Discontinued Operations

6 Months Ended

Jun. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

3. Discontinued Operations

On February 22, 2013, the Company closed on the sale of 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 an agreed-upon price of $184.0 million, including the assumption and repayment by Iona Energy of the $55.0 million of borrowings outstanding under Carrizo UK's senior secured multicurrency credit facility as of the closing date.

The assets of discontinued operations of $6.9 million primarily relate to the remaining deferred consideration which the Company expects to receive during 2013. The liabilities of discontinued operations of $27.9 million relate to an accrual for estimated future obligations related to the sale. See “Note 2. Summary of Significant Accounting Policies—Use of Estimates” for further discussion of estimates and assumptions that may affect the reported amounts of assets and liabilities related to the sale of Carrizo UK.

The following table summarizes the amounts included in net income from discontinued operations, net of income taxes presented in the consolidated statements of income for the three and six months ended June 30,2013 and 2012:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)
OIL AND GAS REVENUES	$	—		$	—		$	—		$	—
COSTS AND EXPENSES
General and administrative	296			9			301			12
Accretion related to asset retirement obligations	—			78			36			154
TOTAL COST AND EXPENSES	296			87			337			166
OPERATING LOSS	(296		)	(87		)	(337		)	(166		)
OTHER INCOME AND EXPENSES
Gain on sale of discontinued operations	—			—			37,294			—
Decrease in estimated future obligations	2,565			—			2,565			—
Gain (loss) on derivative instruments, net	(31		)	357			(75		)	(408		)
Interest expense	—			(919		)	(253		)	(1,798		)
Capitalized interest	—			1,798			253			1,798
Other income (expense), net	308			203			332			(594		)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES	2,546			1,352			39,779			(1,168		)
INCOME TAX (EXPENSE) BENEFIT	(1,414		)	1,469			(14,989		)	2,736
NET INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES	$	1,132		$	2,821		$	24,790		$	1,568

Income Taxes

Carrizo UK is a disregarded entity for U.S. income tax purposes. Accordingly, the income tax (expense) benefit reflected above includes the Company’s U.S. deferred income tax (expense) benefit associated with the income (loss) from discontinued operations before income taxes. The related U.S. deferred tax assets and liabilities have been classified as deferred income taxes of continuing operations in the consolidated balance sheet.

Foreign Currency

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