Note 10 - Subsequent Events	3 Months Ended
Mar. 31, 2020
Notes to Financial Statements
Subsequent Events [Text Block]	10. Subsequent Events COVID- 19 In the first quarter of 2020, a new strain of coronavirus (“COVID- 19” ) emerged, creating a global health emergency that has been classified by the World Health Organization as a pandemic. As a result of the COVID- 19 pandemic, consumer demand for both oil and gas has decreased as a direct result of travel restrictions placed by governments in an effort to curtail the spread of COVID- 19. In addition, in March 2020, members of OPEC failed to agree on production levels, which has caused an increased supply and has led to a substantial decrease in oil prices and an increasingly volatile market. OPEC agreed to cut global petroleum output but did not go far enough to offset the impact of COVID- 19 on demand. As a result of this decrease in demand and increase in supply, the price of oil and gas has decreased, which has affected the liquidity. On one hand, the Company’s commodity hedges protect its cash flows from such price decline but, on the other hand, if oil or natural gas prices remain depressed or continue to decline the Company will be required to record oil and gas property write-downs. The full impact of the coronavirus and the decrease in oil prices continue to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that they will have on the Company’s financial condition, liquidity and future results of operations. Management is actively monitoring the global situation and the impact and/or adverse effect on the Company’s results of future operations, financial position and liquidity in fiscal year 2020. Due to the recent oil price volatility, the Company recently suspended its 2020 capital spending program. The Company has also laid off selected employees, reduced officer salaries from 20% - 40% and reduced all other salaries from 5% - 20%. The Company has also eliminated all overtime for field employees. Additionally, we have curtailed our capital expenditures and temporarily shut in production. In early March 2020, global oil and natural gas prices declined sharply, have since been volatile, and may decline again. The Company expects ongoing oil price volatility over the short term. Continued depressed oil prices could have a material adverse impact on the Company’s oil revenue, which is mitigated by the Company’s hedge contracts. Paycheck Protection Program Loan On May 4, 2020, the Company entered into a an unsecured loan with the U.S. Small Business Administration ("SBA") in the amount of $1.4 million under the Paycheck Protection Program (the "PPP Loan") with an interest rate of 1.0% and maturity date two years from the effective date of the PPP Laon. The Paycheck Protection Program was established under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act") and is administered by the SBA. Payments are required to be made in seventeen monthly installments of principal and interest, with the first payment being due on the date that is seven months after the date of the PPP loan. Under the CARES Act, the PPP Loan is eligible for forgiveness for the portion of the PPP Loan proceeds used for payroll costs and other designated operating expenses for up to eight weeks, provided at least 75% of PPP Loan proceeds are used for payroll costs and the Company meets all necessary criteria for forgiveness. Receipt of these funds requires the Company to, in good faith, certify that the PPP Loan was necessary to support ongoing operations of the Company during the economic uncertainty created by the COVID- 19 pandemic. This certification further requires the Company to take into account current business activity and the ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. Additionally, the SBA provides no assurance that the Company will obtain forgiveness of the PPP Loan in whole or in part. Amendments to First Lien Credit Facility and Second Lien Credit Facility Waiver and Amendment No. 10 to Third Amended and Restated Agreement On June 25, 2020, the Company and its subsidiary guarantors entered into the Waiver and Amendment No. 10 to Credit Agreement (the “1L Amendment”) with Société Générale, as administrative agent and lender, and the lenders party thereto, pursuant to which the parties agreed to, among other things, (i) waive the Company’s events of default with respect to its First Lien Credit Facility as a result of the Borrower’s failure to (A) deliver audited financial statements for the fiscal year ended December 31, 2019 not later than 90 days after the end of such fiscal year in violation of the First Lien Credit Facility and the Second Lien Credit Facility, (B) deliver a consolidated unaudited balance sheet and unaudited financial statements for the fiscal quarter ended March 31, 2020 not later than 45 days after the end of such fiscal quarter in violation of the First Lien Credit Facility and not later than 60 days after the end of such fiscal quarter in violation of the Second Lien Credit Facility and (C) prevent existing hedge agreements from exceeding the maximum coverage permitted pursuant to the First Lien Credit Facility and the Second Lien Credit Facility and (ii) amend certain covenants and payment provisions of the First Lien Credit Facility. Due to the unprecedented conditions surrounding the outbreak and spread of the COVID- 19 pandemic, the recent decline in oil prices, and related geopolitical developments, the Company failed to (i) file its Annual Report on Form 10 -K for the period ended December 31, 2019 no later than 90 days after the end of such fiscal year, (ii) file this Quarterly Report on Form 10 -Q for the period ended March 31, 2020 no later than 45 days after the end of such fiscal quarter and (iii) prevent existing hedge agreements from exceeding the maximum coverage permitted pursuant to the First Lien Credit Facility, which resulted in violations of certain covenants under the First Lien Credit Facility (as in effect prior to the 1L Amendment). Subject to the terms and conditions of the 1L Amendment, Société Générale and each of the other lenders permanently waived such events of default and agreed not to charge default interest with respect to such defaults. The 1L Amendment modified certain provisions of the First Lien Credit Facility, including (i) the addition of monthly mandatory prepayments from excess cash (defined as available cash minus certain cash set-asides and a $3.0 million working capital reserve) with corresponding reductions to the borrowing base; (ii) the elimination of scheduled redeterminations (which were previously made every six months) and interim redeterminations (which were previously made at the request of the lenders no more than once in the six month period between scheduled redeterminations) of the borrowing base; (iii) the replacement of total debt leverage ratio and minimum asset ratio covenants with a first lien debt leverage ratio covenant (comparing the outstanding debt of the First Lien Credit Facility to the consolidated EBITDAX of the Company and requiring that the ratio not exceed 2.75 to 1.00 as of the last day of each fiscal quarter) and a minimum first lien asset coverage ratio covenant (comparing the sum of, without duplication, (A) the PV- 15 of producing and developed proven reserves of the Company, (B) the PV- 9 of the Company’s hydrocarbon hedge agreements and (C) the PV- 15 of proved reserves of the Company classified as “drilled uncompleted” (up to 20% of the sum of (A), (B) and (C)) to the outstanding debt of the First Lien Credit Facility and requiring that the ratio exceed 1.15 to 1.00 as of the last day of each fiscal quarter ending on or before December 31, 2020, and 1.25 to 1.00 for fiscal quarters ending thereafter); (iv) the elimination of current ratio and interest coverage ratio covenants; (v) additional restrictions on (A) capital expenditures (limiting capital expenditures to $3.0 million in any four fiscal quarter period (commencing with the four fiscal quarter period ended June 30, 2020 and calculated on an annualized basis for the 1, 2 and 3 quarter periods ending on June 30, 2020, September 30, 2020 and December 31, 2020, respectively, subject to certain exceptions, including capital expenditures financed with the proceeds of newly permitted, structurally subordinated debt and capital expenditures made when ( 1 ) the first lien asset coverage ratio is at least 1.60 to 1.00, ( 2 ) the Company is in compliance with the first lien leverage ratio, ( 3 ) the amounts outstanding under the First Lien Credit Facility are less $50.0 million, ( 4 ) no default exists under the First Lien Credit Facility and ( 5 ) and all representations and warranties in the First Lien Credit Facility and the related credit documents are true and correct in all material respects), (B) outstanding accounts payable (limiting all outstanding and undisputed accounts payable to $7.5 million, undisputed accounts payable outstanding for more than 60 days to $2.0 million and undisputed accounts payable outstanding for more than 90 days to $1.0 million and (C) general and administrative expenses (limiting cash general and administrative expenses the Company may make or become legally obligated to make in any four fiscal quarter period to $9.0 million for the four fiscal quarter period ending June 30, 2020, $8.25 million for the four fiscal quarter period ending September 30, 2020, $6.9 million for the four fiscal quarter period ending December 31, 2020, and $6.5 million for the fiscal quarter from March 31, 2021 through December 31, 2021 and $5.0 million thereafter; in all cases, general and administrative expense excludes up to $1.0 million in certain legal and professional fees; and (vi) permission for up to an additional $25.0 million in structurally subordinated debt to finance capital expenditures. Under the 1L Amendment, the borrowing base was adjusted from $135.0 million to $102.0 million. The borrowing base will be reduced by any mandatory prepayments from excess cash flow (in an amount equal to such prepayment) and upon the disposition of the Company’s oil and gas properties. Waiver and Second Amendment to Term Loan Credit Agreemen t On June 25, 2020, the Company and its subsidiary guarantors entered into the Waiver and Second Amendment to Term Loan Credit Agreement (the “2L Amendment”) with Angelo Gordon Energy Servicer, LLC, as administrative agent and issuing lender, and the lenders party thereto, pursuant to which the parties agreed to, among other things, waive the Company’s designated events of default with respect to its Second Lien Credit Facility and amend certain covenants and payment provisions of the Second Lien Credit Facility. As noted previously, the Company failed to file its Annual Report on Form 10 -K for the period ended December 31, 2019 no later than 90 days after the end of such fiscal year, which resulted in violations of certain covenants under the Second Lien Credit Facility (as in effect prior to the 2L Amendment). Additionally, the Company failed to maintain the hedges required to be maintained pursuant to the Second Lien Credit Facility with respect to the fiscal quarter ended March 31, 2020, which resulted in a violation of the Company’s covenant under the Second Lien Credit Facility (as in effect prior to the 2L Amendment) to maintain certain required hedges. An additional Event of Default has occurred as a result of the Borrower’s failure to comply with the minimum Asset Coverage Ratio requirement with respect to the fiscal quarter ended March 31, 2020. Subject to the terms and conditions of the Second Lien Credit Facility, Angelo Gordon Energy Servicer, LLC and each of the other lenders permanently waived such events of default and agreed not to charge default interest with respect to such defaults. The 2L Amendment modifies certain provisions of the Second Lien Credit Facility, including (i) a requirement that, while the obligations under the First Lien Credit Facility are outstanding, scheduled payments of accrued interest under the Second Lien Credit Facility will be paid in the form of capitalized interest; (ii) an increase in the interest rate by 200bps for interest payable in cash and 500bps for interest payable in kind; (iii) modification of the minimum asset ratio covenant to be the sum of, without duplication, (A) the PV- 15 of producing and developed proven reserves of the Company, (B) the PV- 9 of the Company’s hydrocarbon hedge agreements and (C) the PV- 15 of proved reserves of the Company classified as “drilled uncompleted” (up to 20% of the sum of (A), (B) and (C)) to the total outstanding debt of the Company and requiring that the ratio not exceed 1.45 to 1.00 as of the last day of each fiscal quarter ending between September 30, 2021 to December 31, 2021, and 1.55 to 1.00 for fiscal quarters ending thereafter); (iv) modification of the total leverage ratio covenant to set the first test date to occur on September 30, 2021; ( v) modification of the current ratio to eliminate the exclusion of certain valuation accounts associated with hedge contracts from current assets and from current liabilities, (vi) additional restrictions on (A) capital expenditures (limiting capital expenditures to those expenditures set forth in a plan of development approved by Angelo Gordon Energy Servicer, LLC, subject to certain exceptions, including capital expenditures financed with the proceeds of newly permitted, structurally subordinated debt), (B) outstanding accounts payable (limiting all outstanding and undisputed accounts payable to $7.5 million, undisputed accounts payable outstanding for more than 60 days to $2.0 million and undisputed accounts payable outstanding for more than 90 days to $1.0 million and (C) general and administrative expenses (limiting cash general and administrative expenses the Company may make or become legally obligated to make in any four fiscal quarter period to $9.0 million for the four fiscal quarter period ending June 30, 2020, $8.25 million for the four fiscal quarter period ending September 30, 2020, $6.5 million for fiscal quarter period from March 31, 2021 through December 31, 2021 and $5.0 million thereafter. . Fee Letter On June 25, 2020, the Company, in connection with the 2L Amendment and to induce Angelo Gordon Energy Servicer, LLC and the lenders to enter into the 2L Amendment, entered into the Fee Letter (the “Fee Letter”) with Angelo Gordon Energy Servicer, LLC, pursuant to which the Company will (i) pay $10.0 million exit fee to Angelo Gordon Energy Servicer, LLC and the lenders upon maturity of the obligations under the Second Lien Credit Facility or the earlier acceleration or payment in full; (ii) grant warrants having an exercise price of $0.01 in an amount equal to 19.9% of the fully diluted common equity of the Company to Angelo Gordon Energy Servicer, LLC and the lenders; (iii) negotiate and provide an alternative financial arrangement that would afford Angelo Gordon Energy Servicer, LLC and the lenders an economic benefit equivalent in value to the warrants if the warrants cannot be issued on terms satisfactory to Angelo Gordon Energy Servicer, LLC; and (iv) protect the lenders by taking such reasonable steps as necessary to grant the lenders either (a) the right to appoint one member to the Company’s Board of Directors or (b) Board observation rights reasonably satisfactory to the administrative agent. Future compliance with the covenants under the First Lien Credit Facility and Second Lien Credit Facility is reliant upon the Company's ability to successfully implement cost reductions, control capital expenditures and restart production that has been shut in. In the event of a future covenant violation, the Company would attempt to obtain waivers or amendments of the related agreements; however, it is uncertain if such waivers or amendments could be obtained on acceptable terms or at all. In the event we default under the First Lien Credit Facility or Second Lien Credit Facility, amounts outstanding would become due and payable at the option of the lenders.

10.

Subsequent Events

COVID-

In the

first

quarter of

2020,

a new strain of coronavirus (“COVID-

19”

) emerged, creating a global health emergency that has been classified by the World Health Organization as a pandemic. As a result of the COVID-

pandemic, consumer demand for both oil and gas has decreased as a direct result of travel restrictions placed by governments in an effort to curtail the spread of COVID-

19.

In addition, in

March 2020,

members of OPEC failed to agree on production levels, which has caused an increased supply and has led to a substantial decrease in oil prices and an increasingly volatile market. OPEC agreed to cut global petroleum output but did

not

go far enough to offset the impact of COVID-

on demand. As a result of this decrease in demand and increase in supply, the price of oil and gas has decreased, which has affected the liquidity. On

one

hand, the Company’s commodity hedges protect its cash flows from such price decline but, on the other hand, if oil or natural gas prices remain depressed or continue to decline the Company will be required to record oil and gas property write-downs.

The full impact of the coronavirus and the decrease in oil prices continue to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that they will have on the Company’s financial condition, liquidity and future results of operations. Management is actively monitoring the global situation and the impact and/or adverse effect on the Company’s results of future operations, financial position and liquidity in fiscal year

2020.

Due to the recent oil price volatility, the Company recently suspended its

2020

capital spending program. The Company has also laid off selected employees, reduced officer salaries from

20%

40%

and reduced all other salaries from

20%.

The Company has also eliminated all overtime for field employees. Additionally, we have curtailed our capital expenditures and temporarily shut in production.

In early

March 2020,

global oil and natural gas prices declined sharply, have since been volatile, and

may

decline again. The Company expects ongoing oil price volatility over the short term. Continued depressed oil prices could have a material adverse impact on the Company’s oil revenue, which is mitigated by the Company’s hedge contracts.

Paycheck Protection Program Loan

May 4, 2020,

the Company entered into a an unsecured loan with the U.S. Small Business Administration ("SBA") in the amount of

$1.4

million under the Paycheck Protection Program (the "PPP Loan") with an interest rate of

1.0%

and maturity date

two

years from the effective date of the PPP Laon. The Paycheck Protection Program was established under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act") and is administered by the SBA. Payments are required to be made in

seventeen

monthly installments of principal and interest, with the

first

payment being due on the date that is

seven

months after the date of the PPP loan. Under the CARES Act, the PPP Loan is eligible for forgiveness for the portion of the PPP Loan proceeds used for payroll costs and other designated operating expenses for up to

eight

weeks, provided at least

75%

of PPP Loan proceeds are used for payroll costs and the Company meets all necessary criteria for forgiveness. Receipt of these funds requires the Company to, in good faith, certify that the PPP Loan was necessary to support ongoing operations of the Company during the economic uncertainty created by the COVID-

pandemic. This certification further requires the Company to take into account current business activity and the ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is

not

significantly detrimental to the business. Additionally, the SBA provides

assurance that the Company will obtain forgiveness of the PPP Loan in whole or in part.

Amendments to First Lien Credit Facility and Second Lien Credit Facility

Waiver and Amendment

No.

to Third Amended and Restated Agreement

June 25, 2020,

the Company and its subsidiary guarantors entered into the Waiver and Amendment

No.

to Credit Agreement (the

“1L

Amendment”) with Société Générale, as administrative agent and lender, and the lenders party thereto, pursuant to which the parties agreed to, among other things, (i) waive the Company’s events of default with respect to its First Lien Credit Facility as a result of the Borrower’s failure to (A) deliver audited financial statements for the fiscal year ended

December 31, 2019

not

later than

days after the end of such fiscal year in violation of the First Lien Credit Facility and the Second Lien Credit Facility, (B) deliver a consolidated unaudited balance sheet and unaudited financial statements for the fiscal quarter ended

March 31, 2020

not

later than

days after the end of such fiscal quarter in violation of the First Lien Credit Facility and

not

later than

days after the end of such fiscal quarter in violation of the Second Lien Credit Facility and (C) prevent existing hedge agreements from exceeding the maximum coverage permitted pursuant to the First Lien Credit Facility and the Second Lien Credit Facility and (ii) amend certain covenants and payment provisions of the First Lien Credit Facility.

Due to the unprecedented conditions surrounding the outbreak and spread of the COVID-

pandemic, the recent decline in oil prices, and related geopolitical developments, the Company failed to (i) file its Annual Report on Form

-K for the period ended

December 31, 2019

later than

days after the end of such fiscal year, (ii) file this Quarterly Report on Form

-Q for the period ended

March 31, 2020

later than

days after the end of such fiscal quarter and (iii) prevent existing hedge agreements from exceeding the maximum coverage permitted pursuant to the First Lien Credit Facility, which resulted in violations of certain covenants under the First Lien Credit Facility (as in effect prior to the

Amendment). Subject to the terms and conditions of the

Amendment, Société Générale and each of the other lenders permanently waived such events of default and agreed

not

to charge default interest with respect to such defaults.

The

Amendment modified certain provisions of the First Lien Credit Facility, including (i) the addition of monthly mandatory prepayments from excess cash (defined as available cash minus certain cash set-asides and a

$3.0

million working capital reserve) with corresponding reductions to the borrowing base; (ii) the elimination of scheduled redeterminations (which were previously made every

six

months) and interim redeterminations (which were previously made at the request of the lenders

more than once in the

six

month period between scheduled redeterminations) of the borrowing base; (iii) the replacement of total debt leverage ratio and minimum asset ratio covenants with a

first

lien debt leverage ratio covenant (comparing the outstanding debt of the First Lien Credit Facility to the consolidated EBITDAX of the Company and requiring that the ratio

not

exceed

2.75

1.00

as of the last day of each fiscal quarter) and a minimum

first

lien asset coverage ratio covenant (comparing the sum of, without duplication, (A) the PV-

of producing and developed proven reserves of the Company, (B) the PV-

of the Company’s hydrocarbon hedge agreements and (C) the PV-

of proved reserves of the Company classified as “drilled uncompleted” (up to

20%

of the sum of (A), (B) and (C)) to the outstanding debt of the First Lien Credit Facility and requiring that the ratio exceed

1.15

1.00

as of the last day of each fiscal quarter ending on or before

December 31, 2020,

and

1.25

1.00

for fiscal quarters ending thereafter); (iv) the elimination of current ratio and interest coverage ratio covenants; (v) additional restrictions on (A) capital expenditures (limiting capital expenditures to

$3.0

million in any

four

fiscal quarter period (commencing with the

four

fiscal quarter period ended

June 30, 2020

and calculated on an annualized basis for the

and

quarter periods ending on

June 30, 2020,

September 30, 2020

and

December 31, 2020,

respectively, subject to certain exceptions, including capital expenditures financed with the proceeds of newly permitted, structurally subordinated debt and capital expenditures made when (

) the

first

lien asset coverage ratio is at least

1.60

1.00,

(

) the Company is in compliance with the

first

lien leverage ratio, (

) the amounts outstanding under the First Lien Credit Facility are less

$50.0

million, (

)

default exists under the First Lien Credit Facility and (

) and all representations and warranties in the First Lien Credit Facility and the related credit documents are true and correct in all material respects), (B) outstanding accounts payable (limiting all outstanding and undisputed accounts payable to

$7.5

million, undisputed accounts payable outstanding for more than

days to

$2.0

million and undisputed accounts payable outstanding for more than

days to

$1.0

million and (C) general and administrative expenses (limiting cash general and administrative expenses the Company

may

make or become legally obligated to make in any

four

fiscal quarter period to

$9.0

million for the

four

fiscal quarter period ending

June 30, 2020,

$8.25

million for the

four

fiscal quarter period ending

September 30, 2020,

$6.9

million for the

four

fiscal quarter period ending

December 31, 2020,

and

$6.5

million for the fiscal quarter from

March 31, 2021

through

December 31, 2021

and

$5.0

million thereafter; in all cases, general and administrative expense excludes up to

$1.0

million in certain legal and professional fees; and (vi) permission for up to an additional

$25.0

million in structurally subordinated debt to finance capital expenditures. Under the

Amendment, the borrowing base was adjusted from

$135.0

million to

$102.0

million. The borrowing base will be reduced by any mandatory prepayments from excess cash flow (in an amount equal to such prepayment) and upon the disposition of the Company’s oil and gas properties.

Waiver and Second Amendment to Term Loan Credit Agreemen

t

On

June 25, 2020,

the Company and its subsidiary guarantors entered into the Waiver and Second Amendment to Term Loan Credit Agreement (the

“2L

Amendment”) with Angelo Gordon Energy Servicer, LLC, as administrative agent and issuing lender, and the lenders party thereto, pursuant to which the parties agreed to, among other things, waive the Company’s designated events of default with respect to its Second Lien Credit Facility and amend certain covenants and payment provisions of the Second Lien Credit Facility.

As noted previously, the Company failed to file its Annual Report on Form

-K for the period ended

December 31, 2019

later than

days after the end of such fiscal year, which resulted in violations of certain covenants under the Second Lien Credit Facility (as in effect prior to the

Amendment). Additionally, the Company failed to maintain the hedges required to be maintained pursuant to the Second Lien Credit Facility with respect to the fiscal quarter ended

March 31, 2020,

which resulted in a violation of the Company’s covenant under the Second Lien Credit Facility (as in effect prior to the

Amendment) to maintain certain required hedges. An additional Event of Default has occurred as a result of the Borrower’s failure to comply with the minimum Asset Coverage Ratio requirement with respect to the fiscal quarter ended

March 31, 2020.

Subject to the terms and conditions of the Second Lien Credit Facility, Angelo Gordon Energy Servicer, LLC and each of the other lenders permanently waived such events of default and agreed

not

to charge default interest with respect to such defaults.

The

Amendment modifies certain provisions of the Second Lien Credit Facility, including (i) a requirement that, while the obligations under the First Lien Credit Facility are outstanding, scheduled payments of accrued interest under the Second Lien Credit Facility will be paid in the form of capitalized interest; (ii) an increase in the interest rate by

200bps

for interest payable in cash and

500bps

for interest payable in kind; (iii) modification of the minimum asset ratio covenant to be the sum of, without duplication, (A) the PV-

of producing and developed proven reserves of the Company, (B) the PV-

of the Company’s hydrocarbon hedge agreements and (C) the PV-

of proved reserves of the Company classified as “drilled uncompleted” (up to

20%

of the sum of (A), (B) and (C)) to the total outstanding debt of the Company and requiring that the ratio

not

exceed

1.45

1.00

as of the last day of each fiscal quarter ending between

September 30, 2021

December 31, 2021,

and

1.55

1.00

for fiscal quarters ending thereafter); (iv) modification of the total leverage ratio covenant to set the

first

test date to occur on

September 30, 2021; (

v) modification of the current ratio to eliminate the exclusion of certain valuation accounts associated with hedge contracts from current assets and from current liabilities, (vi) additional restrictions on (A) capital expenditures (limiting capital expenditures to those expenditures set forth in a plan of development approved by Angelo Gordon Energy Servicer, LLC, subject to certain exceptions, including capital expenditures financed with the proceeds of newly permitted, structurally subordinated debt), (B) outstanding accounts payable (limiting all outstanding and undisputed accounts payable to

$7.5

million, undisputed accounts payable outstanding for more than

days to

$2.0

million and undisputed accounts payable outstanding for more than

days to

$1.0

million and (C) general and administrative expenses (limiting cash general and administrative expenses the Company

may

make or become legally obligated to make in any

four

fiscal quarter period to

$9.0

million for the

four

fiscal quarter period ending

June 30, 2020,

$8.25

million for the

four

fiscal quarter period ending

September 30, 2020,

$6.5

million for fiscal quarter period from

March 31, 2021

through

December 31, 2021

and

$5.0

million thereafter.

Fee Letter

June 25, 2020,

the Company, in connection with the

Amendment and to induce Angelo Gordon Energy Servicer, LLC and the lenders to enter into the

Amendment, entered into the Fee Letter (the “Fee Letter”) with Angelo Gordon Energy Servicer, LLC, pursuant to which the Company will (i) pay

$10.0

million exit fee to Angelo Gordon Energy Servicer, LLC and the lenders upon maturity of the obligations under the Second Lien Credit Facility or the earlier acceleration or payment in full; (ii) grant warrants having an exercise price of

$0.01

in an amount equal to

19.9%

of the fully diluted common equity of the Company to Angelo Gordon Energy Servicer, LLC and the lenders; (iii) negotiate and provide an alternative financial arrangement that would afford Angelo Gordon Energy Servicer, LLC and the lenders an economic benefit equivalent in value to the warrants if the warrants cannot be issued on terms satisfactory to Angelo Gordon Energy Servicer, LLC; and (iv) protect the lenders by taking such reasonable steps as necessary to grant the lenders either (a) the right to appoint

one

member to the Company’s Board of Directors or (b) Board observation rights reasonably satisfactory to the administrative agent.

Future compliance with the covenants under the First Lien Credit Facility and Second Lien Credit Facility is reliant upon the Company's ability to successfully implement cost reductions, control capital expenditures and restart production that has been shut in. In the event of a future covenant violation, the Company would attempt to obtain waivers or amendments of the related agreements; however, it is uncertain if such waivers or amendments could be obtained on acceptable terms or at all. In the event we default under the First Lien Credit Facility or Second Lien Credit Facility, amounts outstanding would become due and payable at the option of the lenders.