Contango Oil & Gas, a Houston-based independent oil and natural gas company, amended certain provisions of its senior credit agreement dated September 17, 2019 with JPMorgan Chase as administrative agent.
The amendment provides for, among other things:
- A slight increase in the applicable margin of the borrowing base utilization-based pricing grid
- A reduction of the borrowing base to $95.0 million with further $10.0 million automatic borrowing base reductions on June 30, 2020 and September 30, 2020
- The suspension of testing the current ratio financial covenant until the fiscal quarter ending March 31, 2022
While the reduction in the borrowing base reflects the dramatic decline in commodity prices the energy sector has experienced during the first half of 2020, Contango continues to maintain a good working relationship with its banks.
With the current ratio covenant waived by the banks until the quarter ending March 31, 2022, believes that it will be positioned to continue its previously disclosed business strategy for 2020.