Vanguard Natural Resources reported that the borrowing base on its reserve-based credit facility has been set at $154 million in conjunction with its semi-annual redetermination as per the terms of the credit agreement. No other terms under the facility changed as a result of the redetermination. The borrowing base was previously set at $175 million.
Mr. Richard Robert, Executive Vice President and CFO, added, "We are pleased to have this redetermination completed and appreciate the support of our bank group in getting this resolved in this difficult credit environment. We now have clarity on the financial parameters we have to work within and can plan accordingly. As we stated on our first quarter earnings press release and conference call, we had anticipated a reduction in our borrowing base given the precipitous decline in commodity prices since our last semi-annual redetermination. We intend to continue to manage our capital expenditures well within these revised parameters in order to maximize the productivity of our assets and preserve our distributable cash flow. Currently, we have approximately $1.1 million of cash and $134 million outstanding on our reserve-based credit facility."
Mr. Robert added, "Our hedging program consists of derivative contracts at commodity prices significantly higher than the current market which provides us more than enough cash flow to meet our anticipated capital expenditures, debt service requirements and meet distributions at current levels. However, in the future, it is possible that we will be subject to additional decreases in our borrowing base availability. In that event, if our outstanding borrowings under the reserve-based credit facility exceed 90% of the reduced borrowing base, we would be required to suspend distributions to our unitholders until such time as we have reduced our borrowings to below the 90% threshold. As a result, it is our intention to utilize our excess cash flow, after payments of distributions, debt service and capital expenditures, to reduce our borrowings under our reserve-based credit facility."
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