exv10w4wb






Exhibit 10.4(b)




EXECUTION VERSION




INCREMENTAL TERM LOAN COMMITMENT AND AMENDMENT AGREEMENT




Endeavour International Corporation

1001 Fannin, Suite 1600

Houston, Texas 77002

Attention: Mr. J. Michael Kirksey

                 Executive Vice President and

                 Chief Financial Officer




Endeavour Energy UK Limited

c/o Endeavour International Corporation

1001 Fannin, Suite 1600

Houston, Texas 77002

Attention: Mr. J. Michael Kirksey

                 Executive Vice President and

                 Chief Financial Officer





	Re:  	 	Incremental Term Loan Commitments




Ladies and Gentlemen:




     Reference is hereby made to the Credit Agreement, dated as of August 16, 2010, among
Endeavour International Corporation (“Holdings”), Endeavour Energy UK Limited (the
“Borrower”), the lenders from time to time party thereto (each, a “Lender” and,
collectively, the “Lenders”), and the Administrative Agent (as amended, modified or
supplemented from time to time, the “Credit Agreement”). Unless otherwise defined herein,
capitalized terms used in this letter agreement (this “Agreement”) shall have the meanings
set forth in the Credit Agreement.



     Each Lender party to this letter agreement (each, an “Incremental Term Loan Lender”)
hereby severally agrees to provide the Incremental Term Loan Commitment set forth opposite its name
on Annex I attached hereto (for each such Incremental Term Loan Lender, its
“Incremental Term Loan Commitment”). Each Incremental Term Loan Commitment provided
pursuant to this Agreement shall be subject to all of the terms and conditions set forth in the
Credit Agreement, including, without limitation, Section 2.10 thereof. The parties to this
Agreement agree that this Agreement constitutes an Incremental Amendment pursuant to and in
accordance with Section 2.10 of the Credit Agreement.



     Each Incremental Term Loan Lender, Holdings, the Borrower (the “Incremental Term Loan
Borrower”) and the Administrative Agent acknowledge and agree that the Incremental Term Loan
Commitments provided pursuant to this Agreement shall constitute Incremental Term Loan Commitments
specified in Annex I attached hereto and, upon the incurrence of Incremental Term Loans
pursuant to such Incremental Term Loan Commitments, shall constitute Term Loans for all purposes of
the Credit Agreement and the other applicable Credit Documents. Each Incremental Term Loan Lender,
Holdings, the Incremental Term Loan Borrower and the Administrative Agent further agree that, with
respect to the Incremental Term



 









 




Loan Commitment provided by each Incremental Term Loan Lender pursuant to this Agreement, such
Incremental Term Loan Lender shall receive from Holdings and/or the Incremental Term Loan Borrower
such upfront fees, unutilized commitment fees and/or other fees, if any, as may be separately
agreed to in writing with Holdings and/or the Incremental Term Loan Borrower and
acknowledged by the Administrative Agent, all of which fees shall be due and payable to such
Incremental Term Loan Lender on the terms and conditions set forth in each such separate agreement.




     Furthermore, each of the parties to this Agreement hereby agree to the terms and conditions
set forth on Annex I hereto in respect of each Incremental Term Loan Commitment provided
pursuant to this Agreement.



     Pursuant to Section 2.10 of the Credit Agreement, Holdings, the Borrower and the
Administrative Agent hereby amend the Credit Agreement as set out in Annex II to this
Agreement.



     Holdings and the Borrower hereby confirm and represent that (i) no Default or Event of Default
has occurred and is continuing or would immediately result from the incurrence of Incremental Term
Loans on the Agreement Effective Date (as defined below), (ii) on the Agreement Effective Date, all
representation and warranties contained in the Credit Agreement and in all other Credit Documents
are true and correct in all material respects with the same effect as though such representations
had been made on such date (it being understood and agreed that any representation and warranty
which by its terms is made as of a specified date shall be required to be true and correct in all
material respects only on such specified date), and (iii) Holdings is in compliance with the
covenants set forth in Sections 8.08 through 8.10 of the Credit Agreement on a Pro Forma Basis for
the Test Period ending on September 30, 2010, as more specifically demonstrated by the calculations
set forth on Annex III hereto; provided that each Incremental Term Loan Lender and the
Administrative Agent acknowledge and agree that in making such calculations, Holdings has used
financial information for its fiscal quarter ending on September 30, 2010 that has not, as of the
date hereof, been finalized and approved by Holdings’ auditors, and as a result, such information
is subject to adjustment.



     Each Incremental Term Loan Lender party to this Agreement (i) confirms that it has received a
copy of the Credit Agreement and the other Credit Documents, together with copies of the financial
statements referred to therein, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this Agreement and to become
a Lender under the Credit Agreement, (ii) agrees that it will, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in taking or not
taking action under the Credit Agreement and the other Credit Documents, (iii) acknowledges and
agrees that no fiduciary or advisory relationship between the Administrative Agent and any
Incremental Term Loan Lender is intended to be or has been created in respect of any of the
transactions contemplated by this Agreement, (iv) acknowledges and agrees that the Administrative
Agent, on the one hand, and each Incremental Term Loan Lender on the other hand, have an
arms-length business relationship that does not directly or indirectly give rise to, and no
Incremental Term Loan Lender relies on, any fiduciary duty on the Administrative Agent’s part, (v)
acknowledges and agrees that each Incremental



2









 




Term Loan Lender is capable of evaluating and understanding, and each such Incremental Term
Loan Lender understands and accepts, the terms, risks and conditions of the transactions
contemplated by this Agreement, (vi) acknowledges and agrees that the Administrative Agent or any
of its Affiliates may have received fees or other compensation from Holdings or any of its
Affiliates in connection with this Agreement which may or may not be publicly disclosed and such
fees or compensation do not affect any Incremental Term Loan Lender’s independent credit decision
to enter into the transactions contemplated by this Agreement, (vii) acknowledges and agrees that
notwithstanding that no fiduciary or similar relationship exists between the Administrative Agent
and any Incremental Term Loan Lender, each such Incremental Term Loan Lender hereby waives, to the
fullest extent permitted by law, any claims it may have against the Administrative Agent or its
Affiliates for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the
Administrative Agent and its Affiliates shall have no liability (whether direct or indirect) to any
Incremental Term Loan Lender in respect of such a fiduciary duty claim or to any Person asserting a
fiduciary duty claim on behalf of or in right of any Incremental Term Loan Lender, including any
such Incremental Term Loan Lender’s stockholders, employees or creditors, (viii) appoints and
authorizes the Administrative Agent and the Collateral Agent to take such action as agent on its
behalf and to exercise such powers under the Credit Agreement, the other Credit Documents as are
delegated to the Administrative Agent and the Collateral Agent, as the case may be, by the terms
thereof, together with such powers as are reasonably incidental thereto, and (ix) agrees that it
will perform in accordance with their terms all of the obligations which by the terms of the Credit
Agreement and the other Credit Documents are required to be performed by it as a Lender.




     Upon the date of (i) the execution of a counterpart of this Agreement by each Incremental Term
Loan Lender, the Administrative Agent, Holdings, the Incremental Term Loan Borrower and
each Guarantor, (ii) the delivery to the Administrative Agent of a fully executed counterpart
(including by way of facsimile or other electronic transmission) hereof, (iii) the payment of any
fees then due and payable in connection herewith and (iv) the satisfaction of any other conditions
precedent set forth in Section 6 of Annex I hereto (such date, the “Agreement Effective
Date”), each Incremental Term Loan Lender party hereto (a) shall be obligated to make the
Incremental Term Loans provided to be made by it as provided in this Agreement on the terms, and
subject to the conditions, set forth in the Credit Agreement and in this Agreement and (b) to the
extent provided in this Agreement, shall have the rights and obligations of a Lender thereunder and
under the other applicable Credit Documents.



     The Incremental Term Loan Borrower acknowledges and agrees that (i) it shall be liable for all
Obligations with respect to the Incremental Term Loan Commitments provided hereby, including,
without limitation, all Incremental Term Loans made pursuant thereto and (ii) all such Obligations
(including all such Incremental Term Loans) shall be entitled to the benefits of the Security
Documents and each Guaranty.



     Each Guarantor acknowledges and agrees that all Obligations with respect to the Incremental
Term Loan Commitments provided hereby and all Incremental Term Loans made pursuant thereto shall
(i) be fully guaranteed pursuant to their respective Guaranties as, and to the extent, provided
therein and in the Credit Agreement and (ii) be entitled to the benefits of their respective
Security Documents as, and to the extent, provided therein and in the Credit Agreement.



3









 





     You may accept this Agreement by signing the enclosed copies in the space provided below, and
returning one copy of same to us before the close of business on October 21, 2010. If you do not
so accept this Agreement by such time, our Incremental Term Loan Commitments set forth in this
Agreement shall be deemed canceled.



     After the execution and delivery to the Administrative Agent of a fully executed copy of this
Agreement (including by way of counterparts and by facsimile or other electronic transmission) by
the parties hereto, this Agreement may only be changed, modified or varied by written instrument in
accordance with the requirements for the modification of Credit Documents pursuant to Section 13.12
of the Credit Agreement.



*****






4









 








     THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.



	 	 	 	 	 
	 	Very truly yours,



CYRUS OPPORTUNITIES FUND II, L.P.

 	 
	 	By:  	CYRUS CAPITAL PARTNERS L.P., as Investment Manager
 	 
	 	 	 
	 	By:  	/s/  Brennan McCaw
 	 
	 	 	Name:  	Brennan McCaw 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	CYRUS EUROPE FUND, L.P.

 	 
	 	By:  	CYRUS CAPITAL PARTNERS L.P., as Investment Manager
 	 
	 	 	 
	 	By:  	/s/  Brennan McCaw
 	 
	 	 	Name:  	Brennan McCaw 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	CRESCENT 1, L.P.

 	 
	 	By:  	CYRUS CAPITAL PARTNERS L.P., as Investment Manager
 	 
	 	 	 
	 	By:  	/s/  Brennan McCaw
 	 
	 	 	Name:  	Brennan McCaw 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	CYR FUND, L.P.

 	 
	 	By:  	CYRUS CAPITAL PARTNERS L.P., as Investment Manager
 	 
	 	 	 
	 	By:  	/s/  Brennan McCaw
 	 
	 	 	Name:  	Brennan McCaw 	 
	 	 	Title:  	Chief Financial Officer 	 



5









 







Agreed and Accepted

this 21st day of October, 2010:




	 	 	 	 	 
	ENDEAVOUR INTERNATIONAL CORPORATION

 	 	 
	By:  	/s/  J. Michael Kirksey
 	 	 
	 	Name:  	J. Michael Kirksey 	 	 
	 	Title:  	  Executive Vice President and Chief Financial
Officer 	 	 
	 
	ENDEAVOUR ENERGY UK LIMITED

 	 	 
	By:  	/s/  J. Michael Kirksey
 	 	 
	 	Name:  	J. Michael Kirksey 	 	 
	 	Title:  	  Executive Vice President and Chief Financial Officer 	 	 



6









 






Agreed and Accepted

this ___ day of October, 2010:




	 	 	 	 	 
	CYAN PARTNERS, LP,

as Administrative Agent

 	 	 
	By:  	/s/  Jonathan Tunis
 	 	 
	 	Name:  	Jonathan Tunis 	 	 
	 	Title:  	Authorized Signatory 	 	 



7









 








     Each Guarantor acknowledges and agrees to each the foregoing provisions of this Agreement and
to the incurrence of the Incremental Term Loans to be made pursuant thereto.



	 	 	 	 	 
	ENDEAVOUR INTERNATIONAL CORPORATION, as a Guarantor

 	 	 
	By:  	/s/  J. Michael Kirksey
 	 	 
	 	Name:  	J. Michael Kirksey 	 	 
	 	Title:  	  Executive Vice President and Chief Financial Officer 	 	 
	 
	ENDEAVOUR ENERGY NORTH SEA LLC, as a Guarantor

 	 	 
	By:  	/s/  Cathy Stubbs
 	 	 
	 	Name:  	Cathy Stubbs 	 	 
	 	Title:  	Senior Vice President — Finance 	 	 
	 
	ENDEAVOUR ENERGY NORTH SEA, L.P., as a Guarantor

 	 	 
	By:  	/s/ Cathy Stubbs
 	 	 
	 	Name:  	Cathy Stubbs 	 	 
	 	Title:  	Senior Vice President — Finance 	 	 
	 
	ENDEAVOUR OPERATING CORPORATION, as a Guarantor

 	 	 
	By:  	/s/ J. Michael Kirksey
 	 	 
	 	Name:  	J. Michael Kirksey 	 	 
	 	Title:  	  Executive Vice President and Chief Financial Officer 	 	 



8









 







	 	 	 	 	 
	ENDEAVOUR INTERNATIONAL HOLDING B.V., as a Guarantor

 	 	 
	By:  	/s/  J. Michael Kirksey
 	 	 
	 	Name:  	J. Michael Kirksey 	 	 
	 	Title:  	  Executive Vice President and Chief Financial Officer 	 	 
	 
	ENDEAVOUR ENERGY NETHERLANDS B.V., as a Guarantor

 	 	 
	By:  	/s/ J. Michael Kirksey
 	 	 
	 	Name:  	J. Michael Kirksey 	 	 
	 	Title:  	Executive Vice President and Chief Financial Officer 	 	 
	 
	ENDEAVOUR ENERGY NEW VENTURES INC., as a Guarantor

 	 	 
	By:  	/s/ J. Michael Kirksey
 	 	 
	 	Name:  	J. Michael Kirksey 	 	 
	 	Title:  	Executive Vice President and Chief Financial Officer 	 	 
	 
	END MANAGEMENT COMPANY, as a Guarantor

 	 	 
	By:  	/s/  J. Michael Kirksey
 	 	 
	 	Name:  	J. Michael Kirksey 	 	 
	 	Title:  	  Executive Vice President and Chief Financial Officer 	 	 
	 




9











 





ANNEX I




TERMS AND CONDITIONS FOR

INCREMENTAL TERM LOAN COMMITMENT



Dated as of October 22, 2010




	1.	 	Name of Incremental Term Loan Borrower: Endeavour Energy UK Limited
	 
	2.	 	Incremental Term Loan Commitment Amounts (as of the Agreement Effective Date):





	 	 	 	 	 
	 	 	Amount of Incremental Term Loan
	Names of Incremental Term Loan Lender(s)	 	Commitment
	 
	 	 	 	 
	Cyrus Opportunities Fund II, L.P.
	 	$	1,843,000	 
	 
	 	 	 	 
	Cyrus Europe Fund, L.P.
	 	$	97,000	 
	 
	 	 	 	 
	Crescent 1, L.P.
	 	$	3,209,000	 
	 
	 	 	 	 
	CYR Fund, L.P.
	 	$	4,851,000	 
	 
	 	 	 	 
	Total:
	 	$	10,000,000	 







	3.	 	Incremental Term Loan Borrowing Date: October 22, 2010
	 
	4.	 	Dates for, and amounts of, Scheduled Incremental Term Loan Repayments:





	 	 	 	 	 
	Fiscal Quarter Ending	 	Amount
	 
	 	 	 	 
	December 31, 2010
	 	$	25,000	 
	March 31, 2011
	 	$	25,000	 
	June 30, 2011
	 	$	25,000	 
	September 30, 2011
	 	$	25,000	 
	December 31, 2011
	 	$	25,000	 
	March 31, 2012
	 	$	25,000	 
	June 30, 2012
	 	$	25,000	 
	September 30, 2012
	 	$	25,000	 
	December 31, 2012
	 	$	25,000	 
	March 31, 2013
	 	$	25,000	 
	June 30, 2013
	 	$	25,000	 
	Maturity Date
	 	$9,725,000 (plus amounts attributable to PIK Interest added to outstanding principal of the Incremental Term Loans pursuant to the Credit Agreement)






10









 







	5.	 	The proceeds of the Incremental Term Loans to be provided hereunder are to be used for general
corporate purposes as provided for in Section 6.08 of the Credit Agreement.
	 
	6.	 	Other Conditions Precedent:






	 	(a)	 	Notice of request by the Incremental Term Loan Borrower for one or more Incremental Term Loans.






	7.	 	Notice Office: c/o Cyan Partners, LP, 399 Park Avenue, 39th Floor, New York, New York, 10022,
Attention: Divya Gopal, Telephone No.: (212) 380-5864, Telecopier No.: (212) 380-5871 or such
other office or person as the Administrative Agent may designate in writing in accordance with
the terms of the Credit Agreement.
	 
	8.	 	Payment Office: c/o Cyan Partners, LP, 399 Park Avenue, 39th Floor, New York, New York,
10022, or such other office as the Administrative Agent may designate in writing in accordance
with the terms of the Credit Agreement.




11









 











ANNEX II




INCREMENTAL AMENDMENTS




	1.	 	The definition of “Borrowing” in appearing in Section 1.01 of the Credit Agreement is
hereby amended by inserting the text “or, in the case of Incremental Term Loans, from the
Lenders and/or Additional Lenders, as applicable, pursuant to an Incremental Amendment”
immediately following the text “on the Funding Date” in such definition.
	 
	2.	 	The definition of “Credit Documents” appearing in Section 1.01 of the Credit Agreement
is hereby amended by inserting the text “each Incremental Amendment,” immediately following
the text “each Note,” in such definition.
	 
	3.	 	The definition of “Lender” appearing in Section 1.01 of the Credit Agreement is hereby
amended by inserting the text “ or an “Additional Lender” pursuant to an Incremental
Amendment in accordance with Section 2.10” immediately following the text “or 11.04(b)” in
such definition.
	 
	4.	 	Section 2.01 of the Credit Agreement is hereby amended by deleting the text “Total
Commitment (immediately prior to the incurrence of Term Loans on the Funding Date) Term
Loans incurred by the Borrower on the Funding Date plus” and inserting in lieu
thereof the text “Term Loans incurred by the Borrower (x) on the Funding Date and (y)
pursuant to any Incremental Amendment (if any) plus, in each case,”.
	 
	5.	 	Section 2.03 of the Credit Agreement is hereby amended by deleting the comma
immediately following the text “Notice of Borrowing” appearing in the first sentence of
such section and inserting in lieu thereof the text “or in an Incremental Amendment, as the
case may be,”.
	 
	6.	 	The table appearing in Section 4.02(a) of the Credit Agreement is hereby amended and
restated by deleting such table and replacing it with the table set forth below to reflect
the Scheduled Incremental Term Loan Repayments set out in paragraph 4 of Annex I to the
Agreement to which this Annex II is attached.





	 	 	 	 	 
	Fiscal Quarter Ending	 	Amount
	 
	 	 	 	 
	December 31, 2010
	 	$	400,000	 
	March 31, 2011
	 	$	400,000	 
	June 30, 2011
	 	$	400,000	 
	September 30, 2011
	 	$	400,000	 
	December 31, 2011
	 	$	400,000	 
	March 31, 2012
	 	$	400,000	 
	June 30, 2012
	 	$	400,000	 
	September 30, 2012
	 	$	400,000	 
	December 31, 2012
	 	$	400,000	 
	March 31, 2013
	 	$	400,000	 
	June 30, 2013
	 	$	400,000	 
	Maturity Date
	 	$155,600,000 (plus amounts






12









 




	 	 	 	 	 
	 
	 	 	 	 
	
	 	attributable to PIK
Interest

added to outstanding principal

of the Incremental Term

Loans pursuant to the Credit

Agreement)




13









 





ANNEX III




FINANCIAL COVENANT CALCULATIONS



8.08 Maximum Total Leverage Ratio

(in million USD)




	 	 	 	 	 

	Ratio of Consolidated Net Indebtedness
to Consolidated EBITDAX
	 	 	 	 
	 
	 	 	 	 
	Consolidated Net Indebtedness
	 	 	 	 
	Consolidated Indebtedness:
	 	 	 	 
	Letters of Credit & Guarantees
	 	 	32.2	 
	Pro Forma Term Loan
	 	 	160.0	 
	Subordinated Notes
	 	 	50.9	 
	Convertible Notes
	 	 	81.3	 
	Convertible Bond
	 	 	54.3	 
	Contingent Obligations
	 	 	0.0	 
	Off-Balance Sheet Liabilities
	 	 	0.0	 
	 
	 	 	 	 
	Subtotal
	 	 	378.6	 
	Less:
	 	 	 	 
	Pro Forma 30 Day Average Daily Unrestricted Cash
	 	 	65.5	 
	 
	 	 	 	 
	Consolidated Net Indebtedness
	 	 	313.1	 
	 
	 	 	 	 
	Consolidated EBITDAX in Test Period
	 	 	50.3	 
	 
	 	 	 	 
	Total Leverage Ratio
	 	 	6.2	 






14









 






8.09 Minimum EBITDAX

(in thousands USD)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Quarter	 	 	 	 	 	 	 	 	 	Quarter	 	Four Consecutive
	 	 	Ended	 	Quarter	 	 	 	 	 	Ended	 	Quarters Ended
	 	 	December	 	Ended March	 	Quarter Ended	 	September	 	September 30,
	 	 	31, 2009	 	31, 2010	 	June 30, 2010	 	30, 2010	 	2010
	Consolidated Net Income:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net income (loss)
	 	 	 	 	 	 	 	 	 	 	605	 	 	 	(13,579	)	 	 	 	 
	Less:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(i) Net income (loss) minority interest
	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	 	 
	(ii) Net income (loss) of subsidiary accrued prior to ownership
	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	 	 
	(iii) Net income (loss) of subsidiary disallowed
	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Consolidated Net Income
	 	 	 	 	 	 	 	 	 	 	605	 	 	 	(13,579	)	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Consolidated EBITDAX:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Consolidated Net Income
	 	 	 	 	 	 	 	 	 	 	605	 	 	 	(13,579	)	 	 	 	 
	Less:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(a) Extraordinary gain (loss)
	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	 	 
	(b) Non-cash income (expense)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-cash G&A
	 	 	 	 	 	 	 	 	 	 	(1,584	)	 	 	(1,501	)	 	 	 	 
	Unrealized gain (loss) on derivatives
	 	 	 	 	 	 	 	 	 	 	6,108	 	 	 	4,555	 	 	 	 	 
	Foreign currency gain (loss)
	 	 	 	 	 	 	 	 	 	 	607	 	 	 	(2,336	)	 	 	 	 
	Extraordinary expense — transaction costs
	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	 	 
	Inventory valuation adjustment
	 	 	 	 	 	 	 	 	 	 	(35	)	 	 	(438	)	 	 	 	 
	Inventory impairment
	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	 	 
	(c) Gain (loss) from sale of assets
	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	 	 
	(d) Interest income
	 	 	 	 	 	 	 	 	 	 	18	 	 	 	7	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Subtotal — Deductions
	 	 	 	 	 	 	 	 	 	 	5,114	 	 	 	287	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Plus:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(i) Interest expense, deferred finance costs amortiz
	 	 	 	 	 	 	 	 	 	 	5,623	 	 	 	10,474	 	 	 	 	 
	(ii) Tax expense (benefit)
	 	 	 	 	 	 	 	 	 	 	5,084	 	 	 	(2,001	)	 	 	 	 
	(iii) DD&A
	 	 	 	 	 	 	 	 	 	 	7,912	 	 	 	7,697	 	 	 	 	 
	(iv) Transaction fees of $160mm deal, not previously added
	 	 	 	 	 	 	 	 	 	 	—	 	 	 	10,201	 	 	 	 	 
	(v) G&G
	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	 	 
	(vi) Impairment of oil & gas properties
	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	 	 
	(vii) Goodwill amortization or impairment
	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Subtotal — Additions
	 	 	 	 	 	 	 	 	 	 	18,619	 	 	 	26,370	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Consolidated EBITDAX (4Q09 & 1Q10 per credit agreement)
	 	 	18,140	 	 	 	9,720	 	 	 	14,110	 	 	 	12,505	 	 	 	54,474	 






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8.10 Minimum Asset Coverage Ratios

(in million USD)




	 	 	 	 	 

	(a) Reserve Coverage Ratio
	 	 	 	 
	Ratio of PV-10 Value + Probable Reserve Value
to Consolidated Net Secured Indebtedness
	 	 	 	 
	 
	 	 	 	 
	PV-10 Value of Proved Reserves
	 	 	463.9	 
	Probable Reserve Value
	 	 	281.0	 
	 
	 	 	 	 
	Total Reserve Value
	 	 	744.9	 
	 
	 	 	 	 
	Consolidated Secured Indebtedness:
	 	 	 	 
	Term Loan
	 	 	160.0	 
	Letters of Credit & Guarantees
	 	 	32.2	 
	Hedging Obligations
	 	 	—	 
	Off-Balance Sheet Liabilities
	 	 	—	 
	Contingent Obligations
	 	 	—	 
	 
	 	 	 	 
	Subtotal
	 	 	192.2	 
	 
	 	 	 	 
	Pro Forma 30 Day Average Daily Unrestricted Cash
	 	 	65.5	 
	 
	 	 	 	 
	Consolidated Net Secured Indebtedness
	 	 	126.7	 
	 
	 	 	 	 
	Reserve Coverage Ratio
	 	 	5.9	 
	 
	 	 	 	 
	(b) PDP Coverage Ratio
	 	 	 	 
	Ratio of PV-10 Value from PDP Production
to Consolidated Net Secured Indebtedness
	 	 	 	 
	 
	 	 	 	 
	PV-10 Value of PDP Reserves
	 	 	87.4	 
	 
	 	 	 	 
	Consolidated Net Secured Indebtedness
	 	 	126.7	 
	 
	 	 	 	 
	PDP Coverage Ratio
	 	 	0.7	 







16