Long-Term Debt

Our long-term debt as of December 31, 2012 and 2011, was as follows (in thousands):



	December 31, 2012		December 31, 2011
7.125% senior notes due in 2017	$	250,000	$	250,000
8.875% senior notes due in 2020 (1)	222,147		221,873
7.875% senior notes due in 2022 (1)	405,387		247,902
Bank Borrowings	39,400		—
Long-Term Debt (1)	$	916,934	$	719,775
(1) Amounts are shown net of any debt discount or premium

As of December 31, 2012, our bank borrowings of $39.4 million are due in 2017. The maturities on our senior notes were $250.0 million in 2017, $225.0 million in 2020 and $400.0 million in 2022.

We have capitalized interest on our unproved properties in the amount of $7.9 million, $7.7 million and $7.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Bank Borrowings. On October 31, 2012, we renewed and extended the maturity of our $500.0 million credit facility with a syndicate of 11 banks from May 12, 2016 to November 1, 2017. We also increased the borrowing base and commitment amount to $450.0 million from a previous borrowing base and commitment amount of $375.0 million and $300.0 million, respectively, at September 30, 2012. As of December 31, 2012, our borrowing base and commitment amount was $450.0 million.

At December 31, 2012, we had $39.4 million in outstanding borrowings under our credit facility while at December 31, 2011, we did not have any borrowings under our credit facility. The interest rate on our credit facility is either (a) the lead bank’s prime rate plus an applicable margin or (b) the Eurodollar rate plus an applicable margin. However with respect to (a), if the lead bank’s prime rate is not higher than each of the federal funds rate plus 0.5%, and the adjusted London Interbank Offered Rate (“LIBOR”) plus 1%, the greatest of these three rates will then apply. The applicable margins vary depending on the level of outstanding debt with escalating rates of 50 to 150 basis points above the Alternative Base Rate and escalating rates of 150 to 250 basis points for Eurodollar rate loans. At December 31, 2012, the lead bank’s prime rate was 3.25% and the commitment fee associated with the first $225.0 million unfunded portion of the borrowing base was set at 37.5 basis points while the commitment fee on any remaining unfunded portion was set at 50 basis points.

The terms of our credit facility include, among other restrictions, a limitation on the level of cash dividends (not to exceed $15.0 million in any fiscal year), a remaining aggregate limitation on purchases of our stock of $50.0 million, requirements as to maintenance of certain minimum financial ratios (principally pertaining to adjusted working capital ratios and EBITDAX) and limitations on incurring other debt. Since inception, no cash dividends have been declared on our common stock. As of December 31, 2012, we were in compliance with the provisions of this agreement. The credit facility is secured by our domestic oil and natural gas properties. Under the terms of the credit facility, we can increase the commitment amount to the total amount of the borrowing base with unanimous consent of the bank group as it might change from time to time.

Interest expense on the credit facility, including commitment fees and amortization of debt issuance costs, totaled $3.7 million, $2.4 million and $1.9 million for the years ended December 31, 2012, 2011 and 2010, respectively. The amount of commitment fees included in interest expense, net was $1.4 million, $1.5 million and $1.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.

In October 2012, we extended our credit facility and changed the composition of the banks included in our syndicate. Due to this change we recorded a reduction in our unamortized debt issuance costs of $0.7 million, which was recorded in "Other Long-Term Assets” on the accompanying consolidated balance sheets and a charge of $0.7 million to "Interest expense, net" on the accompanying consolidated statements of operations for the year ended December 31, 2012.

Senior Notes Due In 2022. At December 31, 2012, these notes consisted of $400.0 million of 7.875% senior notes that will mature on March 1, 2022. On November 30, 2011, we issued $250.0 million of these senior notes at a discount of $2.1 million or 99.156% of par, which equates to an effective yield to maturity of 8%. The original discount of $2.1 million is recorded in “Long-Term Debt” on our consolidated balance sheets and will be amortized over the life of the notes. On October 3, 2012, we issued an additional $150.0 million of these senior notes at 105% of par, which equates to a yield to worst of 6.993%. The premium of $7.5 million is recorded in “Long-Term Debt” on our consolidated balance sheets and will be amortized over the life of the notes using the effective interest method. The net cash proceeds from the recent issuance were $156.8 million. The notes are senior unsecured obligations that rank equally with all of our existing and future senior unsecured indebtedness, are effectively subordinated to all our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, including borrowing under our bank credit facility, and will rank senior to any future subordinated indebtedness of Swift Energy. Payment of interest on these notes is payable semi-annually on March 1 and September 1 and commenced on March 1, 2012. On or after March 1, 2017, we may redeem some or all of these notes, with certain restrictions, at a redemption price, plus accrued and unpaid interest, of 103.938% of principal, declining in twelve-month intervals to 100% in 2020 and thereafter. In addition, prior to March 1, 2015, we may redeem up to 35% of the principal amount of the notes with the net proceeds of qualified offerings of our equity at a redemption price of 107.875% of the principal amount of the notes, plus accrued and unpaid interest. We incurred approximately $7.4 million of debt issuance costs related to these notes, which is included in “Other Long–Term Assets” on the accompanying consolidated balance sheets and will be amortized to interest expense, net over the life of the notes using the effective interest method. In the event of certain changes in control of Swift Energy, each holder of notes will have the right to require us to repurchase all or any part of the notes at a purchase price in cash equal to 101% of the principal amount, plus accrued and unpaid interest to the date of purchase. The terms of these notes include, among other restrictions, limitations on our ability to repurchase shares, incur debt, create liens, make investments, transfer or sell assets, enter into transactions with affiliates, consolidate, merge or transfer all or substantially all of our assets. We were in compliance with the provisions of the indenture governing these senior notes as of December 31, 2012. Under the terms of the sale of the original $250.0 million of senior notes due in 2022, Swift was required to offer to exchange these notes for registered notes with the same terms. We completed the exchange in May 2012.

Interest expense on the senior notes due in 2022, including amortization of debt issuance costs and debt premium, totaled $22.4 million and $1.7 million for the years ended December 31, 2012 and 2011.

Senior Notes Due In 2020. These notes consist of $225.0 million of 8.875% senior notes issued at 98.389% of par, which equates to an effective yield to maturity of 9.125%. The notes were issued on November 25, 2009 with an original discount of $3.6 million and will mature on January 15, 2020. The original discount of $3.6 million is recorded in “Long-Term Debt” on our consolidated balance sheets and will be amortized over the life of the notes using the effective interest method. The notes are senior unsecured obligations that rank equally with all of our existing and future senior unsecured indebtedness, are effectively subordinated to all our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, including borrowing under our bank credit facility, and will rank senior to any future subordinated indebtedness of Swift Energy. Payment of interest on these notes is payable semi-annually on January 15 and July 15 and commenced on November 25, 2009. On or after January 15, 2015, we may redeem some or all of these notes, with certain restrictions, at a redemption price, plus accrued and unpaid interest, of 104.438% of principal, declining in twelve-month intervals to 100% in 2018 and thereafter. In addition, prior to January 15, 2013, we may redeem up to 35% of the principal amount of the notes with the net proceeds of qualified offerings of our equity at a redemption price of 108.875% of the principal amount of the notes, plus accrued and unpaid interest. We incurred approximately $5.0 million of debt issuance costs related to these notes, which is included in “Other Long–Term Assets” on the accompanying consolidated balance sheets and will be amortized to interest expense, net over the life of the notes using the effective interest method. In the event of certain changes in control of Swift Energy, each holder of notes will have the right to require us to repurchase all or any part of the notes at a purchase price in cash equal to 101% of the principal amount, plus accrued and unpaid interest to the date of purchase. The terms of these notes include, among other restrictions, limitations on our ability to repurchase shares, incur debt, create liens, make investments, transfer or sell assets, enter into transactions with affiliates, consolidate, merge or transfer all or substantially all of our assets. We were in compliance with the provisions of the indenture governing these senior notes as of December 31, 2012.

Interest expense on the senior notes due in 2020, including amortization of debt issuance costs and debt discount, totaled $20.6 million for the years ended December 31, 2012 and 2011 and $20.5 million for the year ended December 31, 2010, respectively.

Senior Notes Due In 2017. These notes consist of $250.0 million of 7.125% senior notes due in 2017, which were issued on June 1, 2007 at 100% of the principal amount and will mature on June 1, 2017. The notes are senior unsecured obligations that rank equally with all of our existing and future senior unsecured indebtedness, are effectively subordinated to all our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, including borrowing under our bank credit facility, and will rank senior to any future subordinated indebtedness of Swift Energy. Payment of interest on these notes is payable semi-annually on June 1 and December 1, and commenced on December 1, 2007. We may redeem some or all of these notes with certain restrictions, at a redemption price, plus accrued and unpaid interest of 103.563% of the principal, starting on June 1, 2015 and declining in twelve-month intervals to 100% on June 1, 2015 and thereafter. We incurred approximately $4.2 million of debt issuance costs related to these notes, which is included in “Other Long-Term Assets” on the accompanying consolidated balance sheets and will be amortized to interest expense, net over the life of the notes using the effective interest method. In the event of certain changes in control of Swift Energy, each holder of notes will have the right to require us to repurchase all or any part of the notes at a purchase price in cash equal to 101% of the principal amount, plus accrued and unpaid interest to the date of purchase. The terms of these notes include, among other restrictions, limitations on our ability to repurchase shares, incur debt, create liens, make investments, transfer or sell assets, enter into transactions with affiliates, consolidate, merge or transfer all or substantially all of our assets. We were in compliance with the provisions of the indenture governing these senior notes as of December 31, 2012.

Interest expense on the senior notes due in 2017, including amortization of debt issuance costs, totaled $18.2 million for the years ended December 31, 2012 and 2011 and $18.4 million for the year ended December 31, 2010, respectively.