American oil and gas company Murphy Oil Corporation has received commitments from certain members of its existing bank group and other new lenders to enter into a $1.2 billion revolving credit facility.

The company said on Wednesday that the new revolving credit facility will be a senior unsecured guaranteed facility and will expire in August 2019. The company presently expects the facility to be undrawn at closing.

“Given market conditions this new revolving facility reflects the strength of our asset base and confidence the participating banks place in our company,” stated Roger W. Jenkins, President and Chief Executive Officer.

“This credit facility aligns with our structure as an independent exploration and production company and gives us ample liquidity for our long-term strategy,” Jenkins added.

The company expects that the principal terms of the new revolving credit facility will include the following:

– Unsecured, with guarantees from certain domestic and foreign subsidiaries;

– Automatic reduction in facility size to a minimum of $1.0 billion should the company make substantial asset sales;

– Varying interest rates for the facility, based on the company’s total leverage ratio, between a range of LIBOR plus 250 basis points up to LIBOR plus 450 basis points;

– Beginning in the quarter ending March 31, 2017, if the company’s total leverage ratio exceeds 3.25 times the company’s trailing twelve month consolidated Adjusted EBITDAX the facility will be required to become secured, subject to limitations set forth in the company’s existing notes;

– Various compliance covenants within the facility include: Minimum Adjusted EBITDAX of 2.5 times consolidated interest expense; Consolidated Debt not to exceed 3.75 times Adjusted EBITDAX; and Minimum liquidity from U.S. and Canadian entities, equal to or greater than $500 million.

– As a condition to availability of the facility, the company is required to execute at least a $400 million capital markets offering.

In addition, under the existing 2011 credit facility, the company will retain a total of $630 million of bank commitments until the 2011 credit facility expires in June 2017.