Long Term Debt

6 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Long Term Debt

4. Long Term Debt

Long-term debt on the Consolidated Balance Sheets consisted of the following as of the dates indicated:

	September 30, 2019			March 31, 2019
Credit facility	$	515,000			-
Unamortized debt issuance costs		(32,344	)		-
Total long-term debt	$	482,656			-

The Company has a loan agreement (the “Agreement”) with West Texas National Bank (“WTNB”), which provided for a credit facility of $1,000,000. The Agreement has no monthly commitment reduction and a borrowing base to be evaluated annually.

Under the Agreement, interest on the facility accrues at a rate equal to the prime rate as quoted in the Wall Street Journal plus one-half of one percent (0.5%) floating daily. Interest on the outstanding amount under the Agreement is payable monthly. In addition, the Company will pay an unused commitment fee in an amount equal to one-half of one percent (0.5%) times the daily average of the unadvanced amount of the commitment. The unused commitment fee is payable quarterly in arrears on the last day of each calendar quarter. As of September 30, 2019, there was $485,000 available on the facility.

No principal payments are anticipated to be required through the maturity date of the credit facility, December 28, 2021. Upon closing with WTNB on the Agreement, the Company paid a .5% loan origination fee in the amount of $5,000 plus legal and recording expenses totaling $34,532, which were deferred over the life of the credit facility.

Amounts borrowed under the Agreement are collateralized by the common stock of the Company’s wholly owned subsidiaries and substantially all of the Company’s oil and gas properties.

The Agreement contains customary covenants for credit facilities of this type including limitations on change in control, disposition of assets, mergers and reorganizations. The Company is also obligated to meet certain financial covenants under the Agreement and requires senior debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratios (Senior Debt/EBITDA) less than or equal to 4.00 to 1.00 measured with respect to the four trailing quarters and minimum interest coverage ratios (EBITDA/Interest Expense) of 2.00 to 1.00 for each quarter. The Company is in compliance with all covenants as of September 30, 2019 and believes it will remain in compliance for the next fiscal year.

In addition, this Agreement prohibits the Company from paying cash dividends on its common stock without written permission of WTNB. The Agreement does not permit the Company to enter into hedge covering crude oil and natural gas prices.

The balance outstanding on the line of credit as of September 30, 2019 was $515,000. The following table is a summary of activity on the WTNB line of credit for the three months ended September 30, 2019:

	Principal
Balance at April 1, 2019:	$	-
Borrowings		555,000
Repayments		(40,000	)
Balance at September 30, 2019:	$	515,000

Subsequently, on October 17, 2019, the Company made a payment of $50,000 on the WTNB line of credit and on November 8, 2019, borrowed $60,000, leaving a balance of $525,000.

The Company also maintains a Certificate of Deposit Account at WTNB to collateralize one outstanding letter of credit for $25,000 in lieu of a plugging bond with the Texas Railroad Commission covering the properties the Company operates.