Chaparral’s credit expanded
Oklahoma City-based Chaparral Energy is getting more room to operate. On Monday, the company announced bankers have expanded its borrowing base and revolving credit, reduced its costs to borrow and enabled it to hedge more of its production, if needed. “We are very pleased with the outcome of our fall borrowing base redetermination,” Chaparral CEO Earl Reynolds stated as part of the announcement. “The continued support we have received from our banks and their recognition of our premier STACK assets provides us with the financial flexibility to adjust to changing market conditions,” Reynolds said. The company said its banking group increased its borrowing base, which it currently hasn’t tapped, from $265 million to $325 million. It also increased the overall size of its revolving credit facility from $400 million to $750 million. Additionally, the banking group reduced the company’s costs to borrow against the facility and provided the company with authorization to hedge up to 80 percent of its forecast production to protect its cash flow, as market conditions warrant. Joe Evans, Chaparral’s chief financial officer, said expansions allowed under this semiannual review of the company’s credit facility are intended to give it more room to operate as it continues to proceed after emerging from bankruptcy in March 2017. While Evans agreed Chaparral may not be alone among its peers in seeing credit facilities expand along with improved pricing for oil and natural gas, he said the reduced borrowing costs and an ability to expand the amount of hedged production recognizes Chaparral’s performance. “Our initial borrowing base was set when we came out of bankruptcy,” Evans said. “I think this is a recognition by the banks that we have done what they expected us to do, and they are allowing us to have more capabilities based on the performance we have had since the company came out of Chapter 11.” Reynolds, meanwhile, said he only sees upside in the near future. Chaparral is a pure-play operator focused in the STACK play, where it has approximately 127,000 net acres primarily in Kingfisher, Canadian and Garfield counties. “With our deep inventory of highreturn STACK drilling prospects, strong balance sheet and increased borrowing base, we will be able to continue to deliver outstanding results in one of America’s most active and economic regions,” Reynolds said.