9. Long-Term Debt

Long-term debt consists of the following:

	December 31,
In thousands	2017			2016
Credit Facility	$	142,080		$	43,500
Second Lien Notes		—			11,367
8.750% Senior Notes		151,848			151,848
Less unamortized discount on 8.750% Senior Notes		(949	)		(1,708	)
Less deferred financing costs on 8.750% Senior Notes		(474	)		(851	)
Less deferred financing costs on Second Lien Notes		—			(316	)
Mortgage debt		7,891			—
Other		759			282
Total long-term debt	$	301,155		$	204,122

Senior Secured Credit Facility

On July 28, 2015, LRAI closed a Credit Agreement for a $500 million Senior Secured Credit Facility with Citibank, N.A., as administrative agent, and other lenders party thereto (as amended, supplemented or modified from time to time, the “Credit Facility”). The Credit Facility had a maturity date of October 16, 2018 as of December 31, 2017. Consequent to redeeming the 8.750% Senior Notes (as defined below) in January 2018, the Credit Facility’s maturity date was extended to July 28, 2020. Due to the Company’s ability and intent to refinance the 8.750% Notes as of December 31, 2017, the Credit Facility was classified as a long-term liability on the Consolidated Balance Sheets as of said date. See Note 16, Subsequent Events, for more information. As of December 31, 2017 and 2016, $142.1 and $43.5 million was borrowed, respectively, under the Credit Facility. Borrowing availability was approximately $17.4 million at December 31, 2017.

The Credit Facility may be used for loans and, subject to a $2.5 million sub-limit, letters of credit, and provides for a commitment fee of 0.375% to 0.5% based on the unused portion of the borrowing base under the Credit Facility.

As of December 31, 2017, the borrowing base and lender commitments for the Credit Facility were $160.0 million. The borrowing base under the Credit Facility is determined semi-annually as of May 1 and November 1. On January 4, 2018, the Seventh Amendment and Limited Waiver, Borrowing Base Redetermination Agreement, and Amendment No. 7 to Credit Agreement dated January 4, 2018 reaffirmed the borrowing base at $160.0 million. This January 2018 redetermination constituted the regularly scheduled November 1 determination. See Note 16, Subsequent Events, for more information.

Borrowings under the Credit Facility, at LRAI’s election, bear interest at either: (i) an alternate base rate (“ABR”) equal to the higher of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 0.5% per annum, and (c) the adjusted LIBO rate of a three-month interest period on such day plus 1.0%; or (ii) the adjusted LIBO rate, which is the rate stated on Reuters screen LIBOR01 page, for one, two, three, six or twelve months, as adjusted for statutory reserve requirements for Eurocurrency liabilities, plus, in each of the cases described in clauses (i) and (ii) above, an applicable margin ranging from 1.50% to 2.50% for ABR loans and from 2.50% to 3.50% for adjusted LIBO rate loans (5.13% at December 31, 2017).

Subject to certain permitted liens, LRAI’s obligations under the Credit Facility have been secured by the grant of a first priority lien on no less than 80% of the value of the proved oil and gas properties of the Company and its subsidiaries (currently 90%).

The Credit Facility contains two financial covenants, as defined in the Credit Facility: (a) a maximum debt to EBITDAX ratio (discussed further below) and (b) a current ratio of not less than 1.0 to 1.0. As of December 31, 2017, the Company was in compliance with the minimum debt to EBITDAX ratio; however, the current ratio as of December 31, 2017 was approximately 0.7 to 1.0 due to low availability under the Credit Facility. Upon closing of the 11.250% Senior Notes, as defined below, in January 2018, the Credit Facility’s outstanding balance was paid down by $80.0 million, which increased the Credit Facility’s availability to a level sufficient for purposes of the current ratio. The Company obtained a limited waiver agreement for the current ratio violation from the Credit Facility’s lenders prior to issuance of the Company’s Original Report.

In connection with closing the Marquis Acquisition and the Battlecat Acquisition, on June 15, 2017, LRAI entered into the Sixth Amendment and Joinder to Credit Agreement (the “Sixth Amendment”) to (i) increase the borrowing base from $112 million to $160 million until redetermined or adjusted in accordance with the Credit Facility, (ii) modify the maximum leverage ratio threshold to be 4.0 to 1.0 for all periods, starting with the fiscal quarter ending September 30, 2017, and providing that EBITDAX (as defined in the Credit Facility) shall be calculated at the end of each fiscal quarter using the results of the twelve-month period ending with that fiscal quarter end; provided, that EBITDAX shall be calculated (x) at the end of the fiscal quarter ending September 30, 2017 using an amount equal to the EBITDAX for such fiscal quarter, multiplied by four, (y) at the end of the fiscal quarter ending December 31, 2017 using an amount equal to the EBITDAX for the two fiscal quarter period ended on such date, multiplied by two and (z) at the end of the fiscal quarter ending March 31, 2018 using an amount equal to the EBITDAX for the three fiscal quarter period ended on such date, multiplied by four-thirds, (iii) permit LRAI to declare and pay dividends to the Company equal to the amount of any cash dividends declared and payable in accordance with the terms of the Company’s Certificate of Designations of Convertible Participating Preferred Stock, Series A-1, and Certificate of Designations of Convertible Participating Preferred Stock, Series A-2, subject to certain specified terms and conditions and (iv) amend certain other provisions of the Credit Facility as more specifically set forth in the Sixth Amendment.

8.750% Senior Notes

On April 4, 2014, LRAI issued, at par, $220.0 million of 8.750% Senior Unsecured Notes due April 15, 2019 (the “8.750% Senior Notes”) to U.S.-based institutional investors.

On or after April 15, 2016, LRAI could redeem the 8.750% Senior Notes in whole or in part at the redemption prices (expressed as percentages of the principal amount) set forth in the following table plus accrued and unpaid interest, if any, on the 8.750% Senior Notes redeemed, to the applicable date of redemption, if redeemed during the twelve-month period beginning on April 15 of the years indicated below:

Year	Percentage
2017		104.375	%
2018 and thereafter		100.000	%

The 8.750% Senior Notes has covenants that, among other things, limit the ability of LRAI and its subsidiaries to: incur indebtedness; pay dividends or make other distributions on stock; purchase or redeem stock or subordinated indebtedness; make investments; create liens; enter into transactions with affiliates; sell assets; refinance certain indebtedness; and merge with or into other companies or transfer substantially all of LRAI’s assets.

In January 2018, the Company redeemed the 8.750% Senior Notes in whole using proceeds from the 11.250% Senior Notes, as defined below. See Note 16, Subsequent Events, for more information.

Debt Issuance Costs

The Company capitalizes certain direct costs associated with the issuance of long-term debt and amortizes such costs over the lives of the respective debt. At December 31, 2017 and 2016, the Company had approximately $2.3 and $1.2 million, respectively, of debt issuance costs associated with issuance of the Senior Secured Credit Facility remaining that are being amortized over the lives of the respective debt which are recorded as Other Non-Current Assets in the Consolidated Balance Sheets.

Securities Purchase Agreement and Second Lien Notes

On August 2, 2016, the Company entered into a Securities Purchase Agreement with Juneau Energy, LLC, as initial purchaser (“Juneau”), Leucadia National Corporation (“Leucadia”), as guarantor of Juneau’s obligations, the other purchasers party thereto and Jefferies, LLC, in its capacity as the collateral agent for the purchasers, relating to the issuance and sale of (i) up to $49.9 million aggregate principal amount of LRAI’s 12% senior secured second lien notes due 2021 (the “Second Lien Notes”) and (ii) five-year warrants to purchase up to an aggregate 998,000 shares of the Company’s Class A voting common stock at a price equal to $5.00 per share (the “Warrants”). The balance of these notes and warrants is reflected in the Company’s Long-Term Debt – Related Parties and Equity Warrant Liability –Related Parties on the Consolidated Balance Sheets. The Second Lien Notes are secured by second-priority liens on substantially all of LRAI’s and its subsidiaries’ assets to the extent such assets secure obligations under the Credit Facility.

During 2016, LRAI issued $38.0 million in aggregate principal amount of Second Lien Notes and the Company issued the Warrants to purchase 760,000 shares of its Class A voting common stock. The Company recorded an equity warrant liability of approximately $5.1 million which was the fair value amount at the date of issuance. The Warrants were adjusted to fair value at December 31, 2017 which resulted in a gain on the Warrants of approximately $3.1 million for the year ended December 31, 2017, which is recorded in the Consolidated Statements of Operations. Proceeds from the Second Lien Notes issuance were used to repurchase approximately $68.2 million in aggregate principal amount of the 8.750% Senior Notes in privately negotiated open market repurchases with holders of such notes, and to pay related fees and expenses related to the foregoing. The repurchase amounts paid were approximately $36.2 million in cash. Net of related fees, such repurchases resulted in a gain on debt extinguishment of approximately $28.5 million.

In December 2016, LRAI repaid $21.0 million principal of the Second Lien Notes with proceeds from the offering of the Company’s Class A voting common stock that was completed on December 22, 2016 pursuant to a Registration Statement on Form S-1 (File No. 333-214265), which was declared effective on December 15, 2016 (the “2016 Common Stock Offering”). In June 2017, LRAI repaid the remaining $17.0 million principal of the Second Lien Notes including an early payment premium of approximately $1.1 million with borrowings from the Company’s Credit Facility.

Repurchase Facilitation Agreement

On October 26, 2016, effective September 29, 2016, Lonestar Resources US, Inc. (the “Company”), by and on behalf of itself and certain of its subsidiaries, entered into an Amended and Restated Repurchase Facilitation Agreement (the “Amended and Restated Agreement”) with Seaport Global Securities LLC, a Delaware limited liability company (“Seaport Global”). Pursuant to the Amended and Restated Agreement, Seaport Global has agreed to provide the Company with financing (“Gap Financing”) from time to time in connection with the repurchase of the 8.750% Senior Notes, to be acquired by Seaport Global on the Company’s behalf in one or more open market purchases. In December 2016, LRAI repaid the Gap Financing with proceeds from the 2016 Common Stock Offering.