exv10w1






Exhibit 10.1




[Execution
Version]




October 7, 2011




JPMorgan Chase Bank, N.A.

2200 Ross Avenue, Third Floor

Dallas, Texas 75201

Attention: Kimberly A. Bourgeois





	 	Re:  	 	Eleventh Amendment to Credit Agreement dated as of January 18, 2008 among
Approach Resources Inc. (“Borrower”), JPMorgan Chase Bank, N.A. and the institutions
named therein (“Lenders”) and JPMorgan Chase Bank, N.A., as Agent (“Agent”)




Ladies and Gentlemen:




     Reference is hereby made to that certain Credit Agreement dated as of January 18, 2008 among
Approach Resources Inc., a Delaware corporation (“Borrower”), JPMorgan Chase Bank, N.A., as Agent
(“Agent”), and the Lenders that are signatory parties hereto (the “Lenders”), as amended by
amendments dated February 19, 2008, May 6, 2008, August 26, 2008, April 8, 2009, July 8, 2009,
October 30, 2009, February 1, 2010, May 3, 2010, October 21, 2010, May 4, 2011 and as of the date
hereof (as amended, the “Loan Agreement”). All capitalized terms herein shall have the meanings
ascribed to them in the Loan Agreement.



     Pursuant to this Eleventh Amendment (the “Amendment”), Agent, Lenders and Borrower agree,
effective as of the date hereof, to amend the Loan Agreement according to the terms and provisions
set forth below.



     1. Definition of Loan Documents. Section 1 of the Loan Agreement is hereby amended to
redefine “Loan Documents” as follows:




     “Loan Documents means this Agreement, the Notes, the Collateral Documents and all other
documents executed by Borrower with Agent or Lenders in connection with the transaction described
in this Agreement, including any and all amendments to this Agreement made pursuant to Section 24
of this Agreement.”



     2. Collateral Security. Section 6(b) of the Loan Agreement is hereby amended by
deleting the last sentence thereof and substituting the following therefor:




     “From time to time, Borrower will cause to be executed and delivered to Agent
additional Collateral Documents if Agent reasonably deems such are necessary to insure
perfection or maintenance of Lenders’ security interests and Liens in not less than 80% of
the Engineered Value of the Oil and Gas Properties which are included in the Borrowing Base
then in effect.”



     3. Events of Default. The following is hereby added to the end of Section 14 of the
Loan Agreement, “Events of Default”:



 









 






     “After the exercise of remedies provided for in this Agreement, the Collateral
Documents or any of the other Loan Documents (or after the Loans have automatically become
immediately due and payable as set forth in this Section 14), any amounts received on
account of the Notes or any Loans shall be applied by Agent in the following order:




First, to payment of that portion of the amounts owed hereunder and under the other Loan
Documents constituting fees, indemnities, expenses and other amounts (including fees,
charges and disbursements of counsel to Agent) payable to Agent in its capacity as such;




Second, to payment of that portion of the amounts owed hereunder constituting fees,
indemnities and other amounts (other than principal, interest and Letter of Credit fees)
payable to Lenders (including fees, charges and disbursements of counsel to the respective
Lenders), ratably among them in proportion to the respective amounts described in this
clause Second payable to Agent and Lenders;




Third, to payment of that portion of the amounts due hereunder constituting accrued and
unpaid Letters of Credit Fees and interest on the Loans, ratably among Lenders, in
proportion to the respective amounts described in this clause Third payable to them;




Fourth, to payment of that portion of the amounts owed hereunder constituting unpaid
principal of the Loans, unpaid Reimbursement Obligations, the maximum amounts which Lenders
might then or thereafter be called upon to advance under all Letters of Credit then
outstanding and settlements under Rate Management Transactions ratably among Lenders in
proportion to the respective amounts described in this clause Fourth held by them; and




Last, the balance, if any, after all of the amounts due hereunder, under the Loans and under
the other Loan Documents have been indefeasibly paid in full, to Borrower, or as otherwise
required by applicable law.




If an amount of an undrawn Letter of Credit or other contingent amount is included in the
foregoing and such Letter of Credit or other contingent amount expires and the resulting
obligations are lower than the amount that was included in the forgoing application of
payments, the Agent shall revise the calculation under the forgoing application of payments,
and the Lenders and other parties receiving such payments shall be obligated to refund any
excess payment to the Agent to be applied in accordance with the revised calculation of the
application of payments.”



     4. Agent and Lenders; Consultation with Counsel. Section 15(c) of the Loan Agreement
is hereby amended by deleting “FROST” from line 5 thereof and inserting “JPMORGAN” in its place.



     5. Increase to Borrowing Base and Commitment. As of the date hereof, the Borrowing
Base and Commitment under the Loan Agreement are increased to $260,000,000.



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     6. Assignments of Commitment. Prior to giving effect to this Amendment, JPMorgan
Chase Bank, N.A., BNP Paribas, KeyBank National Association, The Frost National Bank and Royal Bank
of Canada (the “Existing Lenders”) each has a Commitment Percentage as set out below under the
heading “Existing Lender Commitments.” The Existing Lenders desire to assign to Wells Fargo Bank,
N.A. (the “New Lender”), a percentage of each Existing Lender’s Commitment Percentage of its
obligations as a Lender under the Loan Agreement, such that after giving effect to such assignments
and as of the date hereof, the respective Commitment Percentages of the Existing Lenders and the
New Lender will be as set forth below under the heading “Revised Lender Commitments” and on
Schedule I attached hereto and made a part hereof and of the Loan Agreement, as amended hereby.
Agent and Borrower hereby consent to the assignments by Existing Lenders of such portion of each of
their rights and obligations as a Lender under the Loan Agreement to the New Lender. Effective as
of the date hereof such acquisition of a portion of the Existing Lenders’ Commitments by the New
Lender shall be deemed to have been consummated pursuant to the terms of the Assignment and
Acceptance Agreement attached as Exhibit D to the Loan Agreement (which is incorporated herein by
reference as if fully set forth herein) as if the Existing Lenders and the New Lender had executed
Assignment and Acceptance Agreements with respect to such assignments.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Existing Lender Commitments	 	 	Revised Lender Commitments	 
	Lenders	 	Percentage	 	 	Amount	 	 	Percentage	 	 	Amount	 
	JPMorgan Chase Bank, N.A.
	 	 	22.5	%	 	$	45,000,000	 	 	 	21.09	%	 	$	54,843,750	 
	BNP Paribas
	 	 	20.00	%	 	$	40,000,000	 	 	 	15.38	%	 	$	40,000,000	 
	KeyBank National Association
	 	 	20.00	%	 	$	40,000,000	 	 	 	18.75	%	 	$	48,750,000	 
	Royal Bank of Canada
	 	 	20.00	%	 	$	40,000,000	 	 	 	18.75	%	 	$	48,750,000	 
	The Frost National Bank
	 	 	17.5	%	 	$	35,000,000	 	 	 	16.41	%	 	$	42,656,250	 
	Wells Fargo Bank, N.A.
	 	 	N/A	 	 	 	N/A	 	 	 	9.62	%	 	$	25,000,000	 
	TOTAL
	 	 	100.00	%	 	$	200,000,000	 	 	 	100.00	%	 	$	260,000,000	 






     7. Schedule I. Effective as of the date hereof, Schedule I to the Loan Agreement is
deleted in its entirety and Schedule I attached hereto is substituted therefor.



     8. Replacement Notes. As of the date hereof there shall be executed and delivered by
Borrower to each of the Existing Lenders and the New Lenders, if requested, replacement Notes, in
the form of Exhibit “B” attached hereto reflecting the percentage of each Lender’s Pro Rata Part of
the Facility Amount. Promptly upon receipt of a replacement Note, each Lender shall deliver to
Borrower all existing Notes held by each such Lender.



     9. Notes. Notwithstanding Sections 3(a) and 3(b) of the Loan Agreement referencing
that the Loans shall be evidenced by Notes payable to each Lender in the aggregate face amount of
the Facility Amount, the delivery of such a Note to the Lenders shall be at each Lender’s
discretion. Any Lender may request that Loans made by it be evidenced by a Note. In such event,
the Borrower shall prepare, execute and deliver to such Lender a Note payable to the



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order of such Lender in the form of Exhibit “B” to the Loan Agreement. Thereafter, the Loans evidenced by such
Note and interest thereon shall at all times (including after assignment pursuant to Section 29 of
the Loan Agreement) be represented by one or more Notes in such form payable to the order of the
payee named therein. Irrespective of the Facility Amount, no Lender shall ever be obligated to
advance on the Commitment any amount in excess of its Commitment then in effect.




     10. Conditions Precedent. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent, unless specifically waived in writing by
Lenders:




     (a) The Amendment. Borrower, each Guarantor and each Lender shall have duly and
validly executed and delivered this Amendment to Agent.




     (b) Replacement Notes. If requested by any Lender, and upon the delivery to
Borrower of the terminated existing Notes, Borrower shall have duly and validly executed the
Notes payable to each of the Lender signatories hereto in termination and replacement of the
existing Notes.




     (c) Representations and Warranties. The representations and warranties contained in
the Loan Agreement and in the other Loan Documents shall be true and correct in all material
respects as of the date hereof, as if made on the date hereof.




     (e) No Default. No Default or Event of Default shall have occurred and be continuing.




     (f) Corporate/Partnership Proceedings. All corporate and/or partnership proceedings,
taken in connection with the transactions contemplated by this Amendment and all documents,
instruments and other legal matters incident thereto shall be satisfactory to Agent, and its legal
counsel.




     (g) Fees. In consideration for the agreements set forth herein, Borrower shall
have paid to Agent any fees payable to Agent and/or Lenders pursuant to or in connection
with the fee letter agreement of even date herewith between Borrower and Agent.



     11. Ratification by Guarantors. Each Guarantor hereby ratifies and reaffirms all of
its obligations under its Guaranty Agreement (the “Guaranty”) of Borrower’s obligations under the
Loan Agreement, as amended hereby. Each Guarantor also hereby agrees that nothing in this
Amendment shall adversely affect any right or remedy of Lenders under the Guaranty and that
the execution and delivery of this Amendment shall in no way change or modify its obligations as
guarantor under the Guaranty. Although each Guarantor has been informed by Borrower of the matters
set forth in this Amendment and such Guarantor has acknowledged and agreed to the same, such
Guarantor understands that Agent has no duty to notify such Guarantor or to seek such Guarantor’s
acknowledgment or agreement, and nothing contained herein shall create such a duty as to any
transaction hereafter.



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     12. Representations and Warranties. By executing this Amendment, Borrower hereby
represents, warrants and certifies to Lenders that, as of the date hereof, (a) there exists no
Event of Default or events which, with notice or lapse of time, would constitute an Event of
Default; (b) Borrower has performed and complied with all agreements and conditions contained in
the Loan Agreement or the other Loan Documents which are required to be performed or complied with
by Borrower; and (c) the representations and warranties contained in the Loan Agreement and the
other Loan Documents are true in all material respects, with the same force and effect as though
made on and as of the date hereof (except to the extent that such representations and warranties
related solely to an earlier date).



     13. Confirmation and Ratification. Except as affected by the provisions set forth
herein, the Loan Agreement shall remain in full force and effect and is hereby ratified and
confirmed by all parties. 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 Lenders
under the Loan Agreement or the other Loan Documents.



     14. Reference to Loan Agreement. Each of the Loan Agreement and the Loan Documents,
and any and all other agreements, documents or instruments now or hereafter executed and delivered
pursuant to the terms hereof or pursuant to the terms of the Loan Agreement, as amended hereby, are
hereby amended so that any reference in the Loan Agreement, the Loan Documents and such other
documents to the Loan Agreement shall mean a reference to the Loan Agreement as amended hereby.



     15. Multiple Counterparts. This Amendment may be executed in a number of identical
separate counterparts, each of which for all purposes is to be deemed an original, but all of which
shall constitute, collectively, one agreement. No party to this Amendment shall be bound hereby
until a counterpart of this Amendment has been executed by all parties hereto. Delivery of an
executed counterpart of a signature page of this Amendment by telecopy shall be effective as
delivery of a manually executed counterpart of this Amendment.



     16. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS.



     17. Final Agreement. THE LOAN AGREEMENT, AS AMENDED BY THIS AMENDMENT, AND ALL
PROMISSORY NOTES AND OTHER LOAN DOCUMENTS EXECUTED PURSUANT THERETO OR HERETO, REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG ANY OF THE PARTIES.



     Please signify your acceptance to the foregoing terms and provisions by executing a copy of
this Amendment at the space provided below.



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	 	Very truly yours,



BORROWER:



APPROACH RESOURCES INC.,

a Delaware corporation

 	 
	 	By:  	/s/ J. Ross Craft
 	 
	 	 	J. Ross Craft, President and Chief Executive Officer 	 
	 
	 	GUARANTORS:



APPROACH OIL & GAS INC.,

a Delaware corporation

 	 
	 	By:  	/s/ J. Ross Craft
 	 
	 	 	J. Ross Craft, President and Chief Executive Officer 	 
	 
	 	APPROACH RESOURCES I, LP,

a Texas limited partnership

 	 
	 	By:  	Approach Operating, LLC,
 a Delaware limited liability company,
 its general partner
 	 
	 
	 	By:  	Approach Resources Inc.,
 a Delaware corporation,
 its sole member
 	 
	 
	 	By:  	/s/ J. Ross Craft
 	 
	 	 	J. Ross Craft, President and Chief Executive Officer 	 
	 



[Signature Pages]














 







	 	 	 	 	 
	 	ACCEPTED AND AGREED TO

effective as of the date and year

first above written:



AGENT:



JPMORGAN CHASE BANK, N.A.

 	 
	 	By:  	/s/ Michael A. Kamauf
 	 
	 	 	Michael A. Kamauf, Authorized Officer 	 
	 
	 	LENDERS:



JPMORGAN CHASE BANK, N.A.

 	 
	 	By:  	/s/ Michael A. Kamauf
 	 
	 	 	Michael A. Kamauf, Authorized Officer 	 



[Signature Pages]
















 





	 	 	 	 	 
	 	BNP PARIBAS, Lender and Syndication Agent

 	 
	 	By:  	/s/ Michaela Braun
 	 
	 	 	Name:  	Michaela Braun 	 
	 	 	Title:  	Director 	 
	 
	 	 	 
	 	By:  	/s/ Greg Smothers
 	 
	 	 	Name:  	Greg Smothers 	 
	 	 	Title:  	Director 	 
	 



[Signature Pages]







 









 








	 	 	 	 	 
	 	KEYBANK NATIONAL ASSOCIATION, Lender and

Documentation Agent

 	 
	 	By:  	/s/ David Morris
 	 
	 	 	Name:  	David Morris 	 
	 	 	Title:  	Vice President 	 
	 



[Signature Pages]





















 









 








	 	 	 	 	 
	 	THE FROST NATIONAL BANK

 	 
	 	By:  	/s/ Alex Zemkoski
 	 
	 	 	Alex Zemkoski, Vice President 	 
	 	 	 	 
	 



[Signature Pages]

















 









 








	 	 	 	 	 
	 	ROYAL BANK OF CANADA

 	 
	 	By:  	/s/ Jay T. Sartain
 	 
	 	 	Name:  	Jay T. Sartain 	 
	 	 	Title:  	Authorized Signatory 	 
	 



[Signature Pages]







 









 








	 	 	 	 	 
	 	WELLS FARGO BANK, N.A.

 	 
	 	By:  	/s/ Catherine Stacy
 	 
	 	 	Name:  	Catherine Stacy 	 
	 	 	Title:  	Vice President 	 
	 



[Signature Pages]














 









 








SCHEDULE I




	 	 	 	 	 	 	 	 	 
	 	 	Commitment Amount	 	 	Percentage Commitment	 
	JPMorgan Chase Bank, NA
	 	$	54,843,750.00	 	 	 	21.09	%
	 
	 	 	 	 	 	 	 	 
	BNP Paribas
	 	$	40,000,000.00	 	 	 	15.38	%
	 
	 	 	 	 	 	 	 	 
	Key Bank National Association
	 	$	48,750,000.00	 	 	 	18.75	%
	 
	 	 	 	 	 	 	 	 
	Royal Bank of Canada
	 	$	48,750,000.00	 	 	 	18.75	%
	 
	 	 	 	 	 	 	 	 
	The Frost National Bank
	 	$	42,656,250.00	 	 	 	16.41	%
	 
	 	 	 	 	 	 	 	 
	Wells Fargo Bank, N.A.
	 	$	25,000,000.00	 	 	 	9.62	%
	 
	 	 	 	 	 	 	 	 
	TOTAL
	 	$	260,000,000.00	 	 	 	100.00	%











 









 








EXHIBIT “B”




REVOLVING NOTE




					
	 	 	 	 	 
	$_________________
	 	Dallas, Texas
	 	October 7, 2011






     FOR VALUE RECEIVED, the undersigned APPROACH RESOURCES INC., a Delaware corporation
(“Borrower”), hereby unconditionally promises to pay to the order of __________________ (“Lender”)
at the offices of JPMORGAN CHASE BANK, N.A. (“Agent”) in Dallas County, Texas, the principal sum of
_______ MILLION AND NO/100 DOLLARS ($_________________), or so much thereof as may be advanced by
Lender and outstanding at any time or from time to time pursuant to the Credit Agreement (as
hereinafter defined) in lawful money of the United States of America together with interest from
the date hereof until paid at the rates specified in the Credit Agreement. All payments of
principal and interest due hereunder are payable at the offices of Agent at 2200 Ross Avenue, Third
Floor, Dallas, Texas 75201, Attention: Kimberly A. Bourgeois, or at such other address as Agent
shall designate in writing to Borrower.



     The principal and all accrued interest on this Note shall be due and payable in accordance
with the terms and provisions of the Credit Agreement.



     This Note is executed pursuant to that certain Credit Agreement dated January 18, 2008 by and
among Borrower, Agent and the other Lenders parties thereto, as amended (as amended, the “Credit
Agreement”) and is one of the Notes referred to therein. Reference is made to the Credit Agreement
and the Loan Documents (as that term is defined in the Credit Agreement) for a statement of
prepayment rights and obligations of Borrower, for a statement of the terms and conditions under
which the due date of this Note may be accelerated and for statements regarding other matters
affecting this Note (including without limitation the obligations of the holder hereof to advance
funds hereunder, principal and interest payment due dates, voluntary and mandatory prepayments,
exercise of rights and remedies, payment of attorneys’ fees, court costs and other costs of
collection and certain waivers by Borrower and others now or hereafter obligated for payment of any
sums due hereunder). Upon the occurrence of an Event of Default (as that term is defined in the
Credit Agreement and Loan Documents) Agent may declare forthwith to be entirely and immediately due
and payable the principal balance hereof and the interest accrued hereon, and Lender shall have all
rights and remedies of a Lender under the Credit Agreement and Loan Documents. This Note may be
prepaid in accordance with the terms and provisions of the Credit Agreement.



     Regardless of any provision contained in this Note, the holder hereof shall never be entitled
to receive, collect or apply, as interest on this Note, any amount in excess of the Maximum Rate
(as such term is defined in the Credit Agreement), and, if the holder hereof ever receives,
collects, or applies as interest any such amount which would be excessive interest, it shall be
deemed a partial prepayment of principal and treated hereunder as such; and, if the indebtedness
evidenced hereby is paid in full, any remaining excess shall forthwith be paid to Borrower. In
determining whether or not the interest paid or payable under any specific



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contingency exceeds the Maximum Rate, Borrower and the holder hereof shall, to the maximum
extent permitted under applicable law (i) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and
(iii) spread the total amount of interest throughout the entire contemplated term of the
obligations evidenced by this Note and/or referred to in the Credit Agreement so that the interest
rate is uniform throughout the entire term of this Note; provided that, if this Note is paid and
performed in full prior to the end of the full contemplated term thereof and if the interest
received for the actual period of existence thereof exceeds the Maximum Rate, the holder hereof
shall refund to Borrower the amount of such excess or credit the amount of such excess against the
indebtedness evidenced hereby, and, in such event, the holder hereof shall not be subject to any
penalties provided by any laws for contracting for, charging, taking, reserving or receiving
interest in excess of the Maximum Rate.




     If any payment of principal or interest on this Note shall become due on a day other than a
Business Day (as such term is defined in the Credit Agreement), such payment shall be made on the
next succeeding Business Day and such extension of time shall in such case be included in computing
interest in connection with such payment.



     If this Note is placed in the hands of an attorney for collection, or if it is collected
through any legal proceeding at law or in equity or in bankruptcy, receivership or other court
proceedings, Borrower agrees to pay all costs of collection, including, but not limited to, court
costs and reasonable attorneys’ fees.



     Borrower and each surety, endorser, guarantor and other party ever liable for payment of any
sums of money payable on this Note, jointly and severally waive presentment and demand for payment,
notice of intention to accelerate the maturity, protest, notice of protest and nonpayment, as to
this Note and as to each and all installments hereof, and agree that their liability under this
Note shall not be affected by any renewal or extension in the time of payment hereof, or in any
indulgences, or by any release or change in any security for the payment of this Note, and hereby
consent to any and all renewals, extensions, indulgences, releases or changes.



     This Note renews and replaces, but does not extinguish, the amounts remaining unpaid on that
certain promissory note dated May 4, 2011, executed by Borrower and payable to the order of Lender.
[This paragraph does not apply to the Wells Fargo Bank, N.A. Note.]



     THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA AND THE LAWS OF THE STATE OF TEXAS. BORROWER AGREES THAT THIS NOTE IS
PERFORMABLE IN TARRANT COUNTY, TEXAS AND THAT SUCH COUNTY IS PROPER VENUE FOR ANY ACTION OR
PROCEEDING INVOLVING THIS NOTE TO THE EXCLUSION OF ALL OTHER VENUES.



     THIS INSTRUMENT SECURES A LINE OF CREDIT USED PRIMARILY FOR BUSINESS, COMMERCIAL OR
AGRICULTURAL PURPOSES.



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     THIS WRITTEN NOTE, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENTS BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.



     EXECUTED as of the date and year first above written.



	 	 	 	 	 
	 	BORROWER:



APPROACH RESOURCES INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Steven P. Smart, Executive Vice President and  	 
	 	 	Chief Financial Officer 	 
	 




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