Limited Waiver and Second Amendment to Credit Agreement and Borrowing Base Redetermination dated May 8, 2018 among Yuma Energy, Inc., Yuma Exploration and Production Company, Inc., Pyramid Oil LLC, Davis Petroleum Corp., Socit Gnrale, as Administrative Agent, and each of the lenders and guarantors party thereto

THIS LIMITED WAIVER AND SECOND AMENDMENT TO CREDIT AGREEMENT AND BORROWING BASE REDETERMINATION (this “Amendment”) dated as of May 8, 2018, but effective as of March 31, 2018, among YUMA ENERGY, INC., a Delaware corporation (“Yuma Energy”), YUMA EXPLORATION AND PRODUCTION COMPANY, INC., a Delaware corporation, PYRAMID OIL LLC, a California limited liability company, and DAVIS PETROLEUM CORP., a Delaware corporation (“Davis”, and together with Yuma Energy, Yuma Exploration and Production Company, Inc., and Pyramid Oil LLC, the “Borrowers”, and each a “Borrower”), the Guarantors existing on the date hereof, the undersigned Lenders party to the Credit Agreement (the “Lenders”) and SOCIÉTÉ GÉNÉRALE, in its capacity as Administrative Agent (the “Administrative Agent”).

NOW, THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

The waivers in this Section 2 are effective only in respect of the matters and for the time periods expressly set forth in this Section 2 and not for any other period and, except as expressly set forth in this Amendment, no other waivers are intended or made by this Amendment. No failure or delay on the part of the Administrative Agent, any Lender, the Issuing Bank or the holder of any Note in exercising any power or right under the Credit Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No waiver or approval by the Administrative Agent, any Lender, the Issuing Bank or the holder of any Note under this Amendment, the Credit Agreement or any other Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to any subsequent transaction or any Default or Event of Default under any Loan Document.

 

“(a)            Unless otherwise agreed to by the Administrative Agent and the Lenders, the Borrowing Agent shall provide to the Administrative Agent on or before May 18, 2018 evidence satisfactory to the Administrative Agent that the Borrowers have entered into (and thereafter, the Borrower shall maintain in effect) Hedge Transactions with Approved Counterparties with respect to at least the monthly notional volumes of natural gas and crude oil, as applicable, set forth in on Schedule 5.10 for each such month and having the floor price levels indicated therein (it being acknowledged and agreed that the intention of the parties is that the Borrowers shall have entered into (and shall thereafter maintain) Hedge Transactions with Approved Counterparties (including the Hedge Transactions described above) such that (x) the notional volumes of all natural gas related Hedge Transactions of the Borrowers and their respective Subsidiaries, in the aggregate, equal or exceed 70% of the Borrowers’ and their respective Subsidiaries’ reasonably anticipated projected production of proved developed producing reserves from natural gas for each month during the period from June 1, 2018 through December 31, 2019, (y) the notional volumes of all natural gas related Hedge Transactions of the Borrowers and their respective Subsidiaries, in the aggregate, equal or exceed 50% of the Borrowers’ and their respective Subsidiaries’ reasonably anticipated projected production of proved developed producing reserves from natural gas for the 2020 calendar year, and (z) the notional volumes of all crude oil related Hedge Transactions of the Borrowers and their respective Subsidiaries, in the aggregate, equal or exceed 80% of the Borrowers’ and their respective Subsidiaries’ reasonably anticipated projected production of crude oil for each month during the period from ten (10) Business Days after the Effective Date through December 31, 2019).”

“SECTION 5.19  Production Reports and Lease Operating Statements. Commencing with the calendar month ending April 30, 2018, within 45 days after the end of each calendar month, a report setting forth, for such calendar month (i) the volume of production and sales attributable to production (and the prices at which such sales were made and the revenues derived from such sales) for each such calendar month from the Oil and Gas Properties, in the aggregate, and (ii) the related ad valorem, severance and production taxes and lease operating expenses attributable thereto and incurred for each such calendar month.”

“(b)           Current Ratio. Yuma Energy will not permit, as of the last day of any fiscal quarter, commencing with the fiscal quarter ending December 31, 2016, its ratio of (i) consolidated current assets of such Borrower and its Subsidiaries (including the unused amount of the total Commitments (but only to the extent that no Event of Default then exists or that such Event of Default has been waived by the requisite Lenders), but excluding non-cash assets under ASC Topic 815 (formerly FAS 133) to (ii) consolidated current liabilities of such Borrower and its Subsidiaries (excluding (x) non-cash obligations under ASC Topic 815 (formerly FAS 133) that may be classified as current liabilities and (y) the current portion of long-term Indebtedness outstanding under this Agreement) to be less than 1.00 to 1.00.”