Memorial Production amends revolver, sees 21% borrowing base reduction

By Angela McDaniels

Tacoma, Wash., April 14 – Memorial Production Partners LP said the latest semiannual redetermination for its revolving credit facility resulted in a revised borrowing base of $925 million, a decrease of 21% from the previous level of $1.18 billion.

“The downward revision on the borrowing base is largely attributable to the deterioration of commodity prices and was in line with our expectations,” John Weinzierl, chairman and chief executive officer of the general partner of Memorial, said in the news release.

The company also amended the revolver to add a maximum first-lien secured leverage covenant of 3.25 times and the following restrictions on future cash distributions:

• If the total debt ratio is greater than 4 times, the company may only make a distribution if it has availability subject to certain liquidity and financial tests and in any such case up to a maximum total cash distribution amount of $4.15 million per quarter; and

• If the total debt ratio is less than 4 times, the company may only make a distribution if it has availability, pro forma for the distribution, of at least 15% of the borrowing base, but if it satisfies such tests then cash distributions are not limited to any total amount.

At the end of the fourth quarter, the company had a first-lien secured leverage ratio of 2.5 times and an estimated total debt ratio of 5.9 times.

The board of directors of Memorial’s general partner has not yet made a determination on any cash distribution for the first quarter.

As of March 31, the company had $792 million outstanding under the revolver. Pro forma for the revised borrowing base, available borrowing capacity as of March 31 would have been $131 million (including $2.1 million of letters of credit).

“Giving effect to the credit facility amendment announced today, along with significant cash flow generation throughout the year, MEMP should have the liquidity it needs to execute its strategies to reduce the partnership’s total leverage, which we believe will benefit all of MEMP’s stakeholders,” Weinzierl added.

Memorial in an oil and natural gas company based in Houston.

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