DEBT AND INTEREST EXPENSE

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

DEBT AND INTEREST EXPENSE

	December 31,			December 31,
	2015			2014
Variable rate revolving credit agreement payable to Société Générale,
CIT Bank, NAC, and LegacyTexas Bank, maturing May 20, 2017,
secured by the stock of Exploration and its interest in POL, and
guaranteed by The Yuma Companies, Inc.	$	29,800,000		$	22,900,000
Installment loan due February 29, 2016, originating from the
financing of insurance premiums at 3.74% interest rate.		108,894			-
Installment loan due June 11, 2016, originating from the
financing of insurance premiums at 3.76% interest rate.		154,741			-
Installment loan due June 11, 2015, originating from the
financing of insurance premiums at 3.76% interest rate.		-			154,750
Installment loan due February 28, 2015, originating from the
financing of insurance premiums at 3.65% interest rate.		-			128,093
		30,063,635			23,182,843
Less:  current portion		(30,063,635	)		(282,843	)
Total long-term debt	$	-		$	22,900,000

On August 10, 2011, Exploration entered into a $125.0 million syndicated credit agreement with Amegy Bank National Association (“Amegy”) as Administrative Agent, or Agent Bank (the “credit agreement”).  The maximum available under the revolving credit facility is determined by a formula based on the discounted value of the producing and non-producing crude oil and natural gas reserves (the borrowing base).  Interest on the facility accrues at the Company’s option based on prime as published by the Wall Street Journal, or a rate based on London Interbank Offering Rate (“LIBOR”).

On September 24, 2012, the credit agreement was amended whereby Union Bank N. A. (“Union”) joined the facility as a participant at 64.29% (Amegy was reduced to 35.71%) and replaced Amegy as Administrative Agent.  Amegy, however, remained the Company’s bank for regular operational banking functions.

On February 13, 2013, the credit agreement was further amended to add SocGen as a new participant and as a replacement for Union as the Administrative Agent, and to remove Amegy from the syndication.  The participation allocation became 68.75% for SocGen and 31.25% for Union.  The new interest rate margins effective February 13, 2013 are as follows:

Borrowing base utilization	Prime margin			LIBOR margin
Utilization > 90%		2.25	%		3.25	%
75% < utilization < 90%		2.00	%		3.00	%
50% < utilization < 75%		1.75	%		2.75	%
25% < utilization < 50%		1.50	%		2.50	%
Utilization < 25%		1.25	%		2.25	%

On May 20, 2013, a Third Amendment to the credit agreement added CIT Bank, NAC (“CIT”, previously OneWest Bank, FSB) to replace Union with the new participation for SocGen and CIT equal at 50/50.  With the third amendment, the credit agreement maturity date was changed to May 20, 2017.

On September 27, 2013, the Borrowing Base Redetermination Agreement and Assignment added LegacyTexas Bank (“Legacy”, previously View Point Bank, N.A.) as a third lender in the credit agreement.  Participating percentages at September 27, 2013 became 37.5% for SocGen, 37.5% for CIT and 25% for Legacy.

Effective April 22, 2014, Exploration entered into the Fourth Amendment to the credit agreement, which among other things, provided for a borrowing base of $40.0 million.

On October 14, 2014, Exploration entered into the Fifth Amendment to the credit agreement to permit YEI to make dividend payments on the Series A Preferred Stock, subject to certain limitations.

On January 23, 2015, Exploration entered into the Sixth Amendment to the credit agreement.  Pursuant to this amendment, (i) the borrowing base under the credit agreement remained at $40.0 million until the next borrowing base redetermination date which occurred on April 7, 2015, subject to a loan covenant requiring a ten percent availability under the line in order to pay dividends on any preferred stock, (ii) the Company could issue additional series of preferred stock subject to certain restrictions, (iii) the definition of “Change of Control” was amended and restated; (iv) the Company pledged the stock of Exploration; (v) Exploration pledged its interest in its wholly owned subsidiary, Pyramid Oil LLC (“POL”), and (vi) the oil and natural gas properties held by the Company in the state of California were transferred from the Company to POL and were mortgaged under the credit agreement.  In addition, Exploration’s properties in North Dakota were mortgaged.

On April 7, 2015, Exploration entered into the Seventh Amendment to the credit agreement, which reduced the Company’s borrowing base to $33.0 million, with an additional $3.0 million non-conforming borrowing base that expired on September 1, 2015.

On July 7, 2015, Exploration entered into the Eighth Amendment to the credit agreement that changed the borrowing base to $33.5 million with a $1.5 million additional but non-conforming portion that expired on October 1, 2015.  The banks participate in the Company’s revolving line of credit at 37.5%, 37.5% and 25% for SocGen, CIT and Legacy, respectively. During September 2015, Legacy replaced Amegy as the Company’s bank for treasury operations.

On December 30, 2015, Exploration entered into the Waiver, Borrowing Base Redetermination and Ninth Amendment to the credit agreement in which the borrowing base was reduced to $29.8 million and will automatically be reduced to $20 million on May 31, 2016 unless otherwise reduced by or to a different amount by the lenders under the credit agreement.  This amendment also provided a waiver of the financial covenant related to the maximum permitted ratio of funded debt to EBITDA for the fiscal quarter ended September 30, 2015 and any failure to comply with that financial covenant and certain other financial covenants for the fiscal quarter ended December 31, 2015.  Pursuant to the amendment, Exploration agreed that on or before February 6, 2016, it would engage an investment bank to explore strategic options for its finances and, on or before March 31, 2016, would either enter into an underwritten commitment for additional capital in an aggregate amount sufficient to pay any borrowing base deficiency then existing or enter into a definitive agreement for the acquisition by a third party of all or substantially all of the assets of Exploration and its subsidiaries by merger, asset purchase, equity purchase or other structure acceptable to the Administrative Agent and the lenders.  On February 10, 2016, the Company entered into the merger agreement with Davis (see Note 24 – Subsequent Events), and expects to enter into another amendment to the credit agreement to account for the contemplated merger with Davis.

Costs and fees paid to the banks in connection with the revolving credit facility are amortized through May 31, 2016, due to the possible accelerated maturity date per the SocGen Ninth Amendment.  SocGen, as Agent Bank, is also paid an annual administrative fee of $25,000 that is usually amortized over the year, but will also be amortized through May 31, 2016.

The following summarizes interest expense for the years ended December 31, 2015, 2014 and 2013.

	Years Ended December 31,
	2015			2014			2013
Credit facility	$	1,104,231		$	1,109,153		$	1,010,539
Credit facility commitment fees		34,512			70,813			56,092
Amortization and write offs of credit facility loan costs		286,009			188,669			480,261
Insurance installment loan		13,654			13,640			16,161
Louisiana Mineral Board		-			-			32,383
Other interest charges		1,489			3,275			4,056
Capitalized interest		(983,472	)		(1,059,350	)		(1,031,816	)
Total interest expense	$	456,423		$	326,200		$	567,676

The terms of the credit agreement require Exploration to meet a specific current ratio, interest coverage ratio, and a funded debt to EBITDA ratio.  The credit agreement also contains a covenant requiring ten percent availability under the current borrowing line in order to pay dividends on the Series A Preferred Stock.  In addition, the credit agreement requires the guarantee of YCI.  Exploration was not in compliance with all of the loan covenants as of December 31, 2015; however, it received a waiver pursuant to the Waiver, Borrowing Base Redetermination and Ninth Amendment to the credit agreement dated December 30, 2015.

Aggregate principal payments based on the Company’s current borrowings as of December 31, 2015 for the next five years are shown below:

2016	$	30,063,635	*
2017		-
2018		-
2019		-
2020		-

*Includes $29,800,000 for possible accelerated maturity per Ninth Amendment to the credit agreement which otherwise matures May 20, 2017.