Long-Term Debt

12 Months Ended

Dec. 31, 2019

The Company's outstanding debt is summarized below:



		As of December 31, 2019							As of December 31, 2018
	Maturity Date	Principal		Debt Issuance Costs			Carrying Amount		Principal		Debt Issuance Costs			Carrying Amount
		(in thousands)
Amended Credit Facility ⁽¹⁾	September 14, 2023	$	140,000	$	—		$	140,000	$	—	$	—		$	—
7.0% Senior Notes ⁽²⁾	October 15, 2022	350,000		(2,372		)	347,628		350,000		(3,210		)	346,790
8.75% Senior Notes ⁽³⁾	June 15, 2025	275,000		(3,717		)	271,283		275,000		(4,403		)	270,597
Lease Financing Obligation ⁽⁴⁾	August 10, 2020	—		—			—		1,859		—			1,859
Total Debt		$	765,000	$	(6,089	)	$	758,911	$	626,859	$	(7,613	)	$	619,246
Less: Current Portion of Long-Term Debt ⁽⁵⁾		—		—			—		1,859		—			1,859
Total Long-Term Debt		$	765,000	$	(6,089	)	$	758,911	$	625,000	$	(7,613	)	$	617,387


(1)	The recorded value of the Amended Credit Facility approximates its fair value due to its floating rate structure and on financing terms currently available to the Company.


(2)	The aggregate estimated fair value of the 7.0% Senior Notes was approximately $335.0 million and $329.7 million as of December 31, 2019 and 2018, respectively, based on reported market trades of these instruments.


(3)	The aggregate estimated fair value of the 8.75% Senior Notes was approximately $251.2 million and $264.7 million as of December 31, 2019 and 2018, respectively, based on reported market trades of these instruments.


(4)	The aggregate estimated fair value of the Lease Financing Obligation was approximately $1.8 million as of December 31, 2018, based on market-based parameters of comparable term secured financing instruments. The Company exercised the early buyout option and purchased the equipment for $1.8 million on February 10, 2019.


(5)	As of December 31, 2018, the current portion of long-term debt included the Lease Financing Obligation, which was settled on February 10, 2019.

Amended Credit Facility

On September 14, 2018, the Company entered into a fourth amended and restated credit facility (the "Amended Credit Facility"), which, among other things, provides for a maximum credit amount of $1.5 billion, an initial elected commitment amount of $500.0 million and an initial borrowing base of $500.0 million. Due to the amendment, the Company recognized a loss on extinguishment of debt of $0.3 million on the Consolidated Statements of Operations for the year ended December 31, 2018. As credit support for future payment under a contractual obligation, a $26.0 million letter of credit has been issued under the Amended Credit Facility, which reduced the available borrowing capacity of the Amended Credit Facility as of December 31, 2019 to $334.0 million. The Company had $140.0 million and zero outstanding borrowings under the Amended Credit Facility as of December 31, 2019 and 2018, respectively. The current maturity date of the Amended Credit Facility is July 16, 2022. While the stated maturity date in the Amended Credit Facility is September 14, 2023, the maturity date is accelerated if the Company has more than $100.0 million of "Permitted Debt" or "Permitted Refinancing Debt" (as those terms are defined in the Amended Credit Facility) that matures prior to December 14, 2023. If that is the case, the accelerated maturity date is 91 days prior to the earliest maturity of such Permitted Debt or Permitted Refinancing Debt. Because the Company's 7.0% Senior Notes will mature on October 15, 2022, the aggregate amount of those notes exceeds $100.0 million and the notes represent "Permitted Debt", the maturity date specified in the Amended Credit Facility is accelerated to the date that is 91 days prior to the maturity date of those notes, or July 16, 2022.

Interest rates are either adjusted LIBOR plus applicable margins of 1.5% to 2.5% or an alternate base rate plus applicable margins of 0.5% to 1.5%, and the unused commitment fee is between 0.375% to 0.5%. The applicable margin and the unused commitment fee rate are determined based on borrowing base utilization. The weighted average annual interest rate incurred on the Amended Credit Facility was 4.0% for the year ended December 31, 2019.

The borrowing base under the Amended Credit Facility is determined at the discretion of the lenders, based on the collateral value of the Company's proved reserves that have been mortgaged to the lenders, and is subject to regular re-determination on or about April 1 and October 1 of each year, as well as following any property sales. Borrowing bases are computed based on proved oil, natural gas and NGL reserves, hedge positions and estimated future cash flows from the

reserves calculated using future commodity pricing provided by the Company's lenders, as well as any other outstanding debt. Lower commodity prices could result in a decreased borrowing base.

The Amended Credit Facility contains certain financial covenants. The Company is currently in compliance with all financial covenants and has complied with all financial covenants since issuance. If the Company fails to comply with the covenants or other terms of any agreements governing the Company's debt, the lenders under the Amended Credit Facility and holders of the Company's senior notes may have the right to accelerate the maturity of the relevant debt and foreclose upon the collateral, if any, securing that debt. The occurrence of any such event would adversely affect the Company's financial condition.

7.0% Senior Notes Due 2022

The Company's $350.0 million aggregate principal amount 7.0% Senior Notes mature on October 15, 2022 at par, unless earlier redeemed or purchased by the Company. Interest is payable in arrears semi-annually on April 15 and October 15 of each year. The 7.0% Senior Notes are senior unsecured obligations and rank equal in right of payment with all of the Company's other existing and future senior unsecured indebtedness, including the 8.75% Senior Notes.

The 7.0% Senior Notes are redeemable at the Company's option at redemption prices of 101.167% and 100.000% of the principal amount on or after October 15, 2019 and 2020, respectively.

8.75% Senior Notes due 2025

The Company's $275.0 million in aggregate principal amount 8.75% Senior Notes mature on June 15, 2025 at par, unless earlier redeemed or purchased by the Company. Interest is payable in arrears semi-annually on June 15 and December 15 of each year. The 8.75% Senior Notes are senior unsecured obligations and rank equal in right of payment with all of the Company's other existing and future senior unsecured indebtedness, including the 7.0% Senior Notes.

The 8.75% Senior Notes will become redeemable at the Company's option on or after June 15, 2020, 2021, 2022 and 2023 at redemption prices of 106.563%, 104.375%, 102.188% and 100.000% of the principal amount, respectively. Prior to June 15, 2020, the Company may use proceeds of an equity offering to redeem up to 35% of the principal amount at a redemption price of 108.750% of the principal amount. In addition, prior to June 15, 2020, the Company may redeem the notes at a redemption price equal to 100.000% of the principal amount plus a specified "make-whole" premium.

The issuer of the 7.0% Senior Notes and the 8.75% Senior Notes is HighPoint Operating Corporation (f/k/a Bill Barrett). Pursuant to supplemental indentures entered into in connection with the Merger, HighPoint Resources Corporation became a guarantor of the 7.0% Senior Notes and the 8.75% Senior Notes in March 2018. All covenants in the indentures governing the notes limit certain activities of HighPoint Operating Corporation, including limitations on the ability to pay dividends, incur additional indebtedness, make restricted payments, credit liens, sell assets or make loans to HighPoint Resources Corporation, but in most cases the covenants in the indentures are not applicable to HighPoint Resources Corporation. HighPoint Operating Corporation is currently in compliance with all covenants since issuance.

Nothing in the indentures governing the 7.0% Senior Notes or the 8.75% Senior Notes prohibits the Company from repurchasing any of the notes from time to time at any price in open market purchases, negotiated transactions or by tender offer or otherwise without any notice to or consent of the holders.

Lease Financing Obligation Due 2020

The Company had a lease financing obligation with a balance of $1.9 million as of December 31, 2018 resulting from the Company's sale and subsequent lease back of certain compressors and related facilities owned by the Company (the "Lease Financing Obligation"). On February 10, 2019, the Company elected to purchase the equipment under the early buyout option for $1.8 million.

2017 Debt Transactions

Due to the redemption of the Company's 5.0% Convertible Notes and 7.625% Senior Notes on May 30, 2017 with the proceeds from its 8.75% Senior Notes issued on April 28, 2017, the Company recognized a $7.9 million loss on extinguishment of debt on the Consolidated Statement of Operations for the year ended December 31, 2017.