Matador unit lifts revolver cap to $500 million; borrowing base higher

By Susanna Moon

Chicago, Oct. 5 - MRC Energy Co., a wholly owned subsidiary of Matador Resources Co., amended its senior secured revolving credit facility due Dec. 29, 2016, lifting the facility cap to $500 million from $400 million.

Under the terms, the borrowing base is now $200 million, up from $125 million.

The company amended the revolving credit agreement on Sept. 28 with Royal Bank of Canada as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

Borrowings under the agreement are guaranteed by the company and secured by mortgages on substantially all of the company's oil and natural gas properties and by the equity interests of all of MRC Energy Co.'s wholly owned subsidiaries, which are also guarantors.

Various commodity hedging agreements with RBC and Comerica Bank are also secured by the collateral and guaranteed by the company and the subsidiaries of MRC Energy Co.

The lenders will set the borrowing base semiannually based on the estimated value of the company's proven oil and natural gas reserves.

Both the company and the administrative agent may request an unscheduled redetermination of the borrowing base once between scheduled redetermination dates.

Interest on the loans ranges from Libor plus 175 basis points to 325 bps, based on the amounts borrowed. The unused fee ranges from 37.5 bps to 50 bps.

As of Thursday, the company had $106 million in borrowings outstanding under the agreement, about $1.1 million in outstanding letters of credit issued and about $92.9 million available for additional borrowings.

Other loan terms

The company must maintain a ratio of at least 1 times for its consolidated total current assets plus the unused availability under the agreement divided by consolidated total current liabilities. The company's debt-to-EBITDA ratio may not be more than 4 times.

The covenants also limit the company's ability to incur debt or grant liens on any of its assets; enter into commodity hedging agreements or interest rate agreements; declare or pay dividends, distributions or redemptions; merge or consolidate; make any loans or investments; engage in transactions with affiliates; and engage in certain asset dispositions, including a sale of all or substantially all of the company's assets.

Matador is an oil and gas company based in Dallas.

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