EXHIBIT 10.10

 

September 30, 2019

 

Energy Resources 12, L.P.

Energy Resources 12 Operating Company (collectively, the "Borrowers")

5815 B, Western Avenue

Oklahoma City, OK 73118

 

Gentlemen:

 

Simmons Bank, as administrative agent (the "Agent") for the Lenders signatory
below (the "Lenders"), hereby agrees to amend existing Section 6.28 of the
Revolver Loan Agreement between and among Borrowers, the Agent and the Lenders
signatory party thereto dated August 31, 2018 (as amended, restated or otherwise
modified from time to time, the "Revolver Agreement") by deleting Section 6.28
in its entirety and replacing it with the following:

 

6.28 Hedging. Within 30 days after Agent has notified Borrowers that the
Collateral Borrowing Base is equal to or greater than fifty percent (50%) of the
Borrowers’ engineered PDP, as determined by Agent using Agent’s price deck and
engineering evaluation, Borrowers shall, except to the extent that Agent agrees
otherwise in writing, maintain risk management, hedging or other similar forms
of price protection for crude oil and natural gas volumes, such devices shall
include a “price floor” or comparable financial hedge or Risk Management
Agreement with the Swap Counterparty acceptable to Agent in all respects
(including, without limitation, price and term), covering not less than fifty
percent (50%) of Borrowers projected PDP oil and gas volumes (measured on an
equivalent basis) for a rolling eighteen (18) month period (to be measured at
each redetermination and based on the most recently completed reserve report by
the Agent).  Upon reducing the Collateral Borrowing Base amount to below fifty
percent (50%) of engineered PDP, the rolling hedge requirement will be
terminated, until the next time the Collateral Borrowing Base shall be equal to
or greater than fifty percent (50%) of the Borrowers’ engineered PDP. Otherwise,
Borrowers may enter into a Risk Management Agreement with a Swap Counterparty
acceptable to Agent in all respects (including, without limitation, price and
term), so long as (i) the term does not exceed 36 months and (ii) it covers not
more than eighty percent (80%) of Borrowers’ projected oil and gas volumes
(based on the most recently delivered reserve report acceptable to Agent).
Borrowers shall cure or reconcile any non-performance of its hedging covenants
under this Section 6.28 within thirty (30) days of each Redetermination Date.
Borrowers shall not enter into any Prohibited Hedge Transaction, including,
without limitation, any financial and physical hedge transactions affecting or
covering the same volume of production for concurrent or overlapping periods of
time.  The applicable counterparty to any ISDA Agreement shall be the Swap
Counterparty or such other counterparty acceptable to Agent and approved thereby
in writing.

 

The Collateral Borrowing Base is subject to periodic redetermination as set
forth in the Revolver Agreement. In accordance with the most recent such
redetermination, the Collateral Borrowing Base has been reaffirmed in the
existing amount of $40,000,000.00.

 

 

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This Letter Agreement is limited to the foregoing and shall in no way be
interpreted as a requirement or agreement by the Agent or Lenders to make any
similar accommodation or amendment in the future. The remaining terms,
provisions and conditions set forth in Revolver Agreement shall remain in full
force and effect for all purposes and are incorporated herein by reference. The
Borrower restates, confirms, adopts and ratifies the warranties, covenants and
representations set forth in the Revolver Agreement and the other Loan Documents
and further represents to the Bank that, as of the date hereof, no Default or
Event of Default exists under any Loan Document.

 

Capitalized terms used herein and not otherwise defined shall have the meaning
given in the Revolver Agreement. This Letter Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of
which when taken together shall constitute one and the same agreement and any of
the parties hereto may execute this Letter Agreement by signing any such
counterpart. Delivery of an executed counterpart of a signature page to this
Letter Agreement by telecopier shall be as effective as delivery of a manually
executed counterpart of this Letter Agreement.

 

Please indicate your acceptance of this Letter Agreement where indicated below.
This Letter Agreement is a Loan Document as defined in the Revolver Agreement
and may be executed in multiple counterparts, each of which shall be deemed an
original.

 

All other terms and provisions of the Revolver Agreement remain in full force
and effect.

 

Simmons Bank

 

By:      /s/ Charlie Crouse                   

Charlie Crouse

Managing Director

Energy Division

 

Agent and Lender

 

 

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The foregoing letter agreement is accepted and agreed to by each of the
undersigned Borrowers, as of the 30th day of September, 2019:

 

Energy Resources 12, L.P.

 

By:       /s/ David S. McKenney          

David S. McKenney

Chief Financial Officer

 

Energy Resources 12 Operating Company, LLC

 

By:       /s/ David S. McKenney          

David S. McKenney

Chief Financial Officer

 

 

 

The foregoing letter agreement is accepted and agreed to by each of the
undersigned Lenders to the Revolver Agreement, effective as of the 30th day of
September, 2019.

 

Arvest Bank

 

By:       /s/ S. Matt Condry               

S. Matt Condry,

Vice President-Commercial Banking

 

West Texas National Bank

 

By:       /s/ Thomas E. Stelmar, Jr.          

Thomas E. Stelmar, Jr.

Senior Vice President