March 30, 1999
Xx. Xxxxxx X. Xxxxxxx
Vice President - Finance
00000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Re: Credit Agreement dated May 15, 1998 by and between Xxxxxxx Petroleum
Corporation ("Borrower") and Christiania Bank og Kreditkasse ASA, as
Administrative Agent (the "Christiania" or "Agent")
Dear Xxxxxx:
As you know, we are in the process of redetermining the Borrowing Base under
the captioned Agreement pursuant to Article 2.11. Based on this review,
Christiania has determined the Borrowing Base, as of April 1, 1999 to be
$23,000,000. Furthermore, the Borrowing Base shall be subject to the
following terms and conditions:
Borrowing Base: During the period commencing April 1, 1999 until the
Borrowing Base is redetermined in accordance with Article
2.11 (a) of the captioned Agreement, the amount of the
Borrowing Base shall be $23,000,000. The Borrowing Base
shall be reduced on the last day of each month by an amount
equal to $1,500,000, (the "BB Reduction Amount"), commencing
October 31, 1999, and thereafter until the outstanding loan
amount is repaid in full. The Agent preserves its right
under the captioned Agreement to perform additional
redeterminations of the Borrowing Base and the BB Reduction
amount (an "Unscheduled Redetermination") at their sole
discretion as provided for under Article 2.11 (d) of the
captioned Agreement. Notwithstanding the above, Christiania
will redetermine the Borrowing Base at the next mid-year
review.
Use of Proceeds: Borrower is permitted to use proceeds from the Credit
Facility to fund the April 1, 1999 interest payment due
under its $135,000,000 Senior Notes (the "Notes").
Thereafter, Borrower is prohibited from using funds from the
credit facility to fund interest and principal payment under
the Notes.
Interest Margin: As documented in the First Amendment to Credit Agreement,
the interest rate margin shall increase by 50 bps effective
April 1, 1999 for Prime Rate and Eurodollar Rate draws.
Security: Borrower agrees to work with Agent to insure first lien
coverage on at least 90% of Borrower's oil and gas reserve
PV10 value (PV10 value as of the Xxxxxxxxxx & Co. reserve
report dated March 31, 1999).
Debt Service
Reserve: Borrower agrees to set aside on a monthly basis, beginning
May 1, 1999, funds from internal cash flow to insure payment
of the interest payment on the Notes due October 1, 1999.
If requested by Agent, Borrower agrees to set aside these
funds in an account designated by Agent. Borrower agrees to
provide Agent a monthly accounting of funds on deposit in
the Debt Service Reserve Account.
Please acknowledge your agreement with the terms and conditions of the
Borrowing Base by signing in the appropriate place below:
XXXXXXX PETROLEUM CORPORATION
As the Borrower
By: /S/XXXXXX X. XXXXXXX
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Name:
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Title: VICE PRESIDENT
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CHRISTIANIA BANK OG KREDITKASSE, ASA
AS THE Agent and sole Lender
By: /S/XXXXXXX X. XXXXXXXX
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Name:
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Title: FIRST VICE PRESIDENT
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By: /S/XXXXX XXXXX
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Name:
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Title: SENIOR VICE PRESIDENT
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