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) Clause (c) of subsection 8.7 of the Credit Agreement, Limitation on
Dividends, is hereby amended to read as follows:




     “(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




2









 







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




3









 







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.




4









 







     (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.



[The Remainder of this Page Intentionally Left Blank]





5









 






     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	 	 






6









 






	 	 	 	 	 	 	 
	 	 	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	 	 
	 

	 	 	 	 	 	 






7