Netbacks for India, Bangladesh and in total are calculated by dividing the revenue and costs for each country and in total by the total sales volume for each country and in total measured in Mcfe.
LIQUIDITY AND CAPITAL RESOURCES
The Company's funding strategy is to use funds from operations from its producing properties, proceeds from non-core asset dispositions, farm-outs and other arrangements, and equity financing to fund its exploration programs and use funds from operations from its producing properties, and debt and equity financing to fund its development programs. Due to the timing and availability of the funding from various sources, the Company may, on occasion, utilize debt financing to fund its exploration programs and repay the debt with funds from operations, proceeds from non-core asset dispositions, farm-outs and other arrangements, and/or equity financing. If excess funds are available after funding the Company's planned capital programs for the foreseeable future, then the Company's Board of Directors would evaluate the option of paying dividends to its shareholders.
In January 2012, the Company entered into a three-year facility agreement for a $225 million revolving credit facility and a $25 million operating facility for general corporate purposes.
The financial covenants of the credit facilities, calculated at the end ofeach fiscal quarter, are as follows:i. Senior Debt to EBITDAX ratio not greater than 3:1;ii. Debt to EBITDAX ratio not greater than 3.75:1;iii. EBITDAX to Interest Expense ratio greater than 3:1; andiv. Debt to Capitalization ratio not greater than 50%.As at March 31, 2013, as defined in the Credit Agreement:i. Senior Debt includes the Company's a) borrowings under credit facilities and b) finance lease obligation;ii. Debt includes the Company's a) Senior Debt and b) senior unsecured convertible notes, less c) unrestricted cash and cash equivalents;iii. EBITDAX (for the trailing 12 months ending at the end of each fiscal quarter) includes the Company's net income less a) Interest Expense, b) income taxes, c) depletion and depreciation expense, d) exploration and evaluation expenses, and e) other non-cash items;iv. Interest Expense includes the Company's a) interest expense and b) standby and other fees in respect of Debt; andv. Capitalization includes the Company's a) Debt and b) Shareholders' Equity (adjusted for the impact of conversion to IFRS).
As at March 31, 2013, the Senior Debt to EBITDAX ratio was 0.9:1, the Debt to EBITDAX ratio was 1.0:1, the EDITDAX to Interest Expense ratio was 7.0:1, and the Debt to Capitalization ratio was 14%, well within the specified financial covenants. Based on the Company's financial forecasts for fiscal 2014 and fiscal 2015, the Company expects to remain in compliance with the financial covenants of the credit facility throughout fiscal 2014 and fiscal 2015.
The maximum available credit under the credit agreement is subject to review based on, among other things, updates to the Company's reserves. In September, 2012, the syndicate of lenders confirmed a revised borrowing base amount under the facility to an aggregate of $100 million, based on the evaluation of the Company's reserves as at March 31, 2012 and based on an assumption that the pricing for gas sales from the D6 Block in India would remain unchanged at US$4.20 per MMBtu for the life of the D6 gas fields. As at March 31, 2013, the Company had borrowed $90 million under the credit facilities. Upon closing of the Company's private placement of the senior unsecured notes in June 2013, the amounts outstanding and the availability under the credit facility were reduced to $80 million. In connection with the completion of the Company's annual independent reserves evaluation as at March 31, 2013, the borrowing base of the facility will be re-determined by the syndicate banks on or before July 31, 2013, using the new pricing mechanism for domestic gas produced in India that was recently approved by the Government of India and will result in a significant increase in the price for the D6 Block natural gas sales contracts that expire on March 31, 2014.