Item 1.01 Entry into a Material Definitive Agreement
On July 1, 2014, Ring Energy, Inc. (the "Company") entered into a Credit
Agreement with SunTrust Bank, as lender, issuing bank and administrative agent
for several banks and other financial institutions and lenders ("Administrative
Agent") (the "Credit Facility"). The Credit Facility provides for a senior
secured revolving credit facility with a maximum borrowing amount of $150
million. The Credit Facility matures on July 1, 2019, and is secured by
substantially all of the Company's assets.
The initial borrowing base under the Credit Facility is $40 million (the
"Borrowing Base"). The Borrowing Base is subject to periodic redeterminations,
mandatory reductions and further adjustments from time to time. The Borrowing
Base will be redetermined (i) quarterly on each January 1, April 1, July 1 and
October 1, beginning October 1, 2014 through October 1, 2015, and (ii)
semi-annually on each October 1 and April 1 beginning on April 1, 2016. In
addition, the Company may elect to cause the Borrowing Base to be redetermined
one time during each of the following periods (i) between the October 1, 2014
and April 1, 2015 redeterminations, (ii) between the April 1, 2015 and October
1, 2015 redeterminations and (iii) starting with the October 1, 2015
redetermination, during any six month period between redeterminations. The
Borrowing Base will also be reduced in certain circumstances such as the sale or
disposition of certain oil and gas properties of the Company or its subsidiaries
and cancellation of certain hedging positions.
The Credit Facility allows for Eurodollar Loans and Base Rate Loans (each as
defined in the Credit Facility). The interest rate on each Eurodollar Loan will
be the adjusted LIBO rate for the applicable interest period plus a margin
between 1.75% and 5.00% (depending on the then-current level of borrowing base
usage). The annual interest rate on each Base Rate Loan is (a) the greatest of
(i) the Administrative Agent's prime lending rate, (ii) the federal funds rate
plus 0.5% per annum or the (iii) adjusted LIBO rate determined on a daily basis
for an interest period of one-month, plus 1.00% per annum, plus (b) a margin
between 2.75% and 6.00% (depending on the then-current level of borrowing base
The credit facility contains certain covenants, which, among other things,
require the maintenance of (i) a total leverage ratio of not more than 4.0 to
1.0 and (ii) a minimum current ratio of 1.0 to 1.0. The Credit Facility also
contains other customary affirmative and negative covenants and events of
A copy of the Credit Facility is filed as Exhibit 10.1 to this Current Report on
Form 8-K and is incorporated by reference herein. The description of the Credit
Facility in this Current Report on Form 8-K is a summary and is qualified in its
entirety by reference to the complete text of the Credit Facility.
Item 1.02 Termination of a Material Definitive Agreement.
In connection with the closing of the Credit Facility, the Company terminated
the Revolver Loan Agreement, dated as of May 12, 2011
, as amended by the First
Amendment thereto dated as of May 12, 2012
, by the Second Amendment thereto
dated as of January 15, 2013
, by the Third Amendment thereto dated as of May 10,
, and by the Fourth Amendment thereto dated August 10, 2013
, by and among
Stanford Energy, Inc.
, the Company, Stanley M. McCabe
, individually and as sole
trustee of The McCabe Family Trust
, and Lloyd T. Rochford
, individually, as
borrowers, and The F&M Bank & Trust Company
, predecessor-in-interest to
(the "Previous Credit Facility"). The Company has paid off all
amounts outstanding under the Previous Credit Facility.
Item 2.03 Creation of a Direct Financial Obligation
Please see the disclosure under Item 1.01 of this Current Report on Form 8-K,
which disclosure is incorporated into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
Credit Agreement, dated as of July 1, 2014
, by and among Ring Energy, Inc.
several banks and other financial institutions and lenders from time to time
party thereto, and SunTrust Bank
, as administrative agent for the lenders and as