Long-term debt

As of the dates indicated, long-term debt consists of the following:



	December 31,
	2013		2012
9.875% Senior Notes due 2020, net of discount of $5,444 and $5,969, respectively	$	294,556	$	294,031
8.25% Senior Notes due 2021	400,000		400,000
7.625% Senior Notes due 2022, including premium of $5,719 and $6,631, respectively	555,719		556,631
Senior secured revolving credit facility	272,000		25,000
Real estate mortgage notes, principal and interest payable monthly, bearing interest at rates ranging from 2.54% to 5.46%, due August 2021 through December 2028; collateralized by real property	11,202		12,596
Installment notes payable, principal and interest payable monthly, bearing interest at rates ranging from 2.87% to 6.79%, due January 2014 through February 2018; collateralized by automobiles, machinery and equipment	5,235		5,144
Capital lease obligations	24,150		—
	1,562,862		1,293,402
Less current maturities	5,334		3,746
	$	1,557,528	$	1,289,656

Maturities of long-term debt and capital leases, excluding premiums or discounts on our senior notes, are as follows as of December 31, 2013:



2014	$	5,334
2015	4,837
2016	3,757
2017	275,250
2018	3,302
2019 and thereafter	1,270,107
	$	1,562,587

Senior Notes

The senior notes, which, as of December 31, 2013, include our 9.875% senior notes due 2020, our 8.25% senior notes due 2021, and our 7.625% senior notes due 2022 (collectively, our “Senior Notes”) are our senior unsecured obligations, rank equally in right of payment with all of our existing and future senior debt, and rank senior to all of our existing and future subordinated debt. The Senior Notes are redeemable, in whole or in part, prior to their maturity at redemption prices specified in the indentures, plus accrued and unpaid interest to the date of redemption.

Interest on the Senior Notes is payable semi-annually, and the principal is due upon maturity. Certain of the Senior Notes were issued at a discount or a premium which is amortized to interest expense over the term of the respective series of Senior Notes. Net amortization of the (premium) discount was $(387), $439, and $668 during the years ended December 2013, 2012 and 2011, respectively.

We and our restricted subsidiaries are subject to certain negative and financial covenants under the indentures governing the Senior Notes. The provisions of the indentures limit our and our restricted subsidiaries’ ability to, among other things:


•	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 on assets;


•	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.

If we experience a change of control (as defined in the indentures governing the Senior Notes), including making certain asset sales, subject to certain conditions, we must give holders of the Senior Notes the opportunity to sell us their Senior Notes at 101% of the principal amount, plus accrued and unpaid interest.

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 Chaparral Biofuels, LLC.

2012 Activity. 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 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. Costs totaling $21,714 associated with the refinancing of our 8.875% Senior Notes, including repurchase or redemption-related fees and the write-off of deferred financing costs and unaccreted discount, were recorded as a loss on extinguishment of debt in 2012.

On November 15, 2012, we issued an additional $150,000 aggregate principal amount of 7.625% Senior Notes under the same indenture covering the issuance on May 2, 2012. The net proceeds from the additional 7.625% Senior Notes issuance were used to repay the outstanding balance of the indebtedness under our senior secured revolving credit facility and for general corporate purposes.

2011 Activity. On February 22, 2011, we issued $400,000 aggregate principal amount of 8.25% Senior Notes maturing on September 1, 2021. We used the net proceeds from the 8.25% Senior Notes to consummate a tender offer for all of our 8.5% Senior Notes due 2015, to redeem the 8.5% Senior Notes not purchased in the tender offer, and for general corporate purposes. Costs totaling $20,592 associated with the refinancing of our 8.5% Senior Notes, including repurchase and redemption-related fees and the write-off of deferred financing costs, were recorded as a loss on extinguishment of debt in 2011.

Senior secured revolving credit facility

In April 2010, we entered into an Eighth Restated Credit Agreement (our “senior secured revolving credit facility”), which is collateralized by our oil and natural gas properties and, as amended, matures on November 1, 2017. The Thirteenth Amendment, effective October 29, 2013, amended our senior secured revolving credit facility to (a) increase our borrowing base from $500,000 to $550,000, (b) automatically increase the borrowing base to $600,000 upon the consummation of the Cabot Acquisition, (c) allow for the incurrence of $300,000 of unsecured senior or subordinated debt meeting the definition of “Additional Permitted Debt” under our senior secured revolving credit facility, (d) permit entering into swap agreements on production from to-be-acquired properties, including the assets to be acquired in the Cabot Acquisition, in notional amounts up to 80% of anticipated proved developed producing production therefrom if otherwise meeting additional necessary requirements under our senior secured revolving credit facility, and (e) increase permitted other debt from $40,000 to $50,000.

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. Effective December 18, 2013, our borrowing base was increased to $600,000. The banks establish a borrowing base by making an estimate of the collateral value of our oil and natural gas properties. If oil and natural gas prices decrease from the amounts used in estimating the collateral value of our oil and natural gas properties, the borrowing base may be reduced, thus reducing funds available under the borrowing base.

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 December 31, 2013 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 2013, the applicable margin varied from 1.50% to 1.75%. Interest payments on Eurodollar borrowings are due the last day of the interest period, if shorter than 3 months or every 3 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 1.00%, plus a margin that varies depending on our utilization percentage. During 2013, the applicable margin varied from 0.50% to 0.75%.

Commitment fees of 0.375% to 0.50% accrue on the unused portion of the borrowing base amount, based on the utilization percentage, and are 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 contains restrictive covenants that may limit our ability, among other things, to:


•	incur additional indebtedness;


•	create or incur additional liens on our oil and natural gas properties;


•	pay dividends in cash or other property, redeem our capital stock or prepay certain indebtedness;


•	make investments in or loans to others;


•	change our line of business;


•	enter into operating leases;


•	merge or consolidate with another person, or lease or sell all or substantially all of our assets;


•	sell, farm-out or otherwise transfer property containing proved reserves;


•	enter into transactions with affiliates;


•	issue preferred stock;


•	enter into negative pledge agreements or agreements restricting the ability of our subsidiaries to pay dividends;


•	enter into or terminate certain swap agreements;


•	amend our organizational documents; and


•	amend, modify or waive under our permitted bond documents (i) any covenants that would make the terms materially more onerous to us or (ii) certain other provisions.

Our senior secured revolving credit facility, as amended, also 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 4.50 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 December 31, 2013.

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 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 gas properties within 30 days.

Debt issuance costs

The costs that we incur to issue debt includes underwriting and other professional fees. These costs are initially capitalized and are included in “Other assets” in the consolidated balance sheets. The balance of unamortized issuance costs was $23,273 and $25,410 as of December 31, 2013 and 2012, respectively. These costs are amortized as a charge to interest expense using the effective interest method. We recorded amortization of $2,197, $1,694 and $1,608 for the years ended December 31, 2013, 2012 and 2011, respectively.

Capital leases

We entered into lease financing agreements with U.S. Bank National Association for $24,500 through the sale and subsequent leaseback of existing compressors owned by us. The carrying value of these compressors is included in our oil and gas full cost pool. The lease financing obligations are for 84-month terms and include the option to purchase the equipment for a specified price at 72 months as well as an option to purchase the equipment at the end of the lease term for its then-current fair market value. Lease payments related to the equipment are recognized as principal and interest expense based on a weighted average implicit interest rate of 3.8%. Minimum lease payments are $3,181 annually.