Long-Term Debt

Long-term debt consists of the following:



	December 31, 2014		December 31, 2013
	(In thousands)
7.75% Senior Notes due 2019, net of unamortized original issue discount of $304 at December 31, 2014 and $362 at December 31, 2013	$	599,696	$	599,638
Revolving credit facility, due April 2019^(a)	105,000		40,000
	$	704,696	$	639,638
_______

(a) Renewed and extended in April 2014.

Aggregate maturities of long-term debt at December 31, 2014 are as follows: 2019 - $704.7 million, net of unamortized original issue discount of $304,000.

Senior Notes

In March 2011, we issued $300 million of aggregate principal amount of 7.75% Senior Notes due 2019 (the “2019 Senior Notes”). The 2019 Senior Notes were issued at par and bear interest at 7.75% per year, payable semi-annually on April 1 and October 1 of each year. In April 2011, we issued an additional $50 million aggregate principal amount of the 2019 Senior Notes with an original issue discount of 1% or $0.5 million. In October 2013, we issued $250 million of aggregate principal amount of the 2019 Senior Notes at par to yield 7.75% to maturity. These 2019 Senior Notes and the 2019 Senior Notes originally issued in March and April 2011 are treated as a single class of debt securities under the same indenture. We may redeem some or all of the 2019 Senior Notes at redemption prices (expressed as percentages of principal amount) equal to 103.875% beginning on April 1, 2015, 101.938% beginning on April 1, 2016, and 100% beginning on April 1, 2017 or for any period thereafter, in each case plus accrued and unpaid interest.

The Indenture contains covenants that restrict our ability to: (1) borrow money; (2) issue redeemable or preferred stock; (3) pay distributions or dividends; (4) make investments; (5) create liens without securing the 2019 Senior Notes; (6) enter into agreements that restrict dividends from subsidiaries; (7) sell certain assets or merge with or into other companies; (8) enter into transactions with affiliates; (9) guarantee indebtedness; and (10) enter into new lines of business. One such covenant provides that we may only incur indebtedness if the ratio of consolidated EBITDA to consolidated interest expense (as these terms are defined in the Indenture) exceeds 2.25 times. These covenants are subject to a number of important exceptions and qualifications as described in the Indenture. We were in compliance with these covenants at December 31, 2014.

Revolving Credit Facility

We borrow money under an amended and restated credit facility with a syndicate of 16 banks led by JP Morgan Chase Bank, N.A. The credit facility, which was established in April 2014 and amended in November 2014 and February 2015, provides for a revolving line of credit of up to $1 billion, limited to the lesser of the borrowing base amount, as determined by the banks, and the aggregate lender commitments, as determined by us. The credit facility matures in April 2019 and is subject to an accelerated maturity date of October 1, 2018 unless our existing 2019 Senior Notes are refinanced or extended in accordance with the terms of the credit facility prior to October 1, 2018.

The borrowing base, which is based on the discounted present value of future net cash flows from oil and gas production, is redetermined by the banks semi-annually in May and November. We or the banks may also request an unscheduled borrowing base redetermination at other times during the year. If, at any time, the borrowing base is less than the amount of outstanding credit exposure under the credit facility, we will be required to (1) provide additional security, (2) prepay the principal amount of the loans in an amount sufficient to eliminate the deficiency, (3) prepay the deficiency in not more than five equal monthly installments plus accrued interest, or (4) take any combination of options (1) through (3). Increases in aggregate lender commitments require the consent of each lender.

The borrowing base under the credit facility was increased in November 2014 from $415 million to $600 million and was decreased in February 2015 to $500 million. The aggregate lender commitment was increased from $415 million to $500 million in November 2014. At December 31, 2014, we had $105 million of borrowings outstanding on the credit facility, leaving $389.1 million available after allowing for outstanding letters of credit totaling $5.9 million.

The credit facility is collateralized primarily by 80% or more of the adjusted engineered value (as defined in the credit facility) of our oil and gas interests evaluated in determining the borrowing base. The obligations under the credit facility are guaranteed by each of CWEI’s material domestic subsidiaries except for CWEI Andrews Properties, GP, LLC (see Note 18).

At our election, annual interest rates under the credit facility are determined by reference to (1) LIBOR plus an applicable LIBOR margin or (2) if an alternate base rate loan, the greatest of (A) the prime rate, (B) the federal funds rate plus 0.50%, or (C) one-month LIBOR plus 1%, plus an applicable base rate margin. The LIBOR margin ranges between 1.50% and 2.50% per year (amended in February 2015 to range between 1.75% and 2.75%), and the base rate margin ranges between 0.50% and 1.50% per year (amended in February 2015 to range between 0.75% and 1.75%). We also pay a commitment fee on the unused portion of the credit facility at an applicable margin that ranges between 0.375% and 0.50% per year. Applicable margins are based on actual borrowings outstanding as a percentage of the borrowing base. Interest and fees are payable no less often than quarterly. The effective annual interest rate on borrowings under the credit facility, excluding bank fees and amortization of debt issue costs, for the year ended December 31, 2014 was 2.1%.

The credit facility also contains various covenants and restrictive provisions that may, among other things, limit our ability to sell assets, incur additional indebtedness, make investments or loans and create liens. One such covenant requires that we maintain a ratio of consolidated current assets to consolidated current liabilities of at least 1 to 1. Another financial covenant is a leverage ratio that limits our consolidated indebtedness to consolidated EBITDA (determined as of the end of each fiscal quarter for the then most-recently ended four fiscal quarters) from being greater than 4 to 1. In February 2015, the credit facility was amended to temporarily redefine the leverage ratio to limit consolidated senior debt to 2.5 times consolidated EBITDA and to add a consolidated interest coverage ratio of 1.5 times consolidated EBITDA. These temporary amendments apply to each of the quarterly periods from January 1, 2015 through June 30, 2016. The computations of consolidated current assets, current liabilities, EBITDA, indebtedness and interest are defined in the credit facility. We were in compliance with all financial and non-financial covenants at December 31, 2014 and December 31, 2013.