This excerpt taken from the EVEP 10-K filed Apr 2, 2007.
Note 8. Long-Term Debt
As of December 31, 2006, our credit facility consists of a $150.0 million senior secured revolving credit facility that expires in September 2011. Borrowings under the facility are secured by a first priority lien on substantially all of our assets and the assets of our subsidiaries. We may use borrowings under the facility for acquiring and
EV ENERGY PARTNERS, L.P.
NOTES TO CONSOLIDATED/COMBINED FINANCIAL STATEMENTS
Note 8. Long-Term Debt (continued)
developing oil and natural gas properties, for working capital purposes, for general corporate purposes and, so long as outstanding borrowings are less than 90% of the borrowing base, for funding distributions to partners. We also may use up to $20.0 million of available borrowing capacity for letters of credit. The facility contains certain covenants which, among other things, require the maintenance of a current ratio (as defined in the facility) of greater than 1.00 and a ratio of total debt to earnings plus interest expense, taxes, depreciation, depletion and amortization expense and exploration expense of no greater than 4.0 to 1.0. As of December 31, 2006, we were in compliance with all of the facility covenants.
Borrowings under the facility bear interest at a floating rate based on, at our election, a base rate or the London Inter-Bank Offered Rate plus applicable premiums based on the percent of the borrowing base that we have outstanding (6.98% at December 31, 2006). As of December 31, 2006, the amount of borrowings that we may have outstanding under the facility is $50.0 million and is subject to a borrowing base which is calculated semi-annually and in connection with material acquisitions or divestitures of properties. At December 31, 2006, we had $28.0 million outstanding under the facility.
As of December 31, 2005, the Predecessors credit facility consisted of a $15.0 million reducing revolving line of credit that expired in January 2008. EnerVest and EnerVest Production Partners were parties to the line of credit. Borrowings under the line of credit were secured by substantially all of the assets owned by EnerVest Production Partners. Borrowings under the line of credit bore interest at a rate equal to the Compass Bank Index Rate (5.77% at December 31, 2005). At December 31, 2005, we had $10.5 million outstanding under the line of credit. The line of credit was repaid with proceeds from our initial public offering.