Obsidian Energy(US:OBE)2025-05-23 20:00Credit Agreement Overview This section provides an overview of the Amended and Restated Credit Agreement, detailing the parties involved and the structure of the Cdn.$235,000,000 credit facility Parties and Facility Details This section details the Amended and Restated Credit Agreement for Obsidian Energy Ltd., outlining the Cdn.$235,000,000 credit facility and key parties - The agreement amends and restates a prior credit agreement, providing credit facilities totaling Cdn.$235,000,000112 Credit Facility Breakdown | Facility Type | Commitment (Cdn) | | :--- | :--- | | Syndicated Facility | $210,000,000 | | Operating Facility | $25,000,000 | | Total | $235,000,000 | - The primary parties to the agreement are Obsidian Energy Ltd. as the Borrower, a syndicate of Lenders including Royal Bank of Canada, Bank of Montreal, and ICBC Standard Bank PLC, and Royal Bank of Canada as the Agent911 ARTICLE 1 INTERPRETATION This article establishes the foundational definitions and interpretive rules for the credit agreement, ensuring consistent understanding of its terms Definitions This section provides comprehensive definitions for all capitalized terms, including credit facilities, financial ratios, and the Borrowing Base - The agreement defines two main credit facilities: a Cdn.$210,000,000 Syndicated Facility and a Cdn.$25,000,000 Operating Facility232301 - The "Borrowing Base" is defined as the lending value of the Borrower's proved, developed, producing reserves in Canada, as determined by the Lenders. This value serves as the ultimate cap on outstanding loans62 - The "Syndicated Facility Term Out Date" and "Operating Facility Term Out Date" are both set for May 31, 2026, after which the facilities cease to be revolving. The final "Maturity Date" for repayment is one year after the respective Term Out Date236305 Applicable Pricing Rate Grid (Margin over Benchmark) | Consolidated Senior Debt to EBITDA Ratio | Margin on Canadian Prime & U.S. Base Rate Loans | Margin on SOFR & CORRA Loans | Standby Fee | | :--- | :--- | :--- | :--- | | < 0.50:1.00 | [Redacted – Percentage] | [Redacted – Percentage] | [Redacted – Percentage] | | 0.50 to < 1.00:1.00 | [Redacted – Percentage] | [Redacted – Percentage] | [Redacted – Percentage] | | 1.00 to < 1.50:1.00 | [Redacted – Percentage] | [Redacted – Percentage] | [Redacted – Percentage] | | 1.50 to < 2.00:1.00 | [Redacted – Percentage] | [Redacted – Percentage] | [Redacted – Percentage] | | 2.00 to < 2.50:1.00 | [Redacted – Percentage] | [Redacted – Percentage] | [Redacted – Percentage] | | 2.50 to < 3.00:1.00 | [Redacted – Percentage] | [Redacted – Percentage] | [Redacted – Percentage] | | ≥ 3.00:1.00 | [Redacted – Percentage] | [Redacted – Percentage] | [Redacted – Percentage] | Other Interpretive Provisions This subsection outlines general rules for interpreting the agreement, including accounting principles, benchmark rate changes, and prior agreement restatement - All accounting terms and calculations are to be made in accordance with Generally Accepted Accounting Principles (GAAP) in Canada, applied on a consistent basis. The agreement includes a process to amend terms if GAAP changes materially affect the agreement's covenants or protections334339 - The agreement explicitly states it amends and restates the Existing Credit Agreement as of the Effective Date (April 4, 2025), with all outstanding amounts under the prior agreement continuing under this new agreement355351 - A mechanism is established to address potential discontinuation or regulatory reform of benchmark interest rates (like SOFR or CORRA), allowing for the determination of an alternative rate347 ARTICLE 2 THE CREDIT FACILITIES This article details the operational mechanics, repayment terms, and management of the credit facilities, including the Borrowing Base and accordion feature Facility Mechanics and Repayment This section details the operational mechanics of the credit facilities, including loan types, purpose, revolving nature, and repayment procedures - The credit facilities are for general corporate purposes, including oil and gas activities and acquisitions, but are explicitly prohibited from being used to repay or defease any Permitted Junior Debt357 - Both the Syndicated and Operating facilities are revolving credit lines, allowing the Borrower to draw, repay, and redraw funds up to the Term Out Date of May 31, 2026359360 - Mandatory repayment of all outstanding loans and obligations is required on the Maturity Date, which is one year after the applicable Term Out Date375 - The Borrower must repay any amount by which outstanding loans exceed the facility limit due to currency fluctuations (a "Currency Excess"), typically within 5 to 30 days of notice380 Facility Management and Adjustments This part covers facility management, including term out date extensions, lender replacement, Borrowing Base redetermination, and accordion features - The Borrower may request a 364-day extension of the Syndicated and Operating Facility Term Out Dates once per calendar year, subject to lender approval384392 - The initial Borrowing Base is established at Cdn.$300,000,000. It is scheduled for redetermination semi-annually (May 31 and November 30) and can also be redetermined at the request of the Majority of Lenders upon certain events, such as a Material Adverse Effect or significant asset disposition402 - If a Borrowing Base redetermination results in a Borrowing Base Shortfall (where outstanding loans exceed the new Borrowing Base), the Borrower has 60 days to repay the shortfall or add sufficient oil and gas properties to eliminate it407 - An "accordion" feature allows the Borrower to increase the Total Commitment up to the level of the current Borrowing Base by adding new lenders or increasing existing lenders' commitments, provided no default exists409 ARTICLE 3 CONDITIONS PRECEDENT This article specifies the conditions that must be met for the credit agreement to become effective and for any funds to be drawn Conditions for Funding and Effectiveness This section outlines the general and specific conditions required for the agreement's effectiveness and for any subsequent fund drawdowns - For any drawdown to occur, representations and warranties must be true, no Default or Event of Default must exist, and the total outstanding principal must not exceed the facility limit or the Borrowing Base411 - The effectiveness of this amended and restated agreement is contingent upon several key conditions, including the satisfactory execution of all security documents, no Material Adverse Effect since December 31, 2024, and the successful closing of the InPlay Transaction412413 ARTICLE 4 EVIDENCE OF DRAWDOWNS This article establishes the Agent's role in maintaining official records of all loans, which serve as conclusive evidence of the Borrower's obligations Account of Record This article stipulates that the Agent will maintain official books of account, which are conclusive evidence of the Borrower's obligations - The Agent and Operating Lender are responsible for maintaining the official records of all loans and amounts owed, which serve as conclusive evidence of the Borrower's debt obligations under the agreement416 ARTICLE 5 PAYMENTS OF INTEREST AND FEES This article details the calculation and payment of interest and various fees associated with the credit facilities, including penalty interest Interest and Fee Calculations This section details the calculation and payment of interest for different loan types, standby fees, agency fees, and penalty interest - Interest on loans is calculated by adding the Applicable Pricing Rate (a margin based on the Consolidated Senior Debt to EBITDA Ratio) to the relevant benchmark rate (Canadian Prime Rate, U.S. Base Rate, SOFR, or CORRA)418420421422 - The Borrower must pay a standby fee on the daily undrawn amount of the credit facilities, calculated using the Applicable Pricing Rate428 - Any overdue amounts will incur default interest at a rate of 2.0% per annum above the rate applicable to Canadian Prime Rate Loans or U.S. Base Rate Loans433 - The agreement includes provisions to ensure that the total interest charged does not exceed the maximum rate permitted by law, specifically the criminal rate under the Criminal Code (Canada)435 ARTICLE 6 LETTERS OF CREDIT This article governs the issuance, terms, and administration of Letters of Credit under the Operating Facility, including fees and reimbursement Letter of Credit Provisions This article governs the issuance, terms, and administration of Letters of Credit, outlining fees and reimbursement obligations - Letters of Credit can be issued in Canadian or U.S. Dollars under the Operating Facility and reduce its availability. They typically have an expiration date not exceeding one year438439 - If the Operating Lender makes a payment under an LC, the Borrower must immediately reimburse the amount. Failure to do so results in the drawn amount being automatically converted into a Canadian Prime Rate or U.S. Base Rate loan442 - The Borrower is responsible for paying issuance fees based on the Applicable Pricing Rate, as well as the Operating Lender's customary administrative fees and expenses for all LCs443444 - The Borrower's obligation to reimburse is absolute and unconditional, and it indemnifies the lenders from all claims and losses arising from the LCs, except in cases of gross negligence or willful misconduct445449 ARTICLE 7 PLACE AND APPLICATION OF PAYMENTS This article outlines the procedures for making and applying payments, including tax withholding, set-off rights, and default payment application Payment Mechanics and Application This article outlines the procedures for making and applying payments, including currency, tax withholding, and set-off rights - All payments by the Borrower must be made to the Agent or Operating Lender without set-off or counterclaim in the currency of the relevant loan460 - Payments must be made free and clear of Indemnified Taxes. If withholding is required by law, the Borrower must "gross-up" the payment so the Lender receives the full amount463464 - Upon an Event of Default, the Agent and Lenders have the right to set-off and apply any deposits or other indebtedness owed to the Borrower against the Borrower's outstanding obligations470 - Changes in the Applicable Pricing Rate become effective on the day the Borrower delivers a Compliance Certificate showing a change in the Consolidated Senior Debt to EBITDA Ratio473 ARTICLE 8 REPRESENTATIONS AND WARRANTIES This article contains detailed representations and warranties made by the Borrower, covering legal, financial, and compliance aspects Borrower's Representations This article lists the Borrower's representations and warranties regarding its legal existence, financial condition, and compliance with laws - The Borrower warrants its valid corporate existence, its authority to enter into the agreement, and that doing so does not conflict with any laws or other agreements476477479 - The Borrower represents that it has no debt other than Permitted Debt and no liens on its assets other than Permitted Encumbrances482483 - The Borrower confirms compliance with all applicable laws, including Sanctions, Anti-Corruption Laws, and Anti-Money Laundering/Anti-Terrorist Financing Laws, and states that loan proceeds will not be used in violation of these laws505 - These representations and warranties are deemed to be repeated on the date of each drawdown, conversion, or rollover, confirming the ongoing validity of these statements507 ARTICLE 9 GENERAL COVENANTS This article outlines the Borrower's affirmative and negative covenants, ensuring financial health and protecting the Lenders' interests Affirmative Covenants of the Borrower This section outlines the Borrower's obligations, including timely payments, record maintenance, legal compliance, and financial reporting - The Borrower must provide audited annual financial statements within 90 days of year-end and unaudited quarterly statements within 45 days of each quarter-end518 - An independent engineering report on reserves is required annually by March 31, with an internal update by October 31519 - The Borrower must promptly notify the Agent of any Default, Event of Default, Material Adverse Effect, or significant litigation524525526 Negative Covenants of the Borrower This section details actions the Borrower is prohibited from taking without consent, protecting lenders' interests and asset base - The Borrower is restricted from creating any Security Interests on its assets, other than those defined as Permitted Encumbrances551 - Asset sales or hedge monetizations exceeding the Threshold Amount (greater of Cdn.$[Redacted – Amount] or [Redacted – Percentage] of the Borrowing Base) since the last Borrowing Base redetermination require prior written consent of the Lenders553318 - The Borrower is prohibited from incurring any debt other than Permitted Debt and from making investments other than Permitted Investments555556 - Distributions (e.g., dividends) and prepayments of Permitted Junior Debt are only allowed if specific conditions are met, including no default existing, the pro forma Consolidated Total Debt to EBITDA Ratio being below a certain threshold (1.00:1.00 for distributions, 1.50:1.00 for prepayments), and maintaining minimum liquidity250259 ARTICLE 10 SECURITY This article establishes the collateral for the credit facilities, mandating a first-priority security interest on the Borrower's and Material Subsidiaries' assets Security Provisions This article establishes the collateral for the credit facilities, mandating a first-priority security interest on the Borrower's assets - All Secured Obligations are secured by a first-priority Security Interest on all present and future property, assets, and undertaking of the Borrower and each of its Material Subsidiaries571 - The Borrower must ensure that at all times, at least 95% of Consolidated Assets and 95% of Consolidated EBITDA are owned by or attributable to the Borrower and Material Subsidiaries that have provided security574 - Upon the occurrence of a "Fixed Charge Event" (such as a continuing Default), the Agent can require the security to be registered against specific land titles and mineral rights to create fixed charges579580 ARTICLE 11 EVENTS OF DEFAULT AND ACCELERATION This article defines events of default and outlines the Lenders' remedies, including debt acceleration and security enforcement Default and Remedies This article defines events of default and outlines the Lenders' remedies, including debt acceleration and security enforcement - An Event of Default can be triggered by various events, including non-payment, breach of covenants, insolvency, judgments exceeding the Threshold Amount, and cross-defaults to other debt590592593 - A Change of Control, defined as a person or group acquiring more than 50% of voting securities, constitutes an Event of Default87595 - Upon an Event of Default, the Agent may, upon request of the Majority of Lenders, accelerate the debt, making all outstanding principal, interest, and other obligations immediately due and payable595 - Following acceleration, all proceeds from realization on the security are applied first to costs, then rateably to all Secured Parties (Lenders and Hedging Affiliates) to satisfy the Secured Obligations603 ARTICLE 12 CHANGE OF CIRCUMSTANCES This article addresses adjustments for external changes, including benchmark rate replacement, increased costs due to law changes, and illegality of loans Adjustments for Market and Legal Changes This article addresses adjustments for market and legal changes, including benchmark rate replacement and increased costs due to new regulations - The agreement includes a robust framework for transitioning to a new benchmark interest rate if a "Benchmark Transition Event" occurs, allowing the Agent to implement a Benchmark Replacement and make conforming changes without requiring an amendment from all parties612613 - If a change in law or regulation (including Basel III or Dodd-Frank) increases a Lender's cost of maintaining its commitment or loan, the Lender can require the Borrower to pay "Additional Compensation" to cover these increased costs618621 - If it becomes illegal for a Lender to make or maintain a certain type of loan, its obligation to do so is terminated, and the Borrower must prepay or convert the affected loan624 ARTICLE 13 COSTS, EXPENSES AND INDEMNIFICATION This article establishes the Borrower's responsibility for costs and its obligation to indemnify the Lenders and Agent against losses Cost and Indemnity Provisions This article establishes the Borrower's responsibility for costs and its obligation to indemnify the Lenders and Agent against losses - The Borrower is required to pay all reasonable and documented out-of-pocket costs and expenses of the Agent and Lenders related to the negotiation, administration, and enforcement of the credit agreement633 - The Borrower provides a general indemnity to all Indemnified Parties (Lenders, Agent, etc.) against losses, damages, or liabilities incurred in connection with the credit facilities, except those resulting from the Indemnified Party's own gross negligence or willful misconduct634 - A specific environmental indemnity holds the Lenders and Agent harmless from any Environmental Claims related to the Borrower's properties or operations636 ARTICLE 14 THE AGENT AND ADMINISTRATION OF THE CREDIT FACILITY This article defines the Agent's role, authority, and duties in administering the credit facility, acting on behalf of the Lenders Agent's Role and Administration This article defines the Agent's role, authority, and duties in administering the credit facility, including payment handling and liability - Each Lender irrevocably appoints the Agent to act on its behalf. The Agent is required to act upon the instructions of the Majority of the Lenders on most matters643 - The Agent is not liable to the Lenders for any action taken or omitted, except for its own gross negligence or willful misconduct. Each Lender confirms it has made its own independent credit decision and has not relied on the Agent652657 - The Lenders agree to indemnify the Agent on a pro-rata basis for any liabilities or costs incurred in its role as Agent that are not reimbursed by the Borrower658 - The article includes detailed provisions for managing "Erroneous Payments," where the Agent mistakenly transmits funds to a Lender, establishing that such funds remain the property of the Agent and must be returned672 ARTICLE 15 GENERAL This article contains miscellaneous provisions, including confidentiality, governing law, assignment rules, and amendment requirements Miscellaneous Provisions This final article contains miscellaneous provisions, including confidentiality, governing law, assignment rules, and amendment requirements - The Agent and Lenders agree to keep information confidential but are permitted to disclose it under certain circumstances, such as to regulators, auditors, or in legal proceedings686 - Amendments and waivers generally require the written consent of the Borrower and the Majority of the Lenders. However, fundamental changes, such as to the facility amount, interest rates, maturity dates, or security, require the consent of all Lenders704 - The agreement is governed by the laws of the Province of Alberta and the applicable laws of Canada695 - The agreement includes an acknowledgement and consent to the potential application of "Bail-In" legislation, where liabilities of an affected financial institution could be written down or converted to equity by a resolution authority722