Note 11 - Debt |
6 Months Ended |
|---|---|
Jun. 30, 2022 | |
| Notes to Financial Statements | |
| Debt Disclosure [Text Block] |
11. DEBT
As of June 30, 2022 and December 31, 2021, the Company had no outstanding debt.
On May 16, 2022, the Borrower entered into the Facility Agreement by and among the Company, VAALCO Gabon, Glencore, the Law Debenture Trust Corporation P.L.C., as security agent, and the Lenders, providing for a senior secured reserve-based revolving credit facility (the “Facility”) in an aggregate maximum principal amount of up to $50.0 million (the “Initial Total Commitment”). In addition, subject to certain conditions, the Borrower may agree with any Lender or other bank or financial institution to increase the total commitments available under the Facility by an aggregate amount not to exceed $50.0 million (any such increase, an “Additional Commitment”). Beginning October 1, 2023 and thereafter on April 1 and October 1 of each year during the term of the Facility, the Initial Total Commitment, as increased by any Additional Commitment, will be reduced by $6.25 million.
The Facility provides for determination of the borrowing base asset based on the Company’s proved producing reserves and a portion of the Company's proved undeveloped reserves. The borrowing base is determined and redetermined by the Lenders on
March 31 and
September 30 of each year.
Each loan under the Facility will bear interest at a rate equal to LIBOR plus a margin (the “Applicable Margin”) of (i)
6.00% until the
third anniversary of the Facility Agreement or (ii)
6.25% from the
third anniversary of the Facility Agreement until the Final Maturity Date (defined below).
Pursuant to the Facility Agreement, the Company shall pay to Glencore for the account of each Lender a quarterly commitment fee equal to (i)
35% per annum of the Applicable Margin on the daily amount by which the lower of the total commitments and the borrowing base amount exceeds the amount of all outstanding utilizations under the Facility, plus (ii)
20% per annum of the Applicable Margin on the daily amount by which the total commitments exceed the borrowing base amount. The Borrower is also required to pay customary arrangement and security agent fees.
The Facility Agreement contains certain debt covenants, including that, as of the last day of each calendar quarter, (i) the ratio of Consolidated Total Net Debt to EBITDAX (as each term is defined in the Facility Agreement) for the trailing 12 months shall not exceed and (ii) consolidated cash and cash equivalents shall not be lower than $10.0 million. As of June 30, 2022, the Company's borrowing base was $50.0 million. The amount the Company is able to borrow with respect to the borrowing base is subject to compliance with the financial covenants and other provisions of the Facility Agreement. The Company was in compliance with all debt covenants at June 30, 2022. As of June 30, 2022, the Company had no outstanding borrowings under the facility. The Facility will mature on the earlier of (i) the fifth anniversary of the date on which all conditions precedent to the first utilization of the Facility have been satisfied and (ii) the Reserve Tail Date (as defined in the Facility Agreement) (the “Final Maturity Date”).
Deferred financing costs incurred in connection with securing the Facility were $1.5 million, which is carried in the accompanying condensed consolidated balance sheets in the line item "Other long-term assets" and is amortized on a straight-line basis, which approximates the effective interest method, over the term of the Facility and included in interest expense in the accompanying condensed consolidated statements of operations.
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