Long-Term Debt

3 Months Ended

Mar. 31, 2012

Long-Term Debt

Long-Term Debt

6. Long-Term Debt

The Company’s long-term debt as of March 31, 2012 and December 31, 2011 is as follows (in thousands):

	March 31, 2012			December 31, 2011
Credit Facility — senior loan facility	$	234,800		$	234,800
Less: current maturities of debt	(25,000		)	—
	$	209,800		$	234,800

As of March 31, 2012, the Company’s credit facility consisted of a $300 million senior revolving credit facility (the “Facility”) with a borrowing base of $210 million, which was most recently redetermined in March 2012. The Facility has a maturity date of December 10, 2014. Borrowings under the Facility are secured by substantially all of the Company’s oil and natural gas properties. Borrowings under the Facility currently bear interest at LIBOR plus an applicable margin between 2.00% and 2.75% per annum. At March 31, 2012 and December 31, 2011, the weighted-average interest rate was 3.1% and 3.2%, respectively.

In addition to interest expense, the credit agreement requires the payment of a commitment fee each quarter. The commitment fee is computed at the rate of 0.5% per annum based on the average daily amount by which the borrowing base exceeds the outstanding borrowings during each quarter.

The borrowing base is subject to semiannual redeterminations in March and September and up to one additional time per six month period following each scheduled borrowing base redetermination, as may be requested by the Company or the administrative agent, acting on behalf of lenders holding at least two —thirds of the outstanding loans and other obligations.

Under the terms of the Facility, the Company is required to repay the amount by which the principal balance of its outstanding loans and its letter of credit obligations exceed its redetermined borrowing base. Under the terms of the Facility, the Company is permitted to make such repayment in six equal successive monthly payments commencing 30 days following the administrative agent’s notice regarding such borrowing base reduction. At March 31, 2012, as a result of the March 2012 redetermination that reduced the Company’s borrowing base from $235 million to $210 million, $25.0 million is classified as the current portion of long-term borrowings and represents the amount of outstanding borrowings and obligations in excess of the revised borrowing base. On April 20, 2012 the Company made the first of the monthly repayments in an amount of approximately $4.2 million. On April 25, 2012, we repaid approximately $99.0 million of the outstanding Facility balance with a portion of the proceeds from our initial public offering, resulting in an outstanding balance under the Facility of $131.6 million as of May 29, 2012.

The Facility contains financial covenants, which, among other things, set a maximum ratio of debt to earnings before interest, income tax, depletion, depreciation, and amortization (EBITDA) of not more than 3.75 to 1, a minimum current ratio (as defined therein) of not less than 1.0 to 1.0 and various other standard affirmative and negative covenants including, but not limited to, restrictions on the Company’s ability to make any dividends, distributions or redemptions.  As of March 31, 2012, the Company is in compliance with the financial debt covenants set forth in the credit agreement.

The Company believes the carrying amount of the Facility approximates its fair value (Level 2) due to the variable nature of the applicable interest rate.