Business Context and Reporting Period
Company: Matador Resources Company
Filing Type: Form 8-K (Current Report)
Date of Report: September 28, 2012
Event: Entry into a Material Definitive Agreement (Amended and Restated Senior Secured Revolving Credit Agreement).
Key Financial Metrics and Debt Structure
The filing details a restructuring of the Company's credit facility rather than reporting operational financial results (revenue, profit, or cash flow) for a specific period.
| Metric | Previous Value | New Value |
|---|---|---|
| Maximum Facility Amount | $400 million | $500 million |
| Borrowing Base | $125 million | $200 million |
| Outstanding Borrowings (as of Oct 4, 2012) | N/A | $106 million |
| Outstanding Letters of Credit (as of Oct 4, 2012) | N/A | ~$1.1 million |
| Available Borrowing Capacity (as of Oct 4, 2012) | N/A | ~$92.9 million |
Interest Rates: Base rate plus 0.75% to 2.25% or Eurodollar rate plus 1.75% to 3.25%.
Commitment Fee: 0.375% to 0.50% on unused portion.
Maturity Date: December 29, 2016.
Material Changes Versus Prior Period
- Facility Expansion: The maximum facility size increased by $100 million.
- Borrowing Base Increase: The borrowing base, determined by the value of proved oil and natural gas reserves, increased by $75 million (from $125 million to $200 million).
- Administrative Agent: Royal Bank of Canada was named as the administrative agent.
- Collateral: Borrowings are secured by mortgages on substantially all oil and natural gas properties and equity interests of subsidiaries.
Guidance, Covenants, and Risks
Financial Covenants:
- Current Ratio: Must maintain a ratio of 1.0 or greater (defined as current assets plus unused availability divided by current liabilities), measured quarterly starting March 31, 2013.
- Debt to EBITDA: Must maintain a ratio of 4.0 or less (total debt divided by rolling four-quarter EBITDA).
Restrictive Covenants: The agreement limits the Company's ability to incur additional indebtedness, grant liens, enter into hedging agreements, pay dividends, merge, make investments, or engage in certain asset dispositions without lender consent.
Risks: The agreement includes customary events of default that could allow lenders to accelerate the maturity of borrowings. The borrowing base is subject to semi-annual redetermination (May 1 and November 1) based on reserve values.
Key Facts for Investor Verification
- Verify the Company's compliance with the new 4.0 Debt-to-EBITDA covenant and 1.0 Current Ratio requirement.
- Monitor the semi-annual borrowing base redeterminations to ensure the $200 million base is maintained based on reserve valuations.
- Confirm the impact of the increased facility on future capital expenditure plans and liquidity management.
- Review the specific terms of the commodity hedging agreements secured under this new credit facility.