Note 5. Long-Term Debt

The following long-term debt and capital lease obligations were outstanding as of December 31, 2013 and 2012:



	December 31,
In thousands	2013			2012
Bank Credit Agreement	$	340,000		$	700,000
9½% Senior Subordinated Notes due 2016, including premium of $9,118	—			234,038
9¾% Senior Subordinated Notes due 2016, including discount of $13,569	—			412,781
8¼% Senior Subordinated Notes due 2020	996,273			996,273
6 3/8% Senior Subordinated Notes due 2021	400,000			400,000
4 5/8% Senior Subordinated Notes due 2023	1,200,000			—
Other Subordinated Notes, including premium of $16 and $25, respectively	3,823			3,832
Pipeline financings	228,167			236,244
Capital lease obligations	128,519			158,260
Total	3,296,782			3,141,428
Less: current obligations	(36,157		)	(36,966		)
Long-term debt and capital lease obligations	$	3,260,625		$	3,104,462

The ultimate parent company in our corporate structure, Denbury Resources Inc. ("DRI"), is the sole issuer of all of our outstanding senior subordinated notes. DRI has no independent assets or operations. Each of the subsidiary guarantors of such notes is 100% owned, directly or indirectly, by DRI; any subsidiaries of DRI other than the subsidiary guarantors are minor subsidiaries, and the guarantees of the notes are full and unconditional and joint and several.

$1.6 Billion Revolving Credit Agreement

In March 2010, we entered into a $1.6 billion revolving credit agreement with JPMorgan Chase Bank, N.A. ("JPMorgan"), as administrative agent, and other lenders party thereto (as amended, the "Bank Credit Agreement"). Availability under the Bank Credit Agreement is subject to a borrowing base, which is redetermined semi-annually on or prior to May 1 and November 1 of each year, and additionally upon requested special redeterminations. The borrowing base is adjusted at the lenders' discretion and is based in part upon external factors over which we have no control (including approval by the lenders party to the Bank Credit Agreement). If our outstanding credit under the Bank Credit Agreement exceeds the then effective borrowing base, we would be required to repay the excess amount over a period not to exceed four months. As part of the semi-annual review completed in October 2013 pursuant to the terms of the Bank Credit Agreement, our borrowing base was reaffirmed at $1.6 billion effective November 1, 2013, with approval by all of the lenders. The weighted average interest rate on borrowings outstanding as of December 31, 2013 under the Bank Credit Agreement was 1.9%. Loans under the Bank Credit Agreement mature in May 2016.

The Bank Credit Agreement is secured by substantially all of the proved oil and natural gas properties of DRI's restricted subsidiaries (which does not include minor subsidiaries) and by the equity interests of such restricted subsidiaries. In addition, our obligations under the Bank Credit Agreement are guaranteed jointly and severally by DRI's restricted subsidiaries.

The Bank Credit Agreement contains several restrictive covenants including, among others:


•	a requirement to maintain a current ratio, as determined under the Bank Credit Agreement, of not less than 1.0 to 1.0;


•	a requirement to maintain a maximum permitted ratio of consolidated total debt to Consolidated EBITDA (as defined in the Bank Credit Agreement) of DRI and its restricted subsidiaries of not more than 4.25 to 1.0;


•	a prohibition against incurring debt, subject to permitted exceptions; and


•	a limitation on the aggregate amount of forecasted oil and natural gas production that can be economically hedged with oil or natural gas derivative contracts.

Under the Bank Credit Agreement, we are permitted to make unlimited distributions in the form of repurchases of Denbury common stock and payments of cash dividends on Denbury common stock, provided that (1) prior to and after making any such distribution (a) no default or borrowing base deficiency exists, and (b) we are in compliance with the first two financial covenants described immediately above (calculated on a pro forma basis after giving effect to the making of any such distribution), and (2) we have minimum availability of at least 10% of our borrowing base on the date such distribution is made.

Loans under the Bank Credit Agreement are subject to varying rates of interest based on (1) the total outstanding credit in relation to the borrowing base and (2) whether the loan is a Eurodollar loan or a base rate loan. Eurodollar loans bear interest at the Adjusted Eurodollar Rate (as defined in the Bank Credit Agreement) plus the applicable margin in a range from 1.5% to 2.5% based on the ratio of outstanding credit to the borrowing base, and base rate loans bear interest at the Base Rate (as defined in the Bank Credit Agreement) plus the applicable margin in a range from 0.5% to 1.5% based on the ratio of outstanding credit to the borrowing base. The "Eurodollar rate" for any interest period (either one, two, three, six, and, if available to all lenders, nine or twelve months, as selected by us) is the rate per year equal to LIBOR, as published by Reuters or another source designated by JPMorgan, for deposits in dollars for a similar interest period. The "base rate" is calculated as the highest of (1) the annual rate of interest announced by JPMorgan as its "prime rate," (2) the federal funds effective rate plus 0.5%, and (3) the Adjusted Eurodollar Rate (as defined in the Bank Credit Agreement) for a one-month interest period plus 1.0%. We incur a commitment fee of either 0.375% or 0.5%, based on the ratio of outstanding credit to the borrowing base, on the unused availability under the Bank Credit Agreement.

Senior Subordinated Notes

Repurchase and Redemption of 9½% Notes and 9¾% Notes. In January 2013, we commenced cash tender offers to purchase the outstanding $426.4 million principal amount of our 9¾% Senior Subordinated Notes due 2016 (the "9¾% Notes") at 105.425% of par and the outstanding $224.9 million principal amount of our 9½% Senior Subordinated Notes due 2016 (the "9½% Notes") at 106.869% of par. During February 2013, we accepted for purchase $191.7 million principal amount of the outstanding 9¾% Notes and $186.7 million principal amount of the outstanding 9½% Notes. The purchases under these tender offers were funded by a portion of the proceeds received in February 2013 from the issuance of our 4 5/8% Senior Subordinated Notes due 2023 (the "2023 Notes"). In March 2013, we repurchased all of the remaining $234.7 million principal amount outstanding of our 9¾% Notes at 104.875% of par. In May 2013, we repurchased all of the remaining $38.2 million principal amount outstanding of our 9½% Notes at 104.75% of par.

We recognized a loss associated with the debt repurchases of $44.7 million during the year ended December 31, 2013, consisting of both premium payments made to repurchase or redeem the 9¾% Notes and 9½% Notes and the elimination of unamortized debt issuance costs, discounts and premiums related to these notes. The loss is included in our Consolidated Statement of Operations under the caption "Loss on early extinguishment of debt".

8¼% Senior Subordinated Notes due 2020. In February 2010, we issued $1.0 billion of 8¼% Senior Subordinated Notes due 2020 (the "2020 Notes") for net proceeds after underwriting discounts and commissions of $980 million. The 2020 Notes, which carry a coupon rate of 8.25%, were sold at par. We subsequently redeemed $3.7 million principal amount of the 2020 Notes, as required under the indenture governing the 2020 Notes.

The 2020 Notes mature on February 15, 2020, and interest is payable on February 15 and August 15 of each year. We may redeem the 2020 Notes in whole or in part at our option beginning February 15, 2015, at a redemption price of 104.125% of the principal amount, and at declining redemption prices thereafter, as specified in the indenture. Prior to February 15, 2015, we may redeem 100% of the principal amount of the 2020 Notes at a price equal to 100% of the principal amount plus a "make-whole" premium and accrued and unpaid interest. The 2020 Notes are not subject to any sinking fund requirements.

6 3/8% Senior Subordinated Notes due 2021. In February 2011, we issued $400 million of 6 3/8% Senior Subordinated Notes due 2021 ("2021 Notes"). The 2021 Notes, which carry a coupon rate of 6.375%, were sold at par. The net proceeds of $393 million were used to repurchase a portion of our 7½% Senior Subordinated Notes due 2013 (the "2013 Notes") and 7½% Senior Subordinated Notes due 2015 (the "2015 Notes") (see 2011 Redemption of 2013 Notes and 2015 Notes below).

The 2021 Notes mature on August 15, 2021, and interest is payable on February 15 and August 15 of each year. We may redeem the 2021 Notes in whole or in part at our option beginning August 15, 2016 at a redemption price of 103.188% of the principal amount, and at declining redemption prices thereafter, as specified in the indenture. Prior to August 15, 2014, we may at our option redeem up to an aggregate of 35% of the principal amount of the 2021 Notes at a price of 106.375% of par with the proceeds of certain equity offerings. In addition, at any time prior to August 15, 2016, we may redeem 100% of the principal amount of the 2021 Notes at a price equal to 100% of the principal amount plus a "make-whole" premium and accrued and unpaid interest. The 2021 Notes are not subject to any sinking fund requirements.

4 5/8% Senior Subordinated Notes due 2023. In February 2013, we issued $1.2 billion of 2023 Notes. The 2023 Notes, which carry a coupon rate of 4.625%, were sold at par. The net proceeds, after issuance costs, of $1.18 billion were used to repurchase or redeem our 9½% Notes and 9¾% Notes (see Repurchase and Redemption of 9½% Notes and 9¾% Notes above) and to pay down a portion of outstanding borrowings under our Bank Credit Agreement.

The 2023 Notes mature on July 15, 2023, and interest is payable on January 15 and July 15 of each year, commencing July 15, 2013. We may redeem the 2023 Notes in whole or in part at our option beginning January 15, 2018, at a redemption price of 102.313% of the principal amount, and at declining redemption prices thereafter, as specified in the indenture. Prior to January 15, 2016, we may at our option redeem up to an aggregate of 35% of the principal amount of the 2023 Notes at a redemption price of 104.625% of par with the proceeds of certain equity offerings. In addition, at any time prior to January 15, 2018, we may redeem 100% of the principal amount of the 2023 Notes at a redemption price equal to 100% of the principal amount plus a "make-whole" premium and accrued and unpaid interest.

Restrictive Covenants in Indentures for Senior Subordinated Notes. Each of the indentures for the 2020 Notes, 2021 Notes and 2023 Notes contains certain covenants which are generally consistent and which restrict our ability and the ability of our restricted subsidiaries to take or permit certain actions, including restrictions on our ability and the ability of our restricted subsidiaries to (1) incur additional debt; (2) make investments; (3) create liens on our assets or the assets of our restricted subsidiaries; (4) create restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to DRI or other restricted subsidiaries; (5) engage in transactions with our affiliates; (6) transfer or sell assets or subsidiary stock; (7) consolidate, merge or transfer all or substantially all of our assets and the assets of our restricted subsidiaries; and (8) make restricted payments (which includes paying dividends on our common stock or redeeming, repurchasing or retiring such stock or subordinated debt), provided that the restricted payments covenant in the indenture for the 2023 Notes (the "2023 Indenture") permits us in certain circumstances to make unlimited restricted payments so long as we maintain a ratio of total debt to EBITDA (both as defined in the 2023 Indenture) of at least 2.5 to 1 (both before and after giving effect to any restricted payment), although we will not be able to realize the practical benefit of the restricted payment covenant flexibility in the 2023 Indenture until the 2020 Notes and 2021 Notes have been redeemed or retired.

2011 Redemption of 2013 Notes and 2015 Notes. Pursuant to cash tender offers, during 2011 we repurchased $225 million in principal of our 2013 Notes and $300 million in principal of our 2015 Notes. We recognized a $16.1 million loss during the year ended December 31, 2011 associated with the debt repurchases, which is included in our Consolidated Statement of Operations under the caption "Loss on early extinguishment of debt".

Pipeline Financings

In May 2008, we closed two transactions with Genesis Energy, L.P. ("Genesis") involving two of our pipelines. The NEJD Pipeline system included a 20-year financing lease, and the Free State Pipeline included a long-term transportation service agreement. We recorded both of these transactions as financing leases.

Debt Issuance Costs

In connection with the issuance of our outstanding long-term debt, we have incurred debt issuance costs, which are being amortized to interest expense using the effective interest method over the term of each related facility. Remaining unamortized debt issuance costs were $58.9 million and $56.5 million at December 31, 2013 and 2012, respectively. These balances are included in "Other assets" in our Consolidated Balance Sheets.

Indebtedness Repayment Schedule

At December 31, 2013, our indebtedness, including our capital and financing lease obligations but excluding the discount and premium on our senior subordinated debt, is payable over the next five years and thereafter as follows:



In thousands
2014	$	36,156
2015	37,634
2016	377,933
2017	36,855
2018	31,899
Thereafter	2,776,288
Total indebtedness	$	3,296,765