LONG-TERM DEBT

Long-term debt consists of the following:



	September 30, 2014			December 31, 2013
	(in thousands)
Senior notes:
3.25% Convertible senior notes due 2016:
Principal amount	$	115,000		$	115,000
Unamortized discount	(7,087		)	(10,010		)
3.25% Convertible senior notes due 2016, net of discount	107,913			104,990
7.75% Senior notes due 2022	500,000			500,000
Total senior notes	607,913			604,990
Revolving credit facility	68,000			—
Long-term debt	675,913			604,990

PDCM credit facility	44,750			37,000
PDCM second lien term loan	15,000			15,000
PDCM long-term debt (included in liabilities held for sale - non-current)	59,750			52,000

Total debt	$	735,663		$	656,990

Senior Notes

3.25% Convertible Senior Notes Due 2016. In November 2010, we issued $115 million aggregate principal amount 3.25% convertible senior notes due May 15, 2016 (the "Convertible Notes") in a private placement to qualified institutional buyers. Interest is payable semi-annually in arrears on each May 15 and November 15. The indenture governing the Convertible Notes contains certain non-financial covenants. 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 upon the fair value of similar debt instruments with similar terms, excluding the conversion feature, and priced on the same day we issued the Convertible Notes. The original issue discount and capitalized debt issuance costs are being amortized to interest expense over the life of the Convertible Notes 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 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. The Convertible Notes were not convertible at the option of holders as of September 30, 2014. Notwithstanding the inability to convert, the “if-converted” value of the Convertible Notes as of September 30, 2014 exceeded the principal amount by approximately $21.4 million.

7.75% Senior Notes Due 2022. In October 2012, we issued $500 million aggregate principal amount 7.75% senior notes due October 15, 2022 (the “2022 Senior Notes”) in a private placement to qualified institutional buyers. Interest on the 2022 Senior Notes is payable semi-annually in arrears on each April 15 and October 15. The indenture governing the 2022 Senior Notes contains customary restrictive incurrence covenants. Capitalized debt issuance costs are being amortized as interest expense over the life of the 2022 Senior Notes using the effective interest method.

As of September 30, 2014, we were in compliance with all covenants related to the Convertible Notes and the 2022 Senior Notes, and expect to remain in compliance throughout the next 12-month period.

Credit Facility

Revolving Credit Facility. In May 2013, we entered into a Third Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A. as administrative agent and other lenders party thereto. This agreement amends and restates the credit agreement dated November 2010 and expires in May 2018. The revolving credit facility is available for working capital requirements, capital expenditures, acquisitions, general corporate purposes and to support letters of credit. The revolving credit facility provides for a maximum of $1 billion in allowable borrowing capacity, subject to the borrowing base. The borrowing base is based on, among other things, the loan value assigned to the proved reserves attributable to our and our subsidiaries' crude oil and natural gas interests, excluding proved reserves attributable to PDCM and our affiliated partnerships. The borrowing base is subject to a semi-annual size redetermination based upon quantification of our reserves at June 30 and December 31, and is also subject to a redetermination upon the occurrence of certain events. On September 26, 2014, the semi-annual redetermination of our revolving credit facility's borrowing base was completed, resulting in an increase in the borrowing base from $450 million to $700 million. We have elected to maintain the aggregate commitment at $450 million. The revolving credit facility is secured by a pledge of the stock of certain of our subsidiaries, mortgages of certain producing crude oil and natural gas properties and substantially all of our and such subsidiaries' other assets. Neither PDCM nor our affiliated partnerships are guarantors of our obligations under the revolving credit facility.

We had an outstanding balance of $68.0 million on our revolving credit facility as of September 30, 2014 compared to no outstanding balance as of December 31, 2013. The weighted-average borrowing rate on our revolving credit facility, exclusive of the letter of credit noted below, was 4.1% per annum as of September 30, 2014.

As of September 30, 2014, Riley Natural Gas, a wholly-owned subsidiary of PDC, had an irrevocable standby letter of credit of approximately $11.7 million in favor of a third-party transportation service provider to secure firm transportation of the natural gas produced by third-party producers for whom we market production in the Appalachian Basin. The letter of credit expires in September 2015. The letter of credit reduces the amount of available funds under our revolving credit facility by an equal amount. As of September 30, 2014, the available funds under our revolving credit facility, including the reduction for the $11.7 million letter of credit, was $370.3 million. In addition to our currently elected commitment of $450 million, we have an additional $250 million of borrowing base availability under the revolving credit facility.

The revolving credit facility contains covenants customary for agreements of this type, with the most restrictive being certain financial tests on a quarterly basis. The financial tests, as defined per the revolving credit facility, include requirements to: (a) maintain a minimum current ratio of 1.00 to 1.00 and (b) not exceed a maximum leverage ratio of 4.25 to 1.00. As of September 30, 2014, we were in compliance with all the revolving credit facility covenants and expect to remain in compliance throughout the next 12-month period.

PDCM

On October 14, 2014, we closed the sale of our entire 50% ownership interest in PDCM to an unrelated third-party. The transaction included the repayment of the PDCM credit facility and Second Lien Credit Agreement ("Term Loan Agreement") by the buyer. See Note 15, Subsequent Event, for additional information.

PDCM Credit Facility. As of September 30, 2014, PDCM had a credit facility dated April 2010, as amended in February 2014, with a borrowing base of $105 million, of which our proportionate share was approximately $53 million. As of September 30, 2014, our proportionate share of PDCM's outstanding credit facility balance was $44.8 million, included in liabilities held for sale - non-current on the condensed consolidated balance sheets, compared to $37.0 million as of December 31, 2013. The weighted-average borrowing rate on PDCM's credit facility was 3.5% per annum as of September 30, 2014, compared to 3.7% as of December 31, 2013.

PDCM Second Lien Term Loan. In July 2013, PDCM entered into a Term Loan Agreement with Wells Fargo Energy Capital as administrative agent and a syndicate of other lenders party thereto. As of September 30, 2014, amounts borrowed and outstanding on the Term Loan Agreement were $30.0 million, of which our proportionate share was $15 million. This amount is included in liabilities held for sale - non-current on the condensed consolidated balance sheets. The weighted-average interest rate on the term loan was 8.5% per annum as of both September 30, 2014 and December 31, 2013.