an applicable margin to be determined by the lenders. Interest on Eurodollar Loans is payable on either the last day of each Eurodollar option period or monthly, whichever is earlier. Interest on Base Rate Loans is payable monthly.

The Company is subject to the following covenants under the terms of the First Lien Credit Facility. These covenants, as amended, include the following financial covenants: (1) a minimum current ratio of 1.0 to 1.0 (including availability under the borrowing base), (2) a minimum quarterly debt service coverage of 2.75 times through September 30, 2006 and 3 times thereafter, (3) a maximum total net recourse debt to EBITDA (as defined in the First Lien Credit Facility, as amended) ratio, such that the maximum is 3.5 to 1.0 through September 30, 2006, 3.25 to 1.0 through December 31, 2006 and 3.0 to 1.0 thereafter; (4) a covenant regarding maintenance of a minimum shareholders’ equity, such that the quarterly minimum is $115.0 million plus 100% of all subsequent common and preferred equity contributed by shareholders subsequent to March 31, 2005, plus 50% of all positive earnings occurring subsequent to March 31, 2005; and (5) a covenant regarding maintenance of a minimum EBITDA to interest expense ratio, such that the minimum is 2.75 to 1.0 through September 30, 2006 and 3.0 to 1.0 thereafter. The First Lien Credit Facility also places restrictions on additional indebtedness, dividends to shareholders, liens, investments, mergers, acquisitions, asset dispositions, asset pledges and mortgages, change of control, repurchase or redemption for cash of the Company’s common stock, speculative commodity transactions and other matters.

On April 27, 2005, the Company amended the First Lien Credit Facility to, among other things, add a provision restricting loans from the Company to its subsidiaries or guarantors of the First Lien Credit Facility if the proceeds of such loans will be invested in an entity in which the Company holds an equity interest.

The Facility A Borrowing Base, under the First Lien Credit Facility, as of December 31, 2004 and December 31, 2005 was $30.0 million and $22.5 million, respectively.

At December 31, 2005, two letters of credit totaling $5.6 million were outstanding under the First Lien Credit Facility. There were no letters of credit outstanding at December 31, 2004.

Second Lien Credit Facility

On July 21, 2005, the Company entered into a second lien credit agreement with Credit Suisse, as administrative agent and collateral agent (the “Agent”) and the lenders party thereto (the “Second Lien Credit Facility”) that matures on July 21, 2010. The Second Lien Credit Facility provides for a term loan facility in an aggregate principal amount of $150.0 million. It is secured by substantially all of the Company’s assets and is guaranteed by the Company’s subsidiary. The liens securing the Second Lien Credit Facility are second in priority to the liens securing the First Lien Credit Facility, as more fully described in the intercreditor agreement among the Company, the Agent, the agent under the First Lien Credit Facility and the lenders.

A portion of the proceeds from the Second Lien Credit Facility were used to (1) repay $52.9 million of subordinated notes and cancel all outstanding indebtedness under the Subordinated Notes and the Senior Secured Notes; (2) repay, at the Company’s election, $18.5 million existing indebtedness under the First Lien Credit Facility; and (3) to pay associated transaction costs. The remaining proceeds are expected to be used to partially fund the Company’s ongoing capital expenditures program and for other general corporate purposes.

The interest rate on each base rate loan will be (1) the greater of the Agent’s prime rate and the federal funds effective rate plus 0.5%, plus (2) a margin of 5.0%. The interest rate on each eurodollar loan will be the adjusted LIBOR rate plus a margin of 6.0%. Interest on eurodollar loans is payable on either the last day of each period or every three months, whichever is earlier. Interest on base rate loans is payable quarterly.

The Company is subject to certain covenants under the terms of the Second Lien Credit Facility. These covenants include, but are not limited to, the maintenance of the following financial covenants: (1) a minimum current ratio of 1.0 to 1.0 including availability under the borrowing base under the First Lien Credit Facility; (2) a minimum quarterly interest coverage ratio of 2.75 to 1.0 through June 30, 2006 and 3.0 to 1.0 thereafter; (3) a minimum quarterly proved reserve coverage ratio of 1.5 to 1.0 through September 30, 2006 and 2.0 to 1.0 thereafter; and (4) a maximum total net recourse debt to EBITDA (as defined in the Second Lien Credit Facility) ratio of not more than 3.5 to 1.0 through June 30, 2006 and 3.25 to 1.0 thereafter. The Second Lien Credit Facility also places restrictions on additional indebtedness, dividends to shareholders, liens, investments, mergers, acquisitions, asset dispositions, repurchase or redemption of the Company’s common stock, speculative commodity transactions, transactions with affiliates and other matters.

The Second Lien Credit Facility is subject to customary events of default. Subject to certain exceptions, if an event of default occurs and is continuing, the Agent may accelerate amounts due under the Second Lien Credit Facility (except for a bankruptcy event of default, in which case such amounts will automatically become due and payable). If an event of default occurs under the Second Lien Credit Facility as a result of an event of default under the First Lien Credit Facility, the Agent may not accelerate the