Current report Amplify Energy Corp

8-K - Current report

Published: 2016-11-01 17:28:03
Submitted: 2016-11-01
Period Ending In: 2016-10-27
d231318d8k.htm 8-K


> ENT> 8-K 1 d231318d8k.htm 8-K

8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 1, 2016 (October 27, 2016)

MEMORIAL PRODUCTION PARTNERS LP

(Exact Name of Registrant as Specified in Charter)

 

Delaware   001-35364   90-0726667
(State or Other Jurisdiction of Incorporation or Organization)   (Commission File Number)   (I.R.S. Employer Identification No.)

500 Dallas Street, Suite 1600

Houston, Texas

  77002
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (713) 490-8900

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01 Entry into a Material Definitive Agreement.

Credit Agreement

Eleventh Amendment

On October 28, 2016, Memorial Production Partners LP (the “Partnership”), Memorial Production Operating LLC (“Operating LLC”), certain subsidiaries of the Partnership, Wells Fargo Bank, National Association, as administrative agent for the Lenders (the “Administrative Agent”), and the lenders consenting thereto entered into an eleventh amendment (the “Eleventh Amendment”) to the Credit Agreement, dated as of December 14, 2011 (as in effect immediately prior to the effectiveness of such amendment, the “Credit Agreement”), by and among the Partnership, the Operating LLC, the Administrative Agent and the other agents and lenders party thereto from time to time. The Eleventh Amendment (i) pursuant to a regularly-scheduled semi-annual redetermination of the borrowing base, decreases the borrowing base from $925 million to $740 million, effective as of October 28, 2016, and schedules a further decrease of the borrowing base to $720 million, effective as of December 1, 2016 and (ii) amends the Credit Agreement to add a new event of default limiting the Partnership’s, Operating LLC’s and their respective subsidiaries’ ability to call, make or offer to make any redemption of, or make any other payments in respect of the Partnership’s senior unsecured notes if, on a pro forma basis, the Partnership’s and its subsidiaries’ aggregate liquidity (unrestricted cash and cash equivalents plus amounts available to be drawn under the Credit Agreement), is less than $30 million.

The foregoing summary of the Eleventh Amendment is not complete and is qualified in its entirety by reference to the full text of the Eleventh Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated in this Item 1.01 by reference.

Waiver and Twelfth Amendment

On November 1, 2016, the Partnership, Operating LLC, certain subsidiaries of the Partnership, the Administrative Agent, and the lenders consenting thereto entered into the Limited Waiver and Twelfth Amendment (the “Waiver and Twelfth Amendment”) to the Credit Agreement.

Pursuant to the Waiver and Twelfth Amendment, the requisite lenders under the Credit Agreement agreed to the limited waiver of certain defaults and events of default that will occur under the Credit Agreement as a result of the Partnership’s and Memorial Production Finance Corporation’s (collectively, the “Issuers”) election to avail themselves of the 30-day grace period under the indenture governing the Issuers’ 7 5/8% Senior Notes due 2021 for the payment of the semi-annual interest payment in respect of such senior notes due November 1, 2016.

Pursuant to the Waiver and Twelfth Amendment, from the date thereof until November 30, 2016 (the “Waiver Period”), the Partnership and Operating LLC agree to pay 100% of the net cash proceeds from any asset sale, transfer or other disposition (including with respect to notes receivable and accounts receivable) and from the liquidation of any swap transaction or hedge transaction arising under swap or hedge agreements between or among the Partnership, Operating LLC and/or any other loan party and any lender under the Credit Agreement and/or its affiliates, in each case, to the Administrative Agent for the ratable account of each lender under the Credit Agreement, for application to the outstanding loans under the Credit Agreement. Amounts so applied will also reduce the aggregate commitments of the lender under the Credit Agreement by an equivalent amount.

Further, pursuant to the Waiver and Twelfth Amendment, the Partnership and Operating LLC agree, during the Waiver Period, to additional restrictive covenants. These restrictions further limit, until the expiration of the Waiver Period, the ability of, among other things, the Partnership, Operating LLC and certain of their respective subsidiaries from incurring additional indebtedness, creating liens on assets, paying certain dividends and distributions, making any optional or voluntary payments or redemptions in respect of any other indebtedness, making investments (including in respect of the creation of subsidiaries), entering into certain lease agreements, entering into certain business combinations, entering into any sale-leaseback transaction and entering into certain transactions with affiliates. A failure to comply with these restrictions could result in an event of default under the Credit Agreement. In the event of the occurrence of any such event of default, the debtor’s obligations under the Credit Agreement could, under certain circumstances, become immediately due and payable.

Finally, pursuant to the Waiver and Twelfth Amendment, the Partnership and Operating LLC agreed to amend, to be effective from and after the date of the Waiver and Twelfth Amendment, the Credit Agreement to increase, from 90% to 95% (or such lesser amount agreed to by the Administrative Agent in its sole discretion, which lesser amount shall not be less than 92%), the percentage of the total value of Operating LLC’s and its subsidiary-loan parties’ oil and gas properties subject to a mortgage or similar instrument in favor of the Administrative Agent.

The foregoing summary of the Waiver and Twelfth Amendment is not complete and is qualified in its entirety by reference to the full text of the Waiver and Twelfth Amendment, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated in this Item 1.01 by reference.

Item 2.02.      Results of Operations and Financial Condition.

A press release issued by the Partnership on November 1, 2016 regarding the Partnership’s financial and operational results for the quarter ended September 30, 2016 is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Item 2.02 of this Current Report on Form 8-K, including the attached Exhibit 99.1 is being “furnished” pursuant to General Instruction B.2 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any Partnership filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 2.03.      Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information included in Item 1.01 of this Current Report on Form 8-K concerning the Amendment is incorporated by reference into this Item 2.03 of this Current Report on Form 8-K.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On October 27, 2016, the Board of Directors (the “Board”) of Memorial Production Partners GP LLC (the “Company”), the general partner of the Partnership, approved the adoption of a key employee incentive plan and a key employee retention program for the benefit of certain employees identified by the Board, including the named executive officers of the Partnership, whose continued employment and performance is critical to the success of the Company and the Partnership. In adopting the plans, the Board relied upon the market analysis and advice of Pearl Meyer & Partners, LLC, the independent compensation consultant to the Partnership.


Under the key employee incentive plan, the Partnership may make cash bonus payments to specified key employees, including the named executive officers of the Partnership. Participants in the plan will be eligible to receive quarterly cash bonus payments based upon the achievement of pre-established performance measures relating to lease operating expenses, oil and gas production and workplace safety, and such other measures as may be designated by the Board. The quarterly bonuses potentially payable to William J. Scarff, Christopher S. Cooper and Robert L. Stillwell, Jr., measured at the target level of performance, would be $350,000, $200,000 and $200,000, respectively. The actual amount payable may be more or less than the target amount, depending upon performance. The key employee incentive plan is effective for the Partnership’s fiscal quarter ending December 31, 2016 and for future fiscal quarters, unless terminated by the Board. The plan is intended to replace the current annual and long-term incentive plans of the Partnership.

Under the key employee retention program, the Partnership may make cash retention payments to specified key employees, including the named executive officers of the Partnership. Participants in the program will be eligible to receive lump sum retention payments upon entering into a participation agreement with the Partnership. Under the agreement, retention payments will be subject to a repayment “clawback” by the Partnership in the event that the participant terminates employment prior to the occurrence of certain specified events, or expiration of 12 months from the date of the agreements, if later, and subject to exceptions for terminations of employment under certain circumstances. The cash retention bonuses payable (subject to clawback) to Messrs. Scarff, Cooper and Stillwell are $800,000, $675,000 and $625,000, respectively.

Item 7.01.      Regulation FD Disclosure.

On November 1, 2016, the Partnership issued a press release announcing, among other things, its updated borrowing base and its election not to make an interest payment and enter the 30-day grace period with respect to its 7.625% senior notes due 2021. A copy of the press release is furnished as Exhibit 99.1 hereto.

On October 28, 2016, the Partnership also announced that the Board had elected to suspend the Partnership’s quarterly cash distributions to unitholders, effective immediately.

The Partnership has posted on its website, as of November 1, 2016, an update to its hedging overview presentation. The updated hedging presentation includes hedging transactions with respect to the years 2016 through 2019. The presentation entitled “Commodity and Interest Rate Hedging Overview,” dated November 1, 2016, may be accessed by going to www.memorialpp.com, selecting Investor Relations, then selecting Events and Presentations.

The information in this Item 7.01 of this Current Report on Form 8-K, including the attached Exhibit 99.1 is being “furnished” pursuant to General Instruction B.2 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any Partnership filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01.      Financial Statements and Exhibits.

(d)  Exhibits.

 

Exhibit Number         Description

 

 

 

10.1   Eleventh Amendment to Credit Agreement, dated as of October 28, 2016, by and among Memorial Production Partners LP, Memorial Production Operating LLC, the guarantors party thereto, Wells Fargo Bank, National Association, as administrative agent for the lenders party thereto, JPMorgan Chase Bank, N.A., as syndication agent for the lenders party thereto, Royal Bank of Canada, Citizens Bank, N.A., MUFG Union Bank, N.A. f/k/a Union Bank, N.A. and Comerica Bank, as co-documentation agents for the lenders party thereto, and the other lenders party thereto
10.2   Limited Waiver and Twelfth Amendment to Credit Agreement, dated as of November 1, 2016, by and among Memorial Production Partners LP, Memorial Production Operating LLC, the guarantors party thereto, Wells Fargo Bank, National Association, as administrative agent for the lenders party thereto, JPMorgan Chase Bank, N.A., as syndication agent for the lenders party thereto, Royal Bank of Canada, Citizens Bank, N.A., MUFG Union Bank, N.A. f/k/a Union Bank, N.A. and Comerica Bank, as co-documentation agents for the lenders party thereto, and the other lenders party thereto
99.1   Press release dated November 1, 2016


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    MEMORIAL PRODUCTION PARTNERS LP
   By:    

Memorial Production Partners GP LLC,

its general partner

Date:  November 1, 2016   By:  

/s/ Jason M. Childress

    Jason M. Childress
    Vice President, General Counsel & Corporate Secretary


EXHIBIT INDEX

 

Exhibit Number         Description

 

 

 

10.1   Eleventh Amendment to Credit Agreement, dated as of October 28, 2016, by and among Memorial Production Partners LP, Memorial Production Operating LLC, the guarantors party thereto, Wells Fargo Bank, National Association, as administrative agent for the lenders party thereto, JPMorgan Chase Bank, N.A., as syndication agent for the lenders party thereto, Royal Bank of Canada, Citizens Bank, N.A., MUFG Union Bank, N.A. f/k/a Union Bank, N.A. and Comerica Bank, as co-documentation agents for the lenders party thereto, and the other lenders party thereto
10.2   Limited Waiver and Twelfth Amendment to Credit Agreement, dated as of November 1, 2016, by and among Memorial Production Partners LP, Memorial Production Operating LLC, the guarantors party thereto, Wells Fargo Bank, National Association, as administrative agent for the lenders party thereto, JPMorgan Chase Bank, N.A., as syndication agent for the lenders party thereto, Royal Bank of Canada, Citizens Bank, N.A., MUFG Union Bank, N.A. f/k/a Union Bank, N.A. and Comerica Bank, as co-documentation agents for the lenders party thereto, and the other lenders party thereto
99.1   Press release dated November 1, 2016
d231318dex101.htm EX-10.1


> ENT> EX-10.1 2 d231318dex101.htm EX-10.1

EX-10.1

Exhibit 10.1

EXECUTION VERSION

 

 

 

 

LOGO

ELEVENTH AMENDMENT TO CREDIT AGREEMENT

dated as of October 28, 2016

among

Memorial Production Operating LLC,

as Borrower,

The Guarantors Party Hereto,

Wells Fargo Bank, National Association,

as Administrative Agent,

JPMorgan Chase Bank, N.A.,

as Syndication Agent,

Royal Bank of Canada, Citizens Bank, N.A., MUFG Union Bank, N.A. f/k/a Union Bank,

N.A., and

Comerica Bank,

as Co-Documentation Agents,

and

The Lenders Party Hereto

 

 


Wells Fargo Securities, LLC and J.P. Morgan Securities LLC

Co-Lead Arrangers and Joint Bookrunners

 

 

 


ELEVENTH AMENDMENT TO CREDIT AGREEMENT

This ELEVENTH AMENDMENT TO CREDIT AGREEMENT (this “Eleventh Amendment”), dated as of October 28, 2016 (the “Eleventh Amendment Effective Date”), is among MEMORIAL PRODUCTION OPERATING LLC, a limited liability company formed under the laws of the State of Delaware (the “Borrower”); MEMORIAL PRODUCTION PARTNERS LP, a limited partnership formed under the laws of the State of Delaware (the “Parent”); each of the other undersigned guarantors (together with the Borrower and the Parent, collectively, the “Loan Parties”); each of the Lenders that is a signatory hereto; and WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders (in such capacity, together with its successors, the “Administrative Agent”).

Recitals

A.        The Borrower, the Parent, the Administrative Agent and the Lenders are parties to that certain Credit Agreement dated as of December 14, 2011 (as amended prior to the date hereof, the “Credit Agreement”), pursuant to which the Lenders have, subject to the terms and conditions set forth therein, made certain credit available to and on behalf of the Borrower.

B.        The Borrower, the Parent, the Administrative Agent and the Lenders desire to (i) amend certain terms and provisions of the Credit Agreement to add a new Event of Default with respect to certain payments in connection with the Permitted Senior Unsecured Notes, (ii) reflect the reduction of the Borrowing Base from $925,000,000 to $740,000,000, to be effective as of the Eleventh Amendment Effective Date, and (iii) reflect the further reduction of the Borrowing Base from $740,000,000 to $720,000,000, to be effective as of December 1, 2016.

C.        NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1.        Defined Terms.    Each capitalized term which is defined in the Credit Agreement, but which is not defined in this Eleventh Amendment, shall have the meaning ascribed such term in the Credit Agreement, as amended hereby. Unless otherwise indicated, all section references in this Eleventh Amendment refer to the Credit Agreement.

Section 2.        Amendments as of the Eleventh Amendment Effective Date.   In reliance on the representations, warranties, covenants and agreements contained in this Eleventh Amendment, and subject to the satisfaction of the conditions precedent set forth in Section 4 hereof, the Credit Agreement shall be amended effective as of the Eleventh Amendment Effective Date in the manner provided in this Section 2.

2.1        Additional Definition.   Section 1.02 of the Credit Agreement is hereby amended to add thereto in alphabetical order the following definition which shall read in full as follows:

Liquidity” means, as of any date of determination, the sum of (a) unrestricted cash and Cash Equivalents of the Borrower and the other Loan Parties on such date (including cash and Cash Equivalents held in an account

 

1


subject to the Administrative Agent’s Lien securing the Loan Parties’ obligations under the Loan Documents) plus (b) Availability on such date, provided that if a Borrowing Base Deficiency exists on such date, “Liquidity” means (x) unrestricted cash and Cash Equivalents of the Borrower and the other Loan Parties on such date (including cash and Cash Equivalents held in an account subject to the Administrative Agent’s Lien securing the Loan Parties’ obligations under the Loan Documents) minus (y) the Borrowing Base Deficiency on such date.

2.2        Amendment to Section 10.01 of the Credit Agreement.   Section 10.01 of the Credit Agreement is hereby amended by (a) deleting the “or” at the end of clause (n) thereof, (b) replacing the “.” at the end of clause (o) thereof with “; or” and (c) adding the following new clause (p) to the end thereof which shall read in full as follows:

(p)        notwithstanding any provision herein to the contrary, any Loan Party or Subsidiary of a Loan Party calls, makes or offers to make any Redemption of, or otherwise makes any payment of principal, accrued interest, fees, expense reimbursements or other amounts under or with respect to any Permitted Senior Unsecured Notes when, after giving pro forma effect to such Redemption or payment, Liquidity is less than $30,000,000.

Section 3.        Borrowing Base Redetermination and Reduction in Aggregate Elected Commitment Amounts.

3.1       In reliance on the representations, warranties, covenants and agreements contained in this Eleventh Amendment, the Borrowing Base (a) is hereby reduced from $925,000,000 to $740,000,000 effective as of the Eleventh Amendment Effective Date and (b) shall be further reduced from $740,000,000 to $720,000,000 effective as of December 1, 2016 unless an Interim Redetermination or other adjustment to the Borrowing Base, in each case made in accordance with the terms of the Credit Agreement, occurs after the Eleventh Amendment Effective Date and prior to December 1, 2016. The Borrowing Base shall remain at the applicable level until the next Scheduled Redetermination, the next Interim Redetermination or other adjustment to the Borrowing Base thereafter, whichever occurs first pursuant to the Credit Agreement. The redetermination of the Borrowing Base provided for in this Section 3.1 shall be deemed to be the Scheduled Redetermination scheduled for on or about October 1, 2016 for purposes of Section 2.07 of the Credit Agreement.

3.2       Pursuant to Section 2.06(c)(viii) of the Credit Agreement, the Aggregate Elected Commitment Amounts are automatically reduced (ratably among the Lenders in accordance with each Lender’s Applicable Percentage) to (a) $740,000,000 on the Eleventh Amendment Effective Date and (b) $720,000,000 on December 1, 2016 unless an Interim Redetermination or other adjustment to the Borrowing Base, in each case made in accordance with the terms of the Credit Agreement, occurs after the Eleventh Amendment Effective Date and prior to December 1, 2016, and Annex I to the Credit Agreement shall be deemed amended to reflect such amendments to each Lender’s Elected Commitment and the Aggregate Elected Commitment Amounts.

 

2


Section 4.        Conditions Precedent to this Eleventh Amendment.  The effectiveness of the amendments to the Credit Agreement contained in Section 2 hereof is subject to the following:

4.1        The Administrative Agent shall have received counterparts of this Eleventh Amendment from the Loan Parties and the Required Lenders.

4.2        The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Eleventh Amendment Effective Date.

4.3        All fees and expenses due and owing to Linklaters LLP, Opportune LLP and Vinson & Elkins LLP invoiced prior to the Eleventh Amendment Effective Date shall have been paid or reimbursed by the Borrower.

4.4        No Default, Event of Default or Borrowing Base Deficiency shall exist immediately prior to or after giving effect to the amendments to the Credit Agreement contained in Section 2 hereof or the redetermination of the Borrowing Base provided for in Section 3 hereof.

4.5        The Administrative Agent shall have received such other documents as the Administrative Agent or counsel to the Administrative Agent may reasonably request.

The Administrative Agent shall notify the Borrower and the Lenders of the effectiveness of this Eleventh Amendment, and such notice shall be conclusive and binding.

Section 5.        Representations and Warranties; Etc.   Each Loan Party hereby affirms: (a) that as of the date hereof, all of the representations and warranties contained in each Loan Document to which such Loan Party is a party are true and correct in all material respects as though made on and as of the date hereof (unless made as of a specific earlier date, in which case, was true as of such date and except to the extent that any such representation and warranty is qualified by materiality, in which case such representation and warranty shall continue to be true and correct in all respects), (b) no Defaults exist under the Loan Documents or will, after giving effect to this Eleventh Amendment, exist under the Loan Documents and (c) no Material Adverse Effect has occurred.

Section 6.        Miscellaneous.

6.1        Confirmation and Effect.   The provisions of the Credit Agreement (as amended by this Eleventh Amendment) shall remain in full force and effect in accordance with its terms following the effectiveness of this Eleventh Amendment. Each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import shall mean and be a reference to the Credit Agreement as amended hereby, and each reference to the Credit Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Credit Agreement shall mean and be a reference to the Credit Agreement as amended hereby. This Eleventh Amendment is a Loan Document for all purposes under the Loan Documents.

 

3


6.2        Ratification and Affirmation of Loan Parties.  Each of the Loan Parties hereby expressly (a) acknowledges the terms of this Eleventh Amendment, (b) ratifies and affirms its obligations under the Guaranty Agreement and the other Loan Documents to which it is a party, as amended hereby, (c) acknowledges, renews and extends its continued liability under the Guaranty Agreement and the other Loan Documents to which it is a party, as amended hereby, (d) ratifies and affirms all Liens granted by it pursuant to the Loan Documents to secure the Indebtedness (except to the extent that such Liens have been released in accordance with the Loan Documents) and (e) agrees that its guarantee under the Guaranty Agreement and the other Loan Documents to which it is a party, as amended hereby, remains in full force and effect with respect to the Indebtedness.

6.3        Counterparts.  This Eleventh Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of this Eleventh Amendment by facsimile or electronic (e.g., pdf) transmission shall be effective as delivery of a manually executed original counterpart hereof.

6.4        No Oral Agreement.      THIS WRITTEN ELEVENTH AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

6.5        Governing Law.  THIS ELEVENTH AMENDMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

6.6        Payment of Expenses.      The Borrower agrees to pay or reimburse the Administrative Agent for all of its out-of-pocket costs and expenses incurred in connection with this Eleventh Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.

6.7        Severability.  Any provision of this Eleventh Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

6.8        Successors and Assigns.  This Eleventh Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

[Signature pages follow]

 

4


IN WITNESS WHEREOF, the parties hereto have caused this Eleventh Amendment to be duly executed effective as of the date first written above.

 

BORROWER:     MEMORIAL PRODUCTION OPERATING LLC,
    a Delaware limited liability company
      By:  

Memorial Production Partners LP, its sole member

      By:  

Memorial Production Partners GP LLC, its general partner

        By:  

/s/ Robert L. Stillwell, Jr.

        Name:   Robert L. Stillwell, Jr.
        Title:   Chief Financial Officer
GUARANTORS:     MEMORIAL PRODUCTION PARTNERS LP,
    a Delaware limited partnership
      By:  

Memorial Production Partners GP LLC, its general partner

        By:  

/s/ Robert L. Stillwell, Jr.

        Name:   Robert L. Stillwell, Jr.
        Title:   Chief Financial Officer
    COLUMBUS ENERGY, LLC,
    a Delaware limited liability company
      By:  

Memorial Production Operating LLC, its sole member

      By:  

Memorial Production Partners LP, its sole member

      By:  

Memorial Production Partners GP LLC, its general partner

        By:  

/s/ Robert L. Stillwell, Jr.

        Name:   Robert L. Stillwell, Jr.
        Title:   Chief Financial Officer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


  WHT ENERGY PARTNERS LLC, a Delaware limited liability company
    By:  

Memorial Production Operating LLC, its sole member

    By:  

Memorial Production Partners LP, its sole member

    By:  

Memorial Production Partners GP LLC, its general partner

      By:  

/s/ Robert L. Stillwell, Jr.

      Name:   Robert L. Stillwell, Jr.
      Title:   Chief Financial Officer
  RISE ENERGY OPERATING, LLC, a Delaware limited liability company
    By:  

Memorial Production Operating LLC, its sole member

    By:  

Memorial Production Partners LP, its sole member

    By:  

Memorial Production Partners GP LLC, its general partner

      By:  

/s/ Robert L. Stillwell, Jr.

      Name:   Robert L. Stillwell, Jr.
      Title:   Chief Financial Officer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


  RISE ENERGY MINERALS, LLC, a Delaware limited liability company
    By:  

Rise Energy Operating, LLC, its sole member

    By:  

Memorial Production Operating LLC, its sole member

    By:  

Memorial Production Partners LP, its sole member

    By:  

Memorial Production Partners GP LLC, its general partner

      By:  

/s/ Robert L. Stillwell, Jr.

      Name:   Robert L. Stillwell, Jr.
      Title:   Chief Financial Officer
  RISE ENERGY BETA, LLC, a Delaware limited liability company
    By:  

Rise Energy Operating, LLC, its sole member

    By:  

Memorial Production Operating LLC, its sole member

    By:  

Memorial Production Partners LP, its sole member

    By:  

Memorial Production Partners GP LLC, its general partner

      By:  

/s/ Robert L. Stillwell, Jr.

      Name:   Robert L. Stillwell, Jr.
      Title:   Chief Financial Officer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


  MEMORIAL PRODUCTION FINANCE CORPORATION, a Delaware corporation
    By:     

/s/ Robert L. Stillwell, Jr.

 
    Name: Robert L. Stillwell, Jr.  
    Title:  Chief Financial Officer  
  WHT CARTHAGE LLC, a Delaware limited liability company
    By:  

WHT Energy Partners LLC, its sole member

    By:  

Memorial Production Operating LLC, its sole member

    By:  

Memorial Production Partners LP, its sole member

    By:  

Memorial Production Partners GP LLC, its general partner

      By:  

/s/ Robert L. Stillwell, Jr.

      Name:   Robert L. Stillwell, Jr.
      Title:   Chief Financial Officer
 

MEMORIAL ENERGY SERVICES LLC,

a Delaware limited liability company

    By:  

Memorial Production Operating LLC, its sole member

    By:  

Memorial Production Partners LP, its sole member

    By:  

Memorial Production Partners GP LLC, its general partner

      By:  

/s/ Robert L. Stillwell, Jr.

      Name:   Robert L. Stillwell, Jr.
      Title:   Chief Financial Officer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


  MEMORIAL MIDSTREAM LLC,  
  a Texas limited liability company  
    By:  

Memorial Production Operating LLC, its sole member

    By:  

Memorial Production Partners LP, its sole member

    By:  

Memorial Production Partners GP LLC, its general partner

      By:  

/s/ Robert L. Stillwell, Jr.

      Name:   Robert L. Stillwell, Jr.  
      Title:   Chief Financial Officer  
  SAN PEDRO BAY PIPELINE COMPANY, a California corporation
    By:  /s/ Robert L. Stillwell, Jr.                      
    Name: Robert L. Stillwell, Jr.  
    Title:   Chief Financial Officer  

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


  MEMP SERVICES LLC
  By:  

Memorial Production Partners LP,

its sole member

 
  By:  

Memorial Production Partners GP LLC,

its general partner

 
  By:   /s/ Robert L. Stillwell, Jr.                      
  Name: Robert L. Stillwell, Jr.  
  Title:  Chief Financial Officer  
  BETA OPERATING COMPANY, LLC
  By:  

Memorial Production Operating LLC,

its sole member

 
  By:  

Memorial Production Partners LP,

its sole member

 
  By:  

Memorial Production Partners GP LLC,

its general partner

 
  By:   /s/ Robert L. Stillwell, Jr.                      
  Name: Robert L. Stillwell, Jr.  
  Title:  Chief Financial Officer  
  MEMORIAL PRODUCTION PARTNERS GP LLC
  By:   /s/ Robert L. Stillwell, Jr.                      
  Name: Robert L. Stillwell, Jr.  
  Title:  Chief Financial Officer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


ADMINISTRATIVE AGENT AND LENDER:

 

  WELLS FARGO BANK, NATIONAL ASSOCIATION,
  as Administrative Agent, Issuing Bank and a Lender
  By:  

/s/ Bryan McDavid

 
  Name:   Bryan McDavid  
  Title:   Director  

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     ASSOCIATED BANK, N.A., as a Lender
    By:   /s/ Brian Caddell
    Name: Brian Caddell
    Title: Senior Vice President

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     BARCLAYS BANK PLC, as a Lender
    By:   /s/ Christopher Aitkin
    Name: Christopher Aitkin
    Title: Assistant Vice President

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     BRANCH BANKING AND TRUST COMPANY, as a Lender
    By:   /s/ Robert Kret
    Name: Robert Kret
    Title: AVP

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     BMO HARRIS BANK, N.A., as a Lender
    By:   /s/ James V. Ducote
    Name: James V. Ducote
    Title:   Managing Director

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     BANK OF AMERICA, N.A., as a Lender
    By:   /s/ Raza Jafferi
    Name: Raza Jafferi
    Title: Vice President

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     CADENCE BANK, N.A., as a Lender
    By:   /s/ Anthony Blanco
    Name: Anthony Blanco
    Title: Vice President

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, as a Lender
    By:   /s/ Charles D. Mulkeen
     Name: Charles D. Mulkeen
     Title:      Executive Director

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     CAPITAL ONE, NATIONAL ASSOCIATION, as a Lender
    By:   /s/ Michael Higgins
    Name: Michael Higgins
    Title: Senior Director

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     CARGILL, INCORPORATED, as a Lender
    By:   /s/ Tyler R. Smith
    Name: Tyler R. Smith
    Title: Authorized Signer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     CITIBANK, N.A., as a Lender
    By:   /s/ Peter Baumann
    Name: Peter Baumann
    Title: Managing Director

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     CITIZENS BANK, N.A., as a Lender
    By:   /s/ David W. Stack
    Name: David W. Stack
    Title: Senior Vice President

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     COMPASS BANK, as a Lender
    By:   /s/ William H. Douning
    Name: William H. Douning
    Title: Sr. Vice President

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as a Lender
    By:   /s/ Yuriy A. Tsyganov
    Name: Yuriy A. Tsyganov
    Title: Director
    By:   /s/ Kathleen Sweeney
    Name: Kathleen Sweeney
    Title: Managing Director

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     DEUTSCHE BANK AG NEW YORK BRANCH, as a Lender
    By:   /s/ Dusan Lazarov
    Name: Dusan Lazarov
    Title: Director
    By:   /s/ Benjamin Souh
    Name: Benjamin Souh
    Title: Vice President

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     GOLDMAN SACHS BANK USA, as a Lender
    By:   /s/ George Kevin
    Name: George Kevin
    Title: Authorized Signatory

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     ING CAPITAL LLC, as a Lender
    By:   /s/ Josh Strong
    Name: Josh Strong
    Title:   Director
    By:   /s/ Charles Hall
    Name: Charles Hall
    Title: Managing Director

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     JPMORGAN CHASE BANK, N.A., as a Lender
    By:   /s/ Theresa M. Benson
    Name: Theresa M. Benson
    Title: Authorized Officer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     MUFG UNION BANK, N.A. f/k/a UNION BANK, N.A., as a Lender
    By:   /s/ Paul E. Cornell
    Name: Paul E. Cornell
    Title: Managing Director

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     NATIXIS, NEW YORK BRANCH, as a Lender
   

By: /s/ Brice Le Foyer

    Name: Brice Le Foyer
    Title: Director
   

By: /s/ Vikram Nath

    Name: Vikram Nath
    Title: Vice President

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     REGIONS BANK, as a Lender
    By:   /s/ Daniel G. Steele
    Name: Daniel G. Steele
    Title:   Managing Director

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     ROYAL BANK OF CANADA, as a Lender
    By:   /s/ Mark Lumpkin, Jr.
    Name: Mark Lumpkin, Jr.
    Title: Authorized Signatory

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     SUNTRUST BANK, as a Lender
    By:   /s/ William S. Krueger
    Name: William S. Krueger
    Title: First Vice President

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:     UBS AG, STAMFORD BRANCH, as a Lender
    By:   /s/ Darlene Arias
    Name: Darlene Arias
    Title:   Director
    By:   /s/ Kenneth Chin
    Name: Kenneth Chin
    Title:   Director

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


Annex I

LIST OF MAXIMUM CREDIT AMOUNTS AND ELECTED COMMITMENTS

as of Eleventh Amendment Effective Date

 

Name of Lender   

Applicable

Percentage

 

Maximum Credit 

Amount 

    Elected Commitment
Wells Fargo Bank, National Association    6.94444444%   $138,888,888.90      $51,388,888.88
JPMorgan Chase Bank, N.A.    6.94444444%   $138,888,888.90      $51,388,888.88
Bank of America, N.A.    6.94444444%   $138,888,888.90      $51,388,888.88
Citibank, N.A.    6.94444444%   $138,888,888.90      $51,388,888.88
Barclays Bank PLC    4.16666667%   $83,333,333.33      $30,833,333.34
Compass Bank    4.16666667%   $83,333,333.33      $30,833,333.34
Canadian Imperial Bank of Commerce, New York Branch        4.16666667%   $83,333,333.33      $30,833,333.34
Comerica Bank    4.16666667%   $83,333,333.33      $30,833,333.34
Credit Agricole Corporate and Investment Bank    4.16666667%   $83,333,333.33      $30,833,333.34
ING Capital LLC    4.16666667%   $83,333,333.33      $30,833,333.34
Natixis, New York Branch    4.16666667%   $83,333,333.33      $30,833,333.34
Royal Bank of Canada    4.16666667%   $83,333,333.33      $30,833,333.34
MUFG Union Bank, N.A. f/k/a Union Bank, N.A.    4.16666667%   $83,333,333.33      $30,833,333.34
U.S. Bank National Association    4.16666667%   $83,333,333.33      $30,833,333.34
Capital One, National Association    3.47222222%   $69,444,444.44      $25,694,444.45
UBS AG, Stamford Branch    3.47222222%   $69,444,444.44      $25,694,444.45
BMO Harris Bank, N.A.    2.56944444%   $51,388,888.89      $19,013,888.89
Branch Banking and Trust Company        2.56944444%   $51,388,888.89      $19,013,888.89
Santander Bank, N.A.    2.56944444%   $51,388,888.89      $19,013,888.89
Citizens Bank, N.A.    2.56944444%   $51,388,888.89      $19,013,888.89
Regions Bank    2.34640239%   $46,928,047.83      $17,363,377.70
Deutsche Bank AG New York Branch    2.09804205%   $41,960,841.06      $15,525,511.19
Associated Bank, N.A    1.87500000%   $37,500,000.00      $13,875,000.00
Cadence Bank, N.A.    1.87500000%   $37,500,000.00      $13,875,000.00
ZB, N.A. dba Amegy Bank    1.87500000%   $37,500,000.00      $13,875,000.00
SunTrust Bank    1.87500000%   $37,500,000.00      $13,875,000.00
Goldman Sachs Bank USA    1.04166667%   $20,833,333.33      $7,708,333.33
Cargill, Incorporated    0.34722222%   $6,944,444.44      $2,569,444.45

TOTAL

   100.00000000%   $2,000,000,000.00      $740,000,000.00

 

ANNEX I–1


LIST OF MAXIMUM CREDIT AMOUNTS AND ELECTED COMMITMENTS

as of December 1, 2016

 

Name of Lender   

Applicable

Percentage

 

Maximum Credit 

Amount 

    Elected Commitment
Wells Fargo Bank, National Association    6.94444444%   $138,888,888.90      $50,000,000.00
JPMorgan Chase Bank, N.A.    6.94444444%   $138,888,888.90      $50,000,000.00
Bank of America, N.A.    6.94444444%   $138,888,888.90      $50,000,000.00
Citibank, N.A.    6.94444444%   $138,888,888.90      $50,000,000.00
Barclays Bank PLC    4.16666667%   $83,333,333.33      $30,000,000.00
Compass Bank    4.16666667%   $83,333,333.33      $30,000,000.00
Canadian Imperial Bank of Commerce, New York Branch        4.16666667%   $83,333,333.33      $30,000,000.00
Comerica Bank    4.16666667%   $83,333,333.33      $30,000,000.00
Credit Agricole Corporate and Investment Bank    4.16666667%   $83,333,333.33      $30,000,000.00
ING Capital LLC    4.16666667%   $83,333,333.33      $30,000,000.00
Natixis, New York Branch    4.16666667%   $83,333,333.33      $30,000,000.00
Royal Bank of Canada    4.16666667%   $83,333,333.33      $30,000,000.00
MUFG Union Bank, N.A. f/k/a Union Bank, N.A.    4.16666667%   $83,333,333.33      $30,000,000.00
U.S. Bank National Association    4.16666667%   $83,333,333.33      $30,000,000.00
Capital One, National Association    3.47222222%   $69,444,444.44      $25,000,000.00
UBS AG, Stamford Branch    3.47222222%   $69,444,444.44      $25,000,000.00
BMO Harris Bank, N.A.    2.56944444%   $51,388,888.89      $18,500,000.00
Branch Banking and Trust Company        2.56944444%   $51,388,888.89      $18,500,000.00
Santander Bank, N.A.    2.56944444%   $51,388,888.89      $18,500,000.00
Citizens Bank, N.A.    2.56944444%   $51,388,888.89      $18,500,000.00
Regions Bank    2.34640239%   $46,928,047.83      $16,894,097.22
Deutsche Bank AG New York Branch    2.09804205%   $41,960,841.06      $15,105,902.78
Associated Bank, N.A    1.87500000%   $37,500,000.00      $13,500,000.00
Cadence Bank, N.A.    1.87500000%   $37,500,000.00      $13,500,000.00
ZB, N.A. dba Amegy Bank    1.87500000%   $37,500,000.00      $13,500,000.00
SunTrust Bank    1.87500000%   $37,500,000.00      $13,500,000.00
Goldman Sachs Bank USA    1.04166667%   $20,833,333.33      $7,500,000.00
Cargill, Incorporated    0.34722222%   $6,944,444.44      $2,500,000.00

TOTAL

   100.00000000%   $2,000,000,000.00      $720,000,000.00

 

ANNEX I–2

d231318dex102.htm EX-10.2


> ENT> EX-10.2 3 d231318dex102.htm EX-10.2

EX-10.2

Exhibit 10.2

EXECUTION VERSION

 

 

 

 

LOGO

LIMITED WAIVER AND TWELFTH AMENDMENT

TO

CREDIT AGREEMENT

dated as of November 1, 2016

among

Memorial Production Operating LLC,

as Borrower,

The Guarantors Party Hereto,

Wells Fargo Bank, National Association,

as Administrative Agent,

JPMorgan Chase Bank, N.A.,

as Syndication Agent,

Royal Bank of Canada, Citizens Bank, N.A., MUFG Union Bank, N.A. f/k/a Union Bank, N.A.,

and

Comerica Bank,

as Co-Documentation Agents,

and

The Lenders Party Hereto

 

 


Wells Fargo Securities, LLC and J.P. Morgan Securities LLC

Co-Lead Arrangers and Joint Bookrunners

 

 

 

 

1


LIMITED WAIVER AND TWELFTH AMENDMENT TO CREDIT AGREEMENT

This Limited Waiver and Twelfth Amendment to Credit Agreement (this “Waiver”), dated as of November 1, 2016 (the “Waiver Effective Date”), is among Memorial Production Operating LLC, a limited liability company formed under the laws of the State of Delaware (the “Borrower”); Memorial Production Partners LP, a limited partnership formed under the laws of the State of Delaware (the “Parent”); each of the other undersigned guarantors (together with the Borrower and the Parent, collectively, the “Loan Parties”); each of the Lenders that is a signatory hereto (each, a “Consenting Lender” and, collectively, the “Consenting Lenders”); and Wells Fargo Bank, National Association, as administrative agent for the Lenders (in such capacity, together with its successors, the “Administrative Agent”).

Recitals

A. The Borrower, the Parent, the Administrative Agent and the Lenders are parties to that certain Credit Agreement dated as of December 14, 2011 (as amended, restated, amended and restated supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Lenders have, subject to the terms and conditions set forth therein, made certain credit available to, and on behalf of, the Borrower.

B. Pursuant to the terms and provisions of the Parent’s 7 5/8% Senior Notes due 2021 (such Senior Notes, the “2021 Notes”), the Parent and Memorial Production Finance Corporation (collectively, the “Issuers”) are obligated to pay interest semi-annually on May 1 and November 1 of each year (the payment due November 1, 2016, the “November 2016 Interest Payment”).

C. In the event the Issuers fail to make the November 2016 Interest Payment, such failure shall result in an automatic Event of Default under Section 10.01(f) of the Credit Agreement and a Default under Section 10.01(e) and Section 10.01(g)(ii) of the Credit Agreement (such prospective Event of Default and prospective Default are referred to herein, collectively, as the “Prospective Defaults”).

D. The Borrower requests that the Lenders waive the Prospective Defaults.

E. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Defined Terms. Each capitalized term which is defined in the Credit Agreement, but which is not defined in this Waiver, shall have the meaning ascribed such term in the Credit Agreement, as amended hereby. Unless otherwise indicated, all section references in this Waiver refer to the Credit Agreement.

Section 2. Limited Waiver. In reliance on the representations, warranties, covenants and agreements contained in this Waiver, and subject to the satisfaction of the conditions precedent set forth in Section 5 hereof, effective as of the Waiver Effective Date, each of the Administrative Agent, the Issuing Bank and the Consenting Lenders, for itself and the other Secured Parties, hereby waives the Prospective Defaults (such waiver, the “Limited Waiver”) until the Waiver Period (as defined below) ends in accordance with the terms hereof.

 

2


Section 3. Covenants of the Borrower and the other Loan Parties. Notwithstanding anything to the contrary contained in the Credit Agreement, during the period commencing on the Waiver Effective Date and ending on November 30, 2016 at 5:00 pm, New York City time (such period, the “Waiver Period”), the Borrower and each Loan Party covenants and agrees with the Lenders that:

(a) Mandatory Prepayment. If any Loan Party receives any net cash proceeds (1) during the Waiver Period or (2) in connection with any Disposition (as defined below) entered into, committed to or consummated prior to or during the Waiver Period, in each case, from (i) any sale or other disposition of any of its notes receivable or accounts receivable made in accordance with Section 9.10 of the Credit Agreement, (ii) the consummation, whether in a single transaction or a series of transactions, of any sale, assignment, farm-out, conveyance or other transfer of any Property made in accordance with Section 9.12 of the Credit Agreement (other than to the extent permitted by clause (a) of Section 9.12 of the Credit Agreement) or (iii) any Swap Liquidation in respect of commodities made in accordance with clause (d) of Section 9.18 of the Credit Agreement (other than any Swap Liquidation (including in respect of the Liquidation of any transaction thereunder) of the Swap Agreement between the Borrower and Shell Trading Risk Management LLC) (the transactions contemplated by the foregoing clauses (i), (ii) and (iii), “Dispositions”), in each case, the Borrower shall (x) prepay, without duplication of any other prepayment required under the Credit Agreement (including in connection with any Borrowing Base Deficiency), an aggregate principal amount of outstanding Borrowings equal to 100% of such net cash proceeds immediately upon any Loan Party’s receipt of such net cash proceeds and (y) reduce the Aggregate Elected Commitment Amounts (ratably among the Lenders in accordance with each Lender’s Applicable Percentage) by the amount of such prepayment; provided, that the foregoing shall not require any prepayment in connection with a Swap Liquidation to the extent that upon any such Liquidation, the Liquidated Swap Agreement (or transaction thereunder) is replaced, in a substantially contemporaneous transaction, with one or more Swap Agreements or transactions with approximately the same mark-to-market value and without the receipt by any Loan Party of any net cash proceeds as a result thereof. Notwithstanding anything to the contrary in Sections 9.10, 9.12 or 9.18 of the Credit Agreement to the contrary, the Loan Parties agree that 100% of the aggregate consideration received in respect of any sale, disposition or Swap Liquidation permitted by such Sections shall consist of cash or Cash Equivalents. For the avoidance of doubt, prepayment obligations arising under this clause (a) shall survive in respect of any Disposition committed to or consummated during the Waiver Period for which the net cash proceeds in respect thereof are not received until after the expiration of the Waiver Period.

(b) Information. The Parent will deliver to the Administrative Agent and each Lender, no later than 5:00 p.m., New York City time, on each Wednesday (i) commencing November 9, 2016, a report showing actual receipts and disbursements through Friday of the prior week, and a reconciliation of actual expenditures and disbursements with those set forth in the Budget (as defined below), on a line by line basis showing any variance to the proposed corresponding line item of the 13-week cash flow forecast delivered to the Administrative Agent on the Waiver Effective Date (the “Budget”), which report and reconciliation shall be in form and substance reasonably satisfactory to the Administrative Agent, (ii) commencing November 9, 2016, an updated rolling 13-week cash flow forecast of the Parent and its Subsidiaries substantially in the same form as the Budget, (iii) commencing November 2, 2016, a report showing the aging of accounts payable and accounts receivable through Friday of the prior week and (iv) commencing November 2, 2016, a report showing the cash balance as of the prior Friday in each deposit account, securities account and commodity account held by each Loan Party and each Subsidiary of a Loan Party.

 

3


(c) Debt. No Loan Party will incur, create, assume or suffer to exist any Debt other than to the extent permitted by clauses (a), (b), (d) (so long as the Administrative Agent receives prior written notice if any such Debt exceeds $250,000 individually or $1,000,000 in the aggregate during the Waiver Period), (e), (f) (solely in respect of interest accrued in respect of Permitted Senior Unsecured Notes issued as of the date hereof and any guarantees in respect thereof (including any guarantees of obligations that are increased as a result of such accrued interest) in existence on the Waiver Effective Date), and (h) of Section 9.02 of the Credit Agreement. For clarification purposes, the foregoing shall not prohibit any Debt incurred, created, assumed or in existence prior to the Waiver Effective Date.

(d) Liens. No Loan Party will create, incur, assume or permit any Liens on any of their respective Properties (now owned or hereafter acquired) other than to the extent permitted by clauses (a) and (b) of Section 9.03 of the Credit Agreement. For clarification purposes, the foregoing shall not prohibit any Liens created, incurred, assumed or in existence prior to the Waiver Effective Date.

(e) Dividends, Distributions and Repayment of Permitted Additional Debt.

(i) No Loan Party will declare or make, or agree to pay or make, directly or indirectly, any Restricted Payments, return any capital to its stockholders or make any distribution of its Property to its Equity Interest holders other than to the extent permitted by subclause Section 9.04(a)(ii) of the Credit Agreement.

(ii) No Loan Party will call, make or offer to make any optional or voluntary Redemption of or otherwise optionally or voluntarily Redeem (whether in whole or in part) any Debt.

(f) Investments and Loans. No Loan Party will make or permit to remain outstanding any Investments in or to any Person or any loans made between the Parent and Borrower or any intercompany loans other than to the extent permitted by clauses (b), (c), (d), (e), (f), (g)(i), (g)(ii) and (g)(iv) (solely in respect of cash collateral in an aggregate amount not to exceed $600,000 released in connection with any surety or bond arrangements in existence on the Waiver Effective Date and deposited into an account held by MEMP S-1, Inc. or MEMP S-2, Inc.) of Section 9.05 of the Credit Agreement. For clarification purposes, the foregoing shall not prohibit any Investments made prior to the Waiver Effective Date.

(g) Limitation on Leases. No Loan Party will create, incur or assume any obligation for the payment of rent or hire Property of any kind whatsoever (real or personal but excluding (i) Capital Leases in existence on the Waiver Effective Date to the extent such Capital Leases do not go beyond the value and terms of the leased property, (ii) leases of Hydrocarbon Interests in the ordinary course of business and (iii) any lease entered into with the Port of Long Beach or entered into in respect of the current company headquarters, in each case, in the ordinary course of business) under leases or lease agreements. For clarification purposes, the foregoing shall not prohibit any such obligation created, incurred or assumed prior to the Waiver Effective Date.

(h) Mergers, Etc. No Loan Party will merge into or with or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, other than the merger or consolidation of any Loan Party or non-Loan Party into a Loan Party so long as (i) no Default has occurred and is continuing and (ii) the Loan Party is the surviving Person (or, in the case of any

 

4


merger or consolidation involving the Borrower, the Borrower is the surviving Person); provided, that the Borrower shall give prior written notice to the Administrative Agent of any such merger or consolidation.

(i) Sale and Leasebacks. No Loan Party will enter into any sale and leaseback any Property.

(j) Transactions with Affiliates. No Loan Party will enter into any transaction, including without limitation, any purchase, sale, lease or exchange of Property or the rendering of any service, with any Affiliate (other than the Loan Parties) other than (i) to the extent permitted by clauses (a) (to the extent approved by the board of directors (or comparable governing body) of the General Partner) and in effect on the Waiver Effective Date) and (b) (in the case of compensation arrangements for directors and officers, to the extent approved by the board of directors (or comparable governing body) of the General Partner) and in effect on the Waiver Effective Date) of Section 9.14 of the Credit Agreement and (ii) in connection with any “key employee retention plan” or any “key employee incentive program” (to the extent approved by the board of directors (or comparable governing body) of the General Partner) and in effect on the Waiver Effective Date).

(k) Subsidiaries. No Loan Party will create or acquire any additional subsidiary other than to the extent permitted by Section 9.15 of the Credit Agreement and shall give prior written notice to the Administrative Agent at least two Business Days prior to the creation or acquisition thereof.

(l) Successors and Assignments. The Borrower shall not have any consent rights under Section 12.04(b) of the Credit Agreement.

(m) Expenses. The Borrower shall pay each Lender’s reasonable and documented out-of-pocket fees and expenses incurred prior to the Waiver Effective Date in connection with the Eleventh Amendment, October 2016 Borrowing Base Redetermination and this Waiver, in an aggregate amount not to exceed $100,000 for all such Lenders, within three Business Days of receipt of an invoice from such Lender.

Section 4. Amendment as of the Waiver Effective Date. In reliance on the representations, warranties, covenants and agreements contained in this Waiver, and subject to the satisfaction of the conditions precedent set forth in Section 5 hereof, the Credit Agreement shall be amended effective as of the Waiver Effective Date in the manner provided in this Section 4.

4.1 Amendment to Section 8.13 of the Credit Agreement. Section 8.13 of the Credit Agreement is hereby amended by deleting each reference therein to “90%” and inserting in lieu thereof in each instance a reference to “95% (or such lesser amount agreed to by the Administrative Agent in its sole discretion, which lesser amount shall not be less than 92%)”.

Section 5. Conditions Precedent to this Waiver. The effectiveness of the Limited Waiver contained in Section 2 hereof and effectiveness of the amendment contained in Section 4 hereof are subject to the following:

(a) The Administrative Agent shall have received counterparts of this Waiver from the Loan Parties and the Majority Lenders.

 

5


(b) All fees and expenses incurred prior to the Waiver Effective Date in connection with the preparation, negotiation, execution and delivery of this Waiver due and owing to Linklaters LLP, Opportune LLP and Vinson & Elkins LLP invoiced prior to the Waiver Effective Date shall have been paid or reimbursed by the Borrower.

(c) No Default (other than the Prospective Defaults), Event of Default (other than the Prospective Defaults) or Borrowing Base Deficiency shall exist immediately prior to or after giving effect to this Waiver.

(d) The Administrative Agent shall have received a copy of the Budget in form and substance reasonably satisfactory to the Administrative Agent.

The Administrative Agent shall notify the Borrower and the Lenders of the effectiveness of this Waiver, and such notice shall be conclusive and binding.

Section 6. Post-Closing Covenant regarding Mortgages. In addition to the requirements set forth in Section 8.14 of the Credit Agreement, in connection with each redetermination of the Borrowing Base from and including the Waiver Effective Date until the Maturity Date, the Borrower shall review the Reserve Report and the list of current Mortgaged Properties (as described in Section 8.12(c)(vi)) to ascertain whether the Mortgaged Properties represent at least 95% (or such lesser amount agreed to by the Administrative Agent in its sole discretion, which lesser amount shall not be less than 92%) of the total value of the Oil and Gas Properties evaluated in the most recently completed Reserve Report after giving effect to exploration and production activities, acquisitions, dispositions and production. In the event that the Mortgaged Properties do not represent at least 95% (or such lesser amount agreed to by the Administrative Agent in its sole discretion, which lesser amount shall not be less than 92%) of such total value, then the Borrower shall, and shall cause the other Loan Parties to, prior to the expiration of the Waiver Period, grant to the Administrative Agent as security for the Indebtedness a first-priority Lien interest (provided that Excepted Liens of the type described in clauses (a) to (d) and (f) of the definition thereof may exist, but subject to the provisos at the end of such definition) on additional Oil and Gas Properties of the Loan Parties not already subject to a Lien of the Security Instruments such that after giving effect thereto, the Mortgaged Properties will represent at least 95% (or such lesser amount agreed to by the Administrative Agent in its sole discretion, which lesser amount shall not be less than 92%) of such total value. All such Liens will be created and perfected by and in accordance with the provisions of deeds of trust, security agreements and financing statements or other Security Instruments, all in form and substance reasonably satisfactory to the Administrative Agent and in sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording purposes.

Section 7. Representations and Warranties; Etc. Each Loan Party hereby affirms, subject to the Prospective Defaults: (a) that as of the date hereof, all of the representations and warranties contained in each Loan Document to which such Loan Party is a party are true and correct in all material respects as though made on and as of the date hereof (unless made as of a specific earlier date, in which case, was true as of such date and except to the extent that any such representation and warranty is qualified by materiality, in which case such representation and warranty shall continue to be true and correct in all respects), (b) no Defaults exist under the Loan Documents or will, after giving effect to this Waiver, exist under the Loan Documents and (c) no Material Adverse Effect has occurred.

 

6


Section 8. Miscellaneous.

8.1 Confirmation and Effect. The provisions of the Credit Agreement (as amended and modified by this Waiver) shall remain in full force and effect in accordance with its terms following the effectiveness of this Waiver. Each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import shall mean and be a reference to the Credit Agreement as amended and modified hereby, and each reference to the Credit Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Credit Agreement shall mean and be a reference to the Credit Agreement as amended and modified hereby. This Waiver is a Loan Document for all purposes under the Loan Documents.

8.2 Ratification and Affirmation of Loan Parties. Each of the Loan Parties hereby expressly (a) acknowledges the terms of this Waiver, (b) ratifies and affirms its obligations under the Guaranty Agreement and the other Loan Documents to which it is a party, as amended and modified hereby, (c) acknowledges, renews and extends its continued liability under the Guaranty Agreement and the other Loan Documents to which it is a party, as amended and modified hereby, (d) ratifies and affirms all Liens granted by it pursuant to the Loan Documents to secure the Indebtedness (except to the extent that such Liens have been released in accordance with the Loan Documents) and (e) agrees that its guarantee under the Guaranty Agreement and the other Loan Documents to which it is a party, as amended and modified hereby, remains in full force and effect with respect to the Indebtedness.

8.3 Counterparts. This Waiver may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of this Waiver by facsimile or electronic (e.g., pdf) transmission shall be effective as delivery of a manually executed original counterpart hereof.

8.4 No Oral Agreement. This written Waiver, the Credit Agreement and the other Loan Documents executed in connection herewith and therewith represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or unwritten oral agreements of the parties. There are no unwritten oral agreements between the parties.

8.5 Governing Law. This Waiver (including, but not limited to, the validity and enforceability hereof) shall be governed by, and construed in accordance with, the laws of the State of New York.

8.6 Payment of Expenses. The Borrower agrees to pay or reimburse the Administrative Agent for all of its out-of-pocket costs and expenses incurred in connection with this Waiver, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.

8.7 Severability. Any provision of this Waiver which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

7


8.8 Successors and Assigns. This Waiver shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

8.9 Release. EACH OF THE LOAN PARTIES, ON ITS OWN BEHALF AND ON BEHALF OF ITS SUCCESSORS AND ASSIGNS (EACH OF THE FOREGOING, COLLECTIVELY, THE “RELEASING PARTIES”), HEREBY ACKNOWLEDGES AND STIPULATES THAT AS OF THE DATE OF THIS WAIVER, NONE OF THE RELEASING PARTIES HAS ANY CLAIMS, CAUSES OF ACTION, DEMANDS OR LIABILITIES OF ANY KIND WHATSOEVER, WHETHER DIRECT OR INDIRECT, FIXED OR CONTINGENT, LIQUIDATED OR UNLIQUIDATED, DISPUTED OR UNDISPUTED, KNOWN OR UNKNOWN, AGAINST, OR ANY GROUNDS OR CAUSE FOR REDUCTION, MODIFICATION, SET ASIDE OR SUBORDINATION OF THE INDEBTEDNESS OR ANY LIENS OR SECURITY INTERESTS OF, IN EACH CASE WHICH ARISE OUT OF OR ARE RELATED TO THE INDEBTEDNESS OR ANY OF THE LOAN DOCUMENTS (EACH, A “RELEASED CLAIM”), THE ADMINISTRATIVE AGENT, THE ISSUING BANK, THE OTHER SECURED PARTIES OR ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS, OR REPRESENTATIVES, OR AGAINST ANY OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS (EACH OF THE FOREGOING, COLLECTIVELY, THE “RELEASED PARTIES”). IN PARTIAL CONSIDERATION FOR THE AGREEMENT OF THE ADMINISTRATIVE AGENT AND THE LENDERS PARTY HERETO TO ENTER INTO THIS WAIVER, EACH OF THE RELEASING PARTIES HEREBY UNCONDITIONALLY WAIVES AND FULLY AND FOREVER RELEASES, REMISES, DISCHARGES AND HOLDS HARMLESS THE RELEASED PARTIES FROM ANY AND ALL RELEASED CLAIMS, WHICH ANY OF THE RELEASING PARTIES HAS OR MAY ACQUIRE IN THE FUTURE RELATING IN ANY WAY TO ANY EVENT, CIRCUMSTANCE, ACTION OR FAILURE TO ACT AT ANY TIME ON OR PRIOR TO THE WAIVER EFFECTIVE DATE, SUCH WAIVER, RELEASE AND DISCHARGE BEING MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF THE CIRCUMSTANCES AND EFFECTS OF SUCH WAIVER, RELEASE AND DISCHARGE, AND AFTER HAVING CONSULTED LEGAL COUNSEL OF ITS OWN CHOOSING WITH RESPECT THERETO. THIS PARAGRAPH IS IN ADDITION TO ANY OTHER RELEASE OF ANY OF THE RELEASED PARTIES BY THE RELEASING PARTIES AND SHALL NOT IN ANY WAY LIMIT ANY OTHER RELEASE, COVENANT NOT TO SUE OR WAIVER BY THE RELEASING PARTIES IN FAVOR OF THE RELEASED PARTIES.

[Signature pages follow]

 

8


IN WITNESS WHEREOF, the parties hereto have caused this Waiver to be duly executed effective as of the date first written above.

 

BORROWER:   MEMORIAL PRODUCTION OPERATING LLC, a Delaware limited liability company
     By:    Memorial Production Partners LP, its sole member
     By:    Memorial Production Partners GP LLC, its general partner
        By:   

/s/ Robert L. Stillwell, Jr.

  
        Name:    Robert L. Stillwell, Jr.   
        Title:    Chief Financial Officer   
GUARANTORS:   MEMORIAL PRODUCTION PARTNERS LP, a Delaware limited partnership
     By:    Memorial Production Partners GP LLC, its general partner
        By:   

/s/ Robert L. Stillwell, Jr.

  
        Name:    Robert L. Stillwell, Jr.   
        Title:    Chief Financial Officer   
  COLUMBUS ENERGY, LLC, a Delaware limited liability company
     By:    Memorial Production Operating LLC, its sole member
     By:    Memorial Production Partners LP, its sole member
     By:    Memorial Production Partners GP LLC, its general partner
        By:   

/s/ Robert L. Stillwell, Jr.

  
        Name:    Robert L. Stillwell, Jr.   
        Title:    Chief Financial Officer   

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


  WHT ENERGY PARTNERS LLC, a Delaware limited liability company
    By:    Memorial Production Operating LLC, its sole member
    By:    Memorial Production Partners LP, its sole member
    By:    Memorial Production Partners GP LLC, its general partner
       By:   

/s/ Robert L. Stillwell, Jr.

       Name:    Robert L. Stillwell, Jr.
       Title:    Chief Financial Officer
  RISE ENERGY OPERATING, LLC, a Delaware limited liability company
    By:    Memorial Production Operating LLC, its sole member
    By:    Memorial Production Partners LP, its sole member
    By:    Memorial Production Partners GP LLC, its general partner
       By:   

/s/ Robert L. Stillwell, Jr.

       Name:    Robert L. Stillwell, Jr.
       Title:    Chief Financial Officer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


  RISE ENERGY MINERALS, LLC, a Delaware limited liability company
 

By:

   Rise Energy Operating, LLC, its sole member
 

By:

   Memorial Production Operating LLC, its sole member
 

By:

   Memorial Production Partners LP, its sole member
 

By:

   Memorial Production Partners GP LLC, its general partner
     By:   

/s/ Robert L. Stillwell, Jr.

     Name:    Robert L. Stillwell, Jr.
     Title:    Chief Financial Officer
  RISE ENERGY BETA, LLC, a Delaware limited liability company
 

By:

   Rise Energy Operating, LLC, its sole member
 

By:

   Memorial Production Operating LLC, its sole member
 

By:

   Memorial Production Partners LP, its sole member
 

By:

   Memorial Production Partners GP LLC, its general partner
     By:   

/s/ Robert L. Stillwell, Jr.

     Name:    Robert L. Stillwell, Jr.
     Title:    Chief Financial Officer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


  

MEMORIAL PRODUCTION FINANCE CORPORATION, a

Delaware corporation

     

By:

  

/s/ Robert L. Stillwell, Jr.

     

Name: Robert L. Stillwell, Jr.

     

Title: Chief Financial Officer

   WHT CARTHAGE LLC, a Delaware limited liability company
     

By:

   WHT Energy Partners LLC, its sole member
     

By:

   Memorial Production Operating LLC, its sole member
     

By:

   Memorial Production Partners LP, its sole member
     

By:

   Memorial Production Partners GP LLC, its general partner
         By:   

/s/ Robert L. Stillwell, Jr.

         Name:    Robert L. Stillwell, Jr.
         Title:    Chief Financial Officer
   MEMORIAL ENERGY SERVICES LLC, a Delaware limited liability company
     

By:

   Memorial Production Operating LLC, its sole member
     

By:

   Memorial Production Partners LP, its sole member
     

By:

   Memorial Production Partners GP LLC, its general partner
         By:   

/s/ Robert L. Stillwell, Jr.

         Name:    Robert L. Stillwell, Jr.
         Title:    Chief Financial Officer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


  MEMORIAL MIDSTREAM LLC, a Texas limited liability company
        By:   Memorial Production Operating LLC, its sole member
        By:   Memorial Production Partners LP, its sole member
        By:   Memorial Production Partners GP LLC, its general partner
          By:  

/s/ Robert L. Stillwell, Jr.

          Name:   Robert L. Stillwell, Jr.
          Title:   Chief Financial Officer
  SAN PEDRO BAY PIPELINE COMPANY, a California corporation
        By:   /s/ Robert L. Stillwell, Jr.                                
        Name:   Robert L. Stillwell, Jr.
        Title:   Chief Financial Officer
  MEMP SERVICES LLC, a Delaware limited liability company
        By:   Memorial Production Partners LP, its sole member
        By:   Memorial Production Partners GP LLC, its general partner
          By:  

/s/ Robert L. Stillwell, Jr.

          Name:   Robert L. Stillwell, Jr.
          Title:   Chief Financial Officer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


  BETA OPERATING COMPANY, LLC, a Delaware limited liability company
    By:    Memorial Production Operating LLC, its sole member
    By:    Memorial Production Partners LP, its sole member
    By:    Memorial Production Partners GP LLC, its general partner
       By:   

/s/ Robert L. Stillwell, Jr.

       Name:    Robert L. Stillwell, Jr.
       Title:    Chief Financial Officer
  MEMORIAL PRODUCTION PARTNERS GP LLC, a Delaware limited liability company
    By:   

/s/ Robert L. Stillwell, Jr.

    Name:    Robert L. Stillwell, Jr.
    Title:    Chief Financial Officer

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


ADMINISTRATIVE AGENT AND LENDER:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, Issuing Bank and a Lender
By:  

/s/ Bryan McDavid

Name: Bryan McDavid
Title: Director

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   ASSOCIATED BANK, N.A., as a Lender
  By:  

/s/ Alison K. Tregilgas

  Name: Alison K. Tregilgas
  Title: Senior Vice President

 

[SIGNATURE PAGE TO ELEVENTH AMENDMENT TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   BARCLAYS BANK PLC, as a Lender
  By:  

/s/ Sean Duggan

  Name: Sean Duggan
  Title: Assistant Vice President

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   BRANCH BANKING AND TRUST COMPANY, as a Lender
  By:  

/s/ Robert Kret

  Name: Robert Kret
  Title: AVP

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   BMO HARRIS BANK, N.A., as a Lender
  By:  

/s/ James V. Ducote

  Name: James V. Ducote
  Title: Managing Director

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   CADENCE BANK, N.A., as a Lender
  By:  

/s/ Anthony Blanco

  Name: Anthony Blanco
  Title: Vice President

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, as a Lender
  By:  

/s/ Charles D. Mulkeen

  Name: Charles D. Mulkeen
  Title: Executive Director

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   CAPITAL ONE, NATIONAL ASSOCIATION, as a Lender
  By:  

/s/ Daryl Stafford

  Name: Daryl Stafford
  Title: Vice President

 


 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   CARGILL, INCORPORATED, as a Lender
  By:  

/s/ Tyler R. Smith

  Name: Tyler R. Smith
  Title: Authorized Signer

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   CITIBANK, N.A., as a Lender
  By:  

/s/ Peter T. Baumann

  Name: Peter T. Baumann
  Title: Managing Director

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   COMERICA BANK., as a Lender
  By:  

/s/ Chad Stephenson

  Name: Chad Stephenson
  Title: Vice President

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as a Lender
  By:  

/s/ Yuriy A. Tsyganov

  Name: Yuriy A. Tsyganov
  Title: Director
  By:  

/s/ Kathleen Sweeney

  Name: Kathleen Sweeney
  Title: Managing Director

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   GOLDMAN SACHS BANK USA, as a Lender
  By:  

/s/ Mehmet Barlas

  Name: Mehmet Barlas
  Title: Authorized Signatory

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   ING CAPITAL LLC, as a Lender
  By:  

/s/ Josh Strong

  Name: Josh Strong
  Title: Director
  By:  

/s/ Charles Hall

  Name: Charles Hall
  Title: Managing Director

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   JPMORGAN CHASE BANK, N.A., as a Lender
  By:  

/s/ Theresa M. Benson

  Name: Theresa M. Benson
  Title: Authorized Officer

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:  

MUFG UNION BANK, N.A. f/k/a UNION BANK,

N.A., as a Lender

  By:  

/s/ Paul E. Cornell

  Name: Paul E. Cornell
  Title: Managing Director

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   REGIONS BANK, as a Lender
  By:  

/s/ Daniel G. Steele

  Name: Daniel G. Steele
  Title: Managing Director

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   SANTANDER BANK, N.A. as a Lender
  By:  

/s/ Aidan Lanigan

  Name: Aidan Lanigan
  Title: Senior Vice President
  By:  

/s/ Puiki Lok

  Name: Puiki Lok
  Title: Vice President

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   SUNTRUST BANK, as a Lender
  By:  

/s/ William S. Krueger

  Name: William S. Krueger
  Title: First Vice President

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   UBS AG, STAMFORD BRANCH, as a Lender
  By:  

/s/ Darlene Arias

  Name: Darlene Arias
  Title: Director
  By:  

/s/ Kenneth Chin

  Name: Kenneth Chin
  Title: Director

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   U.S. BANK NATIONAL ASSOCIATION, as a Lender
  By:  

/s/ Mike Warren

  Name: Mike Warren
  Title: Sr VP

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   CITIZENS BANK, N.A., as a Lender
  By:  

/s/ David W. Stack

  Name: David W. Stack
  Title: Senior Vice President

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   COMPASS BANK as a Lender
  By:  

/s/ William H Douning

  Name: William H Douning
  Title: Sr. Vice President

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   NATIXIS, NEW YORK BRANCH as a Lender
  By:  

/s/ Vikram Nath

  Name: Vikram Nath
  Title: Vice President
  By:  

/s/ Brice Le Foyer

  Name: Brice Le Foyer
  Title: Director

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]


LENDER:   ROYAL BANK OF CANADA, as a Lender
  By:  

/s/ Mark Lumpkin, Jr.

  Name: Mark Lumpkin, Jr.
  Title: Authorized Signatory

 

[SIGNATURE PAGE TO LIMITED WAIVER TO CREDIT AGREEMENT

MEMORIAL PRODUCTION OPERATING LLC]

d231318dex991.htm EX-99.1


> ENT> EX-99.1 4 d231318dex991.htm EX-99.1

EX-99.1

Exhibit 99.1

 

 

LOGO

Memorial Production Partners LP Announces Third Quarter 2016 Results and

Decision to Enter Grace Period for Payment of Interest on Senior Notes

HOUSTON, November 1, 2016—Memorial Production Partners LP (NASDAQ: MEMP) (“MEMP” or “the Partnership”) announced today its operating and financial results for the three months ended September 30, 2016.

Key Highlights

 

   

Average daily production of 213.8 MMcfe/d for the third quarter of 2016

 

   

Lease operating expenses of $1.61 per Mcfe, or $31.6 million, in the third quarter of 2016

 

   

Net Cash Provided by Operating Activities of $43.2 million for the third quarter of 2016

 

   

Adjusted EBITDA(1) of $76.9 million for the third quarter of 2016

 

   

Strong commodity hedge portfolio with 92% of current expected total production hedged in 2016, 81% in 2017, 74% in 2018 and 57% in 2019

 

   

Mark-to-market hedge book value of approximately $435 million as of October 28, 2016

Bill Scarff, President and Chief Executive Officer of MEMP GP, stated, “We delivered a strong operational quarter driven by production coming in higher than expected and operating costs coming in lower than expected. These results reflect the efforts and focus of our workforce and reaffirm the value potential of our assets, the strength of our operations and MEMP’s significant cash flow generation. Over the past twelve months we have made great strides to reduce MEMP’s outstanding debt, drive down costs, divest non-core assets and manage our cash flows, while at the same time exploring opportunities to further enhance our liquidity and improve our leverage profile.”

Scarff continued, “After delivering another solid quarter from an operational perspective, we are now taking additional steps to strengthen MEMP’s financial position, including exploring strategic alternatives to strengthen MEMP’s balance sheet and continuing discussions with our lenders regarding our capital structure. As we work through this process, our Board has determined it is in the best interest of the Partnership to not make an interest payment on our senior notes

 

1


that was due on November 1, 2016, commencing a 30-day grace period. Importantly, our operations and production are continuing as normal across our asset base, and we remain confident in the strength of our assets and continued cash generation.”

Review of Third Quarter 2016

 

   

Average daily production decreased 8% to 213.8 MMcfe for the third quarter 2016, compared to 231.5 MMcfe for the second quarter 2016, primarily due to the volumes attributable to the divestiture of our Rockies and Permian assets which was partially offset by stronger than expected production from new wells that were completed in East Texas during the third quarter.

 

   

Crude oil, natural gas and NGLs sales, excluding commodity derivatives settlements, were $74.2 million in the third quarter of 2016, compared to $67.8 million in the second quarter of 2016. On an Mcfe basis, crude oil, natural gas and NGLs represented 28%, 56% and 16%, respectively, of sales volumes. On a revenue basis, crude oil, natural gas and NGLs sales represented 47%, 42% and 11%, respectively, of total oil and natural gas revenues.

 

   

Average realized prices, excluding commodity derivatives settlements:

 

    

Q3 2016

    

Q2 2016

    

% Increase/(Decrease)

 

Oil (per Bbl)

     $                         38.95       $                           38.73           

Natural gas (per Mcf)

     2.78         1.94         43    

NGL (per Bbl)

     15.59         13.45         16    
  

 

 

 

Total per (Mcfe)

     $ 3.77       $ 3.22             17    
  

 

 

 

 

   

Averaged realized prices, including commodity derivatives settlements, were $5.65 per Mcfe in the third quarter of 2016, compared to $6.43 per Mcfe in the second quarter of 2016.

 

   

Net Cash Provided by Operating Activities decreased to $43.2 million for the third quarter of 2016 from $79.0 million in the second quarter of 2016, primarily due to lower cash settlements on expired derivatives as a result of the hedge terminations in the second quarter.

 

   

Adjusted EBITDA(1) decreased to $76.9 million for the third quarter of 2016 from $84.1 million for the second quarter of 2016. The decrease was primarily due to lower hedging revenues and moderately higher operating expenses.

 

2


   

Distributable cash flow(1) available to limited partners was $35.9 million for the third quarter of 2016, compared to $44.9 million for the second quarter of 2016.

 

   

Total lease operating expenses increased 8% to $31.6 million in the third quarter of 2016 compared to $29.4 million in the second quarter of 2016. This anticipated increase was primarily due to higher workover expenses across the asset base and was included in our recent guidance estimates. On a per unit basis, total lease operating expenses increased 16% to $1.61 per Mcfe in the third quarter of 2016 compared to $1.39 per Mcfe in the second quarter of 2016.

 

   

Total gathering, processing and transportation fees were $0.43 per Mcfe in the third quarter of 2016 and in line with the $0.42 per Mcfe in the second quarter of 2016.

 

   

Taxes other than income were $0.20 per Mcfe in the third quarter of 2016 compared to $0.17 per Mcfe in the second quarter of 2016.

 

   

General and administrative expenses (“G&A”) were $12.6 million for the third quarter of 2016 compared to $15.2 million for the second quarter of 2016. The decrease in G&A was in line with our expectations and supports a decline in overall costs following our split with Memorial Resource Development Corp. in the second quarter. The $12.6 million also included $2.1 million of non-cash unit-based compensation expense, compared to $2.7 million in the second quarter of 2016.

 

   

Gains of $21.9 million on commodity derivatives were recorded during the third quarter of 2016, which included a $36.9 million gain on cash settlements received on expired positions. This compared to total losses of $124.6 million recorded during the second quarter of 2016, which included $106.9 million of cash settlements received on expired or terminated positions. Total hedged production in the third quarter of 2016 was 18.6 Bcfe, or 95% of third quarter production of 19.7 Bcfe, at an average hedge price of $6.04 per Mcfe.

 

   

Net interest expense was $27.2 million during the third quarter of 2016, including $1.9 million of non-cash amortization of deferred financing fees and accretion of senior notes discount.

 

   

Total capital expenditures for the third quarter of 2016 were $13.7 million.

 

3


Financial Update

As of October 28, 2016, MEMP had total debt of $1.8 billion, which included $1.1 billion of senior notes and $714 million under its revolving credit facility. As recently announced, the borrowing base on MEMP’s revolving credit facility has been reduced to $740 million effective October 28, 2016 and will be further reduced to $720 million as of December 1, 2016. As of October 28, 2016, MEMP’s liquidity consisted of $20 million of cash on hand and available borrowing capacity of $24 million (including the impact of $2.4 million in letters of credit).

MEMP’s total debt outstanding as of each of the respective dates is as follows:

 

(Amounts in $000s)    12/31/2015      9/30/2016      10/28/2016  

Credit Facility due 2018

     $ 836,000          $ 714,000          $ 714,000    

7.625% Senior Notes due 2021

     700,000          646,287          646,287    

6.875% Senior Notes due 2022

     496,990          464,965          464,965    
  

 

 

    

 

 

    

 

 

 

Total Debt Outstanding

     $             2,032,990          $             1,825,252          $             1,825,252    
  

 

 

    

 

 

    

 

 

 

Borrowing Base

     $ 1,175,000          $ 925,000          $ 740,000    

Letters of Credit

     2,100          2,375          2,375    
  

 

 

    

 

 

    

 

 

 

Credit Facility Availability

     $ 336,900          $ 208,625          $ 23,625    
  

 

 

    

 

 

    

 

 

 

As of September 30, 2016, MEMP was in compliance with the financial covenants under its revolving credit facility. These covenants include a first lien coverage test of 3.25x, an interest coverage ratio of 2.5x and a current ratio of 1.0x.

Interest Payment

As previously announced, the Partnership is working with its advisors to explore strategic alternatives to strengthen its balance sheet as it continues discussions with its lenders regarding MEMP’s capital structure.

As it continues this process, MEMP has elected to not make an interest payment of approximately $24.6 million due today on its 7.625% senior notes due 2021 (the “2021 Notes”). Under the terms of the indenture governing the 2021 Notes, the Partnership has a 30-day grace period after the interest payment date before an event of default occurs. The Board of Directors of MEMP GP believes it is in the best interests of MEMP and its subsidiaries to use the grace period to continue discussions with its lenders and noteholders related to alternatives to improve MEMP’s capital structure.

 

4


Failure to pay interest on the 2021 Notes constitutes an event of default under MEMP’s revolving credit facility, which default was waived by the lenders thereunder while MEMP continues such discussions.

There is no assurance that the discussions with MEMP’s lenders and noteholders will result in an agreement before the end of the grace period. MEMP can elect to make the interest payment at any time during the grace period. However, if MEMP decides not to make the interest payment by the end of the grace period, such failure constitutes an event of default under MEMP’s revolving credit facility, the indenture governing the 2021 Notes and the indenture governing MEMP’s 6.875% senior notes due 2022.

Hedging Update

Consistent with its hedging policy, MEMP has entered into natural gas, crude oil and NGL derivatives contracts covering the period from 2016 through December 2019. MEMP’s hedging policy is designed to reduce the impact to cash flows from commodity price and interest rate volatility.

The following table reflects the volumes of MEMP’s expected production covered by commodity derivative contracts and the average fixed or floor prices at which that production is hedged. Targeted average net production estimate represents the mid-point of the annual production range in MEMP’s updated 2016 full year guidance.

 

5


 

Hedge Summary (1)

 

 
   
      Year Ending December 31,  
   
      2016 (2)          2017          2018          2019      
   

Natural Gas Derivative Contracts:

             
   

Total weighted-average fixed/floor price

     $4.14         $4.06         $4.18         $4.31   
   

Percent of expected 2016 production hedged

     98%         93%         85%         78%   
   

Crude Oil Derivative Contracts(3):

             
   

Total weighted-average fixed/floor price

     $65.85         $85.00         $83.74         $85.52   
   

Percent of expected 2016 production hedged

     77%         96%         99%         51%   
   

Natural Gas Liquids Derivative Contracts:

             
   

Total weighted-average fixed/floor price

     $34.01         $37.55                   
   

Percent of expected 2016 production hedged

     97%         22%                   
   

Total Derivative Contracts:

             
   

Total weighted-average fixed/floor price

     $6.05         $7.54         $7.89         $6.84   
   

Percent of expected 2016 production hedged

     92%         81%         74%         57%   

 

  (1)

Updated hedge schedule as of November 1, 2016

 

  (2)

Represents October to December 2016

 

  (3)

2016 price and volumes include $40 crude oil puts purchased on 60,000 bbls/month with deferred premiums averaging $0.86 / bbl

MEMP posted an updated hedge presentation containing additional information on its website, www.memorialpp.com, under the Investor Relations section. There have been no material updates to MEMP’s hedge book since the last presentation was posted on August 3, 2016.

Quarterly Report on Form 10-Q

MEMP’s financial statements and related footnotes will be available in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, which MEMP expects to file with the SEC on or before November 9, 2016.

About Memorial Production Partners LP

Memorial Production Partners LP is a publicly traded partnership engaged in the acquisition, production and development of oil and natural gas properties in the United States. MEMP’s properties consist of mature, legacy oil and natural gas fields. MEMP is headquartered in Houston, Texas. For more information, visit www.memorialpp.com.

 

6


Forward-Looking Statements

This press release includes “forward-looking statements.” All statements, other than statements of historical facts, included in this press release that address activities, events or developments that MEMP expects, believes or anticipates will or may occur in the future are forward-looking statements. Terminology such as “will,” “would,” “should,” “could,” “expect,” “anticipate,” “plan,” “project,” “intend,” “estimate,” “believe,” “target,” “continue,” “potential,” the negative of such terms or other comparable terminology are intended to identify forward-looking statements. These statements include, but are not limited to, statements about MEMP’s future capital expenditures (including the amount and nature thereof), expectations regarding cash flows, distributions and distribution rates, and expectations of plans, goals, strategies (including measures to implement strategies), objectives and anticipated financial and operating results of MEMP, including as to production, lease operating expenses, hedging activities, commodity price realizations, capital expenditure levels and other guidance. These statements are based on certain assumptions made by MEMP based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances, but such assumptions may prove to be inaccurate. Such statements are also subject to a number of risks and uncertainties, many of which are beyond the control of MEMP, which may cause MEMP’s actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks and uncertainties relating to, among other things, MEMP’s efforts to reduce leverage and effectuate strategic alternatives; MEMP’s level of indebtedness including its ability to satisfy its debt obligation; the borrowing base under MEMP’s revolving credit facility and failure to pay interest on its senior notes; risks related to MEMP’s ability to generate sufficient cash flow, to make payments on its debt obligations and to execute its business plan; MEMP’s ability to access funds on acceptable terms, if at all, because of the terms and conditions governing MEMP’s indebtedness or otherwise; the uncertainty inherent in the development and production of oil, natural gas and natural gas liquids and in estimating reserves; drilling activities; volatility in the prices for, oil, natural gas and natural gas liquids, including a further or extended decline in commodity prices; potential difficulties in the marketing of oil, natural gas and natural gas liquids; competition in the oil and natural gas industry; potential failure or shortages of, or increased costs for, drilling and production equipment and supply materials for production; risks related to acquisitions, including MEMP’s ability to integrate acquired properties; and the risk that MEMP’s hedging strategy may be ineffective or may reduce its income. Please read MEMP’s filings with the Securities and Exchange Commission (“SEC”), including “Risk Factors” in MEMP’s Annual Report on Form 10-K, and if applicable, MEMP’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-

 

7


K, which are available on MEMP’s Investor Relations website at http://investor.memorialpp.com/sec.cfm or on the SEC’s website at http://sec.report, for a discussion of risks and uncertainties that could cause actual results to differ from those in such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements in this press release are qualified in their entirety by these cautionary statements. Except as required by law, MEMP undertakes no obligation and does not intend to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.

Use of Non-GAAP Financial Measures

This press release and accompanying schedules include the non-GAAP financial measures of Adjusted EBITDA and Distributable Cash Flow. The accompanying schedules provide a reconciliation of these non-GAAP financial measures to their most directly comparable financial measure calculated and presented in accordance with GAAP. MEMP’s non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, net cash flows provided by operating activities or any other measure of financial performance calculated and presented in accordance with GAAP. MEMP’s non-GAAP financial measures may not be comparable to similarly-titled measures of other companies because they may not calculate such measures in the same manner as MEMP does.

Adjusted EBITDA. MEMP defines Adjusted EBITDA as net income or loss, plus interest expense; income tax expense; depreciation, depletion and amortization; impairment of goodwill and long-lived assets; accretion of asset retirement obligations; losses on commodity derivative instruments; cash settlements received on expired commodity derivative instruments; losses on sale of assets; unit-based compensation expenses; exploration costs; acquisition and divestiture related expenses; amortization of gain associated with terminated commodity derivatives, bad debt expense; and other non-routine items, less interest income; gain on extinguishment of debt; income tax benefit; gains on commodity derivative instruments; cash settlements paid on expired commodity derivative instruments; gains on sale of assets and other, net; and other non-routine items. Adjusted EBITDA is commonly used as a supplemental financial measure by management and external users of MEMP’s financial statements, such as investors, research analysts and rating agencies, to assess: (1) its operating performance as compared to other companies and partnerships in MEMP’s industry without regard to financing methods, capital

 

8


structures or historical cost basis; (2) the ability of its assets to generate cash sufficient to pay interest, support MEMP’s indebtedness and make distributions on its units; and (3) the viability of projects and the overall rates of return on alternative investment opportunities. Since Adjusted EBITDA excludes some, but not all, items that affect net income or loss and because these measures may vary among other companies, the Adjusted EBITDA data presented in this press release may not be comparable to similarly titled measures of other companies. The GAAP measure most directly comparable to Adjusted EBITDA is net cash provided by operating activities.

Distributable Cash Flow. MEMP defines distributable cash flow as Adjusted EBITDA, less cash income taxes; cash interest expense; and total capital expenditures. Management compares the distributable cash flow MEMP generates to the cash distributions it expects to pay MEMP’s partners. Using this metric, management computes MEMP’s distribution coverage ratio. Distributable cash flow is an important non-GAAP financial measure for MEMP’s limited partners since it serves as an indicator of MEMP’s success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not MEMP is generating cash flows at a level that can sustain or support an increase in its quarterly cash distributions. Distributable cash flow is also a quantitative standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is, in part, measured by its yield, which is based on the amount of cash distributions a partnership can pay to a unitholder. The GAAP measure most directly comparable to distributable cash flow is net cash provided by operating activities. On June 1, 2016 MEMP acquired its general partner from Memorial Resource Development Corp. In connection with that acquisition, the MEMP general partner interest was converted into a non-economic interest and the MEMP incentive distribution rights (“IDRs”) were cancelled. Prior to that acquisition, MEMP’s calculation of quarterly distributions required the calculation of Operating Surplus under the MEMP partnership agreement, which required the use of “estimated maintenance capital expenditures” for such calculation. Accordingly, in previous periods MEMP used estimated maintenance capital expenditures to calculate Distributable Cash Flow for each period. Beginning with its acquisition of its general partner and cancellation of the IDRs, Operating Surplus is no longer relevant to the calculation of distributions. Accordingly, MEMP no longer uses estimated maintenance capital expenditures to calculate Distributable Cash Flow. In addition, in the current commodity price environment all of MEMP’s capital expenditures are maintenance capital expenditures. Accordingly, MEMP presents Distributable Cash Flow as

 

9


using capital expenditures rather than estimated maintenance capital expenditures in such calculation. Distributable Cash Flow has been recalculated for the historical periods presented in this press release for consistency.

 

10


Selected Operating and Financial Data (Tables)

 

 

Memorial Production Partners LP

Selected Financial Data - Unaudited

Statements of Operations Data

 

 

    For the Three Months Ended  
(Amounts in $000s, except per unit data)       9/30/2016                               6/30/2016      

Revenues:

   

Oil & natural gas sales

    $                 74,222          $                 67,780     

Pipeline tariff income and other

    -                 286     
 

 

 

   

 

 

 

Total revenues

    74,222          68,066     
 

 

 

   

 

 

 

Costs and Expenses:

   

Lease operating

    31,575          29,354     

Gathering, processing & transportation

    8,519          8,823     

Exploration

    12          15     

Taxes other than income

    3,945          3,485     

Depreciation, depletion and amortization

    43,219          44,413     

Impairment of proved oil and natural gas properties

    -                  -             

General and administrative

    12,605          15,246     

Accretion of asset retirement obligations

    2,383          2,712     

(Gain) loss on commodity derivative instruments

    (21,938)         124,580     

(Gain) loss on sale of properties

    60          (3,539)    

Other, net

    178          (52)    
 

 

 

   

 

 

 

Total costs and expenses

    80,558          225,037     
 

 

 

   

 

 

 

Operating income (loss)

    (6,336)         (156,971)    

Other Income (Expense):

   

Interest expense, net

    (27,209)         (32,143)    

Other income (expense)

    6          -             

Gain on extinguishment of debt

    673          41,664     
 

 

 

   

 

 

 

Total other income (expense)

    (26,530)         9,521     
 

 

 

   

 

 

 

Income (loss) before income taxes

    (32,866)         (147,450)    

Income tax benefit (expense)

    -                  (100)    
 

 

 

   

 

 

 

Net income (loss)

    $ (32,866)         $ (147,550)    

Net income (loss) attributable to noncontrolling interest

    $ -                  $ -             
 

 

 

   

 

 

 

Net income (loss) attributable to Memorial Production Partners LP

    $ (32,866)         $ (147,550)    

Allocation of Net Income (Loss) to:

   

Net income (loss) attributable to Memorial Production Partners LP

    (32,866)         (147,550)    

Net (income) loss allocated to general partner

    -                  128     
 

 

 

   

 

 

 

Limited partners’ interest in net income (loss)

    $ (32,866)         $ (147,422)    
 

 

 

   

 

 

 

Earnings per unit:

   

Basic and diluted earnings per limited partner unit

    $ (0.39)         $ (1.78)    
 

 

 

   

 

 

 

Cash distribution declared per unit

    $ -                  $ 0.03     
 

 

 

   

 

 

 

Weighted average number of limited partner units outstanding

    83,621          83,007     
 

 

 

   

 

 

 

 

11


Oil and natural gas revenue:

     

Oil sales

     $ 35,271          $                     36,973    

NGL sales

     8,041          7,928    

Natural gas sales

     30,910          22,879    
  

 

 

    

 

 

 

Total oil and natural gas revenue

     $                     74,222          $ 67,780    
  

 

 

    

 

 

 

Production volumes:

     

Oil (MBbls)

     906          954    

NGLs (MBbls)

     515          590    

Natural gas (MMcf)

     11,136          11,799    
  

 

 

    

 

 

 

Total (MMcfe)

     19,665          21,063    
  

 

 

    

 

 

 

Average net production (MMcfe)

     213.8          231.5    
  

 

 

    

 

 

 

Average sales price (excluding commodity derivatives):

     

Oil (per Bbl)

     $ 38.95          $ 38.73    

NGL (per Bbl)

     $ 15.59          $ 13.45    

Natural gas (per Mcf)

     $ 2.78          $ 1.94    
  

 

 

    

 

 

 

Total (per Mcfe)

     $ 3.77          $ 3.22    
  

 

 

    

 

 

 

Average unit costs per Mcfe:

     

Lease operating expense

     $ 1.61          $ 1.39    

Gathering, processing and transportation

     $ 0.43          $ 0.42    

Taxes other than income

     $ 0.20          $ 0.17    

General and administrative expenses

     $ 0.64          $ 0.72    

Depletion, depreciation, and amortization

     $ 2.20          $ 2.11    

 

 

Selected Financial Data - Unaudited

Balance Sheet Data

 

 

       September 30, 2016                     June 30, 2016  

Total current assets

     $                   218,884         $                   198,619   

Oil and natural gas properties, net

     1,790,021         1,820,243   

Total assets

     2,473,740         2,540,083   

Total current liabilities

     96,067         90,869   

Long-term debt

     1,798,895         1,824,604   

Total liabilities

     2,053,215         2,085,840   

Total partners’ equity

     420,525         454,243   

 

 

Selected Financial Data - Unaudited

Statements of Cash Flows Data

 

 

     For the Three Months Ended  
     9/30/2016                                 6/30/2016  

Net cash provided by operating activities

     $                     43,175        $                     78,966   

Net cash provided by (used in) investing activities

     1,079        14,301   

Net cash provided by (used in) financing activities

     (28,409     (94,103

 

12


 

Selected Operating and Financial Data (Tables)

Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures

Adjusted EBITDA

 

 

    For the Three Months Ended  
        9/30/2016                         6/30/2016      

Reconciliation of Adjusted EBITDA to Net Income (Loss):

   

Net income (loss)

    $ (32,866)       $ (147,550)    

Interest expense, net

    27,209          32,143     

Gain on extinguishment of debt

    (673)         (41,664)    

Income tax expense (benefit)

    -              100     

Depreciation, depletion and amortization

    43,219          44,413     

Impairment of oil and gas properties

    -              -         

Accretion of asset retirement obligations

    2,383          2,712     

(Gains) losses on commodity derivative instruments

    (21,938)         124,580     

Cash settlements received (paid) on expired commodity derivatives

    36,876          67,638     

Amortization of terminated derivatives gain

    19,997          -         

Acquisition and divestiture related expenses

    416          927     

Unit-based compensation expense

    2,070          2,731     

Exploration

    12          15     

Gain on sale of properties

    60          (3,539)    

(Gain) loss on settlement of AROs

    160          (52)    

Bad debt expense

    -              1,601     
 

 

 

   

 

 

 

Adjusted EBITDA

    $                 76,925          $                 84,055     
 

 

 

   

 

 

 
Reconciliation of Adjusted EBITDA and Distributable Cash Flow to Net Cash Provided by Operating Activities:    

Net cash provided by operating activities

    $ 43,175          $ 78,966     

Changes in working capital

    (14,297)         14,341     

Interest expense, net

    27,209          32,143     

Gain (loss) on interest rate swaps

    1,432          (1,844)    

Cash settlements paid (received) on interest rate swaps

    471          513    

Cash settlements received on terminated derivatives

    -              (39,299)    

Amortization of gain associated with terminated commodity derivatives

    19,997          -         

Amortization of deferred financing fees

    (1,312)         (1,348)    

Accretion of senior notes discount

    (568)         (596)    

Acquisition and divestiture related expenses

    416          927     

Exploration

    12          15     

Plugging and abandonment costs

    390          201     

Current income tax expense (benefit) - current portion

    -              36     
 

 

 

   

 

 

 

Adjusted EBITDA

    $ 76,925          $ 84,055     
 

 

 

   

 

 

 

 

13


 

Selected Operating and Financial Data (Tables)

Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures

Distributable Cash Flow

 

 

    For the Three Months Ended  
        9/30/2016                         6/30/2016      

Net income (loss)

    $ (32,866)         $ (147,550)    

Interest expense, net

    27,209          32,143     

Gain on extinguishment of debt

    (673)         (41,664)    

Income tax expense (benefit)

    -              100     

Depreciation, depletion and amortization

    43,219          44,413     

Impairment of oil and gas properties

    -              -         

Accretion of asset retirement obligations

    2,383          2,712     

(Gains) losses on commodity derivative instruments

    (21,938)         124,580     

Cash settlements received (paid) on expired commodity derivatives

    36,876          67,638     

Amortization of terminated derivatives gain

    19,997          -         

Acquisition and divestiture related expenses

    416          927     

Unit-based compensation expense

    2,070          2,731     

Exploration

    12          15     

Gain on sale of properties

    60          (3,539)    

(Gain) loss on settlement of AROs

    160          (52)    

Bad debt expense

    -              1,601     
 

 

 

   

 

 

 

Adjusted EBITDA

    $ 76,925          $ 84,055     
 

 

 

   

 

 

 

Less: Cash interest expense

    27,407          28,726     

Less: Capital expenditures

    13,663          10,406     
 

 

 

   

 

 

 

Total Distributable cash flow

    $                 35,855          $ 44,923     

Less: Distribution to GP

    -              -         
 

 

 

   

 

 

 

Distributable cash flow available to Limited Partners

    $ 35,855          $ 44,923     
 

 

 

   

 

 

 

Cash distribution to limited partners

    $ -              $                 2,505     
 

 

 

   

 

 

 

Distribution coverage ratio

    NA         17.94x    
 

 

 

   

 

 

 

 

Contacts

Memorial Production Partners LP

Bobby Stillwell – Chief Financial Officer

(713) 588-8347

ir@memorialpp.com

Memorial Production Partners LP

Martyn Willsher – Treasurer

(713) 588-8346

ir@memorialpp.com

 

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Additional Files
FileSequenceDescriptionTypeSize
0001193125-16-755527.txt   Complete submission text file   574379
$MEMP

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