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In the event of a bankruptcy, liquidation or reorganization of any non-guarantor Subsidiary, the non-guarantor Subsidiary
will pay the holders of its debt and its trade creditors before it will be able to distribute any of its assets to the Issuer.
As at and for the three months ended 31 March 2014, the Issuer and the Initial Guarantors represented 78.7% of the
EBITDAX of the Issuer and its Subsidiaries, 81.4% of the average daily working interest production of the Issuer and its
Subsidiaries and 89.4% of the property, plant and equipment of the Issuer and its Subsidiaries. As at 31 May 2014, the
Issuer and the Initial Guarantors represented 96.8% of the 1P reserves of the Issuer and its Subsidiaries on a net
entitlement basis and 88.0% of the NPV of 1P reserves of the Issuer and its Subsidiaries. As at and for the three months
ended 31 March 2014, the Post-Closing Guarantor represented 21.3% of the EBITDAX of the Issuer and its Subsidiaries,
18.6% of the average daily working interest production of the Issuer and its Subsidiaries and 10.6% of the property, plant
and equipment of the Issuer and its Subsidiaries. As at 31 May 2014, the Post-Closing Guarantor represented 3.2% of the
1P reserves of the Issuer and its Subsidiaries on a net entitlement basis and 12.0% of the NPV of 1P reserves of the
Issuer and its Subsidiaries. See "
Risk Factors—Risks related to the Notes and the Structure of the Offering—The Notes
will be structurally subordinated to the liabilities of non-Guarantor subsidiaries
".
As of the Issue Date, all of the Issuer's Subsidiaries will be "Restricted Subsidiaries". However, under the circumstances
described below under the caption "—
Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries
", the
Issuer will be permitted to designate certain of its Subsidiaries as "Unrestricted Subsidiaries". The Issuer's Unrestricted
Subsidiaries will not be subject to any of the restrictive covenants in the Indenture.
Principal, Maturity and Interest
The Issuer will issue $250.0 million in aggregate principal amount of Notes in this offering. The Issuer may issue
additional Notes (the "
Additional Notes
") under the Indenture from time to time after this offering. Any issuance of
Additional Notes is subject to all of the covenants in the Indenture, including the covenant described below under the
caption "—
Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock
". The Notes and any
Additional Notes subsequently issued under the Indenture will be treated as a single class for all purposes under the
Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase, except as otherwise
provided in the Indenture;
provided
,
however
, that Additional Notes that are not fungible with the Notes for US federal
income tax purposes shall have a separate ISIN or other identifying number from the Notes. Unless the context otherwise
requires, the term “Notes” is used herein to refer to both the Notes and the Additional Notes. The Issuer will issue Notes
in minimum denominations of $200,000 and integral multiples of $1,000 in excess thereof. The Notes will mature on 4
August 2019. The redemption price of the Notes at maturity will equal 100% of the principal amount of the Notes.
Interest on the Notes will accrue at the rate of 9.500% per annum and will be payable semi-annually in arrear on 4
February and 4 August, commencing on 4 February 2015. The Issuer will make each interest payment to the holders of
record on the immediately preceding 20 January and 20 July. Interest on overdue principal and interest, if any, will
accrue at a rate that is 1.0% higher than the then applicable interest rate on the Notes.
Interest on the Notes will accrue from the date of original issuance or, if interest has already been paid, from the date it
was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
Transfer and Exchange
The Notes and the Note Guarantees have not been, and will not be, registered under the Securities Act or the securities
laws of any other jurisdictions. Notes will only be sold outside the United States pursuant to Regulation S under the
Securities Act and will initially be represented by one or more global notes in registered form without interest coupons
attached (the "
Regulation S Global Note
").
The Regulation S Global Notes will, upon issuance, be deposited with the Common Depositary and registered in the
name of the nominee of the Common Depositary for the accounts of Euroclear and Clearstream.
Ownership of interests in the Regulation S Global Note ("
Book-Entry Interests
") will be limited to persons that have
accounts with Euroclear and Clearstream or persons that may hold interests through such participants. Ownership of
interests in the Book-Entry Interests and transfers thereof will be subject to the restrictions on transfer described under
"
Notice to Investors
". In addition, transfers of Book-Entry Interests between participants in Euroclear or participants in
Clearstream will be effected by Euroclear or Clearstream pursuant to customary procedures and subject to the applicable
rules and procedures established by Euroclear or Clearstream and their respective participants.
If definitive Notes in registered form ("
Definitive Registered Notes
") are issued, they will be issued in denominations of
$200,000 in principal amount and integral multiples of $1,000 in excess thereof, upon receipt by the Registrar of
instructions relating thereto and any certificates, opinions and other documentation required by the Indenture. It is
expected that such instructions will be based upon directions received by Euroclear or Clearstream from the participant
that owns the relevant Book-Entry Interest.
