LONG-TERM DEBT

Long-term debt consisted of the following:



	June 30, 2012			December 31, 2011
	(in thousands)
Senior notes
3.25% Convertible senior notes due 2016:
Principal amount	$	115,000		$	115,000
Unamortized discount	(15,406		)	(17,079		)
3.25% Convertible senior notes due 2016, net of discount	99,594			97,921
12% Senior notes due 2018:
Principal amount	203,000			203,000
Unamortized discount	(1,618		)	(1,764		)
12% Senior notes due 2018, net of discount	201,382			201,236
Total senior notes	300,976			299,157
Credit facilities
Corporate	265,000			209,000
PDCM	26,000			24,000
Total credit facilities	291,000			233,000
Total long-term debt	$	591,976		$	532,157

Senior Notes

3.25% Convertible Senior Notes Due 2016. In 2010, we issued $115 million of 3.25% convertible senior notes due 2016 in a private placement. The maturity for the payment of principal is May 15, 2016. Interest is payable in cash semiannually in arrears on each May 15 and November 15. We allocated the gross proceeds of the convertible notes between the liability and equity components of the debt. The initial $94.3 million liability component was determined based on the fair value of similar debt instruments, excluding the conversion feature, with similar terms and priced on the same day we issued our convertible notes. The original issue discount and the deferred note issuance costs are being amortized to interest expense over the term of the debt using an effective interest rate of 7.4%. Upon conversion, the convertible notes may be settled, at our election, in shares of our common stock, cash or a combination of cash and shares of our common stock. We have initially elected a net-settlement method to satisfy our conversion obligation, which allows us to settle the $1,000 principal amount of the convertible notes in cash and to settle the excess conversion value in shares, as well as cash in lieu of fractional shares.

12% Senior Notes Due 2018. In 2008, we issued $203 million of 12% senior notes due 2018 in a private placement. The maturity for the payment of principal is February 15, 2018. Interest is payable in cash semiannually in arrears on each February 15 and August 15. The senior notes were issued at a discount, 98.572% of the principal amount. The indenture governing the notes contains customary representations and warranties, as well as typical restrictive covenants. The original issue discount and the deferred note issuance costs are being amortized to interest expense over the term of the debt using the effective interest method.

We were in compliance with all covenants related to our senior notes as of June 30, 2012, and expect to remain in compliance throughout the next twelve-month period.

Credit Facilities

Corporate Credit Facility. On June 29, 2012, concurrent with the acquisition of certain Wattenberg assets from affiliates of Merit Energy (the "Merit Acquisition"), we entered into a Fifth Amendment to our Second Amended and Restated Credit Agreement, dated as of November 5, 2010, with JPMorgan Chase Bank, N.A. as Administrative Agent and other lenders party thereto. The Fifth Amendment increased our available borrowing base to $525 million from $425 million based on our natural gas and crude oil reserves as of December 31, 2011 and the reserves as of April 1, 2012 for the acquired assets from the Merit Acquisition. The maximum allowable facility amount is $600 million. The credit facility is available for working capital requirements, capital expenditures, acquisitions, general corporate purposes and to support letters of credit.

On June 25, 2012, we entered into the Fourth Amendment to our credit facility. The Fourth Amendment amends certain provisions of the credit facility so as to allow us greater flexibility in entering into hedging transactions in connection with future potential asset transactions. Our credit facility borrowing base is subject to size redetermination semiannually based on quantification of our reserves at June 30 and December 31, and is also subject to a redetermination upon the occurrence of certain events. On May 4, 2012, we entered into the Third Amendment to our credit facility and, as a result of the semi-annual redetermination by our bank group, our borrowing base was increased by $25 million to $425 million. The borrowing base of the credit facility will be the loan value assigned to the proved reserves attributable to our and our subsidiaries’ natural gas and crude oil interests, excluding proved reserves attributable to PDCM and our 21 affiliated partnerships. The credit facility is secured by a pledge of the stock of certain of our subsidiaries, mortgages of certain producing natural gas and crude oil properties and substantially all of our and such subsidiaries' other assets. Neither PDCM nor the various limited partnerships that we have sponsored and continue to serve as the managing general partner are guarantors of the credit facility.

Our outstanding principal amount accrues interest at a varying interest rate that fluctuates with an alternate base rate (equal to the greater of JPMorgan Chase Bank, N.A.'s prime rate, the federal funds rate plus a premium and 1-month LIBOR plus a premium), or at our election, a rate equal to the rate for dollar deposits in the London interbank market for certain time periods. Additionally, commitment fees, interest margin and other bank fees, charged as a component of interest, vary with our utilization of the facility. No principal payments are required until the credit agreement expires on November 5, 2015, or in the event that the borrowing base falls below the outstanding balance. The credit facility contains covenants customary for agreements of this type.

We have outstanding an $18.7 million irrevocable standby letter of credit in favor of a third-party transportation service provider to secure the construction of certain additions and/or replacements to its facilities to provide firm transportation of the natural gas produced by us and others for whom we market production in the Appalachian Basin. This letter of credit reduced the amount of available funds under our credit facility by an equal amount. We pay a fronting fee of 0.125% per annum and an additional quarterly maintenance fee equivalent to the spread over Eurodollar loans (2.0% per annum as of June 30, 2012) for the period the letter of credit remains outstanding. The letter of credit expires on July 20, 2013.

As of June 30, 2012, we had an outstanding balance of $265 million on our credit facility compared to $209 million as of December 31, 2011. We pay a fee of 0.5% per annum on the unutilized commitment on the available funds under our credit facility. As of June 30, 2012, the available funds under our credit facility, including a reduction for the $18.7 million irrevocable standby letter of credit in effect, was $241.3 million. The weighted-average borrowing rate on our credit facility, exclusive of the letter of credit, was 4.6% per annum as of June 30, 2012 compared to 3.8% as of December 31, 2011.

PDCM Credit Facility. PDCM has a credit facility dated April 30, 2010, as amended last on May 11, 2012, with an aggregate revolving commitment or borrowing base of $80 million, of which our proportionate share is $40 million. The credit facility is subject to and secured by PDCM's properties, including our proportionate share of such properties. The credit facility borrowing base is subject to size redetermination semiannually based upon a valuation of PDCM's reserves at June 30 and December 31. Further, either PDCM or the lenders may request a redetermination upon the occurrence of certain events. Pursuant to the interests of the joint venture, the credit facility will be utilized by PDCM for the development of its Appalachian assets. As of June 30, 2012, our proportionate share of PDCM's outstanding credit facility draw was $26 million compared to $24 million as of December 31, 2011. PDCM pays a fee of 0.5% per annum on the unutilized commitment on the available funds under this credit facility.

As of June 30, 2012, both the Company and PDCM were in compliance with all credit facility covenants and expect to remain in compliance throughout the next twelve-month period.