Long-term debt

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



	June 30, 2014		December 31, 2013
9.875% Senior Notes due 2020, net of discount of $5,161 and $5,444, respectively	$	294,839	$	294,556
8.25% Senior Notes due 2021	400,000		400,000
7.625% Senior Notes due 2022, including premium of $5,286 and $5,719, respectively	555,286		555,719
Senior secured revolving credit facility	249,000		272,000
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	10,957		11,202
Installment notes payable, principal and interest payable monthly, bearing interest at rates ranging from 2.85% to 6.44%, due August 2014 through February 2018 collateralized by automobiles, machinery and equipment	5,081		5,235
Capital lease obligations	23,004		24,150
	1,538,167		1,562,862
Less current maturities	5,623		5,334
	$	1,532,544	$	1,557,528

Senior Notes

The senior notes, which, as of June 30, 2014, 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 our existing and future senior debt, and rank senior to all of our existing and future subordinated debt.

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. During the six months ended June 30, 2014, we had borrowings of $110,000 and repayments of $133,000 on our senior secured revolving credit facility. The net repayment was funded by proceeds received from our Delaware Basin and Ft. Worth Basin property divestitures.

Availability under our senior secured revolving credit facility is subject to a borrowing base which is set by the banks semiannually 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. On April 22, 2014, our borrowing base was reaffirmed at $600,000.

On May 19, 2014, we entered into a Limited Consent and Fourteenth Amendment to our senior secured revolving credit facility which provides for a series of automatic reductions in the borrowing base under the credit facility as the divestitures of our oil and natural gas properties are completed (see Note 3—Acquisitions and divestitures). As a result of two divestitures that closed during the second quarter, our borrowing base was reduced from $600,000 to $532,000 effective May 23, 2014. Subsequent divestitures during the third quarter further reduced our borrowing base from $532,000 to $484,500 effective July 18, 2014.

The Limited Consent and Fourteenth Amendment also imposed an additional reduction in availability under our senior secured revolving credit facility equal to 10% of the borrowing base to compensate for the over-hedging of our production in excess of the limits specified by covenants under the senior secured revolving credit facility. Outstanding hedges have temporarily exceeded the limits allowed under the senior secured revolving credit facility because of our recent asset divestitures. Our lenders have waived any covenant violations resulting from our temporary hedging noncompliance until August 15, 2014. On August 14, 2014 we entered into a Letter Agreement with our lenders to extend the waiver of temporary hedging noncompliance until November 1, 2014, the date of our next scheduled borrowing base redetermination. In conjunction with this extension, the 10% reduction in availability discussed above was replaced with a requirement to maintain a level of availability on our senior secured credit facility that is calculated based on our overhedged position. The requirement specifies that in the event the market value of our derivative contracts for a given commodity is a liability, the availability on our senior secured revolving credit facility must be no less than two times the liability on the overhedged production. As of August 14, 2014, we were overhedged on our projected natural gas production; however, since the market value of our natural gas derivative contracts, based on prior day settlement prices, was an asset on that date, there was no restriction on the availability under our senior secured credit facility.

We believe we were in compliance with all covenants under our senior secured revolving credit facility as of June 30, 2014.

Capital Leases

During 2013, 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 approximately $3,181 annually.