Debt and Credit Agreements

The Company's debt and credit agreements consisted of the following:



	December 31,
(In thousands)	2015			2014
Total debt
7.33% weighted-average senior notes	$	20,000		$	20,000
6.51% weighted-average senior notes	425,000			425,000
9.78% senior notes	67,000			67,000
5.58% weighted-average senior notes	175,000			175,000
3.65% weighted-average senior notes	925,000			925,000
Revolving credit facility	413,000			140,000
Current maturities
7.33% weighted-average senior notes	(20,000		)	—
Long-term debt, excluding current maturities	$	2,005,000		$	1,752,000

The Company has debt maturities of $20.0 million due in 2016, $312.0 million due in 2018 and $100.0 million due in 2020. In addition, the revolving credit facility matures in 2020. No other tranches of debt are due within the next five years.

At December 31, 2015, the Company was in compliance with all restrictive financial covenants, as amended, for both its revolving credit facility and senior notes.

Senior Notes

The Company has various issuances of senior notes. Interest on each of the senior notes is payable semi-annually. Under the terms of the various senior note agreements, the Company may prepay all or any portion of the notes of each series on any date at a price equal to the principal amount thereof plus accrued and unpaid interest plus a make-whole premium.

Due to the significant decrease in natural gas and crude oil prices during 2015 and the related impact on certain of the Company's financial covenants, effective December 31, 2015, the Company amended the agreements governing its senior notes to adjust certain financial covenants and to include an additional financial covenant, as further described below. The amended agreements provide that the asset coverage ratio (present value of proved reserves to debt, as defined in the agreements) be calculated based on the present value of proved reserves before income taxes, whereas prior to these amendments, the present value was calculated after income taxes. The minimum asset coverage ratio was also reduced from 1.75 to 1.0 to 1.25 to 1.0 through and including December 31, 2017 and increases back to the pre-amended ratio of 1.75 to 1.0 beginning on January 1, 2018 and thereafter. The amendments also introduce a leverage ratio covenant, which is defined in the agreement as the ratio of debt to consolidated EBITDAX. The leverage ratio may not exceed a maximum ratio of:

• 4.75 to 1.0 through and including December 31, 2016;

• 4.25 to 1.0 through and including December 31, 2017; and


•	3.50 to 1.0 beginning on March 31, 2018 and remains in effect until the Company maintains a leverage ratio below 3.0 to 1.0 for two consecutive fiscal quarters ending on or after December 31, 2017, or receives an investment grade rating by Standard & Poor's Ratings Services (S&P) or Moody’s Investor Service, Inc (Moody's).

In addition, the amendments provide for potential increases to the original coupon rates ranging from 0 to 125 basis points depending on the asset coverage and leverage ratios at the end of the respective quarterly period, as defined in the note agreements. These potential increases lapse when the Company maintains a leverage ratio between 3.0 to 1.0 for two consecutive fiscal quarters ending on or after December 31, 2017 or receives an investment grade rating by S&P or Moody's. As of December 31, 2015, based on the Company's asset coverage and leverage ratios, there were no interest rate adjustments required for the Company's senior notes.

The note agreements continue to include a minimum annual coverage ratio of consolidated cash flow to interest expense for the trailing four quarters of 2.8 to 1.0, which was unchanged by the amendments. There are also various other covenants customarily found in such debt instruments. The notes are also subject to customary events of default.

In conjunction with the execution of the amendments, the Company incurred approximately $1.9 million of debt issuance costs, which were capitalized and are being amortized over the term of the respective amended agreements in accordance with ASC 470-50, “Debt Modifications and Extinguishments.”

7.33% Weighted-Average Senior Notes

In July 2001, the Company issued $170 million of senior unsecured notes to a group of seven institutional investors in a private placement. The notes have bullet maturities and were issued in three separate tranches as follows:



	Principal		Term	Maturity Date	Coupon
Tranche 1	$	75,000,000	10 years	July 2011	7.26	%
Tranche 2	$	75,000,000	12 years	July 2013	7.36	%
Tranche 3	$	20,000,000	15 years	July 2016	7.46	%

As of December 31, 2015, the Company has repaid $150 million of aggregate maturities associated with the 7.33% weighted-average senior notes.

6.51% Weighted-Average Senior Notes

In July 2008, the Company issued $425 million of senior unsecured notes to a group of 41 institutional investors in a private placement. The notes have bullet maturities and were issued in three separate tranches as follows:



	Principal		Term	Maturity Date	Coupon
Tranche 1	$	245,000,000	10 years	July 2018	6.44	%
Tranche 2	$	100,000,000	12 years	July 2020	6.54	%
Tranche 3	$	80,000,000	15 years	July 2023	6.69	%

9.78% Senior Notes

In December 2008, the Company issued $67 million aggregate principal amount of 10 year 9.78% senior unsecured notes to a group of four institutional investors in a private placement.

5.58% Weighted-Average Senior Notes

In December 2010, the Company issued $175 million of senior unsecured notes to a group of eight institutional investors in a private placement. The notes have bullet maturities and were issued in three separate tranches as follows:



	Principal		Term	Maturity Date	Coupon
Tranche 1	$	88,000,000	10 years	January 2021	5.42	%
Tranche 2	$	25,000,000	12 years	January 2023	5.59	%
Tranche 3	$	62,000,000	15 years	January 2026	5.80	%

3.65% Weighted‑Average Senior Notes

In September 2014, the Company issued $925 million of senior unsecured notes to a group of 24 institutional investors in a private placement. The notes have bullet maturities and were issued in three separate tranches as follows:



	Principal		Term	Maturity Date	Coupon
Tranche 1	$	100,000,000	7 years	September 2021	3.24	%
Tranche 2	$	575,000,000	10 years	September 2024	3.67	%
Tranche 3	$	250,000,000	12 years	September 2026	3.77	%

In conjunction with the issuance of the 3.65% weighted‑average senior notes in September 2014, the Company incurred approximately $5.6 million of debt issuance costs, which were capitalized and are being amortized over the term of the notes. The amortization of debt issuance costs is included in interest expense in the Consolidated Statement of Operations.

Revolving Credit Agreement

The Company's revolving credit facility is unsecured. The borrowing base is redetermined annually under the terms of the revolving credit facility on April 1. In addition, either the Company or the banks may request an interim redetermination twice a year or in conjunction with certain acquisitions or sales of oil and gas properties.

Effective April 17, 2015, the Company amended its revolving credit facility to extend the maturity date from May 2017 to April 2020 and change the mechanism under which interest rate margins are determined for outstanding borrowings. The revolving credit facility, as amended, provides for a borrowing base of $3.4 billion and commitments of $1.8 billion. The amended credit facility also provides for an accordion feature, which allows the Company to increase the available credit line up to an additional $500 million if one or more of the existing or new banks agree to provide such an increased amount.

In conjunction with the Company's amendments to the senior notes, effective December 31, 2015, the Company also amended its revolving credit facility to adjust certain financial covenants and include an additional financial covenant, as further described below. The amendment provides that the asset coverage ratio (present value of proved reserves to debt, as defined in the agreement) be calculated based on the present value of proved reserves before income taxes, whereas prior to the amendment, the present value was calculated after income taxes. The minimum asset coverage ratio was also reduced from 1.75 to 1.0 to 1.25 to 1.0 through and including December 31, 2017 and increases back to the pre-amended ratio of 1.75 to 1.0 beginning on March 31, 2018. The amendment also introduces a leverage ratio covenant, which is defined in the agreement as the ratio of debt to consolidated EBITDAX. The ratio may not exceed a maximum ratio of:

• 4.75 to 1.0 through and including December 31, 2016;

• 4.25 to 1.0 through and including December 31, 2017; and


•	3.50 to 1.0 beginning on March 31, 2018 and remains in effect until the Company maintains a leverage ratio below 3.0 to 1.0 for two consecutive fiscal quarters beginning on or after December 31, 2017, or receives an investment grade rating by S&P or Moody’s.

In addition to the amendment to the asset coverage ratio and inclusion of the leverage ratio covenant, the amended revolving credit facility also increases the maximum leverage ratio and associated margins. Interest rates under the amended revolving credit facility are based on LIBOR or ABR indications, plus a margin which ranges from 50 to 300
basis points, as defined in the agreement.
These rates will remain in effect (i) until the first date occurring on or after December 31, 2017 on which both the asset coverage ratio is greater than 1.75 to 1.0 and the leverage ratio is less than 3.0 to 1.0 for two consecutive fiscal quarters, at which time the related margins will revert back to pre-amendment levels of 50 to 225 basis points, or (ii) upon the Company achieving an investment grade rating from either Moody's or S&P, at which time the associated margins will be adjusted and determined based on the Company's credit rating on a prospective basis.

The revolving credit facility also contains various other customary covenants that remained unchanged as a result of the amendment, which include the following (with all calculations based on definitions contained in the agreement):


(a)	Maintenance of a minimum annual coverage ratio of consolidated cash flow to interest expense for the trailing four quarters of 2.8 to 1.0.


(b)	Maintenance of a minimum current ratio of 1.0 to 1.0.

The credit facility also provides for a commitment fee on the unused available balance at annual rates ranging from 0.30% to 0.50%. The other terms and conditions of the amended facility are generally consistent with the terms and conditions of the revolving credit facility prior to its amendment.

The Company incurred approximately $7.8 million and $1.1 million of debt issuance costs in connection with the April 17, 2015 and December 31, 2015 amendments to the revolving credit facility, respectively, which were capitalized and will be amortized over the term of the amended credit facility. The remaining unamortized costs will be amortized over the term of the amended revolving credit facility in accordance with ASC 470-50, "Debt Modifications and Extinguishments."

At December 31, 2015, the Company had $413.0 million of borrowings outstanding under its revolving credit facility and had unused commitments of $1.4 billion. The Company's weighted-average effective interest rates for the revolving credit facility during the years ended December 31, 2015, 2014 and 2013 were approximately 2.2%, 2.2% and 2.3%, respectively.