3.	Credit Facility

As of March 31, 2014, the Company had a $150,000 revolving line of credit in place with a $55,000 borrowing base. The credit facility is collateralized by the Company’s oil and gas producing properties. Any balance outstanding on the credit facility is due October 24, 2016.

As of March 31, 2014, the outstanding balance of $47,950 on the credit facility has been used to fund the development of the Catalina Unit and other non-operated projects in the Atlantic Rim, development projects in the Pinedale Anticline, and the Company’s Niobrara exploration project.

Borrowings under the revolving line of credit bear interest at a daily rate equal to (a) the highest of the Federal Funds rate for such day, plus 0.5%, the Prime Rate for such day or the One-Month Eurodollar Rate for such day plus (b) a margin ranging between 0.75% and 2.75% depending on the level of funds borrowed. The average interest rate on the facility at March 31, 2014, including the impact of our interest rate swaps, was 3.4%. For the three months ended March 31, 2014 and 2013, the Company incurred interest expense on the credit facility of $404 and $409, respectively. Of the total interest incurred, the Company capitalized interest costs of $17 and $45 for the three months ended March 31, 2014 and 2013, respectively.

Under the credit facility, the Company is subject to both financial and non-financial covenants. The financial covenants, as defined in the credit agreement, include maintaining (i) a current ratio of 1.0 to 1.0; (ii) a ratio of earnings before interest, taxes, depreciation, depletion, amortization, exploration and other non-cash items (“EBITDAX”) to interest plus dividends of greater than 1.5 to 1.0; and (iii) a funded debt to EBITDAX ratio of less than 3.5 to 1.0. As of March 31, 2014, the Company was in compliance with all financial and non-financial covenants under the credit facility. If the covenants are violated and the Company is unable to negotiate a waiver or amendment thereof, the lenders would have the right to declare an event of default, terminate the remaining commitment and accelerate all principal and interest outstanding.

On April 24, 2014, the Company’s credit facility agreement was amended to reduce its borrowing base to $48,500 with subsequent monthly borrowing base reductions of $1,000 on the first day of each month through the next borrowing base redetermination date of October 1, 2014 (at which time the borrowing base will be $42,500). The first of such repayments was made on May 1, 2014.