Discontinued Operations

9 Months Ended

Sep. 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.

During the third quarter, the Company received the remaining $6.8 million of deferred consideration, which was previously presented in assets of discontinued operations in the consolidated balance sheets. The liabilities of discontinued operations of $28.4 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 (loss) from discontinued operations, net of income taxes presented in the consolidated statements of operations for the three and nine months ended September 30,2013 and 2012:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(In thousands)
OIL AND GAS REVENUES	$	—		$	—		$	—		$	—
COSTS AND EXPENSES
General and administrative	408			56			709			68
Accretion related to asset retirement obligations	—			104			36			258
TOTAL COST AND EXPENSES	408			160			745			326
OPERATING LOSS	(408		)	(160		)	(745		)	(326		)
OTHER INCOME AND EXPENSES
Gain on sale of discontinued operations	—			—			37,294			—
Decrease (increase) in estimated future obligations	(1,187		)	—			1,378			—
Gain (loss) on derivative instruments, net	(18		)	(135		)	(93		)	(543		)
Interest expense	—			(871		)	(253		)	(2,669		)
Capitalized interest	—			871			253			2,669
Other income (expense), net	106			4			438			(590		)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES	(1,507		)	(291		)	38,272			(1,459		)
INCOME TAX (EXPENSE) BENEFIT	316			1,306			(14,673		)	4,042
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES	$	(1,191	)	$	1,015		$	23,599		$	2,583

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 sheets.

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.