| Note 7 - Long Term Debt |
Long term debt consisted of the following at
December 31, 2018 and 2017:
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December 31,
2018
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December 31,
2017
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| As of December 31, 2016, the Company issued a total of $630,000 of 10% Secured promissory notes with a term expiring April 3, 2017 (the “Maturity Date”), and an original issue discount of thirty-seven and one-half percent (37.5%). The discount was modified to fifty percent (50%) retroactively with an extension of the maturity to June 2017. During the quarter ended March 31, 2017, the Company issued an additional $917,833 of 10% Secured promissory notes with terms expiring in June, August and September of 2017, and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the various maturity dates. |
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- |
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75,000 |
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| On October 4, 2016, the Company closed on a revolver loan with Crossfirst Bank in the amount of $1,800,000, payable at $15,000 per month, interest at 10%, with all unpaid principal and accrued interest payable on September 30, 2018. The balance shown is net of unamortized discount of $0 and $10,341 at December 31, 2018 and 2017 respectively. |
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- |
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1,594,659 |
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| During July and August of 2017, the Company borrowed $1,475,000 from private lenders pursuant to a 10% Secured Convertible Promissory Note with a twelve-month maturity. The balance shown is net of unamortized discount of $0 and $271,403 at December 31, 2018 and 2017 respectively. |
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- |
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1,203,597 |
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| During August through December of 2017, the Company borrowed $2,989,000, and from January through June 2018, the Company borrowed $3,230,000, all from private lenders pursuant to a 10% Secured Promissory Note with all principal and accrued interest payable on the maturity date of October 31, 2018. During the year ended December 31, 2018, $1,610,000 of these notes were paid in full and $4,609,000 of these notes have been exchanged for new partially convertible promissory notes.The promissory notes are secured by the membership interests of Mid-Con Drilling, LLC.The balance shown is net of unamortized discount of $0 and $867,399 at December 31, 2018 and 2017 respectively. |
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- |
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2,121,601 |
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| On September 8, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $256,983, payable interest only for the first twelve months commencing October 8, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 8, 2025. The balance shown is net of unamortized discount of $0 and $0 at December 31, 2018 and 2017 respectively. |
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- |
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253,870 |
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| On September 29, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $290,000, payable interest only for the first twelve months commencing October 29, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 29, 2025. The balance shown is net of unamortized discount of $0 and $3,925 at December 31, 2018 and 2017 respectively. |
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- |
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286,075 |
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| On October 3, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $204,000, payable interest only for the first twelve months commencing November 3, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on October 3, 2025. The balance shown is net of unamortized discount of $0 and $3,451 at December 31, 2018 and 2017 respectively. |
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200,549 |
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| On December 22, 2017, the Company borrowed $8,510,638, through 405 Petrodome, LLC, as agent for Lenders, with an OID of 6%., bearing interest initially at 9.875% through June 2018, then 11.375% through December 2018, then 12.875% through June 2019, then 14.375% through December 2019. Interest only through June 2018, at which time Principal will be payable at $75,000 monthly for six months and then $125,000 monthly to the maturity date of December 22, 2019. The balance shown is net of unamortized discounts of $0 and $941,108 at December 31, 2018 and 2017 respectively. |
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7,569,530 |
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| During June through December of 2018, the Company borrowed $9,459,750 from private lenders, and exchanged $5,514,000 of amounts due lenders from prior borrowings as well as $191,250 in accrued interest, pursuant to a 10% Secured Promissory Note with 50% of the principal convertible into the Company’s common stock at $0.20 per share, all principal and accrued interest payable on the maturity date of August 31, 2019. The terms of these notes contain a provision whereby the Company has the right to extend the Maturity Date for one additional year to August of 2020. Consideration for the one-year extension is an increase in the interest rate to 12% for the extension period and the issuance of a warrant to purchase an additional 50,000 common shares per $100,000 of outstanding principal of each note on a pro rata basis. The balance shown is net of unamortized discount of $5,981,012 at December 31, 2018. |
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9,168,988 |
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- |
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| On June 13, 2018, the Company borrowed $12,400,000 pursuant to a revolving line of credit facility with a maximum principal amount of $30,000,000 from Crossfirst Bank, bearing interest 1.5% above a base rate equal to the prime rate of interest published by the Wall Street Journal, interest only for June and July of 2018, at which time Principal will be payable at $100,000 monthly through the maturity date of September 30, 2020, at which time all remaining unpaid principal and accrued interest shall be due. The balance shown is net of unamortized discount of $103,421 at December 31, 2018 |
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11,728,911 |
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| On December 28, 2018, to facilitate the acquisition of certain oil and gas assets, the Company, through one of its subsidiaries, Ichor Energy LLC, entered into a Term Loan Credit Agreement with various lenders represented by ABC Funding, LLC as administrative agent. The agreement provides for a total loan amount of $63,592,000, bearing interest at a rate per annum equal to the greater of (i) a floating rate of interest equal to 10% plus LIBOR, and (ii) a fixed rate of interest equal to 12%, payable monthly on the last day of each calendar month, commencing January 31, 2019. Principal payments shall be made quarterly at 1.25% of the initial loan amount, commencing on the last business day of the fiscal quarter ending June 30, 2019. Cash generated from the operation of these assets is restricted to lease operating expenses, the payment of debt service on the Term Loan, approximately $12,000,000 of oil and gas development projects approved by the lender, and distributions to the Company of $65,000 per month for general and administrative expenses, and a quarterly tax distribution at the current statutory rates. On a quarterly basis, commencing with the quarter ended June 30, 2019, after appropriate distributions to the Company, any cash in excess of $2,000,000 plus unfunded approved development projects will be swept by the lender as an additional principal payment on the debt. To the extent not previously paid, all loans under the Loan Agreement shall be due and payable on the December 28, 2023 (the Maturity Date). The balance shown is net of unamortized discount of $4,385,408 at December 31, 2018. |
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59,206,592 |
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| On December 28, 2018, the Company issued a 10% secured promissory note in the amount of $23,777,948, payable to RPM Investments, secured by 100% of the membership interests of Ichor Energy Holdings, LLC.All accrued interest and unpaid principal are due on January 31, 2020. |
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23,777,948 |
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103,882,439 |
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13,304,881 |
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| Less current portion |
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(11,805,582 |
) |
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(3,562,051 |
) |
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$ |
92,076,857 |
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$ |
9,742,830 |
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Principal maturities of long term debt for
the next five years and thereafter are as follows:
| Period ended December 31, |
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Principal |
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Unamortized Discount |
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Net |
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| 2019 |
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$ |
18,734,700 |
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$ |
6,929,118 |
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$ |
11,805,582 |
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| 2020 |
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37,589,880 |
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912,372 |
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36,677,508 |
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| 2021 |
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3,179,600 |
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878,528 |
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2,301,072 |
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| 2022 |
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3,179,600 |
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878,528 |
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2,301,072 |
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| 2023 |
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51,668,500 |
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871,295 |
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50,797,205 |
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| Thereafter |
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- |
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- |
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- |
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$ |
114,352,280 |
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$ |
10,469,841 |
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$ |
103,882,439 |
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Loan Covenants
Pursuant to the terms of the Revolving Line
of Credit Facility executed on June 13, 2018 with CrossFirst Bank for a maximum principal amount of $30,000,000, the Company is
required to provide certain information to the Bank relative to operational performance of the Borrowers, to include internally
prepared consolidated financial statements, on a sound accounting basis in accordance with GAAP, consistently applied, Hedge Reports,
and a compliance certificate. This information is to be provided on a quarterly and annual basis.
Pursuant to the terms of the Term Loan Credit
Agreement executed on December 28, 2018 with various lenders represented by ABC Funding, LLC as administrative agent, in the amount
of $63,592,000, the Company is required to provide certain information relative to operational performance of the Loan Parties,
on a GAAP basis, on a monthly, quarterly and annual basis, to include unaudited consolidated financial statements and a lease operating
statement on a monthly and quarterly basis, and audited consolidated financial statements on an annual basis. This information
will be accompanied by compliance certificate on a quarterly and annual basis.
At December 31, 2018, the Company is not in
default of any loan covenants.
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