Second Amendment Amended and Restated Credit Agreement

EX-10.L.1 4 h41962exv10wlw1.htm SECOND AMENDMENT AMENDED AND RESTATED CREDIT AGREEMENT exv10wlw1

EXHIBIT 10.I.1

SECOND AMENDMENT TO CREDIT AGREEMENT

THIS SECOND AMENDMENT (herein called this “Amendment”) dated as of December 1, 2006, is among EL PASO EXPLORATION & PRODUCTION COMPANY (formerly El Paso Production Holding Company), EL PASO E&P COMPANY, L.P. (formerly El Paso Production Oil & Gas USA, L.P.) (individually, a “Borrower” and collectively, the “Borrowers”), and FORTIS CAPITAL CORP. (“Fortis”), as administrative agent (“Administrative “Agent”) for the Lenders party to the Credit Agreement (as defined below).

W I T N E S S E T H :

WHEREAS, El Paso Production Holding Company, El Paso Production Company, El Paso Energy Raton Corporation, El Paso Production GOM Inc. (collectively, the “Original Borrowers”), the Administrative Agent and the Lenders entered into that certain Amended and Restated Credit Agreement dated as of October 19, 2005 (the “Credit Agreement”), for the purposes and consideration therein expressed, pursuant to which the Lenders became obligated to make loans and issue letters of credit to the original Borrowers as therein provided;

WHEREAS, pursuant to a reorganization plan implemented by El Paso Corporation on or about December 31, 2005, (i) the outstanding equity interests of El Paso Production Oil & Gas Company, El Paso Production Oil & Gas Holdings, Inc., El Paso Production Resale Company, El Paso Production Oil & Gas USA, L.P., El Paso Energy Oil Transmission, L.L.C. and El Paso Production Oil & Gas Gathering, L.P. were transferred, directly or indirectly, to El Paso Production Holding Company, (ii) El Paso Production GOM Inc. and El Paso Energy Raton Corporation merged into El Paso Production Oil & Gas USA, L.P., which thereby became a Borrower under the Credit Agreement, (iii) the name of El Paso Production Holding Company was changed to El Paso Exploration & Production Company, (iv) the name of El Paso Production Oil & Gas USA, L.P. was changed to El Paso E&P Company, L.P. and (v) the names of certain of the Guarantors were changed;

WHEREAS, pursuant to a reorganization plan implemented by El Paso Exploration & Production Company on or about June 30, 2006, (i) Medicine Bow Energy Corporation merged into El Paso Exploration & Production Company, (ii) Medicine Bow Operating Company merged into El Paso E&P Company, L.P., (iii) El Paso Production Company merged into El Paso E&P Company, L.P., and (iv) El Paso Production Oil & Gas Company changed its name to El Paso Exploration & Production Management, Inc.;

WHEREAS, pursuant to a reorganization plan implemented by El Paso Corporation on or about October 1, 2006, (i) the outstanding equity interests of El Paso E&P International Holding Company (“International Holding”) were transferred to El Paso Exploration & Production Company, (ii) the subsidiaries of International Holding became indirect subsidiaries of El Paso Exploration & Production Company, and (iii) International Holding and certain of its domestic subsidiaries became Guarantors under the Credit Agreement;

WHEREAS, the Borrowers have requested that the Administrative Agent and the Lenders amend the Credit Agreement as set forth herein; and

WHEREAS, the Administrative Agent and the Lenders are willing to amend the Credit Agreement on the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Credit Agreement, in consideration of the loans and letters of credit which may hereafter be made or issued by the Lenders to the Borrowers, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

1. Terms Defined in the Credit Agreement. Unless the context otherwise requires or unless otherwise expressly defined herein, the terms defined in the Credit Agreement shall have the same meanings whenever used in this Amendment.

2. Amendments. The Credit Agreement is hereby amended as set forth below in this Section 2:

(a) The following new definition is hereby added immediately after the definition of “ABR Loans”:

“‘Additional Hedge Party’ – any entity with at least an investment grade credit rating that enters into a Hedging Agreement with the Borrowers.”

(b) Clause (r) of subsection 8.3 of the Credit Agreement, Limitation on Liens, is hereby amended to read as follows:

“(r) Liens not expressly permitted by this subsection 8.3 securing any Indebtedness permitted by subsections 8.2(c), (i) or (j) provided that (i) no such Lien shall encumber any Borrowing Base Properties, and (ii) at the time of incurrence, the outstanding principal amount of the Indebtedness secured by such Liens (other than Indebtedness under Hedging Agreements with Additional Hedge Parties) may not exceed 10% of the PV-10 Value of the Loan Parties’ Oil and Gas Properties and (iii) no such Lien shall secure any Hedging Agreement with El Paso Marketing LP.”

“(c) provided no Default, Event of Default, Borrowing Base Deficiency or Collateral Value Deficiency shall have occurred and be continuing, EPEP may declare and pay dividends or make other distributions of property with respect to any fiscal year (but no later than (A) December 31, 2007, with respect to the fiscal years ended December 31, 2005 and December 31, 2006, and (B) 120 days after the end of each

other fiscal year) in an amount that does not exceed the sum of (i) the Available Distribution Amount, plus (ii) the net proceeds of any equity offering or contribution of equity, in each case received by a Loan Party during such fiscal year, plus (iii) 100% of Free Cash Flow of the Loan Parties accrued during such fiscal year, minus (iv) Free Cash Flow and capital contributions used to repay Indebtedness pursuant to Section 8.9(z).”

(d) Clause (h) of subsection 8.8 of the Credit Agreement, Limitation on Investments, Loans and Advances, is hereby amended to read as follows:

“(h) provided no Default, Event of Default, Borrowing Base Deficiency, or Collateral Value Deficiency shall have occurred and is continuing, additional loans or advances made on a revolving basis to El Paso Corporation or its Subsidiaries under the Cash Management Program up to a maximum outstanding amount of $200,000,000; and”

(e) Clause (y) of subsection 8.9 of the Credit Agreement, Limitation on Payments and Modifications of Debt Instruments, Other Documents, is hereby amended to read as follows:

“(y) provided no Default, Event of Default, Borrowing Base Deficiency or Collateral Value Deficiency shall have occurred and be continuing, pay principal with respect to and interest on Indebtedness owed to El Paso Corporation or any of its Subsidiaries; provided, however, that such Indebtedness was incurred on a revolving basis and the amount of such revolving Indebtedness outstanding at any time does not exceed $200,000,000; and”

(f) Subsection 8.15, Hedging Agreements, is hereby amended to read as follows:

“8.15. Hedging Agreements. Enter into any Hedging Agreement after the Closing Date, other than Hedging Agreements entered into in the ordinary course of business to hedge or mitigate risks to which any Loan Party is exposed in the conduct of its business or the management of its liabilities, and provided that with respect to all Hedging Agreements (without duplication) (i) for oil, the total volumes to be hedged under Hedging Agreements that are not puts or floors shall not exceed 85% of expected oil production of the Loan Parties for the twenty-four month period commencing at the time of such hedging, and 60% for any subsequent twelve month period (determined by reference to the most recent Reserve Report), (ii) for gas, the total volumes to be hedged under Hedging Agreements that are not puts or floors shall not exceed 85% of expected gas production of the Loan Parties for the twenty-four month period commencing at the time of such hedging and 60% for any subsequent twelve month period (determined by reference to the most

recent Reserve Report) and (iii) the total volumes to be hedged under Hedging Agreements (including puts and floors) shall not exceed 100% of expected production of the Loan Parties for any applicable period (determined by reference to the most recent Reserve Report).”

3. Effective Date. This Amendment shall become effective (the “Effective Date”) when the Lenders shall have received, at the Administrative Agent’s office:

(i) A counterpart of this Amendment executed and delivered by Borrowers;

(ii) A confirmation of guaranty executed and delivered by each of the Guarantors; and

(iii) A certificate of a duly authorized officer of each Borrower to the effect that all of the representations and warranties set forth in Section 4 hereof are true and correct at and as of the time of such effectiveness and that there exists no Default or Event of Default under the Credit Agreement.

4. Representations and Warranties of Borrowers. In order to induce the Lenders to enter into this Amendment, each of the Borrowers represents and warrants to Lenders that:

(i) The representations and warranties contained in Section 5 of the Credit Agreement are true and correct at and as of the time of the effectiveness hereof.

(ii) Such Borrower is authorized to execute and deliver this Amendment and such Borrower is and will continue to be duly authorized to borrow and to perform its obligations under the Credit Agreement. Such Borrower has duly taken all action necessary to authorize the execution and delivery of this Amendment and to authorize the performance of the obligations of such Borrower hereunder.

(iii) The execution and delivery by such Borrower of this Amendment, the performance by such Borrower of its obligations hereunder and the consummation of the transactions contemplated hereby do not and will not conflict with any provisions of law, statute, rule or regulation or of the certificate of incorporation and bylaws or certificate of limited partnership and agreement of limited partnership, as applicable, of such Borrower, or of any material agreement, judgment, license, order or permit applicable to or binding upon such Borrower, or result in the creation of any lien, charge or encumbrance upon any assets or properties of such Borrower. Except for those which have been duly obtained, no consent, approval, authorization or order of any court or governmental authority or third party is required in connection with the execution and delivery by such Borrower of this Amendment or to consummate the transactions contemplated hereby.

(iv) When duly executed and delivered, each of this Amendment and the Credit Agreement will be a legal and binding instrument and agreement of such Borrower, enforceable in accordance with their terms, except as limited by bankruptcy, insolvency and similar laws applying to creditors’ rights generally and by principles of equity applying to creditors’ rights generally.

5. Ratification of Agreements. The Credit Agreement is hereby ratified and confirmed in all respects. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders under the Credit Agreement or any other Loan Document nor constitute a waiver of any provision of the Credit Agreement or any other Loan Document.

6. Survival of Agreements. All representations, warranties, covenants and agreements of the Borrowers herein shall survive the execution and delivery of this Amendment and the performance hereof, and shall further survive until all of the Obligations are paid in full. All representations, warranties, acknowledgements and agreements contained in Section 5 of the Credit Agreement are hereby reconfirmed on and as of the date hereof. All statements and agreements contained in any certificate or instrument delivered by any Borrower hereunder or under the Credit Agreement to Lenders shall be deemed to constitute representations and warranties by, or agreements and covenants of, such Borrower under this Amendment and under the Credit Agreement.

7. Loan Documents. This Amendment is a Loan Document, and all provisions in the Credit Agreement pertaining to Loan Documents apply hereto.

8. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York and any applicable laws of the United States of America in all respects, including construction, validity and performance.

9. Counterparts. This Amendment may be separately executed in counterparts and by the different parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one and the same Amendment.

10. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES.

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IN WITNESS WHEREOF, this Amendment is executed as of the date first above written.


EL PASO EXPLORATION & PRODUCTION COMPANY

By:	/s/ Dane E. Whitehead

Name:	Dane E. Whitehead
Title:	Senior Vice President and Chief Financial Officer

EL PASO E&P COMPANY, L.P.

By:	El Paso Production Oil & Gas Company, its general partner

	By:	/s/ Dane E. Whitehead

	Name:	Dane E. Whitehead
	Title:	Senior Vice President Chief Financial Officer


		FORTIS CAPITAL CORP., as Administrative Agent

		By:		/s/ Deirdre Sanborn

		Name:		Deirdre Sanborn

		Title:		Senior Vice President


		By:		/s/ Darrell Holley

		Name:		Darrell Holley

		Title:		Managing Director