As of September 30, we had $279 million of liquidity. Our LTM adjusted EBITDA for covenant purpose was $485 million, and our quarter end leverage ratio was 1.3x. Consistent with our strategy, excess cash flow that is not reinvested through the drill bit will be used to pay down revolver borrowings and SilverBow continues to target a long-term leverage ratio of less than one times. At the end of the third quarter, we were in full compliance with our financial covenants and had sufficient headroom. As Sean previously mentioned, SilverBow announced the acquisition of certain oil and gas assets in South Texas from Chesapeake for a purchase price of $700 million. Chesapeake may also receive up to $50 million in contingent cash consideration based on future WTI prices.
In conjunction with the closing of the transaction, which is expected to be in the fourth quarter SilverBow has secured a borrowing base upside commitment of $425 million, which will increase our borrowing base from $775 million to $1.2 billion. Also, upon close, we will upsize our second lien notes by $350 million, which will increase our total facility size to $500 million and extend the maturity date by two years to December 2028. In addition to customary purchase price adjustments, the $50 million deposit further reduces the cash payment at close. As a closing condition, SilverBow is required to have 75% of oil and gas PDP volumes hedged for the first 24 months following closing and 60% of volumes hedged for months 25 through 36 following closing.
We have been proactively adding hedges to meet these requirements over the last several months at or above our underwriting. Lastly, in September, we completed a $148 million follow-on equity offering consisting of 4 million shares approximately 70% or 2.8 million shares were primary shares issued by SilverBow. Net of the secondary shares issued, the underwriting spread and offering fees the net cash proceeds received by SilverBow was approximately $97 million. These proceeds were used to reduce credit facility borrowings ahead of closing the Chesapeake transaction. And with that, I will turn it over to Sean to wrap up our prepared remarks.
Sean Woolverton: Thanks, Chris. SilverBow continues to execute on its strategy is positioned for significant value creation. The transformational growth we have achieved over the last two years has been underpinned by a low cost and highly efficient operating platform that is able to expand through accretive acquisitions. We expect M&A to remain a central theme across the sector in the near-term. As always, our strategy emphasizes operational flexibility, and real-time capital allocation to our highest returns on investment. The ability to pivot between oil and gas development has been and will continue to be a competitive advantage for us. I want to thank our stakeholders for their continued support. We look forward to closing the Chesapeake transaction in the fourth quarter and providing further updates on our next call. And with that, I will turn the call back to the operator for questions.
Operator: Thank you so much. [Operator Instructions] Looks like our first call questioner is Tim Rezvan from KeyBanc Capital Markets. Tim, go ahead.
Tim Rezvan: I guess first just wanted to pick up the Chesapeake acquisition. The timing is sliding a bit here. Just to ask the big question, is there any concern that this deal doesn’t close? I guess I’ll start there. And then related to that, are you having if that’s not the case, are there discussions underway on gas takeaway terms with Williams, kind of given the unique structure that Chesapeake had? Thanks.
Sean Woolverton: Hey, good morning, Tim, and thanks for the question. In terms of your first question, we continue to work closely with Chesapeake and when we first announced the transaction felt like and disclosed to the market that we would close the transaction in the fourth quarter. So we remain on track to do that and are confident that the deal gets closed here in the near future. In terms of activity on the asset, I will tell you that we’re working closely with Chesapeake’s team as well within our company — our teams to be ready to take control the assets. So we’re confident that we’ll be able to integrate the acquisition very successfully, just like we’ve done with previous deals. And then, lastly, in terms of trying to optimize the asset going forward, you raised the question around pipeline agreements that the asset has.
