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DEBT | 12 Months Ended
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Dec. 31, 2020
Debt Disclosure [Abstract] |
DEBT | DEBT In January 2021, we completed a private placement of $600 million in senior unsecured notes due 2026 (Senior Notes). The net proceeds of $590 million were used to repay in full our Second Lien Term Loan and EHP Notes, with the remainder used to repay a portion of the outstanding borrowings under our Revolving Credit Facility. The Senior Notes will be guaranteed on a senior unsecured basis by certain of our material subsidiaries. See Note 19 Subsequent Events for additional information on this offering. Post-Emergence Indebtedness As of December 31, 2020, our long-term debt consisted of the following credit agreements, Second Lien Notes and Senior Notes (in millions):
| Successor |  | Interest Rate(a) |  | Maturity
| 2020 |  |  |  |
Credit Agreements |  |  |  |  |
Revolving Credit Facility | $ | 99 |  |  | LIBOR plus 3%-4% ABR plus 2%-3% |  | April 29, 2024
Second Lien Notes |  |  |  |  |
Second Lien Term Loan | 200 |  |  | LIBOR plus 9%-10.5% ABR plus 8%-9.5% |  | October 27, 2025
Senior Notes |  |  |  |  |
EHP Notes | 300 |  |  | 6% |  | October 27, 2027
Long-term debt (principal amount) | $ | 599 |  |  |  |  |
Unamortized debt issuance costs | (2) |  |  |  |  |
Total long-term debt, net | $ | 597 |  |  |  |  |
(a)London Interbank Offered Rates (LIBOR) will be phased out after 2021 and replaced with the Secured Overnight Financing Rate within the United States for U.S. dollar-based LIBOR. Our credit agreements contemplate a discontinuation of LIBOR and have an alternate borrowing rate. We do not expect the discontinuation of LIBOR to have a significant impact on our interest expense. Revolving Credit Facility On October 27, 2020, we entered into a Credit Agreement with Citibank, N.A., as administrative agent, and certain other lenders. This credit agreement currently consists of a $540 million senior revolving loan facility (Revolving Credit Facility), which we are permitted to increase if we obtain additional commitments from new or existing lenders. The aggregate revolving commitment is subject to an automatic reduction if additional commitments from new lenders are not obtained. As a result, we expect the aggregate commitment of our lenders will be reduced to $492 million in April 2021. Our Revolving Credit Facility also includes a sub-limit of $200 million for the issuance of letters of credit. As of December 31, 2020, we had approximately $307 million available for borrowing under the Revolving Credit Facility after taking into account $134 million of outstanding letters of credit. On the Effective Date, we borrowed $225 million under the Revolving Credit Facility to refinance our DIP Facilities, replace our existing letters of credit and pay certain costs, fees and expenses related to the other transactions consummated on the Effective Date. Our initial borrowings included $118 million used to cash collateralize on an interim basis certain letters of credit that were outstanding under our Senior DIP Facility. These letters of credit were transitioned into our new Revolving Credit Facility at December 31, 2020. The proceeds of all or a portion of the Revolving Credit Facility may be used for our working capital needs and for other purposes subject to meeting certain criteria. Security – The lenders have a first-priority lien on a substantial majority of our assets, except assets securing the EHP Notes as discussed below. Interest Rate – We can elect to borrow at either an adjusted LIBOR rate or an ABR rate, subject to a 1% floor and 2% floor, respectively, plus an applicable margin. The ABR is equal to the highest of (i) the federal funds effective rate plus 0.50%, (ii) the administrative agent prime rate and (iii) the one-month adjusted LIBOR rate plus 1%. The applicable margin is adjusted based on the borrowing base utilization percentage and will vary from (i) in the case of LIBOR loans, 3% to 4% and (ii) in the case of ABR loans, 2% to 3%; provided that in the event that the EHP Notes are not paid in full on or prior to December 31, 2021, the applicable margin will be increased by 0.25% effective as of January 1, 2022 and will be increased by an additional 0.25% at the beginning of each subsequent fiscal quarter until such date on which the EHP Notes are paid in full. The unused portion of the facility is subject to a commitment fee of 0.50% per annum. We also pay customary fees and expenses. Interest on ABR loans is payable quarterly in arrears. Interest on LIBOR loans is payable at the end of each LIBOR period, but not less than quarterly. Maturity Date – Our Revolving Credit Facility matures on April 29, 2024. Amortization Payments – The Revolving Credit Facility does not include any obligation to make amortizing payments. Borrowing Base – The borrowing base, currently $1.2 billion, will be redetermined semi-annually each April and October. Financial Covenants – Our Revolving Credit Facility includes the following financial covenants:
Ratio |  | Components |  | Required Levels |  | Tested
Consolidated Total Net Leverage Ratio |  | Ratio of consolidated total secured debt to consolidated EBITDAX(a) |  | Not greater than 3.00 to 1.00 |  | Quarterly
Current Ratio |  | Ratio of consolidated current assets to consolidated current liabilities(b) |  | Not less than 1.00 to 1.00 |  | Quarterly
(a)EBITDAX is calculated as defined in the credit agreement. (b)The available credit under our Revolving Credit Facility is included in consolidated current assets as part of the calculation of the current ratio. Other Covenants – Our Revolving Credit Facility includes covenants that, among other things, restrict our ability to incur additional indebtedness, grant liens, make asset sales and investments, repay existing indebtedness, make subsidiary distributions and enter into transactions that would result in fundamental changes. We are also restricted in the amount of cash dividends we can pay on our common stock unless we meet certain covenants included in the credit agreement. Our Revolving Credit Facility also requires us to maintain hedges on a minimum amount of crude oil production, determined semi-annually, of no less than (i) 75% of our reasonably anticipated oil production from our proved reserves for the first 24 months after the closing of the Revolving Credit Facility, which occurred on the Effective Date, and (ii) 50% of our reasonably anticipated oil production from our proved reserves for a period from the 25th month through the 36th month after the same date. The Revolving Credit Facility specifies the forms of hedges and prices (which can be prevailing prices) that must be used for a portion of those hedges. We must also maintain acceptable commodity hedges for no less than 50% of the reasonably anticipated oil production from our proved reserves for at least 24 months following the date of delivery of each reserve report. We may not hedge more than 80% of reasonably anticipated total forecasted production of crude oil, natural gas and natural gas liquids from our oil and gas properties for a 48-month period. Events of Default and Change of Control – Our Revolving Credit Facility provides for certain events of default, including upon a change of control, as defined in the credit agreement, that entitles our lenders to declare the outstanding loans immediately due and payable, subject to certain limitations and conditions. Second Lien Term Loan On October 27, 2020, we entered into a $200 million credit agreement with Alter Domus Products Corp., as administrative agent, and certain other lenders (Second Lien Term Loan). The proceeds were used to refinance our Junior DIP Facility and to pay certain costs, fees and expenses related to the other transactions consummated on the Effective Date. Security – The lenders had a second-priority lien (junior to the Revolving Credit Facility) on a substantial majority of our assets, except assets securing the EHP Notes as discussed below. Interest Rate – We could elect to pay interest at either an adjusted LIBOR rate or ABR rate, subject to a 1% floor and 2% floor, respectively, plus an applicable margin. The ABR rate was equal to the highest of (i) the prime rate, (ii) the federal funds rate effective rate plus 0.50%, and (iii) the one-month adjusted LIBOR rate plus 1%. Prior to the second anniversary of the closing date of the Second Lien Term Loan, the applicable margin in the case of an ABR rate election was 8% per annum if paid in cash and 9.50% per annum if paid-in-kind, and the applicable margin in the case of an adjusted LIBOR rate election was 9% if paid in cash and 10.50% if paid-in-kind. After the second anniversary of the closing date, the applicable margin was 8% with respect to any ABR loan and 9% with respect to an adjusted LIBOR loan. Interest on ABR loans was paid quarterly in arrears and interest based on the adjusted LIBOR rate was due at the end of each LIBOR period, which could be one, two, three or six months but not less than quarterly. We also paid customary fees and expenses. Maturity Date – Our Second Lien Term Loan would mature five years after the closing date, subject to extension. Redemption – We could elect to redeem all or part of our Second Lien Term Loan, at any time prior to the maturity date, at redemption price equal to (i) 100% of the principal amount if redeemed prior to 90 days after closing, (ii) 105% of the principal amount if redeemed after 90 days and before the first anniversary date, (iii) 103% of the principal amount if redeemed on or after the first anniversary date and before the second anniversary date, (iv) 102% of the principal amount if redeemed on or after the second anniversary date and before the third anniversary date, (v) 101% of the principal amount if redeemed on or after the third anniversary date and before the fourth anniversary date, and (vi) at 100% of the principal amount if redeemed in the fifth year. Financial Covenants – Our Second Lien Term Loan included certain financial covenants that were to be tested quarterly, including a consolidated total net leverage ratio and current ratio. Liquidity – We would become subject to a monthly minimum liquidity requirement of $170 million if, as of the Spring 2021 Scheduled Redetermination (as defined in the Revolving Credit Facility), (a) our liquidity was less than $247 million and (b) we were not able to obtain at least $51 million in additional commitments under our Revolving Credit Facility or through capital markets or other junior financing transactions, for so long as the conditions in (a) and (b) remained unmet. Other Covenants – Our Second Lien Term Loan included covenants that, among other things, restricted our ability to incur additional indebtedness, grant liens, make asset sales and investments, repay existing indebtedness, make subsidiary distributions and enter into transactions that would result in fundamental changes. We were also restricted in the amount of cash dividends we could pay on our common stock unless we met certain covenants included in the credit agreement. Our Second Lien Term Loan also required us to maintain hedges on a minimum amount of crude oil production on terms that were substantially consistent with the requirements of our Revolving Credit facility. Events of Default and Change of Control – Our Second Lien Term Loan provided for certain events of default, including upon a change of control, as defined in the credit agreement, that would entitle our lenders to declare the outstanding loans immediately due and payable, subject to certain limitations and conditions. We were subject to a cross-default provision that causes a default under this facility if certain defaults occurred under the Revolving Credit Facility or the EHP Notes. The Second Lien Term Loan was terminated and repaid with proceeds from our Senior Notes offering in January 2021 as described in Note 19 Subsequent Events. EHP Notes On the Effective Date, our wholly-owned subsidiary, EHP Midco Holding Company, LLC (Elk Hills Issuer) entered into a Note Purchase Agreement (Note Purchase Agreement) with certain subsidiaries of Ares and Wilmington Trust, N.A. as collateral agent. The $300 million Notes were issued as partial consideration for the Class B Preferred Units, Class A Common Units and Class C Common Units in the Ares JV previously held by ECR (EHP Notes). The EHP Notes were senior notes due in 2027, and were secured by a first-priority security interest in all of the assets of Elk Hills Power, any third-party offtake contracts for power generated by Elk Hills Power, all of the equity interests of Elk Hills Power held by Elk Hills Issuer and all of the equity interests of Elk Hills Issuer held by its direct parent, EHP Topco Holding Company, LLC, our wholly-owned subsidiary. We and Elk Hills Power guaranteed, on a joint and several basis, all of the obligations of Elk Hills Issuer under the EHP Notes. The EHP Notes bore an interest rate of 6.0% per annum through the fourth anniversary of issuance, increasing to 7.0% per annum after the fourth anniversary of issuance and to 8.0% per annum after the fifth anniversary of issuance. We were permitted to redeem the EHP Notes at any time prior to their maturity date without payment of premium or penalty. The EHP Notes were terminated and repaid with proceeds from our Senior Notes offering in January 2021 as described in Note 19 Subsequent Events. Pre-Emergence Indebtedness 2014 Revolving Credit Facility In September 2014, we entered into a Credit Agreement with JPMorgan Chase Bank, N.A, as administrative agent, and certain other lenders. This credit agreement consisted of a $1 billion senior revolving loan facility (2014 Revolving Credit Facility), which we were permitted to increase by up to $50 million if we obtain additional commitments from new or existing lenders and also included a sub-limit of $400 million for the issuance of letters of credit. Prior to our Chapter 11 Cases in 2020, we amended our the 2014 Revolving Credit Facility to reduce our credit facility to $900 million and our borrowing base was reduced to $1.2 billion. Amounts outstanding under the 2014 Revolving Credit Facility bore interest at either LIBOR or an alternate base rate (ABR), in each case plus an applicable margin. The applicable margin was adjusted based on the borrowing base utilization percentage under the 2014 Revolving Credit Facility and could vary from (i) in the case of LIBOR loans, 3.25% to 4.00% and (ii) in the case of ABR loans, 2.25% to 3.00%. The unused portion of the facility is subject to a commitment fee of 0.50% per annum. We also paid customary fees and expenses. The lenders shared a first-priority lien on a substantial majority of our assets with the lenders under of 2017 Credit Agreement, excluding the Elk Hills power plant and midstream assets that are part of the Ares JV. The maturity date of our 2014 Revolving Credit Facility was June 30, 2021. Under the 2014 Revolving Credit Facility, we were subject to various financial covenants including a monthly liquidity requirement and quarterly tests including maximum leverage ratio, minimum interest coverage ratio and minimum asset coverage ratio. Our 2014 Revolving Credit Facility also included covenants that, among other things, restricted our ability to incur additional indebtedness, grant liens, make asset sales and investments, repay existing indebtedness, make subsidiary distributions and enter into transactions that would result in fundamental changes. We were also restricted from paying cash dividends on our stock. The 2014 Revolving Credit Facility was terminated and repaid with proceeds from the Senior DIP Facility and Junior DIP Facility. 2017 Credit Agreement In November 2017, we entered into a $1.3 billion credit agreement with The Bank of New York Mellon Trust Company, N.A., as administrative agent, and certain other lenders (2017 Credit Agreement). Our 2017 Credit Agreement is secured by the same shared first-priority lien used to secure our 2014 Revolving Credit Facility. The maturity date of the loans was December 31, 2022, subject to a springing maturity of 91 days prior to the maturity of our 2016 Credit Agreement if more than $100 million is outstanding at that time. We were required to maintain a first-lien asset coverage ratio of not less than 1.20 to 1.00 as of any June 30 and December 31. In addition, our 2017 Credit Agreement provided for customary covenants and events of default consistent with, or generally less restrictive than, the covenants in our 2014 Revolving Credit Facility. The covenants included limitations on additional indebtedness, liens, asset dispositions and investments, among others, and were in each case subject to certain limitations and exceptions. We were also restricted from paying cash dividends on our stock. The 2017 Credit Agreement was cancelled upon our emergence from bankruptcy as described in Note 2 Chapter 11 Proceedings. 2016 Credit Agreement In August 2016, we entered into a $1 billion credit agreement with The Bank of New York Mellon Trust Company, N.A., as administrative agent, and certain other lenders (2016 Credit Agreement). Our 2016 Credit Agreement was secured by a first-priority lien on a substantial majority of our assets (excluding the Elk Hills power plant and midstream assets that are part of the Ares JV) but was second in collateral recovery to our 2014 Revolving Credit Facility and 2017 Credit Agreement. The maturity date of the 2016 Credit Agreement was December 31, 2021. We were required to maintain a first–lien asset coverage ratio of not less than 1.20 to 1.00 as of any June 30 and December 31. Our 2016 Credit Agreement also included other covenants that are substantially similar to our 2017 Credit Agreement. We were also restricted from paying cash dividends on our stock. The 2016 Credit Agreement was cancelled upon our emergence from bankruptcy as described in Note 2 Chapter 11 Proceedings. Second Lien Notes In December 2015, we issued $2.25 billion in aggregate principal amount of 8% senior secured second-lien notes due December 15, 2022 (Second Lien Notes). The Second Lien Notes were issued in exchange for $2.8 billion of our then outstanding Senior Notes. We recorded a deferred gain of approximately $560 million on the debt exchange, which was being amortized using the effective yield method over the term of our Second Lien Notes. Our Second Lien Notes were secured on a junior-priority basis to the first-priority liens that secure the loans under our 2014 Revolving Credit Facility, 2017 Credit Agreement and 2016 Credit Agreement. The indenture included covenants that, among other things, limited our ability to grant liens securing borrowed money (subject to certain exceptions) and restricted our ability to merge or consolidate with, or transfer all or substantially all of our assets to, another entity. In the first quarter of 2020, we repurchased $7 million in face value of our Second Lien Notes for $3 million in cash, resulting in a pre-tax gain of $5 million including the effect of unamortized deferred gain and issuance costs. In 2019, we repurchased $252 million in face value of our Second Lien Notes for $156 million in cash, resulting in a pre-tax gain of $126 million including the effect of unamortized deferred gain and issuance costs. The Second Lien Notes were cancelled upon our emergence from bankruptcy as described in Note 2 Chapter 11 Proceedings. Senior Notes In October 2014, we issued $5 billion in aggregate principal amount of our senior unsecured notes, including $1 billion of 5% notes due January 15, 2020 (2020 Notes), $1.75 billion of 5.5% notes due September 15, 2021 (2021 Notes) and $2.25 billion of 6% notes due November 15, 2024 (2024 Notes and, collectively, Senior Notes). We used the net proceeds from the issuance of our Senior Notes to make a $4.95 billion cash distribution to Occidental in October 2014. The indenture included covenants that, among other things, limited our ability to grant liens securing borrowed money subject to certain exceptions and restrict our ability to merge or consolidate with, or transfer all or substantially all of our assets to, another entity. The Senior Notes were cancelled upon our emergence from bankruptcy as described in Note 2 Chapter 11 Proceedings. Other At December 31, 2020, all obligations under our Revolving Credit Facility and Second Lien Term Loan are guaranteed by certain of our material wholly owned subsidiaries. The terms and conditions of all of our indebtedness are subject to additional qualifications and limitations that are set forth in the relevant governing documents. At December 31, 2020, we were in compliance with all debt covenants under our credit agreements. Principal maturities of debt outstanding at December 31, 2020 (Successor) are as follows:
| As of December 31, 2020
| (in millions)
2021 | $ | — |
2022 | — |
2023 | — |
2024 | 99 |
2025 | 200 |
Thereafter | 300 |
Total | $ | 599 |
We estimate the fair value of fixed-rate debt, which is classified as Level 3, based on unobservable inputs as of December 31, 2020. We estimate the fair value of fixed-rate debt, which is classified as Level 1, based on prices known from market transactions as of December 31, 2019. The estimated fair value of our debt at December 31, 2020 and 2019, including the fair value of the variable-rate portion, was approximately $599 million and $3.8 billion, respectively, compared to a face value of approximately $599 million and $5.0 billion, respectively.

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