Emerald Oil closed a senior credit facility with Wells Fargo Bank. The credit facility is a senior secured reserve based revolving credit facility with a maximum commitment of up to $400 million and an initial borrowing base of $27.5 million.

On Nov. 20, 2012, approximately $15.2 million was drawn to pay in full the approximately $15 million balance on the Macquarie Bank Limited credit facility and fees and expenses associated with the credit facility.

Proceeds can be used to acquire oil and gas properties, finance ongoing working capital requirements, for general corporate purposes or refinance existing debt.

The annual interest cost, which is dependent upon the percentage of the borrowing base utilized, is the London Interbank Offer Rate (LIBOR) plus 1.75% to 2.75%. The current annual interest rate on the credit facility is LIBOR plus 2.25%. Redetermination of the borrowing base will be on a semi-annual basis, with an option to elect additional redeterminations every six months, which allows for redeterminations as frequent as every quarter.

The credit facility is secured by first priority, perfected liens and security interests on substantially all assets of Emerald and its subsidiaries and terminates on the fifth anniversary of the closing date on Nov. 20, 2017. The company did not issue equity or provide royalty consideration in connection with the credit facility.

Denver-based Emerald is an independent exploration and production company.