Warren Resources gets $300 million five-year revolving facility

By Marisa Wong

Madison, Wis., Dec. 16 - Warren Resources, Inc. entered into an up to $300 million second amended and restated credit agreement on Dec. 15, according to an 8-K filed Friday with the Securities and Exchange Commission.

The five-year credit agreement provides for a revolving credit facility for up to the lesser of (a) $300 million, (b) the borrowing base and (c) the draw limit requested by the company.

The initial borrowing base is $130 million. The maximum amount available is subject to semiannual 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.

The facility, which is due on Dec. 15, 2016, is secured by substantially all of Warren's oil and gas. Wholly owned subsidiaries Warren Resources of California, Inc. and Warren E&P, Inc. are the guarantors.

Interest is equal to Libor plus 175 basis points to Libor plus 275 bps, depending on the borrowing base.

The facility contains certain covenants, which include maintaining a minimum current ratio of at least 1.0 to 1.0 and a minimum annualized consolidated EBITDAX to net interest expense of not less than 2.5 to 1.0.

The credit agreement also contains other usual and customary conditions, and the facility is subject to customary events of default.

The facility will be used primarily for working capital, capital expenditures, repayment of outstanding debt, acquisitions and other general corporate purposes.

"The credit facility provides us with cost-effective financing to assist and support the funding of our capital expenditure budget for 2012 and beyond. This includes the development of our Wilmington Field oil projects in California and our Atlantic Rim CBM gas project in Wyoming." said chief financial officer Timothy A. Larkin in a company news release.

BMO Capital Markets Inc. and U.S. Bank NA are the joint lead arrangers and bookrunners. Bank of Montreal is the administrative agent, and U.S. Bank is the syndication agent. Capital One, NA is the documentation agent.

Warren is a New York-based oil and gas exploration and development company.

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