Earthstone Energy borrowing base reduced, interest rate increased

By Angela McDaniels

Tacoma, Wash., May 24 – Earthstone Energy, Inc. amended its revolving credit facility on May 18, and the borrowing base under the revolver has been set at $75 million as a result of its lenders' semiannual review.

According to an 8-K filing with the Securities and Exchange Commission, the amendment made the following changes:

• Increased the margin over Libor to between 225 basis points and 325 bps, based on the borrowing base utilization;

• Revised the definitions of consolidated net income, EBITDAX and subsidiary;

• Added definitions for eligible rig contract cancellation expenses, recourse debt and unrestricted subsidiary; and

• Mortgaged newly acquired Lynden Energy Corp. properties as security interests.

In addition, the company must enter into certain hedging arrangements within 60 days of the amendment.

BOKF, NA is the administrative agent and lead arranger. Wells Fargo Bank, NA is the syndication agent.

The company entered into the credit agreement in December 2014. At the time, the borrowing base was $80 million and the margin over Libor ranged from 150 bps to 250 bps.

Utilization currently includes about $47.8 million of debt and $200,000 of letters of credit, according to a company news release.

The facility matures on Dec. 19, 2018.

The company said it currently has about $12 million of cash on hand.

Earthstone Energy completed its acquisition of Lynden Energy on May 18. The oil and natural gas companies are based in Denver and Vancouver, B.C., respectively.

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