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Wells Fargo, Pioneer Energy Upsize $350MM Revolving Credit Facility

September 23, 2014, 07:26 AM
Filed Under: Energy Services

Pioneer Energy Services has amended its existing revolving credit facility.  The new agreement provides Pioneer with a $350 million, five-year, senior secured revolving credit facility, which represents an increase of $100 million in total potential borrowing capacity over the Company's previous facility.  The new agreement also provides a lower interest rate and extends the maturity date of the credit facility from June 30, 2016 to September 22, 2019.  Currently, the Company has $40 million outstanding under the senior revolving credit facility, which includes a pay down of debt related to proceeds from the recent sale of the Company's fishing and rental assets.

According to an 8-K filing with the SEC, Wells Fargo is serving as administrative agent. The following is an excerpt from Pioneer's filing from Sep. 23:

On September 22, 2014, Pioneer Energy Services Corp. (“Pioneer”) entered into a Second Amendment (the “Second Amendment”) to that certain Amended and Restated Credit Agreement, dated as of June 30, 2011, as amended by the First Amendment thereto dated as of March 3, 2014, (as so amended, and as further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Pioneer, the lenders party thereto, and Wells Fargo Bank, N.A., as administrative agent (the “Administrative Agent”).

The purpose of the Second Amendment was to, among other things, (a) increase the aggregate amount of commitments under the Credit Agreement from $250 million to $350 million, (b) extend the maturity date of the Credit Agreement from June 30, 2016 to September 22, 2019, and (c) amend the pricing terms for borrowings and amend the commitment fee, in each case, as set forth below. Pioneer intends to use borrowings to redeem all of its existing 9.875% Senior Notes.

Borrowings under the Credit Agreement bear interest, at Pioneer’s option, at the base rate or Eurodollar rate plus, in each case, an applicable per annum margin. The applicable per annum margin, which has been decreased in connection with the Second Amendment to the Credit Agreement, is determined based upon Pioneer’s total leverage ratio in accordance with a pricing grid. The per annum applicable margin for Eurodollar rate borrowings decreased from a range of 2.50% to 3.25% to the new range of 2.00% to 3.00%, and the per annum applicable margin for base rate borrowings was decreased from a range of 1.50% to 2.25% to the new range of 1.00% to 2.00%. Pioneer’s commitment fee due quarterly under the Credit Agreement is being lowered from 0.50% to a range of 0.40% to 0.50%.

The foregoing description of the Second Amendment to the Credit Agreement in this Current Report on Form 8-K is qualified in its entirety by reference to the complete text of the Second Amendment...

"This amended facility reduces our borrowing costs and increases our financial flexibility, as well as provides an opportunity to redeem the remaining $125 million of our existing 9.875% Senior Notes," said Stacy Locke, Pioneer's President and CEO.  "We estimate that the benefit of the lower borrowing cost combined with the impact of redeeming our higher rate Senior Notes will reduce our annual interest expense by over $9 million."

Pioneer Energy Services provides contract land drilling services to independent and major oil and gas operators in Texas, the Mid-Continent, Rocky Mountain and Appalachian regions and internationally in Colombia through its Drilling Services Segment. Pioneer also provides well, wireline and coiled tubing services to producers in the U.S. Gulf Coast, offshore Gulf of Mexico, Mid-Continent and Rocky Mountain regions through its Production Services Segment.

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