American Energy – Permian amends leverage limits of revolving facility

By Susanna Moon

Chicago, Jan. 8 – American Energy – Permian Basin, LLC, an affiliate of American Energy Partners, LP, said it amended the maintenance covenants in its revolving credit facility.

The company amended the leverage requirements as follows:

• Suspended the leverage ratio requirement for the 2014 fourth quarter;

• Increased the leverage ratio requirement to 5.75 times from 5.25 times in the 2015 first quarter; and

• Lowered the required ratio 0.25 times each subsequent quarter until the 2016 first quarter, when the ratio will remain constant at 4.75 times, no change from current, until maturity of the facility.

The company also adjusted the annualization formula for the calculation of consolidated EBITDAX for purposes of the leverage ratio test:

• For the 2015 first quarter, consolidated EBITDAX will be annualized by multiplying the 2015 first quarter by four;

• For the 2015 second quarter, the consolidated EBITDAX for the six-month period ending June 30, 2015 will be annualized by multiplying by two;

• For the 2015 third quarter, consolidated EBITDAX for the nine-month period ending Sept. 30, 2015 will be annualized by multiplying by 1.333; and

• After that, consolidated EBITDAX for the subsequent quarters will then revert to the standard last 12 month methodology.

The amendments will provide greater financial flexibility in 2015 in a lower oil price environment, Jeffrey L. Mobley, the company’s chief financial officer, said in a company press release.

“Our strong oil and natural gas hedging position for 2015, which combined with our cost reduction initiatives under way, will enable us to deliver attractive drilling returns to our stakeholders,” Mobley said.

“We are pleased to enter 2015 with more than $600 million of liquidity and we plan to closely monitor market conditions before resuming our previously planned acceleration of operated drilling in our Wolfcamp Shale play beyond the five rigs we are utilizing today.”

At the end of 2014, the company had $100 million of borrowings outstanding under its $650 million revolving credit facility.

American Energy is an Oklahoma City-based energy company involved in onshore U.S. unconventional resource plays.

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