Item 1.01 Entry into Material Definitive Agreement.
Credit Agreement Amendment
On June 9, 2020, Contango Oil & Gas Company (the “Company”) entered into the Second Amendment (the “Credit Agreement Amendment”) to its Credit Agreement, dated as of September 17, 2019, by and among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto. The Credit Agreement Amendment provides for, among other things, (i) a fifty (50) basis point increase in the applicable margin at each level of the borrowing base utilization-based pricing grid, (ii) a reduction of the borrowing base to $95.0 million on the effective date of the Credit Agreement Amendment, as well as further $10.0 million automatic borrowing base reductions on each of June 30, 2020 and September 30, 2020, (iii) the suspension of testing the current ratio financial covenant until the fiscal quarter ending March 31, 2022, (iv) the implementation of an accounts payable aging covenant that prohibits the Company’s accounts payable from remaining outstanding for longer than 90 days (subject to certain exceptions), (v) the implementation of certain anti-cash hoarding provisions, including a weekly mandatory prepayment requirement with respect to a consolidated cash balance in excess of $5.0 million and a condition precedent to borrowing, (vi) an increase in the minimum mortgaged total value of proved borrowing base properties from 85% to 90%, (vii) certain reporting and delivery requirements in connection with the anti-cash hoarding provisions and accounts payable covenant, (viii) certain modifications to the Company’s minimum hedging covenant favorable to the Company and (ix) certain other administrative changes to reflect the administrative agent’s policies on EEA and UKbail-in provisions. As of March 31, 2020, the Company had approximately $82.768 million outstanding under the Credit Agreement and $1.881 million in an outstanding letter of credit.
The foregoing description of the Credit Agreement Amendment is qualified in its entirety by reference to such Credit Agreement Amendment, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.
Item 2.02 Results of Operations and Financial Condition.
On June 15, 2020, the Company issued a press release announcing certain operational updates, including the company’s first quarter 2020 production. A copy of the press release is attached hereto as Exhibit 99.1.
As provided in General Instruction B.2. of Form 8-K, the information furnished pursuant to Item 2.02 in this report on Form 8-K (including the press release attached as Exhibit 99.1 incorporated by reference in this report) 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, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 2.03 Creation of Direct Financial Obligation or an Obligation underan Off-Balance Sheet Arrangement of a Registrant.
The information regarding the Credit Agreement Amendment set forth in Item 1.01 of this Current Report onForm 8-K is incorporated by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| * | Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish copies of any of the omitted schedules upon request by the Securities and Exchange Commission. |
