Vanguard Natural Resources Increases Borrowing Base
Vanguard Natural Resources reported that the borrowing base on its reserve-based credit facility has been increased to $175 million from the previous $154 million as a result of pledging additional natural gas and oil assets associated with its recent South Texas acquisition from Lewis Energy. Under its newly amended agreement, the Company currently has $46 million of borrowing capacity. This second amended agreement also includes two new lenders and extends the maturity date of the credit facility to October 1, 2012. Borrowing costs, under the LIBOR interest rate option, increased from LIBOR plus 1.5% - 2.125% to LIBOR plus 2.25% - 3.0%, depending on the amount borrowed under the facility. In addition, the debt-to-EBITDA covenant was reduced to 3.5x from 4.0x.
Mr. Richard Robert, Executive Vice President and CFO, said, "We are pleased to have this amended agreement in place and appreciate the support of our expanded bank group. Following our acquisition of additional properties in South Texas, effective July 1, 2009, we had anticipated an increase in our borrowing base and available borrowing capacity."
Mr. Robert added, "In order to protect the acquisition economics of the recent South Texas purchase, we added natural gas hedge positions upon execution of the purchase and sale agreement and assumed additional natural gas hedge positions at closing. Inclusive of the recent hedges added to our portfolio, we have a significant portion of our expected natural gas and oil production hedged at a weighted average floor price of $8.18 per mmbtu and $86.55 per barrel through 2011. Our hedging program provides us more than enough cash flow to meet our anticipated capital expenditures, debt service requirements and distributions. Although our amended credit facility expands our borrowing capacity, absent additional acquisitions, it is our intent to continue to use excess cash flow to reduce our outstanding debt."