7. Long-Term Debt

As of December 31, 2011 and 2010 our long-term debt was as follows (in thousands):

Aggregate annual maturities of long-term debt as of December 31, 2011 are as follows (in millions): 2012–$0.0; 2013 – $0.0; 2014 – $0.0; 2015 – $117.0; thereafter – $600.0.

See Note 8 for the estimated fair value of our Senior Notes and additional details about fair value measurements.

Senior Notes

On June 10, 2011, we issued $600.0 million of our senior notes at par with an interest rate of 8.5% and maturity date of June 15, 2019 (the "8.5% Senior Notes"). Interest is payable semi-annually in arrears on June 15 and December 15 of each year. The 8.5% Senior Notes are unsecured and are fully and unconditionally guaranteed by certain of our subsidiaries. At December 31, 2011, the outstanding balance of our 8.5% Senior Notes was $600.0 million and was classified at their carrying value as long-term debt. The estimated annual effective interest rate on the 8.5% Senior Notes is 8.7% which includes amortization of debt issuance costs. At December 31, 2011, the estimated fair value of the 8.5% Senior Notes was approximately $612.0 million. In January 2012, holders of the 8.5% Senior Notes exchanged their senior notes for registered notes with the same terms.

In June and July of 2011, we used a portion of the net proceeds from the issuance of the 8.5% Senior Notes to repurchase all of our 8.25% Senior Notes due 2014 (the "8.25% Senior Notes"), which had a principal amount of $450.0 million. Costs of $22.0 million related to repurchasing the 8.25% Senior Notes, which included repurchase premiums and the unamortized debt issuance costs, are included in the statement of income within the line item classification, Loss on extinguishment of debt.

At December 31, 2010, the outstanding balance of our 8.25% Senior Notes was $450.0 million and was classified at their carrying value as long-term debt. At December 31, 2010, the estimated fair value of the 8.25% Senior Notes was approximately $441.0 million.

During 2009, we repaid the Tranche B term loan facility in full with borrowings under our revolving loan facility. As a result, in 2009 we recorded a loss of $2.9 million related to the write-off of deferred financing costs and other related incidental costs.

We and our restricted subsidiaries are subject to certain covenants under the indenture governing the 8.5% Senior Notes, which limit our and our restricted subsidiaries' ability to, among other things, make investments, incur additional indebtedness or issue preferred stock, sell assets, consolidate, merge or transfer all or substantially all of its assets, engage in transactions with affiliates, pay dividends or make other distributions on capital stock or subordinated indebtedness and create unrestricted subsidiaries. We were in compliance with all applicable covenants of the indenture governing the 8.5% Senior Notes as of December 31, 2011.

Credit Agreement

On May 5, 2011, we entered into the Fourth Amended and Restated Credit Agreement (the "Credit Agreement"), which provides a revolving bank credit facility with an initial borrowing base of $525.0 million. In October 2011, the borrowing base was re-determined by our lenders and increased to $575.0 million. This is a secured facility that is collateralized by our oil and natural gas properties. The Credit Agreement terminates on May 5, 2015 and replaces the prior Third Amended and Restated Credit Agreement (the "Prior Credit Agreement"). Availability under the Credit Agreement is subject to a semi-annual borrowing base determination set at the discretion of our lenders. The amount of the borrowing base is calculated by our lenders based on their evaluation of our proved reserves and their own internal criteria. Any determination by our lenders to change our borrowing base will result in a similar change in the availability under our revolving bank credit facility.

The Credit Agreement contains covenants that restrict, among other things, the payment of cash dividends of up to $60.0 million per year, common stock repurchases and Senior Note repurchases of up to $100.0 million, borrowings other than from the revolving bank credit facility, sales of assets, loans to others, investments, merger activity, hedging contracts, liens and certain other transactions without the prior consent of the lenders. Letters of credit may be issued up to $90.0 million, provided availability under the revolving bank credit facility exists. We are subject to various financial covenants calculated as of the last day of each fiscal quarter including a minimum current ratio and a maximum leverage ratio as such ratios are defined in the Credit Agreement. We were in compliance with all applicable covenants of the Credit Agreement as of December 31, 2011.

Borrowings under the revolving bank credit facility bear interest at the applicable LIBOR plus a margin that varies from 2.00% to 2.75% depending on the level of total borrowings under the Credit Agreement, or an alternative base rate equal to the applicable margin ranging from 1.00% to 1.75% plus the highest of the (a) Prime Rate, (b) Federal Funds Rate plus 0.50%, and (c) LIBOR plus 1.0%.The unused portion of the borrowing base is subject to a commitment fee of 0.50%. The estimated annual effective interest rate was 3.7% for 2011 for borrowings under the Credit Agreement and the Prior Credit Agreement. The estimated annual effective interest rate includes amortization of debt issuance costs and excludes commitment fees and other costs.

Unamortized debt issuance costs of $0.7 million related to the Prior Credit Agreement were written off and are included in the statement of income within the line item classification, Loss on extinguishment of debt.

At December 31, 2011, we had $117.0 million in borrowings and $0.4 million in letters of credit outstanding under the revolving bank credit facility. The carrying amount of our revolving bank credit facility debt approximates fair value because the interest rates are variable and reflective of market rates. At December 31, 2010, we had no borrowings and $0.4 million in letters of credit outstanding under the revolving bank credit facility provided by the Prior Credit Agreement.