APPROACH RESOURCES INC. (NASDAQ:AREX) Files An 8-K Entry into a Material Definitive AgreementItem 2.03 Entry into a Material Definitive Agreement.
On December 21, 2017, Approach Resources Inc., as borrower (the “Company”), and certain of its subsidiaries, as guarantors, entered into the fourth amendment (the “Fourth Amendment”) to its Amended and Restated Credit Agreement originally dated as of May7, 2014, by and among the Company and its subsidiary guarantors, JPMorgan Chase Bank, N.A., as the Administrative Agent, and each of the Lenders party thereto (as amended, the “Credit Agreement”).
The Fourth Amendment, among other things:
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(a) |
extends the maturity date of the Credit Agreement from May 7, 2019, to May 7, 2020; |
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(b) |
reaffirmsthe borrowing base at $325 million; |
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(c) |
revises the Company’s minimum permitted ratio of EBITDAX to consolidated cash interest expense to (i)1.50 to 1.00 as of the last day of any fiscal quarter through December31, 2017, (ii)thereafter 1.75 to 1.00 as of the last day of any fiscal quarter throughDecember31, 2018, (iii) thereafter 2.25 to 1.00 as of the last day of any fiscal quarter throughDecember31, 2019, and (iv) 2.50 to 1.00 as of the last day of any fiscal quarter thereafter; |
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(d) |
adds a maximum permitted ratio of total debt to EBITDAX of (i) 5.00 to 1.00, as of the last day of any fiscal quarter from March 31, 2019 , through June 30, 2019, (ii) thereafter 4.75 to 1.00 as of the last day of any fiscal quarter through December 31, 2019, and (iii) 4.00 to 1.00 as of the last day of any fiscal quarter thereafter; |
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(e) |
requires unanimous Lender approval to waive or amend the maximum permitted ratio of total debt to EBITDAX with respect to the fiscal quarter ending March 31, 2019; |
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(f) |
increases the interest rate margin applicable to loans by 50 basis points; |
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(g) |
increases the minimum percentage of mortgaged proved oil and gas properties from 90% to 95%; and |
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(h) |
requires the Company to enter into hedges, not later than February 5, 2018, covering 50% of the Company’s reasonably anticipated 2018 oil and gas production. |
The foregoing description of the Fourth Amendment is qualified in its entirety by the complete text of the agreement filed as Exhibit 10.1 to this Current Report on Form 8-K, which is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation.
The disclosure provided under Item 2.03 of this Form 8-K is incorporated by reference into this Item 2.03 as if fully set forth herein.
Item 2.03 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 20, 2017, to the terms of the previously disclosed Stockholders Agreement, dated as of January 27, 2017, by and among the Company, Wilks Brothers, LLC and SDW Investments, LLC (the “Stockholders Agreement”), James H. Brandi, a member of the Company’s board of directors (the “Board”), delivered the Company a conditional notice of resignation, effective December 31, 2017. The resignation will become effective December31, 2017, in the event that Wilks Brothers, LLC and SDW Investments, LLC own 40% or more of the outstanding common stock of the Company as of such date.
to the Stockholders Agreement, the Board has approved, conditioned on the effectiveness of Mr. Brandi’s resignation on December 31, 2017, a reduction in size from eight members to seven members.
Mr.Brandi is currently a member of the Company’s Audit Committee and Compensation Committee. Mr. Brandi’s resignation was to the terms of the Stockholders Agreement, and was not the result of any disagreement with the Company.
Item 2.03Financial Statements and Exhibits.
(d)Exhibits.
Approach Resources Inc ExhibitEX-10.1 2 arex-ex101_6.htm EX-10.1 arex-ex101_6.htm Exhibit 10.1 FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT This Fourth Amendment to Amended and Restated Credit Agreement (this “Fourth Amendment”) is effective as of December 21,…To view the full exhibit click here
About APPROACH RESOURCES INC. (NASDAQ:AREX)
Approach Resources Inc. is an independent energy company. The Company is focused on the exploration, development, production and acquisition of unconventional oil and gas reserves in the Midland Basin of the greater Permian Basin in West Texas. The Company’s business segment is the exploration and production of oil, natural gas liquids (NGLs) and natural gas. The Company’s assets cover an area of approximately 126,000 net acres. Its proved reserves are approximately 166.6 million barrels of oil equivalent. The Company’s proved reserves are primarily located in Crockett and Schleicher Counties, Texas. The Company’s Permian Basin acreage is known as the Project Pangea. The Company owns and operates approximately 800 producing oil and gas wells in the Permian Basin. The Company, through a joint venture with EnCana Oil & Gas (USA) Inc., holds interests in the approximately 3,000 gross acre project in Limestone and Robertson Counties, Texas, in the East Texas Cotton Valley trend.
