| Chapter 11 Proceedings | Chapter 11 Cases Commencement of Chapter 11 Cases On February 1, 2017 , the Predecessor and certain subsidiaries (such subsidiaries, together with the Predecessor, the “Debtors”) filed voluntary petitions for relief (collectively, the “Bankruptcy Petitions” and, the cases commenced thereby, the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Chapter 11 Cases were administered under the caption “In re Vanguard Natural Resources, LLC, et al.” The subsidiary Debtors in the Chapter 11 Cases were the Successor; VNG; VO; VNRH; ECFP; ERAC; ERAC II; ERUD; ERUD II; ERAP; ERAP II; EAC; and EOC. Reorganization Process We operated our business as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. To assure ordinary course operations during the pendency of the Chapter 11 Cases, the Bankruptcy Court granted certain relief requested by the Debtors, including, among other things and subject to the terms and conditions of such orders, authorizing us to maintain our existing cash management system, to secure debtor-in-possession financing, to remit funds we hold from time to time for the benefit of third parties (such as royalty owners), and to pay the prepetition claims of certain of our vendors that hold liens under applicable non-bankruptcy law. This relief is designed primarily to minimize the effect of bankruptcy on the Company’s operations, customers and employees. For goods and services provided following the Petition Date, we paid vendors in full under normal terms. Subject to certain exceptions provided for in section 362 of the Bankruptcy Code, all judicial and administrative proceedings against us or our property were automatically enjoined, or stayed, as of the Petition Date. In addition, the filing of new judicial or administrative actions against us or our property for claims arising prior to the Petition Date were automatically enjoined. This prohibited, for example, our lenders or noteholders from pursuing claims for defaults under our debt agreements and our contract counterparties from pursuing claims for defaults under our contracts. Accordingly, all of our prepetition liabilities and obligations were settled or compromised under the Bankruptcy Code through our Chapter 11 Cases. Our operations and ability to execute our business remain subject to the risks and uncertainties described in Item 1A, “Risk Factors” in our 2016 Annual Report. These include risks and uncertainties arising as a result of our Chapter 11 Cases, and the number and nature of our outstanding Common Stock (as defined below) and shareholders, assets, liabilities, officers and directors could change materially because of our Chapter 11 cases. In addition, the descriptions of our prepetition operations, properties and capital plans included in this Quarterly Report on Form 10-Q may not accurately reflect our post-emergence operations, properties and capital plans. Creditors’ Committees — Appointment & Formation (a) Restructuring Support Parties Prior to the filing of the Bankruptcy Petitions, on February 1, 2017 , we entered into a restructuring support agreement (the “Initial RSA”). The Debtors entered into the Initial RSA with (i) certain holders (the “Consenting 2020 Noteholders”) constituting at the time of signing approximately 52% of the 7.875% Senior Notes due 2020 (the “Senior Notes due 2020”); (ii) certain holders (the “Consenting 2019 Noteholders and, together with the Consenting 2020 Noteholders, the “Consenting Senior Noteholders”) constituting at the time of signing approximately 10% of the 8.375% Senior Notes due 2019 (the “Senior Notes due 2019,” and all claims arising under or in connection with the Senior Notes due 2020 and Senior Notes due 2019, the “Senior Note Claims”); and (iii) certain holders (the “Consenting Second Lien Noteholders” and, Consenting Senior Noteholders), constituting at the time of signing approximately 92% of the 7.0% Senior Secured Second Lien Notes due 2023 (the “Old Second Lien Notes,” and all claims and obligations arising under or in connection with the Second Lien Notes, the “Second Lien Note Claims”). On June 6, 2017, certain lenders under the Company’s Third Amended and Restated Credit Agreement, dated as of September 30, 2011 (as amended from time to time, the “Reserve-Based Credit Facility”), among them Citibank, N.A., as administrative agent (such lenders, the “Consenting RBL Lenders” and, together with the Consenting Senior Noteholders and Consenting Second Lien Noteholders, the “Restructuring Support Parties”), became parties to the amended Restructuring Support Agreement dated as of May 23, 2017 (the “Amended RSA”). (b) Official Unsecured Creditors Committee On February 14, 2017, the Office of the United States Trustee appointed the Official Committee of Unsecured Creditors (the “Unsecured Creditors Committee”) pursuant to section 1102 of the Bankruptcy Code. The Unsecured Creditors Committee consists of the following three members: (i) UMB Bank, National Association, as Indenture Trustee; (ii) Wilmington Trust, National Association, as Indenture Trustee; and (iii) Encana Oil & Gas (USA), Inc. (c) Ad Hoc Equity Committee On March 16, 2017, we filed a motion with the Bankruptcy Court disclosing a Stipulation and Agreed Order entered into on March 15, 2017, by and between the Debtors and certain unaffiliated holders of our Preferred Units and common units (the “Ad Hoc Equity Committee”) pursuant to which the Debtors and the Ad Hoc Equity Committee agreed, among other things, that professionals for the Ad Hoc Equity Committee would be funded by the Debtors’ estates for services performed within a defined scope and subject to agreed caps on fees and expenses as described in the Stipulation and Agreed Order. Magnitude of Potential Claims On March 16, 2017, the Debtors filed with the Bankruptcy Court Schedules and Statements, as defined below, setting forth, among other things, the assets and liabilities of the Debtors, subject to the assumptions filed in connection therewith. The Schedules and Statements may be subject to further amendment or modification after filing. Certain holders of prepetition claims were required to file proofs of claim by their respective specified deadlines for filing certain proofs of claims in the Debtors’ Chapter 11 cases. Differences between amounts scheduled by the Debtors and claims by creditors have been and are being investigated and resolved through the claims resolution process. The claims resolution process continues after our emergence from bankruptcy. Accordingly, the ultimate number and amount of allowed claims is not presently known, nor can the ultimate recovery with respect to allowed claims be reasonably estimated. Schedules and Statements — Claims & Claims Resolution Process To the best of our knowledge, we notified all of our known current or potential creditors that the Debtors filed Chapter 11 cases. On March 16, 2017, each of the Debtors filed a Schedule of Assets and Liabilities and Statement of Financial Affairs (collectively, the “Schedules and Statements”) with the Bankruptcy Court. These documents set forth, among other things, the assets and liabilities of each of the Debtors, including executory contracts to which each of the Debtors was a party, were subject to the qualifications and assumptions included therein, and were subject to amendment or modification over the course of the Chapter 11 Cases. Many of the claims identified in the Schedules and Statements are listed as disputed, contingent or unliquidated. In addition, there were variances between the amounts for certain claims listed in the Schedules and Statements and the amounts claimed by our creditors. Such variances, as well as other disputes and contingencies will be investigated and resolved through the claims resolution process in our Chapter 11 Cases. Pursuant to the Federal Rules of Bankruptcy Procedure, creditors who wished to assert prepetition claims against us and whose claim (i) was not listed in the Schedules and Statements or (ii) was listed in the Schedules and Statements as disputed, contingent, or unliquidated, were required to file a proof of claim with the Bankruptcy Court prior to April 30, 2017 for non-governmental creditors and July 31, 2017 for governmental creditors As of July 31, 2017, approximately 1,040 claims totaling $19.5 billion have been filed with the Bankruptcy Court against the Debtors by approximately 800 claimants. In addition, creditors who have already filed claims may amend or modify their claims in ways we cannot reasonably predict. The amounts of these additional claims and/or amendments or modifications to claims already filed may be material. We expect the process of resolving claims filed against the Debtors to be complex and lengthy. We plan to investigate and evaluate all filed claims in connection with our Plan. As part of the process, we will work to resolve differences in amounts scheduled by the Debtors and the amounts claimed by creditors, including through the filing of objections with the Bankruptcy Court where necessary. Through the claims resolution process as set forth in the Plan, we have identified, and we expect to continue to identify, claims that we believe should be disallowed by the Bankruptcy Court because they are duplicative, have been later amended or superseded, are without merit, are overstated or for other reasons. We have filed and will file objections with the Bankruptcy Court as necessary for the claims we believe should be disallowed. Claims that have been allowed or we believe are allowable are reflected in “Liabilities Subject to Compromise.” As discussed above, the claims resolution process continues following our emergence from the Chapter 11 Cases. Accordingly, the ultimate number and amount of claims that will be allowed against the Debtors is not presently known, nor can the ultimate recovery with respect to allowed claims be reasonably estimated. Restructuring Support Agreement The Initial RSA and Amended RSA set forth, subject to certain conditions, the commitment of the Debtors and the Restructuring Support Parties to support a comprehensive restructuring of the Debtors’ long-term debt (the “Restructuring Transactions”) to be effectuated through one or more plans of reorganization (the “Plan”) to be filed in the Chapter 11 Cases. A summary of the restructuring transactions agreed to by the Restructuring Support Parties and to be effectuated through the Plan is included below. Capitalized terms used but not defined in this Report on Form 10-Q are defined in the Initial RSA and Amended RSA. Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code The Initial RSA contemplated the following Restructuring Transactions outlined below: • Allowed claims (“First Lien Claims”) under the Reserve-Based Credit Facility to be paid down with $275.0 million in cash from the proceeds of the Senior Note Rights Offering and Second Lien Investment and to be paid down further with proceeds from non-core asset sales or other available cash. The remaining First Lien Claims to participate in a new Company $1.1 billion reserve-based lending facility (the “New Facility”) on terms substantially the same as the Reserve-Based Credit Facility and provided by the same lenders under the Reserve-Based Credit Facility. • Allowed Second Lien Claims to receive new notes in the current principal amount of approximately $75.6 million , substantially similar to the current Second Lien Notes but providing a 12 -month later maturity and a 200 basis point increase to the interest rate. • Each holder of an allowed Senior Note Claim to receive (a) its pro rata share of 97% of the ownership interests in the reorganized Company (the “New Equity Interests”) and (b) the opportunity to participate in the Senior Note Rights Offering. • If the Plan was accepted by the classes of the general unsecured claims and holders of the Preferred Units, the holders of the Preferred Units to receive their pro rata share of (a) 3% of the New Equity Interests and (b) three and a half year warrants for 3% of the New Equity Interests. • A $255.75 million Senior Note Rights Offering to holders of Senior Note Claims to purchase New Equity Interests at an agreed discount. Certain holders of the Senior Note Claims to execute a backstop commitment agreement to fully backstop the Senior Note Rights Offering. • The Second Lien Investors to purchase $19.3 million in New Equity Interests at a 25% discount to the Company’s total enterprise value. The initial terms also provided for the establishment of a management incentive plan at the Company under which 10% of the New Equity Interests would have been reserved for grants made from time to time to the officers and other key employees of the respective reorganized entities. The initial RSA obligated the Debtors and the Restructuring Support Parties to, among other things, support and not interfere with consummation of the Restructuring Transactions and, as to the Restructuring Support Parties, vote their claims in favor of the Plan. Second Amended Joint Plan of Reorganization The following is a summary of the material terms of the Second Amended Joint Plan of Reorganization which was filed on May 31, 2017 and agreed to by the Restructuring Support Parties to the Amended RSA. This summary highlights only certain substantive provisions of this iteration of the Plan and is not intended to be a complete description of that iteration of the Plan. Capitalized terms used but not defined in this Report on Form 10-Q are defined in the Second Amended Joint Plan of Reorganization. The Second Amended Joint Plan of Reorganization provided for: • The Rights Offering, consisting of (i) a $10.2 million rights offering to be conducted in reliance upon the exemption from registration under the Securities Act provided in section 1145 of the Bankruptcy Code, pursuant to which Holders of Senior Notes Claims are entitled to purchase equity in Reorganized VNR Finance, (ii) a $117.7 million rights offering to be conducted in reliance upon the exemption from registration under the Securities Act provided in section 4(a)(2) of the Securities Act, pursuant to which Accredited Investor Eligible Holders of Senior Notes Claims are entitled to purchase equity in Reorganized VNR Finance, and (iii) a $127.9 million equity investment, pursuant to which the Commitment Parties will purchase equity in Reorganized VNR Finance. The Rights Offering Shares equal 84.8% of the New Common Stock, subject to dilution by the GUC Rights Offering, the New Management Incentive Plan, the New Common Stock issuable upon exercise of the New Warrants, and the New Common Stock issued to Encana; • A fully committed $19.3 million equity investment from the Second Lien Investors for shares of New Common Stock equal to 6.4% of the aggregate New Common Stock as of the Effective Date and subject to dilution as set forth in the Plan; • A full recovery for Holders of Allowed Lender Claims consisting of (i) cash in the amount of the Credit Agreement Interest plus (ii) cash in the amount of its Pro Rata share of the Glasscock Sale Proceeds. In addition, each such Holder shall receive treatment under either Option 1 or Option 2 below. If the Holder elects (or is deemed to elect, upon its execution of the Exit Facility Credit Agreement) Option 1 on its Ballot, it shall also receive its Option 1 Pro Rata Share of (i) the Lender Paydown, (ii) the Exit Revolving Loans, and (iii) the Exit Term A Loans. If such Holder elects Option 2 on its Ballot, it shall also receive its Option 2 Pro Rata Share of the Exit Term B Loans; • The issuance of new notes to Holders of Allowed Second Lien Notes Claims in an aggregate principal amount of approximately $78.1 million , plus accrued and unpaid post-petition interest through the Effective Date; • The GUC Rights Offering is in an amount equal to 21.9% of the total amount of all Allowed General Unsecured Claims and Allowed Encana Claims; provided that in no event shall the GUC Rights Offering Amount exceed (a) with respect to Holders of Allowed General Unsecured Claims, $7.7 million (such amount to be reduced, pro rata, for the proportion of General Unsecured Claims for which an election to participate in the GUC Cash Pool was made) and (b) with respect to Encana, 21.9% of the amount of the Allowed Encana Claims (such amount to be reduced to reflect the same final rate, as a percentage of Allowed Claims, at which Holders of Allowed General Unsecured Claims electing to receive distributions from the GUC Equity Pool are able to subscribe for in the GUC Rights Offering in accordance with the GUC Rights Offering Procedures); • With respect to holders of VNR Preferred Units, on the Effective Date, except to the extent that a Holder of VNR Preferred Units agrees to less favorable treatment of its VNR Preferred Units, and subject to the terms of the Restructuring Transactions, all VNR Preferred Units shall be cancelled and shall be of no further force and effect, whether surrendered for cancellation or otherwise, and in full and final satisfaction, settlement, release, and discharge of and in exchange for each VNR Preferred Unit, each Holder of VNR Preferred Units shall receive: (a) if Class 6, Class 7, Class 8, Class 9, and Class 12 are each determined to have voted to accept the Plan in accordance with the Bankruptcy Code, such Holder’s Pro Rata share of (i) the VNR Preferred Unit Equity Distribution and (ii) VNR Preferred Unit New Warrants; or (b) if Class 6, Class 7, Class 8, Class 9, or Class 12 is determined to have voted to reject the Plan in accordance with the Bankruptcy Code, no distribution; provided that each Holder of VNR Preferred Units shall be given the opportunity to elect to waive its recovery, in which case the VNR Preferred Unit Equity Distribution and three year VNR Preferred Unit New Warrants that such Holder would have been entitled to receive shall be cancelled and of no further effect; and • With respect to holders of VNR Common Units, on the Effective Date, except to the extent that a Holder of VNR Common Units agrees to less favorable treatment of its VNR Common Units, and subject to the terms of the Restructuring Transactions, all VNR Common Units shall be cancelled and shall be of no further force and effect, whether surrendered for cancellation or otherwise, and in full and final satisfaction, settlement, release, and discharge of and in exchange for each VNR Common Unit, each Holder of VNR Common Units shall receive: (a) if Class 6, Class 7, Class 8, Class 9, Class 12, and Class 13 are each determined to have voted to accept the Plan in accordance with the Bankruptcy Code, such Holder’s Pro Rata share of three year VNR Common Unit New Warrants; or (b) if Class 6, Class 7, Class 8, Class 9, Class 12, or Class 13 is determined to have voted to reject the Plan in accordance with the Bankruptcy Code, no distribution; provided that each Holder of VNR Common Units shall be given the opportunity to elect to waive its recovery, in which case the VNR Common Unit New Warrants that such Holder would have been entitled to receive shall be cancelled and of no further effect. Prior to the Effective Date, the Debtors were required to distribute waiver election forms to the Holders of VNR Preferred Units and VNR Common Units, pursuant to which the Holders elected to waive and decline any distribution on account of their VNR Preferred Units or VNR Common Units, as applicable. These waiver election forms set forth instructions for such Holders to either (i) electronically deliver their VNR Preferred Unit or VNR Common Unit positions through The Depository Trust Company's Automated Tender Offer Program (if the Holder held its VNR Preferred Units or VNR Common Units through a Nominee) or (ii) mark such election on the form and return the form to Prime Clerk LLC (if the VNR Preferred Units or VNR Common Units, as applicable, were held directly in the Holder’s name on the books and records of the stock transfer agent and not through a nominee). The Amended RSA obligated the Debtors and the Restructuring Support Parties to, among other things, support and not interfere with consummation of the Restructuring Transactions and, as to the Restructuring Support Parties, vote their claims in favor of the Plan. Modified Second Amended Joint Plan of Reorganization On July 18, 2017 , the Bankruptcy Court entered the Order Confirming Debtors’ Modified Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (the “Confirmation Order”), which approved and confirmed the Debtors’ Modified Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (the “Final Plan”). The Final Plan provides for the reorganization of the Debtors as a going concern and will significantly reduce long-term debt and annual interest payments of the reorganized Debtors. The following is a summary of the material modifications of the Final Plan that were made to the Second Amended Joint of Plan of Reorganization described above. Capitalized terms used but not defined in this Report on Form 10-Q are defined in the Final Plan. • the issuance to holders of the Company’s Preferred Units of such holders’ pro rata share of (i) New Common Stock and (ii) three and a half year VNR Preferred Unit New Warrants to purchase additional shares of New Common Stock at a strike price of $44.25 ; and • the issuance to the Company’s common unitholders of such holders’ pro rata share of three and a half year VNR Common Unit New Warrants to purchase shares of New Common Stock at a strike price of $61.45 , regardless of whether the holders of the Company’s common units voted to accept the Plan. The warrant strike prices were calculated based on the Company’s plan equity value of $20.00 per share of New Common Stock, which the Bankruptcy Court confirmed as part of the Plan. Unless otherwise specified, the treatment set forth in the Final Plan and Confirmation Order will be in full satisfaction of all claims against and equity interests in the Debtors, which will be discharged on the Effective Date. Other than assumed obligations, all of the Debtors’ prepetition claims and equity interests will be discharged by the Plan. Additional information regarding the classification and treatment of claims and equity interests can be found in Article III of the Final Plan. The Debtors satisfied all conditions precedent under the Final Plan and emerged from bankruptcy on August 1, 2017 as the Effective Date. The Company reorganized as a Delaware corporation named Vanguard Natural Resources, Inc. on the Effective Date. Pursuant to the Final Plan, each of the Company’s equity securities outstanding immediately before the Effective Date (including any unvested restricted units held by employees or officers of the Debtor, or options and warrants to purchase such securities) have been canceled and are of no further force or effect as of the Effective Date. Under the Final Plan, the Debtors’ new organizational documents became effective on the Effective Date. The reorganized parent’s new organizational documents authorize the company to issue new equity, certain of which was issued to holders of allowed claims pursuant to the Plan on the Effective Date. In addition, on the Effective Date, the Company entered into a registration rights agreement with certain equity holders. As of August 1, 2017, the Company had 20.1 million outstanding shares of common stock, $0.001 par value. (“Common Stock”). Emergence from Chapter 11 On the Effective Date, the Debtors substantially consummated the Plan and emerged from their Chapter 11 Cases. As part of the transactions undertaken pursuant to the Plan, the Predecessor transferred all of its membership interests in Vanguard Natural Gas, LLC (“VNG”), a Kentucky limited liability company, the Predecessor’s wholly owned first-tier subsidiary to the Successor (formerly known as VNR Finance Corp.). VNG directly or indirectly owned all of the other subsidiaries of the Predecessor. As a result of the foregoing and certain other transactions, the Successor is no longer a subsidiary of the Predecessor and now owns all of the former subsidiaries of the Predecessor. Following the end of the current fiscal year, we expect that the Predecessor will be dissolved. Following the completion of these transactions, the Company became the successor issuer to the Predecessor for purposes of and pursuant to Rule 15d-5 of the Exchange Act. Prior to the consummation of the transactions undertaken pursuant to the Plan, the Company (as VNR Finance Corp.) was the co-issuer of the Predecessor’s debt securities and did not have any independent assets or operations. As described below, the Predecessor’s Senior Notes due 2020 and Senior Notes due 2019 were cancelled pursuant to the Plan. However, the Successor issued, and its subsidiaries guaranteed, new second lien notes due 2024 in the aggregate principal amount of $80.7 million in satisfaction of certain claims of the holders of the Old Second Lien Notes co-issued by the Predecessor and Successor. Exit Facility VNG, as borrower, has entered into that certain Fourth Amended and Restated Credit Agreement dated as of August 1, 2017 (the “Exit Facility”), by and among VNG as borrower, Citibank, N.A. as administrative agent (the “Administrative Agent”) and Issuing Bank, and the lenders party thereto (the “Lenders”). Pursuant to the Credit Agreement, the lenders party thereto agreed to provide VNG with $850.0 million exit senior secured reserve-based revolving credit facility (the “Revolving Loans”). The initial borrowing base available under the Credit Agreement as of the Effective Date is $850.0 million and the aggregate principal amount of Revolving Loans outstanding under the Credit Agreement as of the Effective Date is $850.0 million . The Credit Agreement also includes an additional $125.0 million senior secured term loan (the “Term Loan”). The next borrowing base redetermination is scheduled for August of 2018. The maturity date of the Exit Facility is February 1, 2021 with respect to the Revolving Loans and May 1, 2021 with respect to the Term Loan. Until the maturity date for the Term Loan, the Term Loan shall bear an interest rate equal to 6.50% for an Alternate Base Rate loan or 7.50% for a Eurodollar loan. Until the maturity date for the Revolving Loans, the Revolving Loans shall bear interest at a rate per annum equal to (i) the alternative base rate plus an applicable margin of 1.75% to 2.75% , based on the borrowing base utilization percentage under the Exit Facility or (ii) adjusted LIBOR plus an applicable margin of 2.75% to 3.75% , based on the borrowing base utilization percentage under the Exit Facility. Unused commitments under the Exit Facility will accrue a commitment fee of 0.5% , payable quarterly in arrears. VNG may elect, at its option, to prepay any borrowing outstanding under the Revolving Loans without premium or penalty (except with respect to any break funding payments which may be payable pursuant to the terms of the Exit Facility). VNG may be required to make mandatory prepayments of the Revolving Loans in connection with certain borrowing base deficiencies. Additionally, if (i) VNG has outstanding borrowings, undrawn letters of credit and reimbursement obligations in respect of letters of credit in excess of the aggregate revolving commitments or (ii) unrestricted cash and cash equivalents of VNG and the Guarantors (as defined below) exceeds $35.0 million as of the close of business on the most recently ended business day, VNG is also required to make mandatory prepayments, subject to limited exceptions. The obligations under the Exit Facility are guaranteed by the Successor and all of VNG’s subsidiaries (the “Guarantors”), subject to limited exceptions, and secured on a first-priority basis by substantially all of VNG’s and the Guarantors’ assets, including, without limitation, liens on at least 95% of the total value of VNG’s and the Guarantors’ oil and gas properties, and pledges of stock of all other direct and indirect subsidiaries of VNG, subject to certain limited exceptions. The Exit Facility contains certain customary representations and warranties, including, without limitation: organization; powers; authority; enforceability; approvals; no conflicts; financial condition; no material adverse change; litigation; environmental matters; compliance with laws and agreements; no defaults; no borrowing base deficiency; Investment Company Act; taxes; ERISA; disclosure; no material misstatements; insurance; restrictions on liens; locations of businesses and offices; properties and titles; maintenance of properties; gas imbalances; prepayments; marketing of production; swap agreements; use of proceeds; solvency; money laundering; anti-corruption laws and sanctions. The Exit Facility also contains certain affirmative and negative covenants, including, without limitation: delivery of financial statements; notices of material events; existence and conduct of business; payment of obligations; performance of obligations under the Exit Facility and the other loan documents; operation and maintenance of properties; maintenance of insurance; maintenance of books and records; compliance with laws and regulations; compliance with environmental laws and regulations; delivery of reserve reports; delivery of title information; requirement to grant additional collateral; compliance with ERISA; maintenance of commodity price risk management policy; requirement to maintain commodity swaps; maintenance of treasury management; restrictions on indebtedness; liens; dividends and distributions; repayment of permitted unsecured debt; amendments to certain agreements; investments; change in the nature of business; leases (including oil and gas property leases); sale or discount of receivables; mergers; sale of properties; termination of swap agreements; transactions with affiliates; negative pledges; dividend restrictions; marketing activities; gas imbalances; take-or-pay or other prepayments; swap agreements and transactions, and passive holding company status. The Exit Facility also contains certain financial covenants, including the maintenance of (i) the ratio of consolidated first lien debt of VNG and the Guarantors as of the date of determination to EBITDA for the most recently ended four consecutive fiscal quarter period for which financial statements are available of (a) 4.75 to 1.00 as of the last of any fiscal quarter ending from July 1, 2018 through December 31, 2018, (b) 4.50 to 1.00 as of the last day of any fiscal quarter ending from January 1, 2019 through December 31, 2019, (c) 4.25 to 1.00 as of the last day of any fiscal quarter ending from January 1, 2020 through September 30, 2020, and (d) 4.00 to 1.00 as of the last day of any fiscal quarter ending thereafter; (ii) an asset coverage ratio of not less than 1.25 to 1.00 as tested on each January 1 and July 1 for the period from August 1, 2017 until August 1, 2018; and (iii) a current ratio, determined as of the last day of each fiscal quarter for the four fiscal-quarter period then ending, commencing with the fiscal quarter ending December 31, 2017, of not less than 1.00 :1.00. The Exit Facility also contains certain events of default, including, without limitation: non-payment; breaches of representations and warranties; non-compliance with covenants or other agreements; cross-default to material indebtedness; judgments; change of control; and voluntary and involuntary bankruptcy. New Second Lien Notes Indenture On August 1, 2017, the Company issued approximately $80.7 million aggregate principal amount of new 9.0% Senior Secured Second Lien Notes due 2024 (the “New Notes”) to certain eligible holders of their outstanding Old Second Lien Notes issued by the Predecessor and the Successor (the “Existing Notes”) in full satisfaction of their claim of approximately $80.7 million related to the Existing Notes held by such holders. The New Notes were issued in accordance with the exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act. The New Notes are governed by an Amended and Restated Indenture, dated as of August 1, 2017 (as amended, the “Amended and Restated Indenture”), by and among the Company, certain subsidiary guarantors of the Company (the “Guarantors”) and Delaware Trust |
