5.	Line of Credit

The Company has a line of credit with a bank with a borrowing base of $11,000,000 at December 31, 2014 and 2013, respectively. The credit line was amended on March 19, 2014 on substantially identical terms, except that the requirement for a personal guarantee by the former President and CEO was removed, and the maturity date was extended to October 18, 2016. The amount outstanding under this line of credit was $7,240,000 and $6,740,000 as of December 31, 2014 and 2013, respectively. The agreement requires monthly interest-only payments until maturity on October 18, 2016. The interest rate is based on a LIBOR or Prime option. The Prime option provides for the interest rate to be prime plus a margin ranging between 1.75% and 2.25% and the LIBOR option to be the 3-month LIBOR rate plus a margin ranging between 2.75% and 3.25%, both depending on the borrowing base usage. Currently, we have elected the LIBOR interest rate option in which our interest rate was approximately 3.50% as of December 31, 2014 and 2013, respectively. The commitment fee is .50% of the unused borrowing base. The line of credit provides for certain financial covenants and ratios which include a current ratio, leverage ratio, and interest coverage ratio requirements. We were in compliance with our covenants as of December 31, 2014 and 2013.

In addition to our revolving line of credit with Citibank, N.A., the Company also has two irrevocable standby letters of credit with Citibank securing our well plugging liabilities of various operated wells in the amounts of $25,000 and $30,000. These letters of credit must be renewed every year and were most recently renewed in March 2014.