;


•	incur liens;


•	create restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to us;


•	engage in transactions with affiliates;


•	sell assets, including capital stock of our subsidiaries;


•	consolidate, merge, or transfer assets; and


•	enter into other lines of business.

Chaparral Energy, Inc. is a holding company and owns no operating assets and has no significant operations independent of its subsidiaries. Our obligations under our outstanding Senior Notes have been fully and unconditionally guaranteed, on a joint and several basis, by all of our wholly owned subsidiaries except for Oklahoma Ethanol, LLC and Chaparral Biofuels, LLC.

Senior secured revolving credit facility

In April 2010, we entered into our Eighth Restated Credit Agreement (as amended, our “senior secured revolving credit facility”), which is collateralized by our oil and natural gas properties and matures on April 1, 2016. Availability under our senior secured revolving credit facility is subject to a borrowing base which is set by the banks semi-annually on May 1 and November 1 of each year. In addition, the lenders may request a borrowing base redetermination once between each scheduled redetermination and in the event of early termination of our derivative contracts.

The Eighth Amendment to our senior secured revolving credit facility, effective April 30, 2012, amended our Asset Sale Covenant to permit the sale of certain oil and natural gas properties located in southern Oklahoma and increased our permitted ratio of Consolidated Net Debt to Consolidated EBITDAX. The Ninth Amendment to our senior secured revolving credit facility, effective May 24, 2012, amended the calculation of Consolidated EBITDAX to permit the exclusion of our reasonable and customary fees related to the refinancing of our 8.875% Senior Notes. The Tenth Amendment to our senior secured revolving credit facility, effective November 1, 2012, increased our borrowing base from $375,000 to $500,000; increased the Aggregate Maximum Credit Amount from $450,000 to $750,000 and the maximum Aggregate Maximum Credit Amount (after giving effect to any exercise of the accordion option on the terms and conditions set forth in the senior secured revolving credit facility) to $850,000; extended the maturity date to November 1, 2017; reduced the applicable margins added to the Adjusted LIBO Rate for the purposes of determining the interest rate (i) on Eurodollar loans to a margin ranging from 1.50% to 2.50% and (ii) on ABR loans to a margin ranging from 0.50% to 1.50%, each depending on the utilization percentage of the conforming borrowing base; reduced commitment fees to 0.375% if less than 50% of the borrowing base is utilized; reaffirmed the borrowing base through May 1, 2013 and permitted the offering of the Add-on Notes without triggering the automatic 25% reduction of the borrowing base.

As of November 13, 2012, the balance outstanding under our senior secured revolving credit facility is $145,000.

Amounts borrowed under our senior secured revolving credit facility are subject to varying rates of interest based on (1) the total outstanding borrowings in relation to the borrowing base (the “utilization percentage”) and (2) whether we elect to borrow at the Eurodollar rate or the Alternate Base Rate (“ABR”). The entire balance outstanding at September 30, 2012 was subject to the Eurodollar rate.

The Eurodollar rate is computed at the Adjusted LIBO Rate, defined as the rate applicable to dollar deposits in the London interbank market with a maturity comparable to the interest period (one, two, three or six months, selected by us) times a Statutory Reserve Rate multiplier, as defined in our senior secured revolving credit facility, plus a margin that varies depending on our utilization percentage. During the nine months ended September 30, 2012, the margin varied from 1.75% to 2.75%. Interest payments on Eurodollar borrowings are due the last day of the interest period, if shorter than three months or every three months.

Interest on loans subject to the ABR is computed as the greater of (1) the Prime Rate, as defined in our senior secured revolving credit facility, (2) the Federal Funds Effective Rate, as defined in our senior secured revolving credit facility, plus 0.50%, or (3) the Adjusted LIBO Rate, as defined in our senior secured revolving credit facility, plus 1%, plus a margin that varies depending on our utilization percentage. During the nine months ended September 30, 2012, the margin varied from 0.75% to 1.75%.

During the three and nine months ended September 30, 2012, respectively, commitment fees of $378 and $1,236 were incurred at the rate of 0.50% on the unused portion of the borrowing base amount and were included as a component of interest expense. We have the right to make prepayments of the borrowings at any time without penalty or premium.

Our senior secured revolving credit facility has certain negative and affirmative covenants that require, among other things, maintaining a Current Ratio, as defined in our senior secured revolving credit facility, of not less than 1.0 to 1.0 and a Consolidated Net Debt to Consolidated EBITDAX ratio, as defined in our senior secured revolving credit facility, of not greater than 4.5 to 1.0 for each period of four consecutive fiscal quarters ending on the last day of such applicable fiscal quarter.

We believe we were in compliance with all covenants under our senior secured revolving credit facility as of September 30, 2012.

Our senior secured revolving credit facility also specifies events of default, including non-payment, breach of warranty, non-performance of financial covenants, default on other indebtedness, certain adverse judgments, and change of control, among others. In addition, bankruptcy and insolvency events with respect to us or certain of our subsidiaries will result in an automatic acceleration of the indebtedness under our senior secured revolving credit facility. An acceleration of our indebtedness under our senior secured revolving credit facility could in turn result in an event of default under the indentures for our Senior Notes, which in turn could result in the acceleration of the Senior Notes.

If the outstanding borrowings under our senior secured revolving credit facility were to exceed the borrowing base as a result of a redetermination, we would be required to eliminate this excess. Within 10 days after receiving notice of the new borrowing base, we would be required to make an election: (1) to repay a portion of our bank borrowings in the amount of the excess either in a lump sum within 30 days or in equal monthly installments over a six-month period, (2) to submit within 30 days additional oil and natural gas properties we own for consideration in connection with the determination of the borrowing base sufficient to eliminate the excess or (3) to eliminate the excess through a combination of repayments and the submission of additional oil and natural gas properties within 30 days.