Note 7 - Long-term Debt

6 Months Ended

Jun. 30, 2025

Notes to Financial Statements

Long-Term Debt [Text Block]

NOTE 7. Long-Term Debt

The components of long-term debt, including the effects of debt issuance costs, are as follows (in thousands):

	June 30, 2025			December 31, 2024
Term Loan Credit Agreement due 2026	$	1,020,000		$	1,080,000
Senior Credit Facility Agreement due 2026		30,000			—
Discounts, net (a)		(12,318	)		(17,197	)
Debt issuance costs, net (b)		(10,328	)		(14,419	)
Total debt		1,027,354			1,048,384
Less current maturities of long-term debt (c)		—			(120,000	)
Long-term debt, net	$	1,027,354		$	928,384

(a)	Discounts as of June 30, 2025 and December 31, 2024 consisted of $30.0 million in discounts less accumulated amortization of $17.7 million and $12.8 million, respectively.
(b)	Debt issuance costs as of June 30, 2025 and December 31, 2024 consisted of $25.1 million and $25.1 million, respectively, in costs less accumulated amortization of $14.8 million and $10.7 million, respectively.
(c)	Term Loan Credit Agreement debt as of June 30, 2025 is classified as long-term due to the debt amendment that was completed subsequent to quarter end. See below and Note 15 for further information.

Term Loan Credit Agreement. On September 12, 2023, the Company entered into a Term Loan Credit Agreement with Texas Capital Bank (“Texas Capital”) as the administrative agent and Chambers Energy Management, LP (“Chambers”) as collateral agent and lenders from time-to-time party thereto to establish a term loan (“Term Loan Credit Agreement”) in an aggregate principal amount of $1.2 billion, less a 2.5% original issue discount of $30.0 million at closing and customary debt issuance costs which totaled approximately $24.0 million. As of June 30, 2025, $1.0 billion was outstanding under the Term Loan Credit Agreement. The Term Loan Credit Agreement was set to mature on September 30, 2026. Subsequent to quarter end, the Company entered into the First Term Loan Amendment whereby, among other things, (i) the maturity was extended to September 30, 2028, (ii) borrowings were upsized to $1.2 billion, providing additional liquidity, and (iii) the quarterly amortization payments of $30.0 million were deferred for one year such that they begin again in September 2026. Loans under the Term Loan Credit Agreement bear interest at a rate per annum equal to the Adjusted Term SOFR (as defined in the Term Loan Credit Agreement) plus an applicable margin of 7.50%. To the extent that a payment or other event of default exists and is continuing, at the election of the Required Lenders (as defined in the Term Loan Credit Agreement), all amounts outstanding under the Term Loan Credit Agreement will bear interest at 2.00% per annum above the rate otherwise applicable thereto. The Company is able to repay any amounts borrowed prior to the maturity date, subject to a concurrent payment of (i) 1.00% of the principal amount being repaid for any optional prepayment on or after the date that is 18 months after the original closing date but prior to the date that is 24 months after the original closing date and (ii) without any premium for any optional prepayment on or after the date that is 24 months after the closing date. The Term Loan Credit Agreement is guaranteed by the Company and certain of its subsidiaries and is secured by a first-lien second-out security interest in substantially all assets of the Company and certain of its subsidiaries.

The Term Loan Credit Agreement, as amended subsequent to quarter end, also contains certain financial covenants, consisting of (i) an asset coverage ratio that may not be less than 1.25 to 1.00 as of the last day of any fiscal quarter through  the fiscal quarter ended September 30, 2026 and not less than 1.50 to 1.00 as of the last day of any fiscal quarter ending thereafter and (ii) a total net leverage ratio that may not exceed 2.00 to 1.00 as of the last day of any fiscal quarter. Additionally, the Term Loan Credit Agreement contains additional restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness (with exceptions permitting, among other things, the incurrence of a super priority revolving credit facility, subject to a cap of $100 million), incur additional liens, make investments and loans, enter into mergers and acquisitions, make dividends and certain other payments, enter into certain hedging transactions, sell assets, engage in transactions with affiliates and make certain capital expenditures.

The Term Loan Credit Agreement contains customary mandatory prepayments, in addition to quarterly scheduled amortization payments of $30.0 million referenced above, consisting of prepayments with proceeds of prohibited indebtedness and asset sales (including hedge terminations) in excess of $20.0 million in any calendar year, and prepayments with a percentage of Excess Cash Flow (as defined in the Term Loan Credit Agreement) equal to 0%, 25% or 50% based on a total net leverage ratio to the extent pro forma for any such payment, the aggregate cash and cash equivalents of the Company and its restricted subsidiaries would not be less than $100.0 million as of the date of such payment (with no such excess cash flow prepayments made as of June 30, 2025). In addition, the Term Loan Credit Agreement is subject to customary events of default, including a change in control. If an event of default occurs and is continuing, the collateral agent or the majority lenders may accelerate any amounts outstanding and terminate lender commitments.

Collateral Agency Agreement. On September 12, 2023, the Company entered into a collateral agency agreement (the “Collateral Agency Agreement”) with Texas Capital, as collateral agent, Chambers, as term representative, and Mercuria Energy Trading SA, as initial first-out representative, which was later joined by Fifth Third Bank, National Association, as successor first-out representative.

The Collateral Agency Agreement provides for the appointment of Texas Capital, as collateral agent, for the present and future holders of the first-lien obligations (including holders of “first-out” obligations and obligations under the Term Loan Credit Agreement) to receive, hold, administer and distribute proceeds of the collateral  and to enforce the Security Documents. Under the terms of the Collateral Agency Agreement, proceeds of collateral are first distributed to holders of “first-out” obligations, including certain hedging and cash management obligations and obligations under the Senior Credit Facility Agreement but excluding certain “excess” first-out obligations, and second to holders of obligations under the Term Loan Credit Agreement.

Senior Credit Facility Agreement. On November 1, 2023, the Company entered into a credit agreement with Fifth Third Bank, National Association (“Fifth Third”) as the administrative agent and as the collateral agent, together with a number of  other banks and financial institutions party thereto, to establish a senior revolving credit facility (“Senior Credit Facility Agreement”). The Senior Credit Facility Agreement matures on September 30, 2026 and has aggregate maximum commitments of $100.0 million. Subsequent to quarter end, the Company entered into the Second Facility Amendment which, among other things, extended the maturity date to September 30, 2028. As of June 30, 2025, the balance due under the Senior Credit Facility Agreement was $30.0 million. Loans under the Senior Credit Facility Agreement bear interest at either the Adjusted Term SOFR (as defined in the Senior Credit Facility Agreement) or the Base Rate (as defined in the Senior Credit Facility Agreement) at the Company’s option, plus an applicable margin ranging (i) for Adjusted Term SOFR loans, from 4.00% to 5.00%, and (ii) for Base Rate loans, from 3.00% to 4.00%, in each case calculated based on the ratio at such time of the outstanding principal loan amounts to the aggregate amount of lenders’ commitments. To the extent that a payment or other event of default exists and is continuing, at the election of the Required Lenders (as defined in the Senior Credit Facility Agreement), all amounts outstanding under the Senior Credit Facility Agreement will bear interest at 2.00% per annum above the rate otherwise applicable thereto. The Company is able to repay any amounts borrowed prior to the maturity date without premium or penalty. The Senior Credit Facility Agreement is guaranteed by the Company and certain of its subsidiaries and is secured by a first-lien first-out security interest in substantially all assets of the Company and certain of its subsidiaries.

The Term Loan Credit Agreement and the Senior Credit Facility Agreement have hedging requirements to which the Company adheres.