Discontinued Operations

12 Months Ended

Dec. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

3. Assets Held for Sale and Discontinued Operations

On December 27, 2012, the Company agreed to sell Carrizo UK, and all of its interest in the Huntington Field discovery, including a 15% non-operated working interest and certain overriding royalty interests, to a subsidiary of Iona Energy Inc. (“Iona Energy”) for net proceeds of approximately $116.5 million, subject to final post-closing adjustments, which represents an agreed upon price of $184.0 million, including the assumption of $55.0 million in debt and net purchase price adjustments. Purchase price adjustments primarily relate to working capital and other adjustments, transaction costs and accrual of other obligations related to the transaction. The sale closed on February 22, 2013. Carrizo UK’s senior secured multicurrency credit facility agreement that was secured by substantially all of Carrizo UK’s assets with limited recourse to the Company (the “Huntington Facility”) was repaid by Iona Energy in connection with the sale transaction described above. As of December 31, 2012 and February 22, 2013, borrowings outstanding under the Huntington Facility were $52.0 million and $55.0 million, respectively. Additionally, the net proceeds include non-refundable deposits of $8.0 million received by the Company, in accordance with the sale and purchase agreement, as amended, and approximately $18.5 million in deferred consideration that the Company expects to receive as of the earlier of six months from the agreement closing date or when Iona Energy receives payment for its first lifting of production from the Huntington Field.

The U.K. North Sea assets and associated liabilities have been classified as current and long-term assets held for sale and current and long-term liabilities associated with assets held for sale in the consolidated balance sheets. The related results of operations and cash flows have been classified as discontinued operations, net of income taxes, in the consolidated statements of income and cash flows. For the years ended December 31, 2012, 2011 and 2010, the Company’s U.K. North Sea assets had no production or revenues.

The following table summarizes the amounts included in current and long-term assets held for sale and liabilities associated with assets held for sale in the consolidated balance sheets as of December 31, 2012 and 2011:

	December 31,
	2012		2011
	(In thousands)
ASSETS HELD FOR SALE
CURRENT ASSETS
Cash and cash equivalents	$	519	$	1,715
Prepaids and other current assets	1,363		2,159
Total current assets held for sale	1,882		3,874
LONG-TERM ASSETS
Property and equipment, net	120,732		69,597
Deferred income taxes	11,245		6,238
Other assets	649		2,896
Total long-term assets held for sale	$	132,626	$	78,731
LIABILITIES ASSOCIATED WITH ASSETS HELD FOR SALE
CURRENT LIABILITIES
Accrued drilling costs	$	3,800	$	3,027
Current maturities of long-term debt	33,800		—
Other accrued liabilities	11,063		1,211
Total current liabilities associated with assets held for sale	48,663		4,238
LONG-TERM LIABILITIES
Long-term debt, net of current maturities	18,200		17,814
Asset retirement obligations	5,243		3,843
Other liabilities	104		772
Total long-term liabilities associated with assets held for sale	$	23,547	$	22,429

The following table summarizes the amounts included in net income (loss) from discontinued operations, net of income taxes presented in the consolidated statements of income for the years ended December 31, 2012, 2011 and 2010:

	For the Years Ended December 31,
	2012			2011			2010
	(In thousands)
OIL AND GAS REVENUES	$	—		$	—		$	—
COSTS AND EXPENSES
Impairment of oil and gas properties	—			—			2,731
General and administrative	62			242			—
Accretion related to asset retirement obligations	363			76			—
TOTAL COST AND EXPENSES	425			318			2,731
OPERATING LOSS	(425		)	(318		)	(2,731		)
OTHER INCOME AND EXPENSES
Gain (loss) on derivative instruments, net	258			(1,432		)	—
Interest expense	(3,556		)	(1,805		)	—
Capitalized interest	3,556			—			—
Other income (expense), net	(591		)	259			—
LOSS BEFORE INCOME TAXES	(758		)	(3,296		)	(2,731		)
DEFERRED INCOME TAX BENEFIT	5,068			7,391			956
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES	$	4,310		$	4,095		$	(1,775	)

U.K. Huntington Field Development Project Credit Facility

On January 28, 2011, the Company and Carrizo UK, as borrower, entered into the Huntington Facility. The Huntington Facility was secured by substantially all of Carrizo UK’s assets and was limited recourse to the Company. The Huntington Facility provided financing for a substantial portion of Carrizo UK’s share of costs associated with the Huntington Field development project in the U.K. North Sea.

As of December 31, 2012, borrowings outstanding under the Huntington Facility were $52.0 million, of which $33.8 million was classified as current, with a weighted average interest rate of 3.79% and no letters of credit had been issued. In connection with the sale of Carrizo UK, which closed on February 22, 2013, the $55.0 million of borrowings then outstanding under the Huntington Facility was repaid.

Deferred Income Taxes

Carrizo UK is a disregarded entity for U.S. income tax purposes. Accordingly, included in the deferred income tax benefit for the U.K. North Sea is the Company's U.S. deferred income tax benefits of $0.1 million, $1.2 million, and $1.0 million for the years ended December 31, 2012, 2011 and 2010 respectively. The related U.S. deferred tax assets have been classified as deferred income taxes of continuing operations in the consolidated balance sheet.

Foreign Currency

The U.S. dollar is the functional currency for the Company’s operations in the U.K. North Sea. Transaction gains or losses that occur due to the realization of assets and the settlement of liabilities denominated in a currency other than the functional currency are recorded as Other income (expense), net.