Chaparral Energy draws $90 million, makes borrowing base deficiency

By Sarah Lizee

Olympia, Wash., April 6 – Chaparral Energy, Inc. provided notice on April 2 to lenders to borrow $90 million under its credit agreement, according to an 8-K filing with the Securities and Exchange Commission.

The borrowing was made by the company as a precautionary measure in order to increase its cash position.

After receipt of the borrowing proceeds, the company’s total debt under the credit agreement increased to $250 million, while its total cash on hand increased to $109.9 million.

All amounts drawn under the credit agreement may be used for working capital, general corporate or other purposes permitted by the credit agreement.

Chaparral Energy said that in the evening on April 2, the lenders notified the company that they had exercised their right to make an interim redetermination of the company’s borrowing base. The borrowing base was decreased to $175 million from $325 million effective April 3.

As a result of the borrowing base redetermination, the borrowing, once funded, created a borrowing base deficiency in the amount of $75 million under the credit agreement.

The company will be required to notify the administrative agent on or before April 16 of the action that the company proposes to take to eliminate the borrowing base deficiency, which action may include repaying the amount of the borrowing base deficiency in six equal monthly installments, with the first payment of $12.5 million expected to occur on or before May 2.

No premium or penalty would be charged with respect to those repayments.

If the company is unable to repay the amount of the borrowing base deficiency within the time period required under the credit agreement, an event of default would occur under the credit agreement.

Chaparral is an Oklahoma City-based independent oil and natural gas exploration and production company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.