Long-term debt

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



	December 31,
	2014		2013
9.875% Senior Notes due 2020, net of discount of $4,861 and $5,444, respectively	$	295,139	$	294,556
8.25% Senior Notes due 2021	400,000		400,000
7.625% Senior Notes due 2022, including premium of $4,869 and $5,719, respectively	554,869		555,719
Senior secured revolving credit facility	347,000		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	10,705		11,202
Installment notes payable, principal and interest payable monthly, bearing interest at rates ranging from 2.85% to 5.95%, due January 2015 through February 2018; collateralized by automobiles, machinery and equipment	4,252		5,235
Capital lease obligations	21,837		24,150
	1,633,802		1,562,862
Less current maturities	5,377		5,334
	$	1,628,425	$	1,557,528

Maturities of long-term debt and capital leases, excluding premiums or discounts on our senior notes, are as follows as of December 31, 2014:



2015	$	5,377
2016	4,409
2017	350,600
2018	3,302
2019	12,328
2020 and thereafter	1,257,778
	$	1,633,794

Senior Notes

The senior notes, which, as of December 31, 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 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 $(268), $(387), and $439 during the years ended December 2014, 2013 and 2012, 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.

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.

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. 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 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.

The initial borrowing base on our senior secured revolving credit facility for 2014 was $600,000. On May 19, 2014, we entered into a Limited Consent and Fourteenth Amendment to our senior secured revolving credit facility which imposed a series of automatic borrowing base reductions as the divestitures of our oil and natural gas properties were completed (see Note 3—Acquisitions and divestitures). As a result of two divestitures that closed during the second quarter and two additional divestitures that closed in July 2014, our borrowing base was reduced to $484,500 effective July 18, 2014. Our semiannual redetermination, effective November 5, 2014, increased our borrowing base to $650,000. Our lenders have completed the semi-annual borrowing base redetermination originally scheduled for May 1, 2015, which has resulted in a decrease of our borrowing base to $550,000 to be effective on April 1, 2015.

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, 2014 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 2014, the applicable margin varied from 1.75% to 2.00%. 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. We did not have loans subject to the ABR during 2014.

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, 2014.

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.

We have negotiated an amendment to our senior secured revolving credit facility (the “Fifteenth Amendment”) to be effective April 1, 2015. Among other things, the Fifteenth amendment will replace the Consolidated Net Debt to Consolidated EBITDAX covenant described above with a covenant based on the ratio of Consolidated Net Secured Debt to Consolidated EBITDAX, as defined in the amendment. Under this covenant, we are required to maintain a ratio of Consolidated Net Secured Debt to Consolidated EBITDAX no greater than 2.25 to 1.0 for each period of four consecutive fiscal quarters ending on the last day of such applicable fiscal quarter. For the same applicable periods, the Fifteenth Amendment also requires us to maintain an Interest Coverage Ratio, as defined in the amendment, of no less than 2.00 to 1.00. Under the Fifteenth Amendment, we are allowed to incur an additional $300,000 in Additional Permitted Debt, as revised in the amendment to now include both secured and unsecured debt.

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 $20,937 and $23,273 as of December 31, 2014 and 2013, respectively. These costs are amortized as a charge to interest expense using the effective interest method. We recorded amortization of $2,335, $2,197 and $1,694 for the years ended December 31, 2014, 2013 and 2012, respectively.

Capital leases

In 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 $3,181 annually.