St. Mary Land & Exploration has entered into a new $300 million credit that backs the oil and gas exploration company's acquisition of properties from Flying J Oil & Gas and Big West Oil & Gas. The new three-year revolver is led by Wachovia Securities, while Bank of America led the previous $200 million revolver, said Richard Norris, v.p. of finance and treasurer.
He explained that Wachovia had done previous non-related business with the Denver-based company, leading the bank to pitch one of the seven proposals that St. Mary reviewed from possible lead lenders. He noted that B of A pitched a credit proposal as well, but was not selected and is not involved in the new credit. Nine banks ended up in the new deal, he said, adding that seven are new relationships. A B of A spokeswoman did not return calls for comment. Norris declined to specify reasons why Wachovia was chosen over the other banks.
"Our line was coming up for renewal with B of A and was put on a faster track because of the acquisition," Norris said of the refinancing. The company issued shares of its restricted common stock for the purchase of the properties. St. Mary also loaned about $72 million, tapped from the new credit, to Flying J and Big West at LIBOR plus 2% for up to a 39-month period, which is secured by a pledge of the shares of St. Mary stock.
The initial calculated borrowing base on the new credit was set at $250 million after the purchase, with St. Mary accepting an initial commitment of $150 million. Pricing is currently at LIBOR plus 11/ 4%. Norris noted that the rate is based on a grid tied to utilization. There was also a 30 basis point commitment fee. He added that the loan is secured by 75% of the company's oil and assets.