Delta Petroleum has received commitments from its expanded bank group for a new $590 million revolving credit facility with an initial borrowing base of $295 million, an increase from the previous borrowing base of $250 million.
The increase to both the borrowing base and size of the credit facility was driven by solid reserve and production growth through drilling, primarily in the Piceance Basin, since the last redetermination of the borrowing base in April 2008. The new credit facility will have a lending group comprised of ten banks led by J.P. Morgan Securities Inc. and BMO Capital Markets. Documents are currently being finalized and the facility is expected to close no later than November 3, 2008 with a maturity date of November 1, 2011.
"We are pleased with the support from our banks for a new credit facility with a larger borrowing base, especially in this challenging credit market environment," commented Roger Parker, Delta's Chairman and CEO. "We believe the increase in our borrowing base, along with the addition of two new banks to our lending group, attests to the intrinsic value of our assets, even in a lower commodity price environment.
"We expect to announce our 2009 capital expenditure plan when we release third quarter results on November 6, 2008. We intend to maintain liquidity by funding capital expenditures out of cash flow and, accordingly, some reductions in drilling capital expenditures have recently been implemented. The Company's previously accelerated 2008 drilling program has created an inventory of wells that have been drilled but not yet completed. Therefore, even with a significant reduction in drilling capital expenditures, the Company expects to realize meaningful year-over-year production growth for the year ending December 31, 2009."
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