Tellurian Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Debt

Debt

3 Months Ended

Sep. 30, 2012

Note 3 - Debt

Long term debt relates to a $1.7 million note payable re-issued in January 2011. This note will be fully amortized in June 2014. The outstanding principal as of September 30, 2012, and June 30, 2012, consisted of the following:



	September 30, 2012			June 30, 2012
	(In thousands)
Note payable	$	738		$	870
Less current portion of note payable	(456		)	(480		)
Long term debt, excluding current portion	$	282		$	390

As of September 30, 2012, the minimum future principal maturities of long term debt were as follows:



	September 30, 2012
	(In thousands)
One year	$	456
Two years	282
Total	$	738

The variable rate of the note is based upon the Wall Street Journal Prime Rate (the "Index") plus 1.00%, subject to a floor rate of 6.25%. The Index was 3.25% at September 30, 2012, resulting in an interest rate of 6.25% per annum as of September 30, 2012. Under the note payable, NP is required to maintain certain customary financial and restrictive covenants. As of September 30, 2012, NP was in compliance with all financial and restrictive covenants.

In addition, the Company has a $1.0 million working capital line of credit classified as short term debt. The amount due on the line of credit was $0.1 million as of September 30, 2012. The line of credit bears interest at a variable rate, which was 6.25% as of September 30, 2012. The line of credit also secures both a letter of credit in the amount of $25 thousand in favor of the Bureau of Land Management and business credit cards in the amount of $25 thousand. As of September 30, 2012, $0.8 million was available under this line of credit.

The note payable, letters of credit, and business credit cards are collateralized by a first mortgage and an assignment of production from Poplar and are guaranteed by Magellan up to $6.0 million, not to exceed the amount of the principal owed. The carrying amount of the Company's long term debt approximates its fair value, due to its variable interest rate, which resets based on the market rates.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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