Item 1.01 Entry into a Material Definitive Agreement.
On June 17, 2020, Ring Energy, Inc. (the "Company"), as borrower, entered into a
second amendment (the "Amendment") to its amended and restated credit agreement
dated April 9, 2019 ("Credit Facility") with Truist Bank, successor by merger to
SunTrust Bank, as lender, issuing bank and administrative agent for several
banks and other financial institutions and lenders thereto. The Amendment
reduces the Company's borrowing base under the Credit Facility from $425.0
million to $375.0 million and, to the extent there is a Borrowing Base
Deficiency, provides for the payment of such deficiency in five equal
installments, each equal to one-fifth of such Borrowing Base Deficiency, the
first of which is due on the thirtieth day following the Amendment Effective
Date (as defined in the Amendment). As of May 31, 2020, the Company had
approximately $388 million outstanding on the Credit Facility; however, through
the use of hedge revenue and surplus capital, the Company has reduced the
current outstanding balance to $375 million.
Additionally, the Amendment, among other things, (i) requires a mandatory
prepayment of borrowings to the extent the Consolidated Cash Balance (as defined
in the Amendment) exceeds $20.0 million, which such Consolidated Cash Balance
excludes certain amounts relating to the Company's payroll and benefits, working
interest and royalty payments to third parties, escrow and indemnity holdback
obligations in connection with purchase and sale agreements, and equity
contributions and issuances of capital stock by the Company; (ii) restricts the
Company from making borrowings under the Credit Facility if the Company has or,
after giving effect to the borrowing, will have a Consolidated Cash Balance in
excess of $20.0 million; (iii) amends the Leverage Ratio covenant to not greater
than 4.75 to 1.0 as of the last day of the fiscal quarter ending September 30,
2020; (iv) increases the required mortgage coverage on the total value of the
oil and gas properties included in the Company's most recent reserve report from
80% to 90%; and (v) increases the margin and commitment fee on loans.
As previously announced, the Company entered into a purchase and sale agreement
to sell its Delaware Basin assets located in Culberson and Reeves Counties,
Texas. The Amendment permits the sale of the Company's Delaware Basin assets,
provided that certain conditions are met upon commencement of the sale
(including, among other conditions, an automatic reduction in the borrowing base
by $20.0 million and the prepayment of the principal amount of $20.0 million).
The Company projects the sale to close on or before the end of July.
A copy of the Amendment is filed as Exhibit 10.1 to this Current Report on Form
8-K and is incorporated by reference herein. The description of the Amendment in
this Current Report on Form 8-K is a summary and is qualified in its entirety by
reference to the complete text of the Amendment.
Item 2.02 Results of Operations and Financial Condition
On June 17, 2020, the Company issued a press release announcing the Amendment.
The press release is furnished as Exhibit 99.1 to this Current Report on Form
8-K.
Item 2.03 Creation of a Direct Financial Obligation
Please see the disclosure under Item 1.01 of this Current Report on Form 8-K,
which disclosure is incorporated into this Item 2.03.
Item 7.01 Regulation FD Disclosure
The information set forth under Item 2.02 of this Current Report on Form 8-K is
hereby incorporated in Item 7.01 by reference.
On June 17, 2020, the Company made available on its website a presentation
entitled "Corporate Presentation", which can be accessed by going to
www.ringenergy.com , selecting the "Investors" tab, and then selecting the
"Events and Presentations" tab. A copy of the presentation is furnished as
Exhibit 99.2 to this Current Report on Form 8-K, which is incorporated by
reference herein.
The information in Item 2.02 and Item 7.01 of this Current Report on Form 8-K,
including the attached Exhibit 99.1 and Exhibit 99.2, is being furnished
pursuant to Item 2.02 and Item 7.01 and shall not be deemed to be "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise subject to the liabilities of that section, and
shall not be deemed to be incorporated by reference into any of the Company's
filings under the Securities Act of 1933, as amended, or the Exchange Act,
whether made before or after the date hereof and regardless of any general
incorporation language in such filings, except to the extent expressly set forth
by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Title of Document
10.1 Second Amendment to Amended and Restated Credit Agreement, dated June
17, 2020, by and among Ring Energy, Inc., the lenders party thereto, and
Truist Bank, as administrative agent for the lenders and as issuing
bank.
99.1 Press Release dated June 17, 2020.
99.2 Corporate Presentation dated June 17, 2020.
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