Earthstone Energy enters into $500 million revolving credit facility

By Marisa Wong

Madison, Wis., Dec. 30 – Earthstone Energy, Inc. entered into a credit agreement on Dec. 19 for a $500 million four-year senior secured revolving credit facility with BOKF, NA (dba Bank of Texas) as agent and lead arranger and Wells Fargo Bank, NA as syndication agent, according to an 8-K filing with the Securities and Exchange Commission.

The initial borrowing base of the credit facility is $80 million and is subject to redetermination on March 1 and Sept. 1 of each year.

Borrowings bear interest at Libor plus 150 basis points to 250 bps, depending on the amount borrowed under the credit facility.

The company must also pay a commitment fee ranging from 37.5 bps to 50 bps, depending upon the unused portion of the borrowing base in effect.

Principal amounts outstanding under the credit facility are due and payable in full at maturity on Dec. 19, 2018.

The credit agreement contains a number of covenants and requires the company to maintain the following financial covenants: a current ratio of not less than 1 to 1 and a funded debt to EBITDAX ratio of not greater than 4 to 1.

Also on Dec. 19, the company terminated its credit agreement dated Dec. 21, 2012 with BOKF, NA (dba Bank of Oklahoma), the filing noted.

The Bank of Oklahoma facility provided the company with a revolving line of credit of up to a maximum of $25 million.

Earthstone is an oil and gas company based in Denver.

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