

(in thousands)	December 31, 2019			December 31, 2018
Alta Mesa RBL	$	355,943		$	161,000
KFM Credit Facility	224,000			174,000
2024 Notes	500,000			500,000
Unamortized premium on 2024 notes	—			29,123
Total debt, net	1,079,943			864,123
Less: Liabilities subject to compromise	(855,943		)	—
Less: Current portion	(224,000		)	(690,123		)
Long-term debt, net	$	—		$	174,000

In connection with the Business Combination, we entered into the Alta Mesa RBL which has a face amount of $1.0 billion and had an initial $350.0 million borrowing base, which was subsequently increased to $400.0 million in April 2018. The facility matures in February 2023 and was subject to semiannual redeterminations, as well as an additional optional redetermination between semiannual redeterminations either by us or the lender group. As of December 31, 2019, we had $355.9 million in outstanding borrowings under the Alta Mesa RBL, plus $1.9 million in outstanding letters of credit.

Amounts outstanding under the Alta Mesa RBL are secured by first priority liens on substantially all of our upstream oil and gas properties and all of our equity of our wholly owned guarantor subsidiaries. Upon closing of the expected AMH Sale Transaction, these outstanding amounts will be secured by the proceeds from such sale and all of the equity of our wholly

owned guarantor subsidiaries. Additionally, SRII Opco and Alta Mesa GP, both of which are under bankruptcy protection at the time of this filing, had pledged their respective partner interests as security.

In August 2019, the lenders exercised their option to conduct an optional redetermination, pursuant to which they established a revised borrowing base of $200.0 million, a reduction from the prior $370.0 million established in April 2019. As a condition to the borrowing base reduction, we were required to make monthly installments of $32.5 million for five months, beginning in September 2019, to reduce our outstanding borrowings to the revised borrowing base. AMR and the AMH Debtors filed for bankruptcy protection prior to making any of these payments.

Alta Mesa’s filing of the Bankruptcy Petitions constituted an event of default under the Alta Mesa RBL that accelerated Alta Mesa’s obligations thereunder. Under the Bankruptcy Code, the lenders under the Alta Mesa RBL are stayed from taking any action against the AMH Debtors as a result of an event of default.

Prior to default, we had the ability to designate borrowings in either Eurodollars or at a reference rate. Subsequent to our default, all Eurodollar loans were converted into reference rate loans at maturity, which bear interest at a rate per annum equal to the greater of (i) the agent bank’s prime rate, (ii) the federal funds effective rate plus 50 basis points or (iii) the rate for one-month Eurodollar loans plus 1.00%, plus a margin ranging from 1.00% to 2.00%. At December 31, 2019, outstanding borrowings bore interest at a rate of 10.75%, which consisted of the Prime Rate plus additional penalty margins of 2.00% due to our borrowing base deficiency and 2.00% due to our default.

Prior to our default, restrictive covenants generally limited our ability to incur additional indebtedness, sell assets, guarantee or make loans to others, make investments, enter into mergers, make certain payments and distributions in excess of specific amounts, enter into or be party to hedge agreements outside of hedge requirements, amend organizational documents, incur liens and engage in certain other transactions without the prior consent of the lenders. Subsequent to the AMH Debtors’ bankruptcy filing, we currently operate under cash collateral orders issued by the Bankruptcy Court that allow us to use our cash collateral, with restrictions on our ability to dispose of assets or settle liabilities. The terms and conditions of the cash collateral orders include, without limitation, adherence to a budget with an agreed upon variance and provide for certain monthly reporting obligations.

Effective May 30, 2018, KFM entered into the KFM Credit Facility with an aggregate committed amount of $300.0 million. The KFM Credit Facility matures in May 2023. As of December 31, 2019, outstanding borrowings totaled $224.0 million and there were no outstanding letters of credit.

Amounts outstanding under the KFM Credit Facility are secured by first priority liens on substantially all of KFM’s assets and are guaranteed by KFM’s wholly owned subsidiaries. Upon closing of the expected KFM Sale Transaction these outstanding amounts will be secured by the proceeds from such sale and all of the equity of our wholly owned guarantor subsidiaries. Additionally, SRII Opco, LP had pledged its membership interests in KFM as collateral.

In September 2019, KFM received a letter from the Administrative Agent whereby the lenders under the KFM Credit Facility alleged a potential event of default in respect of liens placed on KFM’s assets. As a result, KFM was unable to borrow additional funds under the KFM Credit Facility after September 2019.

On January 12, 2020, the KFM Debtors filed for protection under the Bankruptcy Code. This filing constituted an event of default under the KFM Credit Facility that accelerated KFM’s obligations thereunder.

Prior to the alleged default, we had the ability to designate borrowings under the KFM Credit Facility in either Eurodollars or at a reference rate. Subsequent to the alleged default, all Eurodollar loans were converted into reference rate loans at maturity, which bear interest at a rate per annum equal to the greater of (i) the agent bank’s prime rate, (ii) the federal funds effective rate plus 50 basis points or (iii) the rate for one-month Eurodollar loans plus 1.00%, plus an applicable margin ranging from 1.00% to 2.25%. At December 31, 2019, outstanding borrowings bore interest at a rate of 6.5%.

Prior to our default, restrictive covenants limited our ability to incur additional indebtedness, dispose of assets, make loans to others, make investments, enter into mergers, make certain payments and distributions, enter into or be party to hedge

agreements, amend organizational documents, incur liens, hold cash in excess of $15.0 million and engage in certain other transactions. Subsequent to the KFM Debtors bankruptcy filing in January 2020, we currently operate under cash collateral orders issued by the Bankruptcy Court that allow us to use our cash collateral, with restrictions on our ability to dispose of assets or settle liabilities. The terms and conditions of the cash collateral orders include, without limitation, adherence to a budget with an agreed upon variance and provide for certain monthly reporting obligations.

Alta Mesa’s filing of the Bankruptcy Petitions constituted an event of default under the 2024 Notes that accelerated Alta Mesa’s obligations thereunder. Under the Bankruptcy Code, the holders of the 2024 Notes are stayed from taking any action against Alta Mesa as a result of an event of default including acceleration. We ceased accruing interest on the 2024 Notes effective upon filing of the Initial Bankruptcy Petitions as payment was unlikely to occur. Unrecorded contractual interest on the 2024 Notes was approximately $12.0 million through December 31, 2019.

The 2024 Notes are guaranteed by each of Alta Mesa’s subsidiaries and rank equal in right of payment to all of Alta Mesa’s existing senior indebtedness; senior in right of payment to all of Alta Mesa’s existing and future subordinated indebtedness; effectively subordinated to all of Alta Mesa’s existing secured indebtedness to the extent of the value of the collateral securing such indebtedness, including amounts outstanding under the Alta Mesa RBL; and structurally subordinated to all existing and future indebtedness and obligations of any of Alta Mesa’s subsidiaries that do not guarantee the 2024 Notes.

The terms of the 2024 Notes originally provided for early redemption over certain periods at their principal amount plus an applicable make-whole premium and contained covenants restricting our ability to enter into certain transactions or to sell or otherwise dispose of assets, among other things.

The fair value of the 2024 Notes as of the Business Combination was $533.6 million, yielding a bond premium of $33.6 million. Amortization of the premium reduced our interest expense by $3.4 million and $4.5 million during the year ended December 31, 2019 and the 2018 Successor Period, respectively. Upon filing for bankruptcy protection, the remaining unamortized premium was written off as part of reorganization items, net.

Based on the defaults associated with Alta Mesa’s and KFM’s bankruptcy filings and the reporting requirements for entities under bankruptcy protection, we have classified all of the indebtedness under the Alta Mesa RBL as liabilities subject to compromise and all of the indebtedness under the KFM Credit Facility as current liabilities at December 31, 2019 despite the scheduled maturities shown above. At December 31, 2018, all of the indebtedness under the Alta Mesa RBL and the related bond premium were classified as current liabilities due to our expectations at that time the indebtedness would become accelerated during 2019.