XML 19 R12.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Long Term Debt
 6 Months Ended
Jun. 30, 2011
Long Term Debt [Abstract]  
Long Term Debt
(6) Long Term Debt
Installments Payable on Property Acquisition
On February 28, 2008, the Company closed a transaction with EnCana to jointly develop a portion of EnCana’s leasehold in the Vega Area of the Piceance Basin. The remaining installment payable due in November 2011 is recorded in the accompanying consolidated financial statements as a current liability at a discounted value. The discount is being accreted on the effective interest method over the term of the installments, including accretion of $600,000 and $1.3 million for the three months ended June 30, 2011 and 2010, respectively, and accretion of $1.3 million and $2.5 million for the six months ended June 30, 2011 and 2010, respectively.
7% Senior Unsecured Notes, due 2015
On March 15, 2005, the Company issued 7% senior unsecured notes for an aggregate principal amount of $150.0 million. The Company was in compliance with the covenants under the indenture as of June 30, 2011 (See Note 13, “Guarantor Financial Information”). The fair value of the Company’s senior unsecured notes at June 30, 2011 was approximately $114.0 million.
33/4% Senior Convertible Notes, due 2037
On April 25, 2007, the Company issued $115.0 million aggregate principal amount of 33/4% Senior Convertible Notes due 2037 for net proceeds of $111.6 million after underwriters’ discounts and commissions of approximately $3.4 million. The convertible notes will mature on May 1, 2037 unless earlier converted, redeemed or repurchased, but each holder of convertible notes has the option to require the Company to purchase any outstanding convertible notes on each of May 1, 2012, May 1, 2017, May 1, 2022, May 1, 2027 and May 1, 2032 at a price equal to 100% of the principal amount of the convertible notes to be purchased, payable in cash. The convertible notes were recorded based on the estimated fair value of the liability component and the equity component. The debt discount on the liability component is accreted over the expected life of the convertible notes, including $1.2 million and $1.1 million of accretion for the three months ended June 30, 2011 and 2010, respectively, and $2.4 million and $2.3 million of accretion for the six months ended June 30, 2011 and 2010, respectively. Combined with the amortization of debt discount, the convertible notes had an effective interest rate of approximately 7.9% and 7.7% with total interest costs of $2.3 million and $2.2 million for the three months ended June 30, 2011 and 2010, respectively, and interest costs of $4.5 million and $4.4 million for the six months ended June 30, 2011 and 2010, respectively. The fair value of the convertible notes at June 30, 2011 was approximately $102.4 million.
Credit Facility — Delta
On December 29, 2010, the Company entered into the MBL Credit Agreement, which provides for a revolving loan and a term loan, each with a maturity date of January 31, 2012. As a combined result of amendments on March 14, 2011 to increase the amount available under the term loan and June 28, 2011 to reduce the borrowing base for the revolving loan and reduce the amount available under the term loan in conjunction with the divestiture of assets, the revolving loan currently has a borrowing base of $18.0 million and the term loan is limited to $15.0 million. The revolving loan bears interest at prime plus 6% per annum for prime rate advances and LIBOR plus 7% per annum for LIBOR advances, while the term loan bears interest at prime plus 9.5% through September 30, 2011 and prime plus 11.0% thereafter for prime rate advances and at LIBOR plus 10.5% for LIBOR advances through September 30, 2011 and LIBOR plus 12.0% thereafter for LIBOR advances. The March 14, 2011 amendment removed the requirement that advances under the term loan be subject to approval of a development plan. In addition, so long as Delta is not in default under the MBL Credit Agreement, Delta is not required to comply with certain cash management provisions, including the previous requirement to repay any term loan advances outstanding on a monthly basis with 100% of net operating cash flows.
At June 30, 2011, zero was outstanding under the revolving loan and $15.0 million was outstanding under the term loan. The revolving loan and the term loan are subject to quarterly financial covenants, in each case as defined in the MBL Credit Agreement and described in summary here, including maintenance of a minimum current ratio of 1:1, minimum quarterly net operating cash flow of $8.6 million, and maximum quarterly general and administrative expenses (excluding equity based compensation) of $5.0 million.
In addition, the Company may not permit its trade payables to be outstanding more than 90 days following the receipt of applicable invoices. At June 30, 2011, the Company was in compliance with its financial covenants under the MBL Credit Agreement, as adjusted by the lender for certain one-time effects of the 2011 Wapiti Transaction.
Credit Facility — DHS
DHS did not pay its scheduled principal and interest payments due on January 3, April 1, and July 1, 2011 and as a result, entered into a forbearance agreement, as amended, that currently expires on August 8, 2011. In conjunction with the forbearance agreement, the January 3 and April 1 missed interest payments were capitalized to the principal balance of the loan on April 1, 2011 and the July 1 interest payment was capitalized to the principal balance of the loan on July 1, 2011, and the loan now bears interest at the default rate of 11% per annum. The DHS credit agreement financial covenants require a minimum EBITDA of $1.5 million per quarter and a capital expenditures limitation of $1.2 million for any fiscal quarter and $2.3 million in the aggregate for fiscal year 2011. DHS was not in compliance with its minimum EBITDA covenant and capital expenditures limitation for the six months ended June 30, 2011. The DHS credit facility debt of $69.9 million at June 30, 2011 is included in the accompanying consolidated balance sheets as a component of liabilities related to assets held for sale. The DHS credit facility is non-recourse to Delta.