NOTE 12. LONG–TERM DEBT, NET

The following table presents the consolidated debt obligations at the dates indicated:


	Successor		Predecessor
	December 31, 2018		December 31, 2017
Successor Exit Credit Facility (1)	$	115,000	$	—
Predecessor Credit facility		—		263,000
Predecessor 8.0% senior notes due April 2019:
Principal outstanding		—		343,348
Unamortized discount and debt issuance costs (2)		—		(1,701)
Unaccreted premium (3)		—		902
		—		342,549
Total debt		115,000		605,549
Less: Current portion of long-term debt (4)		—		(605,549)
Long-term debt, net	$	115,000	$	—

(1)On January 29, 2019 and February 8, 2019, the Company repaid $35.0 million and $25.0 million, respectively, of the outstanding amount under the Exit Credit Facility.

(2)Imputed interest rate of 8.49% for December 31, 2017.

(3)Imputed interest rate of 7.43% for December 31, 2017.

(4)Due to the anticipated financial covenant violations as of December 31, 2017, the borrowings under the Predecessor’s credit facility and Senior Notes were classified as current at December 31, 2017. There were no financial covenant violations as of December 31, 2018.

Exit Credit Facility

In connection with the Company’s emergence from bankruptcy, on the Effective Date, the Company entered into a Credit Agreement providing for a $1.0 billion new reserve-based revolving loan. The Exit Credit Facility matures on February 26, 2021. Borrowings under the Exit Credit Facility are secured by a first priority lien on substantially all of the Company’s oil and natural gas properties. The Company may use borrowings under the Exit Credit Facility for acquiring and developing oil and natural gas properties, for working capital purposes and for general corporate purposes. The Company also may use up to $50.0 million of available borrowing capacity for letters of credit. As of December 31, 2018, the Company had a $0.2 million letter of credit outstanding.

The terms of the credit facility do not require any repayments of amounts outstanding until it matures in February 2021. Borrowings under the credit facility bear interest at a floating rate based on, at the Company’s election, a base rate or the London Inter–Bank Offered Rate plus applicable premiums based on the percent of the borrowing base outstanding (weighted average effective interest rate of 5.10% at December 31, 2018).

Borrowings under the Exit Credit Facility may not exceed a “borrowing base” determined by the lenders under the credit facility based on the Company’s oil and natural gas reserves. In August 2018, as a result of the Central Texas divestiture, the borrowing base was reduced by $60.3 million to $264.7 million. During the fourth quarter of 2018, as a result of other divestitures, the borrowing base was reduced by $2.4 million to $262.3 million as of December 31, 2018. In addition, during the first quarter of 2019, as a result of other divestitures, the borrowing base was reduced by an additional $2.0 million. The borrowing base is subject to scheduled redeterminations starting on April 1, 2019, and semi-annually as of April 1 and October 1 of each year thereafter with an additional redetermination once per calendar year at the election of either the Company or the lenders.

The Exit Credit Facility requires the following (as defined in the Credit Agreement):

the Total Debt to EBITDAX ratio covenant to be no greater than 4.0 to 1.0;

the current consolidated assets (including unused commitments under the Exit Credit Facility) to current consolidated liabilities be no less than 1.0 to 1.0;

the percentage of Mortgaged Properties be no less than 95% of the total value of the Oil and Gas Properties evaluated in the most recent Reserve Report;

no later than 60 days following the Effective Date, 70% of projected production volumes (excluding projected production volumes from certain properties) be hedged (as of the date such swap agreements were executed) for the 18 months following the Effective Date; and

cash held by the Company be limited to the greater of 5% of the current borrowing base or $30.0 million.

As of December 31, 2018, the Company was in compliance with all of these financial covenants.

Predecessor’s Credit Facility

The Predecessor was party to a $1.0 billion credit facility, which was scheduled to expire in February 2020. Borrowings under that credit facility were secured by a first priority lien on substantially all of the Predecessor’s oil and natural gas properties. The Predecessor also had access to up to $100.0 million of available borrowing capacity for letters of credit. As of May 31, 2018 and December 31, 2017, the Predecessor had a $0.2 million letter of credit outstanding.

The terms of the Predecessor’s credit facility did not require any repayments of amounts outstanding until it expired in February 2020. Borrowings under the credit facility bore interest at a floating rate based on, at the Partnership’s election, a base rate or the London Inter–Bank Offered Rate plus applicable premiums based on the percent of the borrowing base that the Partnership had outstanding (weighted average effective interest rate of 5.47% and 4.82% at May 31, 2018 and December 31, 2017, respectively).

Borrowings under the credit facility could not exceed a “borrowing base” determined by the lenders under the credit facility based on the Partnership’s oil and natural gas reserves. As of May 31, 2018 and December 31, 2017, the borrowing base under the credit facility was $325.0 million.

In connection with EVEP’s emergence from bankruptcy on June 4, 2018, the holders of claims under the Predecessor’s credit facility received full recovery, consisting of (i) their pro rata share of the $1 billion new reserve-based revolving loan; (ii) cash in amount equal to the accrued but unpaid interest payable to such lenders under the credit facility as of the Effective Date; and (iii) unfunded commitments and letter of credit participation under the Exit Credit Facility equal to the unfunded commitments and letter of credit participation of such lender as of the Effective Date.

Predecessor’s 8.0% Senior Notes due April 2019

The Predecessor’s Senior Notes were issued under the Indenture, would have matured April 15, 2019, and bore interest at 8.0%. The Senior Notes were general unsecured obligations and were effectively junior in right of payment to any of the Partnership’s secured indebtedness to the extent of the value of the collateral securing such indebtedness.

The Senior Notes were fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by all of the Partnership’s existing subsidiaries other than EV Energy Finance Corp. (“Finance”), which is a co–issuer of the Senior Notes. Neither EVEP nor Finance had independent assets or operations apart from the assets and operations of the Predecessor’s subsidiaries.

In 2016, EVEP redeemed $82.7 million of the Senior Notes for $35.0 million, resulting in a gain on the early extinguishment of debt of $47.7 million.

As a result of EVEP’s emergence from bankruptcy, the Senior Notes were cancelled and the Predecessor’s liability thereunder discharged as of June 4, 2018, and the holders of the Notes received (directly or indirectly) their pro rata share of New Common Stock representing, in the aggregate, 95% of the New Common Stock on the Effective Date (subject to dilution by the MIP and the common shares issuable upon exercise of the Warrants). See also Note 2.