Business Context and Reporting Period
This Form 8-K was filed by Midstates Petroleum Company, Inc. on November 21, 2018, reporting events occurring on November 15, 2018. The filing details the entry into a material definitive agreement regarding the company's senior secured credit facility.
Key Financial Metrics and Covenants
The filing does not report specific revenue, profit, or cash flow figures for a fiscal period. Instead, it outlines financial covenants established under the Second Amendment to the Senior Secured Credit Agreement:
- Liquidity Requirement: The company must maintain liquidity of at least $50,000,000 to make dividends or equity repurchases.
- Debt Ratio: The ratio of total net indebtedness to EBITDAX for the most recent four fiscal quarters must not exceed 1.50:1.00.
- Default Status: No default or event of default may exist under the credit agreement.
Material Changes
The primary material change is the execution of the Second Amendment to the Senior Secured Credit Agreement dated November 15, 2018. This amendment modifies the terms of the original agreement dated October 21, 2016, specifically granting the company the ability to:
- Make dividends and distributions.
- Repurchase its equity interests in cash, provided all repurchased interests are immediately retired.
Guidance, Outlook, and Risks
Management commentary is limited to the disclosure of the amendment's terms. The filing references a press release issued on November 21, 2018, for further details. No specific forward-looking guidance on production, pricing, or earnings is included in this text. The primary risk highlighted is the strict adherence to the liquidity and leverage covenants required to execute capital return activities.
Investor Verification Checklist
- Verify the company's current liquidity position to ensure it meets the $50,000,000 threshold for potential buybacks.
- Confirm the most recent four-quarter EBITDAX and total net indebtedness to validate compliance with the 1.50:1.00 leverage ratio.
- Review the full text of the Second Amendment (Exhibit 10.1) for additional covenants or restrictions not summarized in the 8-K.
- Check the November 21, 2018 press release (Exhibit 99.1) for management's strategic intent regarding the new distribution capabilities.