Debt

3 Months Ended

Mar. 31, 2020

DEBT

The following table provides a summary of the Company’s debt as of the dates indicated (in thousands):


	March 31, 2020		December 31, 2019
Revolving Credit Agreement	$	300,000	$	—
6.250% senior unsecured notes due 2024	—		400,000
5.375% senior unsecured notes due 2025	650,000		650,000
5.250% senior unsecured notes due 2025	450,000		450,000
5.875% senior unsecured notes due 2026	500,000		—
5.625% senior unsecured notes due 2027	700,000		700,000
4.125% senior unsecured notes due 2028	400,000		—


Total debt	3,000,000		2,200,000
Debt issuance costs on senior unsecured notes	(20,150)		(19,448)
Premium on senior unsecured notes	18,838		2,280

Total long-term debt	$	2,998,688	$	2,182,832

Assumption of Jagged Peak Notes and Payoff of Jagged Peak Revolving Credit Facility

In connection with the completion of the Jagged Peak Acquisition, Parsley LLC assumed Jagged Peak’s guarantee of $500.0 million in aggregate principal amount of the 5.875% senior notes due 2026 (the “2026 Notes”) of its subsidiary, Jagged Peak Energy LLC, a Delaware limited liability company (“Jagged Peak LLC”), as well as Jagged Peak’s credit facility, which had an outstanding balance of $365.7 million, including interest. The Company repaid in full all outstanding obligations under Jagged Peak’s credit facility by drawing on the Revolving Credit Agreement. The 2026 Notes are the senior unsecured obligations of Jagged Peak LLC, which became a wholly owned subsidiary of Parsley LLC upon the completion of the Jagged Peak Acquisition, and the other subsidiaries of Parsley LLC that are guarantors of the 2026 Notes.

Issuance of 4.125% Senior Unsecured Notes Due 2028; Redemption of the 2024 Notes

On February 11, 2020, Parsley LLC and Parsley Finance Corp. issued $400.0 million aggregate principal amount of 4.125% senior unsecured notes due 2028 (the “2028 Notes”) in an offering that was exempt from registration under the Securities Act (the “2028 Notes Offering”). The 2028 Notes Offering resulted in net proceeds to Parsley LLC, after deducting fees and expenses, of approximately $393.6 million.

On March 7, 2020, Parsley LLC used the net proceeds of the 2028 Notes Offering and borrowings under the Revolving Credit Agreement to redeem in full the $400.0 million aggregate principal amount of outstanding 6.250% senior unsecured notes due 2024 (the “2024 Notes”) at a redemption price of 104.688%, plus accrued and unpaid interest to the redemption date (the “2024 Notes Redemption”). In connection with the 2024 Notes Redemption, the Company made a cash payment of $425.5 million to the holders of the 2024 Notes, which included principal of

$400.0 million, a prepayment premium on the extinguishment of debt of $18.8 million and accrued interest of approximately $6.7 million. Additionally, the Company wrote off $4.8 million of debt issuance costs and $2.2 million of issue premium related to the 2024 Notes.

Revolving Credit Agreement

As of March 31, 2020, the borrowing base under the Revolving Credit Agreement was $2.7 billion with a commitment level of $1.0 billion. Parsley LLC had $300.0 million in borrowings outstanding at an interest rate of 2.54% and $6.7 million in letters of credit outstanding at a weighted average interest rate of 1.50%, resulting in $693.3 million of availability under the Revolving Credit Agreement as of March 31, 2020. The amount Parsley LLC is able to borrow under the Revolving Credit Agreement is subject to compliance with the financial covenants, satisfaction of various conditions precedent to borrowing and other provisions of the Revolving Credit Agreement.

On April 27, 2020, Parsley LLC and certain of its subsidiaries entered into the Ninth Amendment (the “Ninth Amendment”) to the Revolving Credit Agreement, which, among other things, increased the commitment level under the Revolving Credit Agreement to $1.075 billion, reaffirmed the borrowing base at $2.7 billion, and extended the maturity date to October 28, 2023. See Note 17—Subsequent Events—Ninth Amendment to Revolving Credit Agreement for additional information regarding the terms of the Ninth Amendment.

Certain borrowings on the Revolving Credit Agreement accrue interest based on LIBOR. The use of LIBOR as a global reference rate is expected to be discontinued after 2021. As discussed in Note 17—Subsequent Events—Ninth Amendment to Revolving Credit Agreement, the Ninth Amendment adds provisions to facilitate the transition from the use of LIBOR as a benchmark rate for borrowings upon the occurrence of certain events. At such time, an alternative benchmark rate to LIBOR will be selected by the administrative agent and Parsley LLC. We currently do not expect the transition from LIBOR to have a material impact on interest expense or borrowing activities under the Revolving Credit Agreement or to otherwise have a material adverse impact on our business. Please refer to Note 2—Summary of Significant Accounting Policies for discussion of ASU 2020-04, which provides guidance for the reference rate reform.

Covenant Compliance

The Revolving Credit Agreement and the indentures governing the 2028 Notes, the 5.625% senior unsecured notes due 2027 (the “2027 Notes”), the 2026 Notes, the 5.250% senior unsecured notes due 2025 (the “New 2025 Notes”), and the 5.375% senior unsecured notes due 2025 (the “2025 Notes” and, together with the 2028 Notes, 2027 Notes, the 2026 Notes and the New 2025 Notes, the “Notes”) limit the Company’s ability and the ability of certain of its subsidiaries to, among other things: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends on capital stock or redeem, repurchase or retire its capital stock or subordinated indebtedness; (iii) transfer or sell assets; (iv) make investments; (v) create certain liens; (vi) enter into agreements that restrict its restricted subsidiaries from issuing dividends or making other payments to the Company; (vii) consolidate, merge or transfer all or substantially all of its assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications. If at any time the Notes are rated investment grade by either Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Services and no default or event of default has occurred and is continuing, many of the foregoing covenants pertaining to the Notes will be suspended. If the ratings on the Notes were to subsequently decline to below investment grade, the suspended covenants would be reinstated.

As of March 31, 2020, the Company was in compliance with all required covenants under the Revolving Credit Agreement and each of the indentures governing the Notes.

On April 27, 2020, Parsley LLC and certain of its subsidiaries entered into the Ninth Amendment, which imposed additional covenants on the Company. See Note 17—Subsequent Events—Ninth Amendment to Revolving Credit Agreement for additional information regarding the terms of the Ninth Amendment.

Interest Expense

The following amounts have been incurred and charged to interest expense for the three months ended March 31, 2020 and 2019 (in thousands):


	Three Months Ended March 31,
	2020		2019
Cash payments for interest	$	38,049	$	30,493
Change in interest accrual	3,121		1,453
Amortization of deferred loan origination costs	1,201		1,185

Amortization of bond premium	(692)		(129)
Total interest expense, net	$	41,679	$	33,002