	2011		2010

	(in thousands)
Debentures consist of the following at December 31:
Secured Convertible Debentures, due December 31, 2020, bearing interest at 12%, due in monthly payments. As of December 31, 2011 and 2010, principal collateralized by $850 thousand and $850 thousand, respectively, principal amount of zero coupon U.S. Treasury Bonds due November 15, 2020.(1)	$	850	$	850
Secured Convertible Debentures, due December 31, 2022, bearing interest at 12%, due in monthly payments. As of December 31, 2011 and 2010, principal collateralized by $801 thousand and $801 thousand respectively, principal amount of zero coupon U.S. Treasury Bonds due November 15, 2022.(1)		801		801

		1,651		1,651
Less current maturities		165		165

Long-term portion	$	1,486	$	1,486

The Convertible Debentures may be converted from the date of issuance until maturity at 100% of principal amount into common stock of the Company at prices which generally increase over the term of the Debentures and range from approximately $35.00 to $50.00. Conversion of the Debentures would increase the number of shares outstanding at December 31 as follows:

2011	Maturity date	Outstanding principal amount		Per share conversion price

	(in thousands, except share and per share amounts)
Secured Convertible 12% Debentures	December 31, 2020	$	850	$	35.00	24,285
Secured Convertible 12% Debentures	December 31, 2022		801		35.00	22,885

		$	1,651			47,170

Each year, holders of the Secured Convertible Debentures may tender to the Company up to 10% of the aggregate amount outstanding. As of December 31, 2011, the estimated principal that can be tendered by the secured holders is as follows:

	(in thousands)

Fiscal year ending December 31:
2012	$	165
2013		149
2014		134
2015		120
2016		108
Thereafter		975

	$	1,651

Long-term liabilities, excluding derivative financial instruments consist of the following at December 31:

	2011		2010

	(in thousands)
Line of Credit	$	89,500	$	69,500
Debentures		1,651		1,651
Debt collateralized by treasury stock		103		245
Asset retirement obligations		15,507		10,217
Litigation allowance		3,100		3,100
Drilling rig obligation		466		2,567

		110,327		87,280
Less current maturities		2,831		3,631

Long-term portion	$	107,496	$	83,649

During 2002, the Company entered into an agreement to purchase 702,500 shares of common stock from a shareholder through the issuance of a noninterest-bearing note. The Company discounted the note at 10% and the outstanding balance at December 31, 2011 and 2010 was approximately $103 thousand and $245 thousand, respectively, net of discount of approximately $4 thousand and $22 thousand, which is included in other long-term liabilities in 2010. The note requires monthly payments of $13 thousand until August 2012 and is collateralized by treasury stock. In the event of default as defined by the agreement, the only remedy by the note holder will be the issuance of the common stock. During 2010, the Company acquired a drilling rig for a purchase price of $7 million. The Company paid $3.5 million at closing and executed a non-interest bearing secured note for the remaining $3.5 million, payable in fifteen equal monthly payments commencing September 2010.

On December 15, 2011, the Company entered into a five-year $300 million Second Amended and Restated Credit Agreement with Bank of Montreal. This replaced the prior $250 million credit agreement with GE Business Financial Services, Inc. The Credit Facility provides for a revolving credit facility up to the lesser of: (i) $300 million, (ii) the Borrowing Base, or (iii) the Draw Limit requested by the Company. The Credit Facility matures on December 15, 2016, is secured by substantially all of Warren's oil and gas assets, and is guaranteed by the two wholly-owned subsidiaries of the Company.

The initial Borrowing Base is $130 million. The maximum amount available is subject to semi-annual redeterminations of the borrowing base in April and October of each year, based on the value of the Company's proved oil and natural gas reserves in accordance with the lenders' customary procedures and practices. Both the Company and the lenders have the right to request one additional redetermination each year.

The Company is subject to various covenants required by the Credit Facility, including the maintenance of the following financial ratios: (1) a minimum current ratio of not less than 1.0 to 1.0 (including the unused borrowing base and excluding unrealized gains and losses on derivative financial instruments), and (2) a minimum annualized consolidated EBITDAX (as defined in the Credit Facility) to net interest expense of not less than 2.5 to 1.0.

Depending on the amount outstanding and the level of borrowing base usage, the annual interest rate on each base rate loan under the Credit Facility will be, at the Company's option, either: (a) a "LIBOR Loan", which has an interest rate equal to the sum of the applicable LIBOR period plus the applicable "LIBOR Margin" that ranges from 1.75% to 2.75%, or (b) a "Base Rate Loan", or any other obligation other than a LIBOR Loan, which has an interest rate equal to the sum of the "Base Rate", calculated to be the higher of: (i) the Agent's prime rate of interest announced from time to time, or (ii) the Federal Funds rate most recently determined by the Agent plus one-half percent, plus an applicable "Base Rate Margin" that ranges from 0.75% to 1.75%. As of December 31, 2011, the Company had borrowed $89.5 million under the Credit Facility and was in compliance with all covenants. The weighted average interest rate as of December 31, 2011, was 2.5%.

The Credit Facility also places restrictions on certain additional indebtedness, dividends to shareholders, liens, investments, mergers, acquisitions, asset dispositions, repurchase or redemption of our common stock, speculative commodity transactions, transactions with affiliates and other matters.

The Credit Facility is subject to customary events of default. If an event of default occurs and is continuing, the Agent may, or at the request of the Lenders shall, accelerate amounts due under the Credit Facility (except for a bankruptcy event of default, in which case such amounts will automatically become due and payable).