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Debt
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Debt Debt
The following table summarizes our outstanding debt:
September 30,
2021		December 31,
2020		Interest RateMaturitySecurity
(in thousands)
2021 RBL Facility $— n/a
variable rates 5.3% (2021)
August 26, 2025
Mortgage on 90% of Present Value of proven oil and gas reserves and lien on certain other assets
2017 RBL Facilityn/a$— 
variable rates 4.0% (2020)
July 29, 2022
(Terminated August 26, 2021)
Mortgage on 85% of Present Value of proven oil and gas reserves and lien on certain other assets
2026 Notes400,000 400,000 7.0%February 15, 2026Unsecured
Long-Term Debt - Principal Amount400,000 400,000 
Less: Debt Issuance Costs(5,715)(6,520)
Long-Term Debt, net$394,285 $393,480 
Deferred Financing Costs
We incurred legal and bank fees related to the issuance of debt. At September 30, 2021 and December 31, 2020, debt issuance costs for the 2021 RBL Facility and 2017 RBL Facility (each as defined below) reported in “other noncurrent assets” on the balance sheet were approximately $5 million and $7 million net of amortization, respectively. In the third quarter of 2021 we expensed $3 million of unamortized debt issuance costs related to the termination of the 2017 RBL Facility. Also in the third quarter of 2021 we incurred approximately $3 million of legal and bank fees related to the issuance of the 2021 RBL Facility, which costs are reported in “other noncurrent assets” on the balance sheet. At September 30, 2021 and December 31, 2020, debt issuance costs, net of amortization, for the unsecured notes due February 2026 (the “2026 Notes”) reported in “Long-Term Debt, net” on the balance sheet were approximately $6 million and $7 million, respectively.
For each of the three month periods ended September 30, 2021 and 2020, the amortization expense for the 2021 RBL Facility, the 2017 RBL Facility and the 2026 Notes, combined, was approximately $1 million and was included in “interest expense” in the condensed consolidated statements of operations. For each of the nine month periods ended September 30, 2021 and 2020, the amortization expense for the 2021 RBL Facility, the 2017 RBL Facility and the 2026 Notes was approximately $4 million.
Fair Value
Our debt is recorded at the carrying amount on the balance sheets. The carrying amount of the 2021 RBL Facility approximates fair value because the interest rates are variable and reflect market rates. The fair value of the 2026 Notes was approximately $409 million and $337 million at September 30, 2021 and December 31, 2020, respectively.
2021 RBL Facility
On August 26, 2021, we entered into a credit agreement that provided for a revolving loan with up to $500 million of commitment, subject to a reserve borrowing base (“2021 RBL Facility”). Our initial borrowing base and elected commitment is $200 million. The 2021 RBL Facility provides a letter of credit subfacility for the issuance of letters of credit in an aggregate amount not to exceed $20 million. Issuances of letters of credit reduce the borrowing availability for revolving loans under the 2021 RBL Facility on a dollar for dollar basis. The 2021 RBL Facility matures on August 26, 2025, unless terminated earlier in accordance with the 2021 RBL Facility terms. Borrowing base redeterminations generally become effective each May and November, although the borrower and the lenders may each make one interim redetermination between scheduled redeterminations. The first scheduled redetermination is scheduled for November 2021.
If the outstanding principal balance of the revolving loans and the aggregate face amount of all letters of credit under the 2021 RBL Facility exceeds the borrowing base at any time as a result of a redetermination of the borrowing base, we have the option within 30 days to take any of the following actions, either individually or in combination: make a lump sum payment curing the deficiency, deliver reserve engineering reports and mortgages covering additional oil and gas properties sufficient in certain lenders’ opinion to increase the borrowing base and cure the deficiency or begin making equal monthly principal payments that will cure the deficiency within the next six-month period. Upon certain adjustments to the borrowing base, we are required to make a lump sum payment in an amount equal to the amount by which the outstanding principal balance of the revolving loans and the aggregate face amount of all letters of credit under the 2021 RBL Facility exceeds the borrowing base. In addition, the 2021 RBL Facility provides that if there are any outstanding borrowings and the consolidated cash balance exceeds $20 million at the end of each calendar week, such excess amounts shall be used to prepay borrowings under the credit agreement. Otherwise, any unpaid principal will be due at maturity.

The outstanding borrowings under the revolving loan bear interest at a rate equal to either (i) a customary base rate plus an applicable margin ranging from 2.0% to 3.0% per annum, and (ii) a customary benchmark rate plus an applicable margin ranging from 3.0% to 4.0% per annum, and in each case depending on levels of borrowing base utilization. In addition, we must pay the lenders a quarterly commitment fee of 0.5% on the average daily unused amount of the borrowing availability under the 2021 RBL Facility. We have the right to prepay any borrowings under the 2021 RBL Facility with prior notice at any time without a prepayment penalty.

The 2021 RBL Facility requires us to maintain on a consolidated basis as of each quarter-end (i) a leverage ratio of not more than 3.0 to 1.0 and (ii) a current ratio of not less than 1.0 to 1.0. As of September 30, 2021, our leverage ratio and current ratio were 2.1:1.0 and 2.4:1.0, respectively. In addition, the 2021 RBL Facility currently provides that to the extent we incur unsecured indebtedness, including any amounts raised in the future, the borrowing base will be reduced by an amount equal to 25% of the amount of such unsecured debt. We were in compliance with all financial covenants under the 2021 RBL Facility as of September 30, 2021.

The 2021 RBL Facility contains usual and customary events of default and remedies for credit facilities of a similar nature. The 2021 RBL Facility also places restrictions on the borrower and its restricted subsidiaries with respect to additional indebtedness, liens, dividends and other payments to shareholders, repurchases or redemptions of our common stock, redemptions of the borrower’s senior notes, investments, acquisitions, mergers, asset dispositions, transactions with affiliates, hedging transactions and other matters. For instance, the 2021 RBL Facility contains certain oil sales hedging requirements.

The 2021 RBL Facility permits us to repurchase equity and indebtedness, among other things, if availability is equal to or greater than 20% of the elected commitments or borrowing base, whichever is in effect, and our pro forma leverage ratio is less than or equal to 2.0 to 1.0.

Berry Corp. and its existing subsidiaries (other than Berry LLC (who is the borrower), C&J Management and C&J Well Services) guarantee, and each future subsidiary of Berry Corp., with certain exceptions, is required to guarantee, our obligations and obligations of the other guarantors under the 2021 RBL Facility and under certain hedging transactions and banking services arrangements (the “Guaranteed Obligations”). The lenders under the 2021
RBL Facility hold a mortgage on at least 90% of the present value of our proven oil and gas reserves. The obligations of Berry LLC and the guarantors are also secured by liens on substantially all of our personal property, subject to customary exceptions.

As of September 30, 2021, we had no borrowings outstanding and approximately $200 million of available borrowings capacity under the 2021 RBL Facility.
2017 RBL Facility
On July 31, 2017, we entered into a credit agreement that provided for a revolving loan with up to $1.5 billion of commitment, subject to a reserve borrowing base (“2017 RBL Facility”). In April 2021, we completed our scheduled semi-annual borrowing base redetermination under our 2017 RBL Facility, which resulted in a reaffirmed borrowing base and our elected commitment at $200 million. On August 26, 2021, we terminated the 2017 RBL Facility agreement. There were no borrowings outstanding at the time of termination.
Bond Repurchase Program
In February 2020, our Board of Directors adopted a program to spend up to $75 million for the opportunistic repurchase of our 2026 Notes. The manner, timing and amount of any purchases will be determined based on our evaluation of market conditions, compliance with outstanding agreements and other factors, may be commenced or suspended at any time without notice and do not obligate Berry Corp. to purchase the 2026 Notes during any period or at all. We have not yet repurchased any bonds under this program.
Corporate Organization
Berry Corp., as Berry LLC’s parent company, has no independent assets or operations and is subject to a passive holding company covenant under the 2021 RBL Facility. Any guarantees of potential future registered debt securities by Berry Corp. or Berry LLC would be full and unconditional. In addition, there are no significant restrictions upon the ability of Berry LLC to distribute funds to Berry Corp. by distribution or loan other than restrictions under the 2021 RBL Facility. None of the assets of Berry Corp. or Berry LLC represent restricted net assets.
The 2021 RBL Facility permits Berry Corp. to make dividends so long as both before and after giving pro forma effect to such distribution, no default or event of defaults exists, availability exceeds 20% of the elected commitments or borrowing base, whichever is in effect, and Berry Corp. demonstrates a pro forma leverage ratio less than or equal to 2.0 to 1.0. The conditions are currently met with significant margin.