Debt

12 Months Ended

Dec. 31, 2019

DEBT

The components of debt as of December 31, 2019 and 2018 consisted of the following:


	December 31, 2019
(in millions)	Debt Instrument		Unamortized Issuance Expense			Unamortized Debt Discount		Total




Long-term debt:
Variable rate (4.310% at December 31, 2019) 2018 revolving credit facility, due April 2024	$	34	$	—	⁽¹⁾	$	—	$	34
4.10% Senior Notes due March 2022	213		(1)			—		212
4.95% Senior Notes due January 2025 ⁽²⁾	892		(5)			(1)		886
7.50% Senior Notes due April 2026	639		(7)			—		632
7.75% Senior Notes due October 2027	484		(6)			—		478


Total long-term debt	$	2,262	$	(19)		$	(1)	$	2,242


	December 31, 2018
(in millions)	Debt Instrument		Unamortized Issuance Expense			Unamortized Debt Discount		Total
Long-term debt:
Variable rate (3.920% at December 31, 2018) 2018 term loan facility, due April 2023	$	—	$	—	⁽¹⁾	$	—	$	—
4.05% Senior Notes due January 2020 ⁽²⁾	52		—			—		52
4.10% Senior Notes due March 2022	213		(1)			—		212
4.95% Senior Notes due January 2025 ⁽²⁾	927		(7)			(1)		919
7.50% Senior Notes due April 2026	650		(8)			—		642
7.75% Senior Notes due October 2027	500		(7)			—		493
Total long-term debt	$	2,342	$	(23)		$	(1)	$	2,318

(1)At December 31, 2019 and 2018, unamortized issuance expense of $11 million associated with the 2018 revolving credit facility was classified as other long-term assets on the consolidated balance sheet.

(2)In February and June 2016, Moody’s and S&P downgraded certain senior notes, increasing the interest rates by 175 basis points effective July 2016. As a result of the downgrades, interest rates increased to 5.80% for the 2020 Notes and 6.70% for the 2025 Notes. S&P and Moody’s upgraded certain senior notes in April and May 2018, respectively. As a result of these upgrades, interest rates decreased to 5.30% for the 2020 Notes and 6.20% for the 2025 Notes effective July 2018. The first coupon payment to the bondholders at the lower interest rate was paid in January 2019.

The following is a summary of scheduled debt maturities by year as of December 31, 2019:


(in millions)
2020	$	—
2021	—
2022	213
2023	—
2024⁽¹⁾	34
Thereafter	2,015
	$	2,262

(1)The Company’s current revolving credit facility matures in 2024.

Credit Facilities

2016 Credit Facility

In June 2016, the Company reduced its $2.0 billion unsecured revolving credit facility entered into in December 2013 to $66 million and entered into a new credit agreement for $1,934 million, consisting of a $1,191 million secured term loan and a new $743 million unsecured revolving credit facility, maturing in December 2020.

Concurrent with the closing of the 2018 credit facility agreement in April 2018, the Company repaid the $1,191 million secured term loan balance and recognized a loss on early debt extinguishment of $8 million on the consolidated income statement related to the unamortized issuance expense. In addition, approximately $4 million of unamortized issuance expense associated with the closed $743 million revolving credit facility was carried forward into the unamortized issuance expenses of the 2018 credit facility.

2018 Credit Facility

In April 2018, the Company replaced its credit facility entered into in 2016 with a new revolving credit facility (the “2018 credit facility”). The 2018 credit facility has an aggregate maximum revolving credit amount of $3.5 billion with a current aggregate commitment of $2.0 billion and borrowing base (limit on availability) that is redetermined at least each April and October. The 2018 credit facility is secured by substantially all of the assets owned by the Company and its subsidiaries. The permitted lien provisions in the senior notes indentures currently limit liens securing indebtedness to the greater of $2.0 billion and 25% of adjusted consolidated net tangible assets. On October 8, 2019, the Company entered into an amendment to the 2018 credit facility that, among other things, established the October 2019 borrowing base at $2.1 billion and extended the maturity date to April 2024.

Loans under the 2018 credit facility are subject to varying rates of interest based on whether the loan is a Eurodollar loan or an alternate base rate loan. Eurodollar loans bear interest at the Eurodollar rate, which is adjusted LIBOR for such interest period plus the applicable margin (as those terms are defined in the 2018 credit facility documentation). The applicable margin for Eurodollar loans under the 2018 credit facility ranges from 1.50% to 2.50% based on the Company’s utilization of the borrowing base under the 2018 credit facility. Alternate base rate loans bear interest at the alternate base rate plus the applicable margin. The applicable margin for alternate base rate loans under the 2018 credit facility ranges from 0.50% to 1.50% based on the Company’s utilization of the borrowing base under the 2018 credit facility.

The 2018 credit facility contains customary representations and warranties and covenants including, among others, the following:

•a prohibition against incurring debt, subject to permitted exceptions;

•a restriction on creating liens on assets, subject to permitted exceptions;

•restrictions on mergers and asset dispositions;

•restrictions on use of proceeds, investments, transactions with affiliates, or change of principal business; and

•maintenance of the following financial covenants, commencing with the fiscal quarter ended June 30, 2018:

(1)Minimum current ratio of no less than 1.00 to 1.00, whereby current ratio is defined as the Company’s consolidated current assets (including unused commitments under the credit agreement, but excluding non-cash derivative assets) to consolidated current liabilities (excluding non-cash derivative obligations and current maturities of long-term debt).

(2)Maximum total net leverage ratio of no greater than (i) with respect to each fiscal quarter ending during the period from June 30, 2018 through March 31, 2019, 4.50 to 1.00, (ii) with respect to each fiscal quarter ending during the period from June 30, 2019 through March 31, 2020, 4.25 to 1.00, and (iii) with respect to each fiscal quarter ending on or after June 30, 2020, 4.00 to 1.00. Total net leverage ratio is defined as total debt less cash on hand (up to the lesser of 10% of credit limit or $150 million) divided by consolidated EBITDAX for the last four consecutive quarters. EBITDAX, as defined in the Company’s 2018 credit agreement, excludes the effects of interest expense, depreciation, depletion and amortization, income tax, any non-cash impacts from impairments, certain non-cash hedging activities, stock-based compensation expense, non-cash gains or losses on asset sales, unamortized issuance cost, unamortized debt discount and certain restructuring costs.

The 2018 credit facility contains customary events of default that include, among other things, the failure to comply with the financial covenants described above, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments and cross-defaults to material indebtedness. If an event of default occurs and is continuing, all amounts outstanding under the 2018 credit facility may become immediately due and payable. As of December 31, 2019, the Company was in compliance with all of the covenants of the credit agreement in all material respects.

Each United States domestic subsidiary of the Company for which the Company owns 100% of its equity guarantees the 2018 credit facility. Pursuant to requirements under the indentures governing its senior notes, each subsidiary that became a guarantor of the 2018 credit facility also became a guarantor of each of the Company’s senior notes. See Note 1 6 for the Company’s Condensed Consolidated Financial Information, presented in accordance with Rule 3-10 of Regulation S-X.

As of December 31, 2019, the Company had $172 million in letters of credit and $34 million in borrowings outstanding under the 2018 credit facility.

Senior Notes

In January 2015, the Company completed a public offering of $850 million aggregate principal amount of its 4.05% Senior Notes due 2020 (the “2020 Notes”) and $1.0 billion aggregate principal amount of its 4.95% Senior Notes due 2025 (the “2025 Notes” together with the 2020 Notes, the “Notes”). The interest rates on the Notes are determined based upon the public bond ratings from Moody’s and S&P. Downgrades on the Notes from either rating agency increase interest costs by 25 basis points per downgrade level and upgrades decrease interest costs by 25 basis points per upgrade level, up to the stated coupon rate, on the following semi-annual bond interest payment. In February and June 2016, Moody’s and S&P downgraded the Notes, increasing the interest rates by 175 basis points effective July 2016. As a result of these downgrades, interest rates increased to 5.80% for the 2020 Notes and 6.70% for the 2025 Notes. In the event of future downgrades, the coupons for this series of notes were capped at 6.05% and 6.95%, respectively. The first coupon payment to the bondholders at the higher interest rates was paid in January 2017. S&P and Moody’s subsequently upgraded the Notes in April and May 2018, respectively. As a result of these upgrades, interest rates decreased to 5.30% for the 2020 Notes and 6.20% for the 2025 Notes effective July 2018. The first coupon payment to bondholders at the lower interest rates was paid in January 2019.

As discussed in Note 3 above, in December 2018, the Company closed the Fayetteville Shale sale and used a portion of the proceeds to repurchase $40 million of its 4.05% Senior Notes due January 2020, $787 million of its 4.10% Senior Notes due March 2022 and $73 million of its 4.95% Senior Notes due January 2025. The Company recognized a loss on extinguishment of debt of $9 million, which included $2 million of premiums paid.

In the second half of 2019, the Company repurchased $35 million of its 4.95% senior notes due 2025, $11 million of its 7.50% Senior Notes due 2026 and $16 million of its 7.75% Senior Notes due 2027 at a discount for $54 million, and recognized an $8 million gain on extinguishment of debt. Additionally, in December 2019, the Company retired the remaining $52 million principal of its 4.05% Senior Notes due January 2020.