10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 333-174226

BLACK ELK ENERGY OFFSHORE OPERATIONS, LLC

(Exact name of registrant as specified in its charter)

Texas	38-3769404
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3100 South Gessner Road, Suite 215 Houston, Texas	77063
(Address of principal executive offices)	(Zip Code)

(832) 379-2300

Registrant’s telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ¨     No  ý

(Explanatory Note: The registrant is a voluntary filer and is not subject to the filing requirements of the Securities Exchange Act of 1934. However, during the preceding 12 months, the registrant has filed all reports that it would have been required to file by Section 13 or 15(d) of the Securities Exchange Act of 1934 if the registrant was subject to the filing requirements of the Securities Exchange Act of 1934.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x  No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of November 19, 2014, there were 1,361,300 Class A Units, 114,277,308.5 Class B Units, 12,031,250 Class C Units and 7,935,670 Class E Units issued and outstanding.

BLACK ELK ENERGY OFFSHORE OPERATIONS, LLC

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED September 30, 2014

TABLE OF CONTENTS

		Page
Part I. Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheet (unaudited) as of September 30, 2014 and December 31, 2013	1
	Consolidated Statement of Operations (unaudited) for the Three and Nine Months Ended September 30, 2014 and 2013	2
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013	3
	Notes to Consolidated Financial Statements (unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
Part II. Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	38
Item 6.	Exhibits	39
Signatures		41
Exhibit Index		42

(i)

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

BLACK ELK ENERGY OFFSHORE OPERATIONS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands)

	September 30, 2014			December 31, 2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	5,467		$	6,227
Restricted cash	675			775
Accounts receivable, net of allowance for doubtful accounts of $826 and $811 at September 30, 2014 and December 31, 2013, respectively	29,452			61,747
Due from affiliates	273			273
Prepaid expenses and other current assets	6,811			7,109
Current portion of escrow for abandonment costs	25,872			21,976
Derivative assets	270			1,370
TOTAL CURRENT ASSETS	68,820			99,477
OIL AND GAS PROPERTIES, successful efforts method of accounting, net of accumulated depreciation, depletion, amortization and impairment of $217,526 and $293,973 at September 30, 2014 and December 31, 2013, respectively	43,200			196,136
OTHER PROPERTY AND EQUIPMENT, net of accumulated depreciation of $6,112 and $5,350 at September 30, 2014 and December 31, 2013, respectively	2,962			4,862
OTHER ASSETS
Debt issue costs, net	557			1,488
Asset retirement obligation escrow receivable	20,348			20,348
Escrow for abandonment costs, net of current portion	196,262			235,473
Other assets	7,548			7,830
TOTAL OTHER ASSETS	224,715			265,139
TOTAL ASSETS	$	339,697		$	565,614
LIABILITIES AND MEMBERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	96,366		$	155,880
Derivative liabilities	1,179			9,828
Asset retirement obligations	32,839			43,109
Current portion of debt and notes payable	340			257
TOTAL CURRENT LIABILITIES	130,724			209,074
LONG-TERM LIABILITIES
Gas imbalance payable	727			1,888
Derivative liabilities	—			31
Asset retirement obligations, net of current portion	162,661			233,623
Debt, net of current portion, net of unamortized discount of $398 and $617 at September 30, 2014 and December 31, 2013, respectively	138,192			183,929
TOTAL LONG-TERM LIABILITIES	301,580			419,471
TOTAL LIABILITIES	432,304			628,545
CLASS E PREFERRED UNITS	7,936			109,744
COMMITMENTS AND CONTINGENCIES
MEMBERS’ DEFICIT	(100,543		)	(172,675		)
TOTAL LIABILITIES AND MEMBERS’ DEFICIT	$	339,697		$	565,614

The accompanying notes are an integral part of these consolidated financial statements.

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BLACK ELK ENERGY OFFSHORE OPERATIONS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands)

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2014			2013			2014			2013
REVENUES:
Oil sales	$	7,811		$	50,479		$	70,692		$	136,415
Natural gas sales	4,718			12,600			26,192			40,046
Plant product sales	(101		)	1,457			3,032			5,831
Gain (loss) on derivative financial instruments	4,883			(7,868		)	(3,593		)	(8,562		)
Other revenues	2,441			7,089			15,830			16,389
TOTAL REVENUES	19,752			63,757			112,153			190,119
OPERATING EXPENSES:
Lease operating	12,744			51,168			66,753			141,657
Workover	1,431			1,028			2,050			7,312
Depreciation, depletion and amortization	2,537			10,027			24,476			32,727
Impairment of oil and gas properties	11,395			402			14,469			55,779
General and administrative	8,901			9,621			21,630			28,250
Gain on involuntary conversion of asset	—			(7,194		)	—			(17,827		)
Accretion of asset retirement obligations	551			4,458			3,536			19,551
(Gain) loss on sale of assets	(98,526		)	424			(133,077		)	(35,367		)
Other operating expenses	1,062			2,704			6,413			5,117
TOTAL OPERATING EXPENSES	(59,905		)	72,638			6,250			237,199
INCOME (LOSS) FROM OPERATIONS	79,657			(8,881		)	105,903			(47,080		)
OTHER INCOME (EXPENSE):
Interest income	10			30			45			81
Miscellaneous expense	(1,312		)	(2,674		)	(5,778		)	(7,620		)
Interest expense	(5,459		)	(6,890		)	(17,733		)	(19,526		)
TOTAL OTHER EXPENSE, NET	(6,761		)	(9,534		)	(23,466		)	(27,065		)
NET INCOME (LOSS)	72,896			(18,415		)	82,437			(74,145		)
LESS: PREFERRED UNIT DIVIDENDS	$	2,033		$	4,755		$	10,233		$	12,581
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON UNIT HOLDERS	$	70,863		$	(23,170	)	$	72,204		$	(86,726	)

The accompanying notes are an integral part of these consolidated financial statements.

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BLACK ELK ENERGY OFFSHORE OPERATIONS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	Nine Months Ended September 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	82,437		$	(74,145	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation, depletion, and amortization	24,476			32,727
Impairment of oil and gas properties	14,469			55,779
Accretion of asset retirement obligations	3,536			19,551
Amortization of debt issue costs	4,520			4,595
Accretion of debt discount	219			195
Loss on derivative financial instruments	3,593			8,562
Settlement of derivative financial instruments	(11,174		)	(2,573		)
Gain on sale of assets	(133,077		)	(35,367		)
Provision on doubtful accounts	16			308
Gain on involuntary conversion of assets	—			(17,827		)
Changes in operating assets and liabilities:
Accounts receivable	31,370			(13,086		)
Escrow receivable, short term	(29,525		)	—
Due from affiliates, net	—			74
Prepaid expenses and other assets	(3,290		)	16,440
Other assets	310			464
Accounts payable and accrued liabilities	(36,290		)	74,560
Gas imbalance	(1,198		)	(16		)
Settlement of asset retirement obligations	(17,717		)	(41,512		)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(67,325		)	28,729
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties	(11,150		)	(112,719		)
Acquisition of oil and gas properties	—			(3,250		)
Sale of oil and gas properties	170,698			65,741
Additions to property and equipment	(10		)	(683		)
Cash assumed in consolidation of Freedom Well Services, LLC	—			473
Proceeds received from insurance recovery	—			23,837
Deposits	—			(9		)
Restricted cash	100			(694		)
Escrow payments, net	5,817			(23,394		)
Escrow released	59,024			—
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	224,479			(50,698		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds on short term notes	2,818			348
Payments on short term notes	(2,758		)	(3,827		)
Borrowing on bank debt	—			23,168
Payments on bank debt	(45,933		)	(40,168		)
Debt issuance costs	—			(2,249		)
Contributions from members	—			50,000
Distributions to members	(112,041		)	—
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(157,914		)	27,272
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(760		)	5,303
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	6,227			1,383
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	5,467		$	6,686
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	10,983		$	11,773
NONCASH INVESTING AND FINANCING ACTIVITIES:
Asset retirement obligations relieved due to sale of properties	$	(67,051	)	$	(22,999	)
Increase in asset retirement due to revaluation	$	—		$	2,341
Paid-in-kind dividends on preferred equity and accrued distributions to members	$	10,233		$	12,581

The accompanying notes are an integral part of these consolidated financial statements.

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BLACK ELK ENERGY OFFSHORE OPERATIONS, LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

Nature of Operations: Black Elk Energy Offshore Operations, LLC and our wholly-owned subsidiaries (collectively, “Black Elk”, "BEEOO", “we”, “our” or “us”) is a Houston-based oil and natural gas company engaged in the exploration, development, production and exploitation of oil and natural gas properties. We were formed on November 20, 2007 for the purpose of acquiring oil and natural gas producing properties within the Outer Continental Shelf of the United States in the Gulf of Mexico.

Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation of our interim and prior period results have been included in the accompanying consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for any other interim period or for the entire fiscal year. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”).

Reclassifications: Certain reclassifications have been made to conform 2013 balances to our 2014 presentation. Such reclassifications had no effect on net income (loss) or cash flow.

Principles of Consolidation: The consolidated financial statements include the accounts of Black Elk Energy Offshore Operations, LLC and our wholly-owned subsidiaries, Black Elk Energy Land Operations, LLC and Black Elk Energy Finance Corp. Effective January 1, 2013, in accordance with accounting guidelines for consolidation of variable interest entities, we consolidated Freedom Well Services, LLC (“FWS”), as we determined that we are the primary beneficiary of FWS and will have the power to direct the activities of FWS. All material inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates in Preparation of Financial Statements: The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses recognized during the reporting period. We analyze our estimates based on historical experience, current factors and various other assumptions that we believe to be reasonable under the circumstances. However, actual results could differ from such estimates.

Recent Accounting Pronouncements: In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 narrows the definition of “discontinued operations” to dispositions that represent a strategic shift that has or will have a significant impact on the entity’s operations and financial results. The ASU requires additional disclosures regarding assets and liabilities held for sale, and income and losses, including gain or loss on sale, and cash flows from discontinued operations. In addition, the ASU requires disclosures for disposals of individually significant components of the business which do not qualify as discontinued operations, including general information about the disposition and disclosure of the pretax profit or loss from the component for the period of disposal and all comparable historic periods presented. ASU 2014-08 is effective for all fiscal years beginning after December 15, 2014, and can be adopted early for certain asset dispositions and reclassifications of assets from “held and used” to “held for sale.” We are evaluating the impact this standard will have on our consolidated financial statements and related disclosures.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606).  The update provides guidance concerning the recognition and measurement of revenue from contracts with customers.  Its objective is to increase the usefulness of information in the financial statements regarding the nature, timing and uncertainty of revenues.  The update is effective for the Company beginning in calendar year 2017.  We are evaluating the impact this standard will have on our consolidated financial statements and related disclosures.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires management to assess an entity’s ability tocontinue as a going concern, and to provide related footnote disclosures in certain circumstances. The standard is effective for annual financial statement starting period ending December 15, 2016, with early adoption permitted. We arecurrently evaluating the provisions of ASU 2014-15 and assessing the impact, if any, it may have on our consolidated financial position, results of operations or cash flows.

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NOTE 2 - GOING CONCERN CONSIDERATION

The consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2014, the Company had a net working capital deficit of approximately $61.9 million and a members' deficit of approximately $100.5 million. The net working capital deficit at September 30, 2014 is primarily the result of the Company's accounts payable and accrued expenses of $96.3 million. Additionally, the Company’s 13.75% Senior Secured Notes will mature in December 2015 (see “Note 8 - Debt and Notes Payable” for further discussion). We cannot assure that the Company will generate sufficient cash flow from operations to service the remaining Notes. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Our primary cash flow for the first nine months of 2014 was from divestiture of assets (see “Note 5 - Acquisitions and Divestitures” for further discussion). The combination of restricted credit availability, lower production since the fourth quarter of 2013, settlement of our plugging and abandonment ("P&A") liabilities and additional collateral requirements related to our surety bonds that secure our P&A obligations led to significant cash reductions in the fourth quarter of 2013 and the first nine months of 2014. To increase liquidity, we continue to manage accounts payable, aggressively pursue accounts receivable and seek opportunities to sell non-core assets.

Our primary use of capital has been for collateral to secure our P&A obligations. As we plug and abandon certain fields and meet the various criteria related to the corresponding escrow accounts, we expect to release funds from the escrow accounts. On August 15, 2014, the Company closed the sale of seven operated and one non-operated assets to Renaissance Offshore, LLC (the “Renaissance Sale”). The net proceeds of the Renaissance Sale were used primarily to fund our purchase of the Notes validly tendered and not withdrawn pursuant to the tender offer on July 16, 2014 and to re-purchase Series E preferred units.

The Company may continue to liquidate additional oil and natural gas properties to meet its liquidity needs; however, there is no certainty that this would generate the cash necessary to meet our obligation. Additionally, this could affect the Company’s long-term strategic plan and require the Company to liquidate certain oil and gas properties at an amount less than would normally be achieved if sold in the ordinary course of business (see “Note 3 - Liquidity, Risks and Uncertainties” for further discussion).

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Please refer to Item1A. Risk Factors for detail discussions of our risk factors.

NOTE 3— LIQUIDITY, RISKS AND UNCERTAINTIES

                  The Company currently faces significant challenges with our cash flow and our need to pay for operating expenses, including our debt service obligations. The Company's cash position raises substantial doubt about the Company's ability to continue as a going concern. We will need to seek additional working capital through the sale of equity or assets and potentially refinance our debt in an effort to improve our liquidity position.

We routinely monitor and adjust our capital expenditures in response to changes in prices, availability of financing, drilling and acquisition costs, industry conditions, the timing of regulatory approvals, the availability of rigs, success or lack of success in drilling activities, contractual obligations, internally generated cash flows and other factors both within and outside our control.

Virtually all of our current production is concentrated in the Gulf of Mexico, which is characterized by production declines more rapid than those of conventional onshore properties. As a result, we are particularly vulnerable to a near-term severe impact resulting from unanticipated complications in the development of, or production from, any single material well or infrastructure installation, including lack of sufficient capital, delays in receiving necessary drilling and operating permits, increased regulation, reduced access to equipment and services, mechanical or operational failures, and severe weather. Any unanticipated significant disruption to, or decline in, our current production levels or prolonged negative changes in commodity prices or operating cost levels could have a material adverse effect on our financial position, results of operations, cash flows, the quantity of proved reserves that we report, and our ability to meet our commitments as they come due.

As an oil and gas company, our revenue, profitability, cash flows, proved reserves and future rate of growth are substantially dependent on prevailing prices for oil and natural gas. Historically, the energy markets have been very volatile, and we expect such price volatility to continue. Any extended decline in oil or gas prices could have a material adverse effect on our financial position, results of operations, cash flows, the quantities of oil and gas reserves that we can economically

5

produce, and may restrict our ability to obtain additional financing or to meet the contractual requirements of our debt and other obligations.

NOTE 4—OIL AND GAS PROPERTIES

The following table reflects capitalized costs related to our oil and gas properties:

	September 30, 2014			December 31, 2013
	(Unaudited)
	(in thousands)
Proved properties	$	260,726		$	490,109
Accumulated depreciation, depletion, amortization and impairment	(217,526		)	(293,973		)
Oil and gas properties, net	$	43,200		$	196,136

The following table describes the changes to our asset retirement obligations (unaudited):

	(in thousands)
Balance at December 31, 2013	$	276,732
Liabilities settled	(17,717		)
Liabilities relieved due to sale of properties	(67,051		)
Accretion expense	3,536
Balance at September 30, 2014	195,500
Less: current portion	(32,839		)
Total Long-Term Asset Retirement Obligations	$	162,661

NOTE 5—ACQUISITIONS AND DIVESTITURES

On August 15, 2014, the Company closed the sale of seven operated and one non-operated assets to Renaissance Offshore, LLC (the “Renaissance Sale”). After customary purchase price adjustments, the Company received $125.1 million in net proceeds from the Renaissance Sale. The assets sold in the Renaissance Sale represent a significant amount of the Company’s cash flow, proved reserves and production. Reflected in our September 30, 2014 consolidated financial statements is a preliminary gain of $98.5 million related to the Renaissance sale. The net proceeds of the Renaissance Sale was used primarily to fund our purchase of the Notes validly tendered and not withdrawn pursuant to the tender offer on August 13, 2014 and to re-purchase Series E preferred units.

On March 13, 2014 , the Company entered into a Purchase and Sale Agreement (the “PSA”) with a wholly owned subsidiary of Fieldwood Energy LLC (“Fieldwood”). Pursuant to the PSA, Fieldwood acquired all of the Company’s interest in one operated and 15 non-operated fields in the offshore Gulf of Mexico, for $50 million, prior to normal purchase price adjustments (the “Sale”). The Sale closed on March 17, 2014. Reflected in our September 30, 2014 consolidated financial statements is a preliminary gain of $34.5 million related to Fieldwood.

On March 26, 2013, we completed the sale of four fields to Renaissance Offshore, LLC for approximately $52.5 million prior to normal purchase price adjustments. The proceeds were used to reduce the amount borrowed under the Credit Facility. Reflected in our September 30, 2013 consolidated financial statements is a gain of $35.8 million.

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NOTE 6—DERIVATIVE INSTRUMENTS

We enter into hedging transactions with major financial institutions to reduce exposure to fluctuations in the price of oil and natural gas. We use financially settled crude oil and natural gas swaps. With a swap, the counterparty is required to make a payment to us if the settlement price for a settlement period is below the hedged price for the transaction, and we are required to make a payment to the counter-party if the settlement price for any settlement period is above the hedged price for the transaction. We elected not to designate any of our derivative contracts as qualifying hedges for financial reporting purposes, therefore all of the derivative instruments are categorized as standalone derivatives and are being marked-to-market with “Unrealized (loss) gain on derivative financial instruments” recorded in the consolidated statements of operations.

At September 30, 2014, we had the following contracts outstanding (Asset (Liability) and Fair Value Gain (Loss) (unaudited)):

	Crude Oil								Natural Gas								Total
Period	Monthly Volume (Bbls)	Contract Price ($/Bbl)	Asset (Liability)			Fair  Value Gain (Loss)			Monthly Volume (MMBtu)	Contract Price ($/MMBtu)	Asset (Liability)			Fair  Value Gain (Loss)			Asset (Liability)			Fair  Value Gain (Loss)
Swaps:			(in thousands)								(in thousands)						(in thousands)
10/14 - 12/14	15,000	65.00	$	(1,122	)	$	(1,122	)	—	—	$	—		$	—		$	(1,122	)	$	(1,122	)
10/14 - 10/14	5,525	87.75	(17		)	(17		)	28,635	4.09	3			3			(14		)	(14		)
11/14 - 11/14	5,525	87.75	(13		)	(13		)	27,081	4.09	(1		)	(1		)	(14		)	(14		)
12/14 - 12/14	5,525	87.75	(10		)	(10		)	34,114	4.09	(3		)	(3		)	(13		)	(13		)
1/15 - 1/15	—	—	—			—			27,838	4.09	(4		)	(4		)	(4		)	(4		)
2/15 - 2/15	—	—	—			—			24,461	4.09	(4		)	(4		)	(4		)	(4		)
3/15 - 3/15	—	—	—			—			26,443	4.09	(2		)	(2		)	(2		)	(2		)
10/14 -10/14	—	—	—			—			29,753	4.19	6			6			6			6
11/14 - 11/14	—	—	—			—			28,635	4.19	2			2			2			2
12/14 -12/14	—	—	—			—			27,081	4.19	—			—			—			—
1/15 - 1/15	—	—	—			—			34,114	4.19	(2		)	(2		)	(2		)	(2		)
2/15 - 2/15	—	—	—			—			27,838	4.19	(1		)	(1		)	(1		)	(1		)
3/15 - 3/15	—	—	—			—			24,461	4.19	1			1			1			1
10/14 - 10/14	—	—	—			—			192,799	4.47	94			94			94			94
11/14 - 11/14	—	—	—			—			186,296	4.47	64			64			64			64
12/14 - 12/14	—	—	—			—			189,992	4.47	52			52			52			52
1/15 - 1/15	—	—	—			—			58,684	4.47	12			12			12			12
2/15 - 2/15	—	—	—			—			68,337	4.47	15			15			15			15
3/15 - 3/15	—	—	—			—			69,732	4.47	21			21			21			21
			$	(1,162	)	$	(1,162	)			$	253		$	253		$	(909	)	$	(909	)

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The fair values of derivative instruments in our consolidated balance sheets were as follows (in thousands) (unaudited):

	Asset Derivatives			Liability Derivatives				Asset (Liability) Derivatives Total
Derivatives Not  Designated as Hedging Instruments under Accounting Guidance	Balance Sheet Location	Fair Value at September 30, 2014		Balance Sheet Location	Fair Value at September 30, 2014			Balance Sheet Location	Fair Value at September 30, 2014
Commodity Contracts	Derivative  financial instruments			Derivative  financial instruments				Derivative  financial instruments
	Current	$	270	Current	$	(1,179	)	Current	$	(909	)
	Non-current	—		Non-current	—			Non-current	—
Total derivative instruments		$	270		$	(1,179	)		$	(909	)
	Asset Derivatives			Liability Derivatives				Asset (Liability) Derivatives Total
Derivatives Not  Designated as Hedging Instruments under Accounting Guidance	Balance Sheet Location	Fair Value at December 31, 2013		Balance Sheet Location	Fair Value at December 31, 2013			Balance Sheet Location	Fair Value at December 31, 2013
Commodity Contracts	Derivative financial instruments			Derivative financial instruments				Derivative financial instruments
	Current	$	1,370	Current	$	(9,828	)	Current	$	(8,458	)
	Non-current	—		Non-current	(31		)	Non-current	(31		)
Total derivative instruments		$	1,370		$	(9,859	)		$	(8,489	)

We have a netting agreement with our financial institution that permits net settlement of gross commodity derivative assets against gross commodity derivative liabilities, and we routinely exercise our contractual right to offset realized gains against realized losses when settling with our derivative counter-party.

The effect of derivate instruments on our consolidated statements of operations was as follows (in thousands) (unaudited):

		Three Months Ended   September 30,						Nine Months Ended   September 30,
Derivatives Not  Designated as Hedging Instruments under Accounting Guidance	Statements of Operations Location	2014			2013			2014			2013
Realized Commodity Contracts	Gain (loss) on derivative financial instruments	$	(2,316	)	$	(2,725	)	$	(11,174	)	$	(2,573	)
Unrealized Commodity Contracts	Gain (loss) on derivative financial instruments	7,199			(5,143		)	7,581			(5,989		)
Total derivative instruments		$	4,883		$	(7,868	)	$	(3,593	)	$	(8,562	)

NOTE 7—FAIR VALUE MEASUREMENTS

Accounting guidance for fair value measurements clarifies the definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about fair value measurements. The three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is:

• Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

• Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

• Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

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As required by accounting guidance for fair value measurements, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The following tables present information about our assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013 and indicate the fair value hierarchy of the valuation techniques utilized by us to determine such fair value (in thousands) (unaudited):

	Fair Value Measurements at September 30, 2014 Using Fair Value Hierarchy
	Fair Value as of September 30, 2014			Level 1		Level 2			Level 3
Assets
Oil and Natural Gas Derivatives	$	270		$	—	$	270		$	—
	$	270		$	—	$	270		$	—
Liabilities
Oil and Natural Gas Derivatives	$	(1,179	)	$	—	$	(1,179	)	$	—
	$	(1,179	)	$	—	$	(1,179	)	$	—
	Fair Value Measurements at December 31, 2013 Using Fair Value Hierarchy
	Fair Value as of December 31, 2013			Level 1		Level 2			Level 3
Assets
Oil and Natural Gas Derivatives	$	1,370		$	—	$	1,370		$	—
	$	1,370		$	—	$	1,370		$	—
Liabilities
Oil and Natural Gas Derivatives	$	(9,859	)	$	—	$	(9,859	)	$	—
	$	(9,859	)	$	—	$	(9,859	)	$	—

We estimated the fair value of derivative instruments using internally-developed models that use as their basis readily observable market parameters.

The determination of the fair values above incorporates various factors required under accounting guidance for fair value measurements. These factors include not only the impact of our nonperformance risk but also the credit standing of the counter-parties involved in our derivative contracts.

As of September 30, 2014, the estimated fair value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and other current liabilities approximated their carrying value due to their short-term nature. The estimated fair value of our debt was primarily based on quoted market prices as well as prices for similar debt based on recent market transactions. The fair value of debt at September 30, 2014 was $121.5 million.

Fair Value on a Non-Recurring Basis

Oil and gas properties with a carrying value of $57.7 million were written down to their fair value of $43.2 million, resulting in an impairment charge of $11.4 million and $14.5 million for the three and nine months ended September 30, 2014, which is recognized under “ Impairment of oil and gas properties” in the consolidated statements of operations. As of September 30, 2013, oil and gas properties with a carrying value of $290.7 million were written down to their fair value of $234.9 million, resulting in an impairment charge of $0.4 million and $55.8 million for the three and nine months ended September 30, 2013, respectively. The impairment analysis is based on the estimated discounted future cash flows for those properties. Significant Level 3 assumptions used in the calculation of estimated discounted cash flows included our estimate of future oil and gas prices, production costs, development expenditures, estimated quantities and timing of production of proved reserves, appropriate risk-adjusted discount rates, and other relevant data.

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NOTE 8—DEBT AND NOTES PAYABLE

Our debt and notes payable are summarized as follows:

	September 30, 2014			December 31, 2013
	(in thousands)
	(unaudited)
Senior Secured Revolving Credit Facility	$	—		$	34,500
13.75% Senior Secured Notes, net of discount	138,169			149,383
Other debt	363			303
Total debt	138,532			184,186
Less: current portion	(340		)	(257		)
Total long-term debt	$	138,192		$	183,929

Senior Secured Revolving Credit Facility

Our Credit Facility was paid in full on March 17, 2014. As of September 30, 2014, we had zero borrowings outstanding in letters of credit issued under the Credit Facility. Our letters of credit were paid in full and terminated on June 8, 2014.

13.75% Senior Secured Notes

On November 23, 2010, we issued $150 million face value of 13.75% Notes discounted at 99.109% (the "Notes"). The net proceeds were used to repay all of the outstanding indebtedness under our prior revolving Credit Facility, to fund BOEM collateral requirements, and to prefund our escrow accounts. We pay interest on the Notes semi-annually in arrears, on June 1 and December 1 of each year, which commenced on June 1, 2011. The Notes will mature on December 1, 2015, at which time all principal then outstanding will be due. As of September 30, 2014, the recorded value of the Notes was $138.2 million, which includes the unamortized discount of $0.4 million. We incurred underwriting and debt issue costs of $7.2 million, which have been capitalized and are being amortized over the life of the Notes.

The Notes are secured by a security interest in our and the guarantors’ assets (excluding the W&T Escrow Accounts (as defined below)).

We have the right to redeem the Notes under various circumstances. If we experience a change of control, the holders of the Notes may require us to repurchase the Notes at 101% of the principal amount thereof, plus accrued unpaid interest. We also have an optional redemption in which we may redeem up to 35% of the aggregate principal amount of the Notes at a price equal to 110% of the principal amount, plus accrued interest and unpaid interest to the date of redemption, with the net cash proceeds of certain equity offerings until December 1, 2013. From December 1, 2013 until December 1, 2014, we may redeem some or all of the Notes at an initial redemption price equal to par value plus one-half the coupon which equals 106.875% plus accrued and unpaid interest to the date of the redemption. On or after December 1, 2014, we may redeem some or all of the Notes at a redemption price equal to par plus accrued and unpaid interest to the date of redemption.

On May 23, 2011, we commenced a Consent Solicitation that resulted in our entry into the First Supplemental Indenture. We paid a consent solicitation fee of $4.5 million. The First Supplemental Indenture amended the Indenture, among other things, to: (1) increase the amount of capital expenditures permitted to be made by us on an annual basis, (2) enable us to obtain financial support from our majority equity holder by way of a $30 million investment in Sponsor Preferred Stock, which can be repaid over time, and (3) obligate us to make an offer to repurchase the Notes semi-annually at an offer price equal to 103% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest to the extent we meet certain defined financial tests and as permitted by our credit facilities.

On July 16, 2014, each of Black Elk Energy Offshore Operations, LLC and Black Elk Energy Finance Corp. announced that it has commenced a cash tender offer to purchase its outstanding $150,000,000 aggregate principal amount of 13.75% senior secured notes due 2015. The Offer and the Consent Solicitation were being made in connection with our proposed disposition of certain assets pursuant to a Purchase and Sale Agreement between the Company and Renaissance Offshore, LLC, dated July 10, 2014. The offer expired on August 13, 2014. As of the expiration of the offer, $11,333,000 principal amount of the Notes validly tendered and not withdrawn, and holders of $110,565,000 principal amount of the Notes, or 73.71% of the Notes, validly consented to the Consent Solicitation and not revoked such consent.

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On August 15, 2014, we announced the closing of the Renaissance sale of seven operated and one non-operated assets. Based on the consents received and the conditions to effectiveness, including the Renaissance Sale, having been satisfied or waived in connection with the announced tender offer and consent solicitation, the guarantor and the trustee under the indenture governing the Notes entered into a Second Supplemental Indenture in order to effect the proposed amendments to the indenture governing the Notes effective as of August 19, 2014. At the effective time, the Second Supplemental Indenture was binding on all holders of Notes, including those who did not deliver a consent. All Notes validly tendered and not withdrawn by 5 P.M ET on August 13, 2014 were accepted for payment and the Company promptly paid for such Notes, using Renaissance proceeds, in accordance with the terms of the Company’s Offer to Purchase and Consent Solicitation Statement dated July 16, 2014, and in the related Letter of Transmittal and Consent to Tender and to Give Consent.

The Notes require us to maintain certain financial covenants. Specifically, we may not permit our SEC PV-10 to consolidated leverage to be less than 1.4 to 1.0 as of the last day of each fiscal year. In addition, we and our subsidiaries (excluding FWS) are subject to various covenants, including restricted payments, incurrence of indebtedness and issuance of preferred stock, liens, dividends and other payments, merger, consolidation or sale of assets, transactions with affiliates, designation of restricted and unrestricted subsidiaries, and a maximum limit for capital expenditures. Amended in conjunction with the Consent Solicitation on May 31, 2011 (the “Indenture”), our limitation on capital expenditures of a maximum limit of $60 million for the fiscal year ending December 31, 2012 and 30% of consolidated earnings before interest expense, income taxes, DD&A and impairment, and exploration expense for any year thereafter. This covenant limiting capital expenditures was removed in the Supplemental Indenture described below.

On August 19, 2014, as supplemented by the First Supplemental Indenture, entered into a Second Supplemental Indenture (the “Supplemental Indenture”) in order to effect the proposed amendments to the Indenture effective as of August 19, 2014 (the “Effective Time”). At the Effective Time, the Supplemental Indenture will be binding on all holders of the Notes, including those who did not deliver a consent or who validly revoked their consent before the Expiration Time.

Among other things, the Supplemental Indenture (i) allowed the Company to apply the net proceeds from the Renaissance Sale to consummate the Offer and to use any remaining proceeds from the Renaissance Sale to purchase preferred equity issued by the Company; (ii) permitted the incurrence of indebtedness arising from the performance of the Company’s plugging and abandonment obligations and liens on the Company’s oil and gas properties to secure such indebtedness; and (iii) removed the covenant prohibiting the Company and its Restricted Subsidiaries (as defined in the Indenture) from incurring aggregate capital expenditures in excess of 30% of Consolidated EBITDAX (as defined in the Indenture) in any fiscal year.

The amounts of required principal payments based on our outstanding debt amounts as of September 30, 2014, were as follows:

Period Ending September 30,	(in thousands)
2015	$	340
2016	138,590
	$	138,930
Unamortized discount on 13.75% Senior Secured Notes	(398		)
Total debt	$	138,532

NOTE 9- MEMBERS' DEFICIT

The Member Agreement (the “Agreement”) has four (Class A, B, C, and E) classes of members. Net income (loss) is allocated to the members in accordance with the terms set forth in the Agreement. The Agreement allows for preferred returns to certain members after internal rate of return and return of investment hurdles are met.

In the first quarter of 2013, we entered into contribution agreements with PPVA (Equity) and Platinum Partners Black Elk Opportunities Fund LLC (“PPBE”) or entities designated by PPBE (together, the “Platinum Group”) pursuant to which we have issued 50.0 million additional Class E Preferred Units (the “Class E Units”) and 3.8 million additional Class B Units to the Platinum Group for an aggregate offering price of $50.0 million. The Class E Units are recorded under "Preferred Units" and the Class B Units are included in "Members' Deficit" in the consolidated balance sheets. In addition, we also agreed to issue an additional 43 million Class E Units in exchange for $30.0 million of outstanding Class D Preferred Units and $13.0 million of paid-in-kind dividends. The Class D Preferred Units were recorded under "Preferred Units" in the consolidated balance sheets. The Class E Units had a preferred return of 20% per annum, which was set to increase to 36% on March 25, 2014. On March 24, 2014, AQR Diversified Arbitrage Fund exercised its right, and we complied, requiring us and PPVA to repurchase all of its Class E Preferred Units for $14.0 million. We obtained waivers to the Class E Preferred Units waiving the incremental

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preferred return. As a result of the waivers obtained, we issued Class E Units of approximately $10.2 million as paid-in-kind dividends for the nine months ended September 30, 2014.

In August 2014, we re-purchased $96 million of our Series E Preferred units using proceeds of the Renaissance Sale reflected in our Consolidated Statement of Cash Flows. As of September 30, 2014, we have $7.9 million Series E Preferred units outstanding.

On February 12, 2013, we entered into an agreement with Platinum under which we agreed to issue Class B Units to Platinum in exchange for financial consulting services, including (1) analysis and assessment of our business and financial condition and compliance with financial covenants in our Credit Facility, (2) discussion with us and senior bank lenders regarding capital contributions and divestitures of non-core assets, and (3) coordination with our attorneys, accountants, and other professionals. On February 12, 2013, we issued 1,131,458.5 Class B Units to PPVA Black Elk (Equity) LLC, an affiliate of Platinum, pursuant to such agreement.

On February 12, 2013, we entered into the Fourth Amendment to the Second Amended and Restated Limited Liability Operating Agreement of the Company (the “Fourth Amendment”). The Fourth Amendment amended the Company’s operating agreement to effectuate a 10,000 to 1 unit split for each of the Class A Units, Class B Units and Class C Units.

NOTE 10—COMMITMENTS AND CONTINGENCIES

General

Due to the nature of our business, some contamination of the real estate property owned or leased by us is possible. Environmental site assessment of the property would be necessary to adequately determine remediation costs, if any. Management does not consider the amounts that would result from any environmental site assessments to be significant to the consolidated financial position or results of our operations. Accordingly, no provision for potential remediation costs is reflected in the accompanying consolidated financial statements. We are subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on our consolidated financial position or results of operations.

West Delta 32

We continue to go through the discovery phases of the civil litigation of the personal injury lawsuits filed as a result of the November 16, 2012, explosion and fire which occurred on our West Delta 32-E platform, located in the Gulf of Mexico approximately 17 miles southeast of Grand Isle, Louisiana. Several civil lawsuits have been filed as a result of the West Delta 32 Incident. The lawsuits that were filed in Texas have been transferred to the United States District Court for the Eastern District of Louisiana, and all cases have been consolidated for discovery purposes in that Court. The first plaintiff’s case will be tried in either December of 2014 or January of 2015. All civil cases filed as a result of the West Delta 32 Incident are being defended by insurance defense counsel. We believe we have strong defenses and cross-claims and intend to defend ourselves.

Thomas Andrus, et al

As previously reported, six investors in Black Elk Energy, LLC (“BEE”) filed a purported derivative complaint on behalf of BEE in the Supreme Court of the State of New York, County of New York, against the Company, John Hoffman, Iron Island Technologies Inc., and various entities and individuals associated with the Company’s majority unit owner (the “Platinum Defendants”). The lawsuit seeks unspecified damages allegedly arising from (1) the dilution of BEE’s ownership interest in the Company through various financing transactions with the Platinum Defendants and the issuance of membership units under management and employee incentive programs; and (2) the alleged mismanagement of the Company in connection with certain alleged safety violations and the West Delta 32 Incident. We believe there are strong defenses to the claims asserted in the lawsuit, and the Company intends to defend the case vigorously.

On or about September 24, 2013, Plaintiffs filed a motion for a preliminary injunction to restrain a portion of the proceeds of the Company’s proposed sale of certain oil fields in the Gulf of Mexico. The Court denied the motion on November 15, 2013. On or about November 20, 2013, we filed a motion to dismiss the complaint in its entirety, inter alia, on the grounds that (i) the claims fail to state a cause of action; (ii) the claims are refuted by documentary evidence; (iii) plaintiffs, who are not members of the Company, lack standing to assert a claim for mismanagement of the Company; and (iv) certain claims are barred by the statute of limitations.

Oral arguments were heard on July 24, 2014. At that time, the judge has asked for additional briefing on the Conflicts of Law issue. We had a conference call with the Court on Friday, September 5, 2014 to set a schedule for the supplemental

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briefs the Court has requested. Our revised brief was due and submitted on or about September 10, 2014. Oral arguments on the motions to dismiss were heard on November 6, 2014 and we are awaiting the judge's ruling.

Grand Isle Shipyard ("GIS") Matters

On April 29, 2013, Grand Isle Shipyards, Inc. (“GIS”) sued BEEOO, Enviro Tech Systems, LLC, Wood Group USA, Inc., and Compass Engineering & Consultants, LLC in the United States District Court for the Eastern District of Louisiana for damages it alleged incurred in connection with the West Delta 32 Incident. GIS specifically sought damages for loss of property and equipment, expenses in the form of indemnity and medical benefits paid to or on behalf of its employees, and for unpaid invoices in connection with the work it performed at West Delta 32. Upon motion by BEEOO, however, the court dismissed GIS’ lawsuit and ordered GIS and BEEOO to first attempt to resolve their claims through mediation which took place on November 12, 2013.  Since the mediation was unsuccessful, the Parties have now agreed to enter into binding Arbitration pursuant to and in accordance with the MSA.

Invoice Arbitration - On October 8, 2014, Black Elk submitted to the Arbitrator its initial briefing on all affirmative claims and defenses.  This briefing was drafted and submitted pursuant to an order from the Arbitrator.  GIS ignored this order to some degree and submitted Motions for summary Judgment on that date instead.  GIS asked for summary judgment on all of its claims and confusingly argued that Black Elk is not entitled to summary judgment on its affirmative claims (Black Elk obviously has not sought summary judgment on its affirmative claims).  On October 17, 2014, the parties participated in a telephonic hearing with the Arbitrator regarding the briefing and preexisting motions.  The Arbitrator (1) granted Black Elk the right to conduct an audit pursuant to the MSA between the parties, (2) granted Black Elk limited discovery concerning the use of D&R workers on Black Elk platforms, and (3) stated that he would not be granting any dispositive motions in the case (i.e. GIS’ Motions for Summary Judgment).

The arbitration, currently scheduled for December 1, 2014, has been delayed until the new year.  This was a necessary step as both parties will need to take depositions and aggregate discovery before an arbitration can take place.

Platform Arbitration - The arbitration case for damages to the West Delta 32 Platform is scheduled for hearing before a three-arbitrator panel on May 12, 2015. The arbitration proceeding initiated by Black Elk against Compass Engineering & Consultants, LLC for damages arising from the explosion of the WD-32 Platform has been abated pending resolution of Compass’ separate lawsuit filed in the United States District for the Western District of Louisiana seeking a declaration that it was not subjected to arbitration. We are currently in the process of drafting discovery to GIS concerning D&R Resources, LLC's employees' rates, duties, and training. We will continue to defend ourselves vigorously.

Vistar Oil Texas, LLC Joint Venture

On April 16, 2014, Vistar Oil Texas LLC (“Vistar”) filed a petition against Black Elk in Harris County District Court. This suit alleges that Black Elk breached an Acquisition and Participation Agreement and a Joint Operating Agreement between the parties, primarily by failing to provide Vistar with the funds required to bring several wells into operation in Wilson County, Texas. Vistar alleges damages of approximately $6,500,000, certain lease acquisition costs and promissory note payments required to cover liens placed on the wells. Vistar further alleges that Black Elk is in breach by refusing to provide approximately $10,350,000 to Vistar to acquire additional property. This case is in discovery. We believe we have strong potential defenses and have submitted counterclaims, and intend to defend ourselves vigorously.

Arthur Garza III

On August 31, 2014, Arthur Garza, former Chief Technical Officer of Black Elk Energy Offshore Operations, LLC, filed suit against Black Elk Energy Offshore Operations for payment of severance under his employment agreement. This case is in discovery. We believe we have strong potential defenses and intend to defend ourselves vigorously.

Operating Leases

We lease office space and certain equipment under non-cancellable operating lease agreements that expire on various dates through 2020.

Approximate future minimum lease payments for operating leases at September 30, 2014 were as follows:

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Period Ending September 30,	(in thousands)
2015	$	4,056
2016	2,072
2017	1,784
2018	1,655
2019	1,590
Thereafter	1,941
	$	13,098

Escrow Accounts

Pursuant to the purchase agreement from W&T Offshore, Inc. (the “W&T Acquisition”), we are required to fund two escrow accounts (the “W&T Escrow Accounts”), relating to the operating and non-operating properties that were acquired in maximum aggregate amount of $63.8 million ($32.6 million operated and $31.2 million non-operated) for future P&A costs that may be incurred on such properties. As of November 2010, we fully funded the operating escrow account in the amount of $32.6 million and the payment schedule for the Non-Operated Properties Escrow Account was amended and commenced on December 2011. As of September 30, 2014, we have funded $20.5 million into the non-operating escrow account, leaving $10.7 million to be funded through May 1, 2017.

The obligations under the W&T Escrow Accounts are fully guaranteed by an affiliate of Platinum. W&T Offshore Inc. (“W&T”) has a first lien on the entirety of the W&T Escrow Accounts, and BP Corporation North America Inc. and Platinum are pari passu second lien holders. Once P&A obligations with respect to the interest in properties acquired from the W&T Acquisition have been fully satisfied, the lien on the W&T Escrow Accounts will be automatically extinguished. W&T also has a second priority lien with respect to the interest in properties acquired from the W&T Acquisition (with Platinum and BNP Paribas sharing a first priority lien), which lien will be released once the W&T Escrow Accounts have been fully funded.

On December 19, 2012, we entered into a Third Amendment to Purchase and Sale Agreement (the “Third Amendment”) with W&T. Pursuant to the Third Amendment, we caused performance bonds (the “ARGO Bonds”) in an aggregate amount of $32.6 million to be issued by Argonaut Insurance Company to W&T to guaranty our performance of certain plugging and abandonment obligations. Upon receipt of the ARGO Bonds, W&T (i) released its rights to any money held in an escrow account established to secure our performance of certain plugging and abandonment obligations with respect to the Operated Properties Escrow Account, (ii) released the security interest and deposit account control agreement formerly securing its rights in the Operated Properties Escrow Account and (iii) authorized the escrow agent to release such funds from the Operated Properties Escrow Account to or at our direction. In addition, we and W&T agreed that until the funding of an escrow account established to our performance of certain plugging and abandonment obligations with respect to certain non-operated properties is complete, we may not obtain reductions of the ARGO Bonds under any circumstances without W&T’s consent. As of September 30, 2014, we no longer use ARGO Bonds as these are now backed by cash collateral.

Pursuant to the purchase agreement for the Maritech acquisition, we are required to fund an escrow account (the “Maritech Escrow Account”), relating to the properties that were acquired, of $13.1 million to be used for future P&A costs that may be incurred on such properties. This escrow obligation was fully funded in February 2014.

In regards to the Merit acquisition, we are required to establish an escrow account to secure the performance of our P&A obligations and other indemnity obligations with respect to P&A and/or decommissioning of the acquired wells and facilities. We paid $33 million in surety bonds at closing and are required to, over time, deposit in the escrow account an amount equal to $60 million, which is to be paid in 30 equal monthly installments payable on the first day of each month commencing on June 1, 2011. This escrow obligation was fully funded in November 2013.

NOTE 11—RELATED PARTY TRANSACTIONS

We pay for certain operating and general and administration expenses on behalf of Black Elk Energy, LLC. At both September 30, 2014 and December 31, 2013, we had receivables from Black Elk Energy, LLC in the amount of $273,430.

On August 30, 2013, we consented to the assignment by Capital One Bank, N.A. and the other lenders of all of their rights and obligations under our Credit Facility to White Elk LLC, as Administrative Agent and Lender, and Resource Value Group LLC, as Lender. Resource Value Group LLC is affiliated with Platinum. As part of this transaction, we paid a required $0.3 million purchase fee on behalf of Platinum pursuant to the Loan Purchase Agreement.

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During 2011, we entered into a contribution agreement with Platinum. We also entered into additional contributions with (PPVA (Equity)) and the Platinum Group in 2013. Please see "Notes to Consolidated Financial Statements - Note 9 - Members' Deficit" in this Form 10-Q for additional discussion regarding members' contributions.

On May 28, 2013, FWS entered into an equipment lease agreement with Pea and Eigh Company, LLC (“Pea and Eigh”), a related party of Platinum. The lease began on July 1, 2013 and is payable in monthly installments of approximately $35,000, maturing on December 31, 2013, with an option to purchase the equipment for $1.5 million. As of September 30, 2014, we have not purchased all of the equipment. We currently have restricted cash of $0.6 million for the additional equipment to be purchased as well as advances due to Pea and Eigh, which is included in “Accounts payable and accrued expenses”.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact included in this Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Form 10-Q, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements may include statements that relate to, among other things, our:

• Financial data, including production, costs, revenues and operating income;

• Future financial and operating performance and results;

• Business strategy and budgets;

• Market prices;

• Expected plugging and abandonment obligations and other expected asset retirement obligations;

• Technology;

• Financial strategy;

• Amount, nature and timing of capital expenditures;

• Drilling of wells and the anticipated results thereof;

• Oil and natural gas reserves;

• Timing and amount of future production of oil and natural gas;

• Competition and government regulations;

• Operating costs and other expenses;

• Cash flow and anticipated liquidity;

• Prospect development;

• Property acquisitions and sales; and

• Plans, forecasts, objectives, expectations and intentions.

These forward-looking statements are based on our current expectations and assumptions about future events and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisition. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause our actual results to differ from those in the forward-looking statements are described in “Item 1A. Risk Factors” in this Form 10-Q and our 2013 Form 10-K.

These factors include risks summarized below:

• Low and/or declining prices for oil and natural gas;

• Oil and natural gas price volatility;

15

• Risks associated with drilling, including completion risks, cost overruns and the drilling of non-economic wells or dry holes;

• Ability to raise additional capital to fund future capital expenditures;

• Ability to post additional collateral as required by surety companies;

• Cash flow and liquidity;

• Ability to find, acquire, market, develop and produce new oil and natural gas properties;

• Uncertainties in the estimation of proved reserves and in the projection of future rates of production and timing of development expenditures;

• Geological concentration of our reserves;

• Discovery, acquisition, development and replacement of oil and natural gas reserves;

• Operating hazards attendant to the oil and natural gas business;

• Down hole drilling and completion risks that are generally not recoverable from third parties or insurance;

• Potential mechanical failure or underperformance of significant wells or pipeline mishaps;

• Potential increases in plugging and abandonment and other asset retirement costs as a result of new regulations;

• Weather conditions;

• Availability and cost of material and equipment;

• Delays in anticipated drilling start-up dates;

• Actions or inactions of third-party operators of our properties;

• Ability to find and retain skilled personnel;

• Strength and financial resources of competitors;

• Potential defects in title to our properties;

• Federal and state regulatory developments and approvals, including the adoption of new regulatory requirements;

• Losses possible from current litigation matters as a result of the explosion and fire on the West Delta 32-E Platform and other future litigation;

• Environmental risks;

• Changes in interest rates;

• Developments in oil and natural gas-producing countries;

• Events similar to those of September 11, 2001, Hurricanes Katrina, Rita, Gustav and Ike and the Deepwater Horizon explosion; and

• Worldwide political and economic conditions.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no responsibility to publicly release the results of any revisions of our forward-looking statements after the date they are made.

Should one or more of the risks or uncertainties described in “Item 1A. Risk Factors” in this Form 10-Q and our 2013 Form 10-K occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statement.

All forward-looking statements, express or implied, included in this Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as required by law, we undertake no obligations to update, revise or release any revisions to any forward-looking statements to reflect events or circumstances occurring after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to

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which any factors, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Form 10-Q. The following discussion and analysis contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the volatility of oil and natural gas prices, production timing and volumes, estimates of proved reserves, operating costs and capital expenditures, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors discussed in this Form 10-Q, particularly in “Item 1A. Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” all of which are difficult to predict. As a result of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.

Overview

We are an oil and gas company engaged in the acquisition, exploitation, development and production of oil and natural gas properties. Our strategy is to acquire and economically maximize properties that are currently producing or have the potential to produce given additional attention and capital resources. We are engaged in a continual effort to monitor and reduce operating expenses by finding opportunities to safely increase efficiencies related to staffing, transportation and operational procedures. Moreover, our ability to accurately estimate and manage plugging and abandonment costs associated with potential acquisitions increases the likelihood of achieving our target returns on investment. Our management team has extensive engineering, geological, geophysical, technical and operational expertise in successfully developing and operating properties in both our current and planned areas of operation. As of September 30, 2014, we held an aggregate net interest in approximately 273,916 gross (146,403 net) acres under lease and had an interest in 547 gross wells, 68 of which are producing.

We have financed our acquisitions to date through a combination of cash flows provided by operating activities, borrowings under lines of credit and the Notes, and capital contributions from our members. We have historically acquired properties that we believe will meet or exceed our rate of return criteria. With our recent downsized operation, we have divested majority of our operated assets. We are expecting to revisit our strategy in the fourth quarter of 2014.

Black Elk Energy Offshore Operations, LLC and Black Elk Energy Land Operations, LLC were formed on November 20, 2007 as operating subsidiaries of Black Elk Energy, LLC. Black Elk Energy, LLC subsequently assigned its interests in Black Elk Energy Land Operations, LLC to Black Elk Energy Offshore Operations, LLC. Black Elk Energy Offshore Operations, LLC currently has three wholly owned domestic subsidiaries: (i) Black Elk Energy Land Operations, LLC, which is a guarantor under our Indenture, (ii) Black Elk Energy Finance Corp., which is the co-issuer of the Notes and (iii) Freedom Well Services, LLC. Neither Black Elk Energy Land Operations, LLC nor Black Elk Energy Finance Corp has any material assets or operations. Black Elk Energy, LLC owns a minority interest in Black Elk Energy Offshore Operations, LLC.

Prior to an acquisition, we perform stringent structural engineering tests to determine whether the reservoirs possess potential upside. Each opportunity is presented, catalogued and graded by our management and risked appropriately for the overall impact to our Company.

Our revenue, profitability and future growth rate depend significantly on factors beyond our control, such as economic, political and regulatory developments, and environmental hazards, as well as competition from other sources of energy. Oil and natural gas prices historically have been volatile and may fluctuate widely in the future. Sustained periods of low prices for oil or natural gas could materially and adversely affect our financial position, our results of operations, the quantities of oil and natural gas reserves that we can economically produce and our access to capital. Prices for oil and natural gas can fluctuate widely in response to relatively minor changes in the global and regional supply of and demand for oil and natural gas, market uncertainty, economic conditions and a variety of additional factors. Since our inception, commodity prices have experienced significant fluctuations.

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From time to time, we use derivative financial instruments to economically hedge a portion of our commodity price risk to mitigate the impact of price volatility on our business. Our average prices that reflect both the before and after effects of our realized commodity hedging transactions for the three and nine months ended September 30, 2014 and 2013 are shown in the table below.

	Three Months Ended   September 30,				Nine Months Ended   September 30,
	2014		2013		2014		2013
Oil:
Average price before effects of hedges ($/Bbl)(1)	$	99.72	$	110.41	$	102.51	$	108.24
Average price after effects of hedges ($/Bbl)	65.71		102.01		86.88		103.41
Average price differentials(2)	2.12		4.59		2.74		10.07
Gas:
Average price before effects of hedges ($/Mcf)(1)	$	4.16	$	3.74	$	4.86	$	3.85
Average price after effects of hedges ($/Mcf)	4.47		4.07		4.79		4.18
Average price differentials(2)	0.23		0.19		0.29		0.16

(1) Realized oil and natural gas prices do not include the effect of realized derivative contract settlements.

(2) Price differential compares realized oil and natural gas prices, without giving effect to realized derivative contract settlements, to West Texas Intermediate crude index prices and Henry Hub natural gas prices, respectively.

Oil and natural gas prices remain unstable and we expect them to remain volatile in the future. Factors affecting the price of oil include worldwide economic conditions, geopolitical activities, worldwide supply disruptions, weather conditions, actions taken by the Organization of Petroleum Exporting Countries and the value of the U.S. dollar in international currency markets. Factors affecting the price of natural gas include North American weather conditions, industrial and consumer demand for natural gas, storage levels of natural gas and the availability and accessibility of natural gas deposits in North America.

In order to mitigate the impact of changes in oil and natural gas prices on our cash flows, we are a party to hedging and other price protection contracts, and we intend to continue entering into such transactions in the future to reduce the effect of oil and natural gas price volatility on our cash flows. Currently, our risk management program is designed to hedge a significant portion of our production to assure adequate cash flow to meet our obligations. If the global economic instability continues, commodity prices may be depressed for an extended period of time, which could alter our development plans and adversely affect our growth strategy and our ability to access additional funding in the capital markets.

The primary factors affecting our production levels are capital availability and our portfolio of well work projects. In addition, we face the challenge of natural production declines. As initial reservoir pressures are depleted, production from a given well decreases. We attempt to overcome this natural decline primarily through drilling our existing undeveloped reserves and enhancing our current asset base. Our future growth will depend on our ability to continue to add reserves in excess of production and to bring back to production or increase production on well-bores that are currently not productive or not being optimized. Our ability to add reserves through drilling and well work projects is dependent on our capital resources and can be limited by many factors, including our ability to timely obtain drilling permits and regulatory approvals. Any delays in drilling, completing or connecting our new wells to gathering lines will negatively affect our production, which will have an adverse effect on our revenues and, as a result, cash flow from operations.

We focus our efforts on increasing oil and natural gas reserves and production while controlling costs at a level that is appropriate for long-term operations. Our future cash flows from operations are dependent upon our ability to manage our overall cost structure.

Recent Events

Performance Improvement Plan (“PIP”)

On November 21, 2012, BSEE sent us a letter requiring us to take certain actions and to improve our performance. The letter made reference to, among other things, the explosion and fire that occurred on our West Delta 32-E platform on November 16, 2012, (the “November 16, 2012 Incident”). BSEE stated in the letter that if we did not improve our performance, we would be subject to additional enforcement action up to and including possible referral to the Bureau of Ocean Energy Management ("BOEM") to revoke our status as an operator on all of our existing facilities. We have undertaken the actions BSEE required of us in the November 21 letter and have been regularly reporting our progress on those required improvements to BSEE. We have submitted a PIP to BSEE that identifies corrective action items to improve safety performance in offshore operations. The primary components of the PIP address:

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• Independent Third-Party SEMS Audit

• Enhanced oversight of work on our operated platforms

• Hazard Recognition

• Compliance

• Reduction of Incidents of Non-Conformance (INCs)

• Stop Work Authority

In a meeting held at the BSEE Regional Office on October 30, 2013, BEEOO shared with BSEE representatives that implementation of corrective actions (18 elements and 58 tasks) associated with the PIP has been 100% completed. Other essential work control processes such as our Project Execution Plans and Contractor Bridging Agreements have been improved to provide better guidelines and procedures for hazard assessment and work controls. Training in Hazard Recognition, National Pollutant Discharge Elimination System ("NPDES"), Job Safety Analysis ("JSA") and Stop Work Authority ("SWA") will be ongoing and has been incorporated into our training matrix.

On May 22, 2014, we received a letter from BSEE expressing that BEOO completed all the items and elements described in our Performance Improvement Plan. The last remaining task list item is to notify the Lake Charles District upon completion of the Vermilion Block 369 A platform blasting and painting operations. On June 5, 2014, BEEOO notified BSEE Lake Charles District of the completion of the last remaining item on the Performance Improvement Plan, i.e. Vermilion Block 369 platform blasting and painting operations, on June 4, 2014. As of September 30, 2014, we are no longer on the PIP. BSEE recognizes that BEOO has made safety enhancements and implemented changes to our oversight processes on our operated platforms. We plan to continue with cultivating a safety environment in an effort to mitigate risks in all operations as required by statute and regulation. Additionally, BSEE will continue to regularly inspect our facilities and conduct compliance follow-up inspections to confirm correction of noncompliance issued since the beginning of 2014.

Capital Contributions

In the first quarter of 2013, we entered into contribution agreements with PPVA (Equity) and Platinum Partners Black Elk Opportunities Fund LLC (“PPBE”) or entities designated by PPBE (together, the “Platinum Group”) pursuant to which we have issued 50 million additional Class E Units and 3.8 million additional Class B Units to the Platinum Group for an aggregate offering price of $50.0 million. In addition, we also agreed to issue an additional 43 million Class E Units in exchange for $30.0 million of outstanding Class D Preferred Units and $13.0 million of paid-in-kind dividends. The Class E Units had a preferred return of 20% per annum, which was set to increase to 36% on March 25, 2014 (such date as determined by our Fifth Amendment to Second Amended and Restated Limited Liability Operating Agreement). On March 24, 2014 AQR Diversified Arbitrage Fund exercised its right, and we complied, requiring us and PPVA to repurchase all of its Class E Preferred Units for $14.0 million. We obtained waivers to the Class E Preferred Units waiving the incremental preferred return. As a result of the waivers obtained, we issued an additional amount of Class E Units of approximately $10.2 million as paid-in-kind dividends during the period ended September 30, 2014.

In August 2014, we re-purchased $96 million of our Series E Preferred units using proceeds of the Renaissance Sale. As of September 30, 2014, we have $7.9 million Series E Preferred units outstanding.

Operating Agreement Amendment

On April 9, 2013, we entered into the Fifth Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC (the “Fifth Amendment”) to (1) revise and confirm the order and manner of distributions to our members and (2) permit the issuance of Class E Units in an aggregate amount not to exceed $95.0 million and the issuance of Class B Units in connection with such Class E Units in an aggregate amount not to exceed 3,800,000 units before giving effect to any capitalized Class E preferred return, for cash or property capital contributions.

On May 3, 2013, we entered into the Sixth Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC (the “Sixth Amendment”) to (1) establish the payment of the Class E Preferred Return to be paid in kind at the end of each calendar quarter to holders of record on that date unless we, with the consent of the Platinum Manager, elect to pay the Class E Preferred Return in cash and (2) establish New Mountain Finance Holdings, LLC as a Class E Member and, in the event that we do not file required reports with the U.S. Securities and Exchange Commission, provide them with rights as an Observer to the Board (as such term is defined by the Sixth Amendment). Additionally, pursuant to the Sixth Amendment, for so long as any Class E Preferred Units are outstanding, we cannot, without the written consent of the

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Class E Members, issue any equity instruments, including any additional classes of preferred units, that have rights, privileges or priorities that are equal or superior to the rights, privileges, or priorities of the existing Class E Preferred Units.

Letter of Credit Facility Waivers And Amendments

On August 15, 2013, we entered into a Limited Waiver, Ninth Amendment to Letter of Credit Facility Agreement to (1) obtain waivers related to certain covenants in the Letter of Credit Facility for the fiscal quarter ended June 30, 2013, (2) reduce the commitments and cap the outstanding principal balance under the Letter of Credit Facility at approximately $105.7 million and (3) reduce the maximum principal amount available under the Third Amended and Restated Note dated November 8, 2012 from $200.0 million to approximately $105.7 million.

On November 14, 2013, we entered into the Waiver and Tenth Amendment on our Letter of Credit Facility to (1) obtain waivers related to our financial covenants for the third quarter of 2013, (2) cap the outstanding principal balance under the Letter of Credit Facility at approximately $66.6 million, (3) no longer issue or renew existing Letters of Credit and (4) remove the financial covenant requirements and the restriction of asset sales.

As of September 30, 2014, we had zero borrowings outstanding in letters of credit issued under this Credit Facility. Our letters of credit have been paid in full and terminated on June 8, 2014.

Revolving Credit Facility Waivers and Amendments

On March 17, 2014, our credit facility was paid in full.

Liquidity, Risks and Uncertainties

As shown in the accompanying consolidated financial statements, we had a net working capital deficit of approximately $61.9 million at September 30, 2014. The Company's cash position raises substantial doubt about the Company's ability to continue as a going concern. This going concern risk is due to the losses from operations, net capital deficiency, volatile prices, uncertain regulatory environment, and inclement weather. We will need to seek additional working capital through the sale of equity or assets and potentially refinance our Notes in an effort to improve our liquidity position.

In 2014 we have decided to defer a significant portion of our identified capital expenditures until later periods to prioritize capital projects that we believe have the highest expected returns and potential to generate near-term cash flows. We will monitor and adjust our future capital expenditures to respond to changes in prices, availability of financing, industry conditions, and contractual obligations.

In 2013, we realized approximately $131.8 million in sales proceeds (subject to customary closing adjustments) which we used to reduce our credit facility and fund our 2013 capital expenditures. We no longer have our Credit Facility as it was paid in full on March 17, 2014.    

In 2014, our primary use of capital has been for providing collateral to secure our P&A obligations and re-purchase Series E Preferred Units. As we plug and abandon certain fields and meet the various criteria related to the corresponding escrow accounts, we expect to release funds from the escrow accounts. Our letters of credit with Capital One that were backed entirely by cash were paid in full on June 8, 2014. We used these letters of credit to back our surety bonds for P&A obligations. We terminated the 100% cash-backed letters of credit and increased our collateral with the surety agencies in the second quarter of 2014 for P&A obligations.

On July 10, 2014, we entered into a Purchase and Sale Agreement with Renaissance Offshore, LLC. Pursuant to the

Purchase and Sale Agreement, Renaissance will acquire our interests, subject to certain exclusions, in nine fields, seven

operated and two non-operated, -in the offshore Gulf of Mexico (the "Renaissance Sale"). On August 15, 2014, we closed the sale to Renaissance Offshore, LLC of seven operated and one non-operated assets in the offshore Gulf of Mexico. After customary purchase price adjustments, the Company received $125.1 million in net proceeds from the Renaissance Sale. The assets sold in the Renaissance Sale represent a significant amount of the Company’s cash flow, proved reserves and production.

On July 16, 2014, we commenced a cash tender offer to purchase all of the Notes on the terms and subject to the

conditions set forth in an Offer to Purchase and Consent Solicitation Statement dated July 16, 2014. In conjunction with the

tender offer, and on the terms and subject to the conditions set forth in the offer documents, we solicited consents of

holders of the Notes to modify certain of the restrictive covenants contained in the indenture governing the Notes. The Offer

and the Consent Solicitation were made solely by means of the offer documents, which were made available to the

holders of Notes.

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As of the expiration of the Offer at 5:00 p.m. EST on August 13, 2014, $11,333,000 principal amount of the Notes had validly tendered and not withdrawn, and holders of $110,565,000 principal amount of the Notes, or 73.71% of the Notes, had validly consented to the Consent Solicitation and not revoked such consent. Based on the consents received and the conditions to effectiveness, including the Renaissance Sale, having been satisfied or waived in connection with the tender offer and Consent Solicitation with respect to the Company’s outstanding $150,000,000 aggregate principal amount of 13.75% senior secured notes due 2015 (the “Notes”), the Company, Black Elk Energy Finance Corp., the guarantor and the trustee under the indenture governing the Notes entered into a Second Supplemental Indenture in order to effect the proposed amendments to the indenture governing the Notes effective as of August 19, 2014 (the “Effective Time”). At the Effective Time, the Second Supplemental Indenture was binding on all holders of Notes, including those who did not deliver a consent.

All Notes validly tendered and not withdrawn at or before 5:00 p.m. Eastern Time on August 13, 2014 were accepted for payment and the Company had promptly paid for such Notes, using the Renaissance Sale proceeds, in accordance with the terms of the Company’s Offer to Purchase and Consent Solicitation Statement dated July 16, 2014, and in the related Letter of Transmittal and Consent to Tender and to Give Consent.

Virtually all of our current production is concentrated in the Gulf of Mexico, which is characterized by production declines more rapid than those of conventional onshore properties. As a result, we are particularly vulnerable to a near-term severe impact resulting from unanticipated complications in the development of, or production from, any single material well or infrastructure installation, including lack of sufficient capital, delays in receiving necessary drilling and operating permits, increased regulation, reduced access to equipment and services, mechanical or operational failures, and severe weather. Any unanticipated significant disruption to, or decline in, our current production levels or prolonged negative changes in commodity prices or operating cost levels could have a material adverse effect on our financial position, results of operations, cash flows, the quantity of proved reserves that we report, and our ability to meet our commitments as they come due.

As an oil and gas company, our revenue, profitability, cash flows, proved reserves and future rate of growth are substantially dependent on prevailing prices for oil and natural gas. Historically, the energy markets have been very volatile, and we expect such price volatility to continue. Any extended decline in oil or gas prices could have a material adverse effect on our financial position, results of operations, cash flows, the quantities of oil and gas reserves that we can economically produce, and may restrict our ability to obtain additional financing or to meet the contractual requirements of our debt and other obligations.

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How We Evaluate Our Operations

We use a variety of financial and operational measures to assess our overall performance. Among these measures are (1) volumes of oil and natural gas produced, (2) oil and natural gas prices realized, (3) per unit operating and administrative costs and (4) Adjusted EBITDA (as defined in the following table).

The following table contains certain financial and operational data for each of the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2014			2013			2014		2013
Average daily sales(1):
Oil (Bopd)	851			4,969			2,526		4,617
Natural gas (Mcfpd)	12,315			36,595			19,739		38,149
Plant products (Galpd)	(148		)	16,484			12,321		24,397
Oil equivalents (Boepd)	2,900			11,461			6,109		11,556
Average realized prices(1)(2):
Oil ($/Bbl)	$	65.71		$	102.01		$	86.88	$	103.41
Natural gas ($/Mcf)	4.47			4.07			4.79		4.18
Plant products ($/Gallon)	7.43			0.96			0.90		0.88
Oil equivalents ($/Boe)	37.89			58.62			53.21		56.97
Costs and Expenses:
Lease operating expense ($/Boe)	$	47.76		$	48.55		$	40.02	$	44.90
General and administrative expense ($/Boe)	33.36			9.12			12.97		8.95
Net income (loss) (in thousands)	72,896			(18,415		)	82,437		(74,145		)
Adjusted EBITDA(3) (in thousands)	(11,548		)	9,126			6,956		25,722

(1) Average daily sales and average realized prices comprise of actuals and accruals. During the nine months ended September 30, 2014, we identified a non-cash adjustment that impacted our average daily sales calculations that originated in prior periods. Because the adjustment was immaterial to any prior periods in which they arose, the correction was recorded in the current period.

(2) Average realized prices presented give effect to our hedging.

(3) Adjusted EBITDA is defined as net (loss) income before interest expense, net, surety and letter of credit fees, West Delta 32 costs, unrealized loss (gain) on derivative instruments, accretion of asset retirement obligations, depreciation, depletion, and amortization, impairment of oil and gas properties, gain on involuntary conversion of assets and loss (gain) on sale of assets. Adjusted EBITDA is not a measure of net loss or cash flows as determined by GAAP, and should not be considered as an alternative to net loss, operating loss or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. We present Adjusted EBITDA because it is frequently used by securities analysts, investors and other interested parties in the evaluation of high-yield issuers, many of whom present Adjusted EBITDA when reporting their results. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results or cash flows as reported under GAAP. Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. A reconciliation table is provided below to illustrate how we derive Adjusted EBITDA.

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	Three Months Ended   September 30,						Nine Months Ended   September 30,
	2014			2013			2014			2013
	(in thousands)
Net income (loss)	$	72,896		$	(18,415	)	$	82,437		$	(74,145	)
Adjusted EBITDA	$	(11,548	)	$	9,126		$	6,956		$	25,722
Reconciliation of Net (loss) income to Adjusted EBITDA
Net income (loss)	$	72,896		$	(18,415	)	$	82,437		$	(74,145	)
Interest expense, net	5,417			6,813			17,568			19,293
Surety and letter of credit fees	1,200			2,458			4,685			7,017
West Delta 32 costs	181			4,702			427			12,397
Unrealized (gain) loss on derivative instruments	(7,199		)	5,143			(7,581		)	5,989
Accretion of asset retirement obligations	551			4,458			3,536			19,551
Depreciation, depletion and amortization	2,537			10,027			24,476			32,727
Impairment of oil and gas properties	11,395			402			14,469			55,779
Gain on involuntary conversion of assets	—			(7,194		)	—			(17,827		)
Provision for doubtful accounts	—			308			16			308
(Gain) loss on sale of assets	(98,526		)	424			(133,077		)	(35,367		)
Adjusted EBITDA	$	(11,548	)	$	9,126		$	6,956		$	25,722

The following table sets forth certain information with respect to oil and gas operations for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30,											Nine Months Ended September 30, 2013
	2014			2013			Change			% Change		2014			2013			Change			% Change
PRODUCTION:
Oil (MBbl)	78			457			(379		)	(83	)%	690			1,260			(570		)	(45	)%
Natural gas (MMcf)	1,133			3,367			(2,234		)	(66	)%	5,389			10,415			(5,026		)	(48	)%
Plant products (MGal)	(14		)	1,517			(1,531		)	(101	)%	3,364			6,660			(3,296		)	(49	)%
Total (MBoe)	267			1,054			(787		)	(75	)%	1,668			3,155			(1,487		)	(47	)%
REVENUES:
Oil sales	$	7,811		$	50,479		$	(42,668	)	(85	)%	$	70,692		$	136,415		$	(65,723	)	(48	)%
Natural gas sales	4,718			12,600			(7,882		)	(63	)%	26,192			40,046			(13,854		)	(35	)%
Plant product sales and other revenue	(101		)	1,457			(1,558		)	(107	)%	3,032			5,831			(2,799		)	(48	)%
Gain (loss) on derivative financial instruments	4,883			(7,868		)	12,751			162	%	(3,593		)	(8,562		)	4,969			58	%
Other revenues	2,441			7,089			(4,648		)	(66	)%	15,830			16,389			(559		)	(3	)%
TOTAL REVENUES	19,752			63,757			(44,005		)	(69	)%	112,153			190,119			(77,966		)	(41	)%
OPERATING EXPENSES:
Lease operating	12,744			51,168			(38,424		)	(75	)%	66,753			141,657			(74,904		)	(53	)%
Workover	1,431			1,028			403			39	%	2,050			7,312			(5,262		)	(72	)%
Depreciation, depletion and amortization	2,537			10,027			(7,490		)	(75	)%	24,476			32,727			(8,251		)	(25	)%
Impairment of oil and gas properties	11,395			402			10,993			2,735	%	14,469			55,779			(41,310		)	(74	)%
General and administrative	8,901			9,621			(720		)	(7	)%	21,630			28,250			(6,620		)	(23	)%
Gain on involuntary conversion of asset	—			(7,194		)	7,194			100	%	—			(17,827		)	17,827			100	%
Accretion of asset retirement obligations	551			4,458			(3,907		)	(88	)%	3,536			19,551			(16,015		)	(82	)%
(Gain) loss on sale of assets	(98,526		)	424			(98,950		)	(23,337	)%	(133,077		)	(35,367		)	(97,710		)	(276	)%
Other operating expenses	1,062			2,704			(1,642		)	(61	)%	6,413			5,117			1,296			25	%
TOTAL OPERATING EXPENSES	(59,905		)	72,638			(132,543		)	(182	)%	6,250			237,199			(230,949		)	(97	)%
INCOME (LOSS) FROM OPERATIONS	79,657			(8,881		)	88,538			(997	)%	105,903			(47,080		)	152,983			(325	)%
OTHER INCOME (EXPENSE):
Interest (expense) income	10			30			(20		)	(67	)%	45			81			(36		)	(44	)%
Miscellaneous income (expense)	(1,312		)	(2,674		)	1,362			51	%	(5,778		)	(7,620		)	1,842			24	%
Interest expense	(5,459		)	(6,890		)	1,431			21	%	(17,733		)	(19,526		)	1,793			9	%
TOTAL OTHER EXPENSE, NET	(6,761		)	(9,534		)	2,773			29	%	(23,466		)	(27,065		)	3,599			13	%
NET INCOME (LOSS)	$	72,896		$	(18,415	)	$	91,311		496	%	$	82,437		$	(74,145	)	$	156,582		211	%

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Production

Oil and natural gas production. Total oil, natural gas and plant product production of 267 MBoe decreased 787 MBoe, or 75%, and 1,668 MBoe decreased 1,487 MBoe, or 47%, during the three and nine months ended September 30, 2014 compared to the same periods in 2013 as a result of asset sales, pipeline repairs, and natural decline. Additionally, average daily sales and average realized prices comprise of actuals and accruals. During the nine months ended September 30, 2014, we identified a non-cash adjustment that impacted our average daily sales calculations that originated in prior periods. Because the adjustment was immaterial to any prior periods in which they arose, the correction was recorded in the current period.

Revenues

Total revenues. Total revenues for the three and nine months ended September 30, 2014 of $19.8 million and $112.2 million decreased$44.0 million, or 69%, and $78.0 million, or 41%, respectively, over the comparable periods in 2013.

Revenues, excluding the realized and unrealized revenues from commodity hedge contracts, decreased$56.8 million, or 79%, and $82.9 million, or 42%, for the three and nine months ended September 30, 2014, respectively, compared to the same periods in 2013. The decrease was primarily due to the impact of recent divestitures of properties and various gas pipeline shut-ins. Additionally, average daily sales and average realized prices comprise of actuals and accruals. During the nine months ended September 30, 2014, we identified a non-cash adjustment that impacted our average daily sales calculations that originated in prior periods. Because the adjustment was immaterial to any prior periods in which they arose, the correction was recorded in the current period.

We entered into certain oil and natural gas commodity derivative contracts in 2014 and 2013. We realized losses on these derivative contracts in the amounts of $2.3 million and $11.2 million for the three and nine months ended September 30, 2014, respectively, and $2.7 million and $2.6 million for the three and nine months ended September 30, 2013, respectively. We recognized unrealized gains of $7.2 million and $7.6 million for the three and nine months ended September 30, 2014, respectively, and losses of $5.1 million and $6.0 million in the same periods of 2013.

Excluding hedges, we realized average oil prices of $99.72 per barrel and $102.51 per barrel and gas prices of $4.16 per Mcf and $4.86 per Mcf for the three and nine months ended September 30, 2014, respectively. For the same periods in 2013, excluding hedges, we realized average oil prices of $110.41 per barrel and $108.24 per barrel and gas prices of $3.74 per Mcf and $3.85 per Mcf for the three and nine months ended September 30, 2013, respectively. Oil prices were lower on a quarter and year-to-date basis that were partially offset by slightly higher gas prices compared to 2013. We expect commodity prices to remain volatile in the future.

Operating Expenses

Lease operating costs. Our lease operating costs for the three and nine months ended September 30, 2014 were $12.7 million, or $47.76 per Boe, and $66.8 million, or $40.02 per Boe. For the three and nine months ended September 30, 2013, our lease operating costs were $51.2 million, or $48.55 per Boe, and $141.7 million, or $44.90 per Boe, respectively. Lease operating expenses decreased by $38.4 million and $74.9 million for the three and nine months ended September 30, 2014, respectively, compared to the same periods in 2013, primarily as a result of the 2013 Renaissance transaction and the 2014 Fieldwood and Renaissance transactions. The increase in cost per Boe during 2014 was primarily attributable to decreased production and operating expenses that are fixed in the short-term.

Workover costs. Our workover costs for the three and nine months ended September 30, 2014 were $1.4 million and $2.1 million, an increase of $0.4 million and a decrease$5.3 million compared to the third quarter and nine months of 2013, respectively. For the nine months ended September 30, 2014, South Pelto 20, Garden Banks 82/128, Garden Banks 602, South Timbalier 8, and South Pelto 13 were the primary workover expense projects.

Depreciation, depletion, amortization and impairment. DD&A expense was $2.5 million, or $9.51 per Boe, and $24.5 million, or $14.68 per Boe, for the three and nine months ended September 30, 2014, respectively. For the three and nine months ended September 30, 2013, DD&A was $10 million, or $9.51 per Boe and $32.7 million, or $10.37 per Boe, respectively. The decrease in DD&A for the three and nine months ended September 30, 2014 was a result of asset sales, lower production and reduced asset basis as a result of the impairments recorded in 2014 and 2013. Depletion is recorded based on units of production and DD&A expense includes depletion of future asset retirement obligations. We recorded $11.4 million and $14.5 million impairment for the three and nine months ended September 30, 2014 and $0.4 million and $55.8 million in the same periods in 2013, respectively.

General and administrative expenses. G&A expense was $8.9 million, or $33.36 per Boe, and $21.6 million, or $12.97 per Boe, for the three and nine months ended September 30, 2014, respectively, and $9.6 million, or $9.12 per Boe, and $28.3

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million, or $8.95 per Boe, for the same periods in 2013. The decrease in G&A expense for the three and nine months ended September 30, 2014 was primarily the result of headcount reductions, and restructuring overhead and insurance contracts that was partially offset by higher severance expenses. Excluding the severance expenses recorded in the third quarter of 2014 of $1.8 million, our G&A expenses for the three and nine months September 30, 2014 were $7.1 million, or $26.61 per Boe, and $19.8 million, or $11.89 per Boe, respectively. G&A expense for the nine month ended September 30, 2013 reflects a reclassification of surety fees from G&A expenses to miscellaneous expense.

Accretion expense. We recognized accretion expense of $0.6 million and $3.5 million for the three and nine months ended September 30, 2014, respectively, compared to $4.5 million and $19.6 million for the three and nine months ended September 30, 2013. The decrease in accretion expense is a result of P&A activity incurred during 2013 and the nine months ended September 30, 2014, decreased asset retirement liability due to the sale of properties during 2013 and the Fieldwood and Renaissance transactions in 2014, and a revision to the discount rate used to calculate accretion. As the Company had fully funded our operating escrow accounts, we have prospectively adjusted the accretion rate to be reflective.

Gain on sale of assets. We recognized a gain on the sale of assets of $98.5 million and $133.1 million for the three and nine months ended September 30, 2014 related to the Apache settlement and the sale to Fieldwood and Renaissance. Fieldwood acquired all of the Company’s interest in one operated and 15 non-operated fields for $50 million, subject to normal purchase price adjustments that was closed on March 17, 2014. On August 15, 2014, we closed a sale with Renaissance of seven operated and one non-operated assets for $125.1 million, after normal purchase price adjustments.

Other operating expenses. Other operating expenses of $1.1 million and $6.4 million for the three and nine months ended September 30, 2014, compared to $2.7 million and $5.1 million for the three and nine months ended September 30, 2013. The decrease in other operating expenses is due to FWS experiencing less P&A projects, and therefore less operating expenses, in third quarter 2014. For the nine months ended September 30, 2014, an increase in other operating expenses was primarily due to the nine months impact on the operating lease that became effective effective July 2013.

Miscellaneous expense. Miscellaneous expense is $1.3 million and $5.8 million for the three and nine months ended September 30, 2014, compared to $2.7 million and $7.6 million for the three and nine months ended September 30, 2013, respectively. Miscellaneous expense for the three and nine months ended September 30, 2013 reflects reclassification of surety fees from G&A expense to miscellaneous expense. Miscellaneous expense for the three and nine months ended September 30, 2014 reflects a decrease in surety and escrow fees and a settlement loss of $0.8 million incurred in the first quarter of 2013. The settlement loss of $0.8 million related to final settlement on outstanding accounts payable and accounts receivable between Black Elk Energy and Fieldwood, Apache and W&T Offshore.

Liquidity and Capital Resources

The Company currently faces challenges with our current cash flow and need to pay our operating expenses, including our debt service obligations. The Company's cash position raises substantial doubt about the Company's ability to continue as a going concern. We will need to seek additional working capital through the sale of equity or assets and potentially refinance our Notes in an effort to improve our liquidity.

In 2014 we have decided to defer a significant portion of our identified capital expenditures until later periods to prioritize capital projects that we believe have the highest expected returns and potential to generate near-term cash flows. We will monitor and adjust our future capital expenditures to respond to changes in prices, availability of financing, industry conditions, and contractual obligations.

As of September 30, 2014, our primary use of capital has been for Series E payment as well as providing collateral to secure our P&A obligations. As we abandon certain fields and meet the various criteria related to the corresponding escrow accounts, we expect to release funds from the escrow accounts. Furthermore, we no longer use letters of credit to back our surety bonds for P&A obligations. Our surety bonds are now backed by the surety agencies.    

Senior Secured Revolving Credit Facility

On December 24, 2010, we entered into a Credit Facility comprised of a senior secured revolving credit facility of up to $35 million and a $75 million secured letter of credit facility to be used exclusively for the issuance of letters of credit in support of our future P&A liabilities relating to our oil and natural gas properties (the “Letter of Credit Facility”). The Credit Facility bears interest based on the borrowing base usage, at the applicable London Interbank Offered Rate, plus applicable margins ranging from 4.75% to 5.5%, or an alternate base rate based on the federal funds effective rate plus applicable margins

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ranging from 3.25% to 4.00%. The applicable margin is computed based on the borrowing based utilization percentage in effect from time to time. The borrowing base under our Credit Facility is subject to redetermination on a semi-annual basis, effective April 1 and October 1, and up to one additional time during any six month period, as may be requested by either us or the administrative agent, acting at the direction of the majority of the lenders. The borrowing base will be determined by the administrative agent in its sole discretion and consistent with its normal oil and gas lending criteria in existence at that particular time. Our obligations under the Credit Facility were guaranteed by our existing subsidiaries and are secured on a first-priority basis by all of our and our subsidiaries’ assets, in the case of the Credit Facility, and by cash collateral, in the case of the Letter of Credit Facility. On March 17, 2014 the Credit Facility was paid in full.

We have entered into various amendments to the Letter of Credit Facility. These amendments have, among other things, (1) adjusted the commitments under the Letter of Credit Facility to approximately $66.6 million, (2) updated the fees on the letters of credit to 2% on a go-forward basis, (3) changed the maturity date from June 22, 2014 on the Letter of Credit Facility. These letters of credit were paid in full and closed as of June 8, 2014.

A letter of credit fee is computed based on the same applicable margin used to determine the interest rate to Eurodollar loans times the stated face amount of each letter of credit.

For a further discussion of our Credit Facility, please see “Notes to Consolidated Financial Statements—Note 8—Debt and Notes Payable” in this Form 10-Q.

13.75% Senior Secured Notes

On November 23, 2010, we issued $150 million in aggregate principal amount of the Notes discounted at 99.109%. The net proceeds were used to repay all of the outstanding indebtedness under our lines of credit, to fund BOEM collateral requirements and to prefund our P&A escrow accounts. We pay interest on the Notes semi-annually, on June 1st and December 1st of each year, in arrears, commencing June 1, 2011. The Notes mature on December 1, 2015.

The Notes are secured by a security interest in the issuers’ and the guarantors’ assets (excluding the escrow accounts set up for the future P&A obligations of the properties acquired in the W&T acquisition). The liens securing the Notes are subordinated and junior to any first lien indebtedness, including our derivative contracts obligation and Credit Facility.

We have the right or the obligation to redeem the Notes under various conditions. If we experience a change of control, the holders of the Notes may require us to repurchase the Notes at 101% of the principal amount thereof, plus accrued unpaid interest. We also have an optional redemption in which we may redeem up to 35% of the aggregate principal amount of the Notes at a price equal to 110.0% of the principal amount, plus accrued and unpaid interest to the date of redemption, with the net cash proceeds of certain equity offerings until December 1, 2013. From December 1, 2013 until December 1, 2014, we may redeem some or all of the Notes at an initial redemption price equal to par value plus one-half the coupon which equals 106.875% plus accrued and unpaid interest to the date of the redemption. On or after December 1, 2014, we may redeem some or all of the Notes at a redemption price equal to par plus accrued and unpaid interest to the date of redemption.

On May 31, 2011, we amended the Indenture, among other things, to: (1) increase the amount of capital expenditures permitted to be made by us on an annual basis, (2) enable us to obtain financial support from our majority equity holder by way of a $30 million investment in Class D Units that can be repaid over time and (3) obligate us to make an offer to repurchase the Notes semiannually at an offer price equal to 103% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest to the extent it meets certain defined financial tests and as permitted by our credit facilities.

On August 19, 2014, as a result of the receipt of the requisite consents in connection with the tender offer and consent solicitation of the Company’s outstanding $150,000,000 aggregate principal amount of 13.75% senior secured notes due 2015 (the “Notes”) prior to 5:00 p.m. Eastern Time on August 13, 2014 (the “Expiration Time”) and the satisfaction or waiver of the conditions to effectiveness specified in the Company’s Offer to Purchase and Consent Solicitation Statement dated July 16, 2014, the Company, Black Elk Energy Finance Corp., the guarantor and the trustee under the Indenture governing the Notes dated as of November 23, 2010, as supplemented by the First Supplemental Indenture dated as of May 31, 2011 (the “Indenture”) entered into a Second Supplemental Indenture (the “Supplemental Indenture”) in order to effect the proposed amendments to the Indenture effective as of August 19, 2014 (the “Effective Time”). At the Effective Time, the Supplemental Indenture will be binding on all holders of the Notes, including those who did not deliver a consent or who validly revoked their consent before the Expiration Time.

As of September 30, 2014, the recorded value of the Notes was $138.2 million, which includes the unamortized discount of $0.4 million.

Renaissance Sale

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On July 10, 2014, we entered into a Purchase and Sale Agreement with Renaissance Offshore, LLC. Pursuant to the

Purchase and Sale Agreement, Renaissance will acquire our interests, subject to certain exclusions, in nine fields, seven

operated and two non-operated, in the offshore Gulf of Mexico(the "Renaissance Sale"). On August 15, 2014, the Company closed the sale of seven operated and one non-operated assets to Renaissance Offshore, LLC. After customary purchase price adjustments, the Company received $125.1 million in net proceeds from the Renaissance Sale. The net proceeds of the Renaissance Sale was used primarily to fund our purchase of the Notes validly tendered and not withdrawn pursuant to the tender offer on August 13, 2014 and to re-purchase Series E preferred units.

Tender Offer and Consent Solicitation

On July 16, 2014, we commenced a cash tender offer to purchase all of the Notes on the terms and subject to the conditions set forth in an Offer to Purchase and Consent Solicitation Statement dated July 16, 2014. In conjunction with the tender offer, and on the terms and subject to the conditions set forth in the offer documents, we solicited consents of holders of the Notes to modify certain of the restrictive covenants contained in the indenture governing the Notes. The Offer and the Consent Solicitation were made solely by means of the offer documents, which were made available to the holders of Notes.

The Offer and the Consent Solicitation were made in connection with our proposed disposition of certain assets pursuant to the Renaissance Sale. The net proceeds of the Renaissance Sale was used primarily to fund our purchase of the Notes validly tendered and not withdrawn pursuant to the tender offer on August 13, 2014 and to re-purchase Series E preferred units.

Our obligation to accept for purchase and to pay for Notes validly tendered and not withdrawn pursuant to the tender offer was subject to the satisfaction or waiver, in our discretion, of certain conditions, including, among others, our receipt of consents from the holders of at least a majority in principal amount of the outstanding Notes to the proposed amendments and our receipt of aggregate proceeds in the Renaissance Sale of at least $100 million.

Consents from the holders of at least a majority in principal amount of the outstanding Notes were validly received prior to the expiration time and the conditions to effectiveness were satisfied or waived. A Second Supplemental Indenture was entered in order to effect the proposed amendments to the indenture governing the Notes effective as of August 19, 2014. All Notes validly tendered and not withdrawn at or before 5:00 p.m. Eastern Time on August 13, 2014 were accepted for payment and the Company promptly paid for such Notes in accordance with the terms of the Company’s Offer to Purchase and Consent Solicitation Statement dated July 16, 2014, and in the related Letter of Transmittal and Consent to Tender and to Give Consent. Among other things, the Second Supplemental Indenture:

• allowed us to apply the net proceeds from the Renaissance Sale to consummate the tender offer and to use any remaining proceeds from the Renaissance Sale to purchase our preferred equity; and

• permitted the incurrence of indebtedness arising from the performance of our plugging and abandonment obligations and liens on our oil and gas properties to secure such indebtedness

•

• removed the covenant prohibiting the Company and its Restricted Subsidiaries from incurring aggregate capital expenditures in excess of 30% of Consolidated EBITDAX in any fiscal year.

Member Contributions

In the first quarter of 2013, we entered into contribution agreements with PPVA (Equity) and Platinum Partners Black Elk Opportunities Fund LLC (“PPBE”) or entities designated by PPBE (together, the “Platinum Group”) pursuant to which we have issued 50 million additional Class E Units and 3.8 million additional Class B Units to the Platinum Group for an aggregate offering price of $50.0 million. In addition, we also agreed to issue an additional 43 million Class E Units in exchange for $30.0 million of outstanding Class D Preferred Units and $13.0 million of paid-in-kind dividends. The Class E Units had a preferred return of 20% per annum, which was set to increase on March 25, 2014 to 36% per annum (such date as determined by our Fifth Amendment to Second Amended and Restated Limited Liability Operating Agreement). On March 24, 2014 AQR Diversified Arbitrage Fund exercised its right, and we complied, requiring us and PPVA to repurchase all of its Class E Preferred Units for $14.0 million. We obtained waivers to the Class E Preferred Units waiving the incremental preferred return. As a result of the waivers obtained, we issued an additional amount of Class E Units of approximately $10.2 million as paid-in-kind dividends as of September 30, 2014.

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On February 12, 2013, we entered into an agreement with Platinum under which we agreed to issue Class B Units to Platinum in exchange for financial consulting services, including (1) analysis and assessment of our business and financial condition and compliance with financial covenants in our credit facility, (2) discussion with us and senior bank lenders regarding capital contributions and divestitures of non-core assets, and (3) coordination with our attorneys, accountants, and other professionals. On February 12, 2013, we issued 1,131,458.5 Class B Units to PPVA Black Elk (Equity) LLC, an affiliate of Platinum, pursuant to such agreement.

Stock Split. On February 12, 2013, we entered into the Fourth Amendment to the Second Amended and Restated Limited Liability Operating Agreement of the Company (the “Fourth Amendment”). The Fourth Amendment amended the Company’s operating agreement to effectuate a 10,000 to 1 unit split for each of the Class A Units, Class B Units and Class C Units.

Operating Agreement Amendment. In April 2013, we entered into the Fifth Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC (the “Fifth Amendment”) to (1) revise and confirm the order and manner of distributions to our members and (2) permit the issuance of Class E Units in an aggregate amount not to exceed $95.0 million and the issuance of Class B Units in connection with such Class E Units in an aggregate amount not to exceed 3,800,000 units before giving effect to any capitalized Class E preferred return, for cash or property capital contributions.

Historically, we used our commodity derivative positions to help us stabilize a portion of our expected cash flows from operations despite potential declines in the price of oil and natural gas. We are currently assessing our commodity derivative positions to determine whether or not to enter into additional oil and gas hedging. Please see “—Oil and Natural Gas Hedging” and “—Quantitative and Qualitative Disclosures About Market Risk.”

We actively review acquisition opportunities on an ongoing basis. Our ability to make significant additional acquisitions for cash would require us to obtain additional equity or debt financing, which we may not be able to obtain on terms acceptable to us or at all.

Cash Flows

The table below discloses the net cash provided by (used in) operating activities, investing activities, and financing activities for the nine months ended September 30, 2014 and 2013:

	Nine Months Ended September 30,
	2014			2013
Net cash (used in) provided by operating activities	$	(67,325	)	$	28,729
Net cash provided by (used in) investing activities	224,479			(50,698		)
Net cash (used in) provided by financing activities	(157,914		)	27,272
Net (decrease) increase in cash and equivalents	$	(760	)	$	5,303

Cash flows (used in) provided by operating activities. Cash used in operating activities totaled $(67.3) million during the nine months ended September 30, 2014 compared to $28.7 million provided by operating activities during the nine months ended September 30, 2013. Significant components of net cash (used in) operating activities during the nine months ended September 30, 2014 included $(56.3) million of changes in operating assets and liabilities and $(93.4) million of non-cash items, primarily DD&A expense, impairment and accretion of asset retirement obligations partially offset by the net gain on sale of assets. Cash provided by operating activities in the comparable period of 2013 were attributed tochanges in operating assets and liabilities and non-cash items, primarily DD&A expense, impairment and accretion of asset retirement obligations partially offset by the net loss, gain on sale of assets and gain on involuntary conversion of assets.

Our operating cash flows are sensitive to a number of variables, the most significant of which is the volatility of oil and natural gas prices. Regional and worldwide economic activity, weather, infrastructure capacity to reach markets and other variable factors significantly impact the prices of these commodities. These factors are beyond our control and are difficult to predict. For additional information on the impact of changing prices on our financial position, see “Item 3. Quantitative and Qualitative Disclosures About Market Risk” below.

Cash flows provided by (used in) investing activities. Cash provided by investing activities was $224.5 million in the nine months ended September 30, 2014 was primarily attributable to the sale to Fieldwood Energy, LLC and Renaissance Offshore Operations, LLC partially offset by additions to the oil and gas properties during the period and the funding of the future P&A obligations through escrow. Cash used in investing activities in the comparable period of 2013 were attributed to

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oil and gas property additions associated with the capital drilling program during the period and the funding of the future P&A obligations through escrow partially offset by the sale proceeds of the sale of four fields to Renaissance Offshore and proceeds received from insurance recovery for HI 443.

Cash flows (used in) provided by financing activities. Cash flows used in financing activities of $(157.9) million in the nine months ended September 30, 2014 were attributable to $11.4 million of payments on the $150 million bond, $34.5 million of payments on the Credit Facility and $112.0 million distribution to members. Cash flows provided by financing activities of $27.3 million in the nine months ended September 30, 2013 were attributable to contributions from Platinum Group and PPVA and borrowings under the Credit Facility partially offset by payments on the Credit Facility and short-term notes.

Asset Retirement Obligations

As many as four times per year, we review and, to the extent necessary, revise our asset retirement obligation estimates.As of September 30, 2014, we had a decrease of $81.2 million in our asset retirement obligations primarily as a result of the asset sales to Fieldwood Energy, LLC and Renaissance Offshore Operations, LLC, settlements of asset retirement obligations, and recognized $3.5 million in accretion expense. For the three and nine months ended September 30, 2013, we decreased our assets retirement obligations primarily as a result of the asset sale to Renaissance Offshore, LLC and in P&A work performed in 2013.

At September 30, 2014 and December 31, 2013, we have total asset retirement obligations of $195.5 million and $276.7 million, respectively, and have funded approximately $196.3 million and $235.4 million in our long-term escrows and $25.9 million and $22.0 million in our short-term escrows, respectively, in collateral to secure our P&A obligations, inclusive of performance bonds. As of September 30, 2014 and December 31, 2013, we also have a guaranteed escrow amount of $20.3 million for certain fields which will be refunded to us once we have completed our P&A obligations on the entire field. The escrow is guaranteed by TETRA Technologies, Inc.

Contractual Obligations

We have various contractual obligations in the normal course of our operations and financing activities. The following schedule summarizes our contractual obligations and other contractual commitments at September 30, 2014:

	Payments Due by Period
	Total		Less than 1 Year		1 - 3 Years		3 -5 Years		After 5 Years
	(in thousands)
Contractual Obligations
Total debt and notes payable	$	138,930	$	340	$	138,590	$	—	$	—
Interest on debt and notes payable	28,847		19,321		9,526		—		—
Operating leases (1)	13,098		4,056		3,856		3,245		1,941
Total contractual obligations	180,875		23,717		151,972		3,245		1,941
Other Obligations
Asset retirement obligations (2)	195,500		32,839		104,805		10,793		47,063
Total obligations (3)	$	376,375	$	56,556	$	256,777	$	14,038	$	49,004

(1) Consists of office space leases for our Texas and Louisiana offices and services provided in the office.

(2) Asset retirement obligations will be partially funded via the escrow. The obligations reflected above are discounted.

(3) Does not include Class E Cumulative Convertible Participating Preferred Units as they are contingently redeemable at the holders’ option.

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements.

Oil and Gas Hedging

As part of our risk management program, we hedge a portion of our anticipated oil and natural gas production to reduce our exposure to fluctuations in oil and natural gas prices. Reducing our exposure to price volatility helps ensure that we have

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adequate funds available for our capital programs and more price sensitive drilling programs. Our decision on the quantity and price at which we choose to hedge our future production is based in part on our view of current and future market conditions.

While the use of these hedging arrangements limits the downside risk of adverse price movements, their use also may limit future revenues from favorable price movements. In addition, the use of hedging transactions may involve basis risk. The use of hedging transactions also involves the risk that the counter-parties will be unable to meet the financial terms of such transactions.

Please see “Notes to Consolidated Financial Statements—Note 6—Derivative Instruments” in this Form 10-Q for additional discussion regarding the accounting applicable to our hedging program.

Critical Accounting Policies

“Management’s Discussion and Analysis of Financial Condition” is based upon our consolidated financial statements, which have been prepared in conformity with GAAP. The preparation of these statements requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We base these estimates on historical experience and on assumptions that we consider reasonable under the circumstances; however, reported results could differ from the current estimates under different assumptions and/or conditions. We have disclosed the areas requiring the use of management’s estimates in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2013 Form 10-K.

Inflation and Changes in Prices

Our revenues, the value of our assets, and our ability to obtain bank financing or additional capital on attractive terms

have been and will continue to be affected by changes in commodity prices and the costs to produce our reserves. Commodity

prices are subject to significant fluctuations that are beyond our ability to control or predict. During the three and nine months ended September 30, 2014, we received an average of $99.72 and $102.51 per barrel of oil and $4.16 and $4.86 per Mcf of natural gas, respectively, before consideration of commodity derivative contracts, compared to $110.41 and $108.24 per barrel of oil and $3.74 and $3.85 per Mcf of natural gas, in the three and nine months ended September 30, 2013, respectively. Although certain of our costs are affected by general inflation, inflation does not normally have a significant effect on our business.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to a variety of market risks including commodity price risk, credit risk and interest rate risk. We address these risks through a program of risk management, which may include the use of derivative instruments.

The following quantitative and qualitative information is provided about financial instruments to which we are a party, and from which we may incur future gains or losses from changes in market interest rates or commodity prices and losses from extension of credit.

Hypothetical changes in interest rates and commodity prices chosen for the following estimated sensitivity analysis are considered to be reasonably possible near-term changes generally based on consideration of past fluctuations for each risk category. However, since it is not possible to accurately predict future changes in interest rates and commodity prices, these hypothetical changes may not necessarily be an indicator of probable future fluctuations.

Commodity Price Risk

Our primary market risk exposure is in the pricing applicable to our oil and natural gas production. Realized pricing is primarily driven by the prevailing worldwide price for oil and spot market prices applicable to our U.S. natural gas production. Pricing for oil and natural gas production has been volatile and unpredictable for several years, and we expect this volatility to continue in the future. The prices we receive for production depend on many factors outside of our control, including volatility in the differences between product prices at sales points and the applicable index price. Based on our annualized production for the nine months ended September 30, 2014, our annual revenue would increase or decrease by approximately $9.2 million for each $10.00 per barrel change in oil prices and $7.2 million for each $1.00 per MMBtu change in natural gas prices without giving effect to any hedging. Based on our production for the nine month ended September 30, 2013, our revenues would have increased or decreased by approximately $16.8 million for each $10.00 per barrel change in oil prices and $13.9 million for each $1.00 per MMBtu change in natural gas prices without giving effect to any hedging.

To partially reduce price risk caused by these market fluctuations, we hedge a significant portion of our anticipated oil and natural gas production as part of our risk management program. Reducing our exposure to price volatility helps ensure that we have adequate funds available for our capital programs and more price sensitive drilling programs. Our decision on the quantity and price at which we choose to hedge our production is based in part on our view of current and future market conditions. While hedging limits the downside risk of adverse price movements, it also may limit future revenues from favorable price movements. The use of hedging transactions also involves the risk that counterparties, which generally are financial institutions, will be unable to meet the financial terms of such transactions.

At September 30, 2014, the fair value of our commodity derivatives included in our consolidated balance sheets represent a net current liability of $0.9 million. At December 31, 2013, the fair value of our commodity derivatives was approximately $8.5 million and $0.3 million, which were recorded as current liabilities and long-term liabilities, respectively. For the three and nine months ended September 30, 2014, we realized net decrease in oil and natural gas revenues related to hedging transactions of approximately $4.9 million and $3.6 million, and decreases for the same periods in 2013 of $2.7 and $2.6 million, respectively.

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As of September 30, 2014, we maintained the following commodity derivative contracts:

Remaining Contract Term: Oil	Contract Type	Notational Volume in Bbls/Month	NYMEX Strike Price
October 2014 - October 2014	Swap	5,525	$	87.75
November 2014 - November 2014	Swap	5,525	87.75
December 2014 - December 2014	Swap	5,525	87.75
October 2014 - December 2014	Swap	15,000	65.00

Remaining Contract Term: Natural Gas	Contract Type	Notational Volume in MMBtus/Month	NYMEX Strike Price
October 2014 - October 2014	Swap	28,635	$	4.09
November 2014 - November 2014	Swap	27,081	4.09
December 2014 - December 2014	Swap	34,114	4.09
January 2015 - January 2015	Swap	27,838	4.09
February 2015 - February 2015	Swap	24,461	4.09
March 2015 - March 2015	Swap	26,443	4.09
October 2014 - October 2014	Swap	29,753	4.19
November 2014 - November 2014	Swap	28,635	4.19
December 2014 - December 2014	Swap	27,081	4.19
January 2015 - January 2015	Swap	34,114	4.19
February 2015 - February 2015	Swap	27,838	4.19
March 2015 - March 2015	Swap	24,461	4.19
October 2014 - October 2014	Swap	192,799	4.47
November 2014 - November 2014	Swap	186,296	4.47
December 2014 - December 2014	Swap	189,992	4.47
January 2015 - January 2015	Swap	58,684	4.47
February 2015 - February 2015	Swap	68,337	4.47
March 2015 - March 2015	Swap	69,732	4.47

For a further discussion of our hedging activities, please see “Notes to Consolidated Financial Statements—Note 6—Derivative Instruments” in this Form 10-Q.

Credit Risk

We monitor our risk of loss associated with non-performance by counter-parties of their contractual obligations. Our principal exposure to credit risk is through joint interest receivables, which totaled $17.2 million at September 30, 2014 and $17.0 million at December 31, 2013. Joint interest receivables arise from billing entities who own partial interests in the wells we operate. These entities participate in our wells primarily based on their ownership in leases on which we have an interest. We also have exposure to credit risk from the sale of our oil and natural gas production that we market to energy marketing companies and refineries, the receivables totaled $9.8 million at September 30, 2014 and $35.2 million at December 31, 2013. We also have credit risk associated with our financially settled crude oil and natural gas swaps. As of September 30, 2014, all of our swaps were with BP Energy Company as the counter-party.

In order to minimize our exposure to credit risk, we request prepayment of costs where it is allowed by contract or state law. For such prepayments, a liability is recorded and subsequently reduced as the associated work is performed. We also have the right to place a lien on our co-owners interest in the well to redirect production proceeds in order to secure payment or, if necessary, foreclose on the interest. In addition, we monitor our exposure to counter-parties on oil and natural gas sales primarily by reviewing credit ratings, financial statements and payment history. We extend credit terms based on our evaluation of each counterparty’s credit worthiness. We historically have not required our counter-parties to provide collateral to support oil and natural gas sales receivables owed to us.

Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time

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periods specified in the rules and forms of the U.S. Securities and Exchange Commission, and to ensure that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer / Chief Financial Officer, to allow timely decisions regarding required disclosure.

As required by Rule 15d-15(b) under the Exchange Act, management annually reviews our accounting policies and practices, and as a result of such review, identified it had an ineffective financial reporting process and inconsistent review of certain routine accrual calculations and journal entries. As a result of these material weaknesses (as further discussed below), our Chief Executive Officer / Chief Financial Officer have concluded that our disclosure controls and procedures as of June 30, 2014 were not effective at a reasonable level of assurance, based on the evaluation of these controls and procedures required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act. Notwithstanding the material weaknesses further discussed below, our Chief Executive Officer / Chief Financial Officer believe that the financial statements included in this report fairly present in all material respects (and in accordance with U.S. generally accepted accounting principles) our financial condition, results of operations and cash flows for the periods presented.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as that term is defined by Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is designed under the supervision of our Chief Executive Officer / Chief Financial Officer in order to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our control environment is the foundation for our system of internal control over financial reporting and is an integral part of the changes within the organization and internal reporting.

We carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer/Chief Financial Officer, of the effectiveness of our internal controls over financial reporting pursuant to Rule 13a-15(c) under the Securities Exchange Act as of the end of the period covered by the 2013 Form 10-K. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Management evaluated the effectiveness of our internal control over financial reporting as of September 30, 2014. In making this evaluation, management used the criteria established in 1992 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In connection with such evaluation, our management identified material weaknesses in our control environment based on the criteria established in the 1992 Internal Control-Integrated Framework issued by the COSO. A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of our annual or interim financial statements will not be prevented or detected.

The material weaknesses identified were related to our continued lack of sufficient control over financial accounting and reporting processes, specifically our inconsistent review of certain routine accrual calculations and journal entries, whereas in prior year, the matter related to accounting for non-routine and non-systematic transactions. Significant turnover and reduction in force in late 2013 and early 2014 caused the above-mentioned control deficiencies and resulted in the recording of certain adjustments prior to the issuance of our consolidated financial statements included in the 2013 Form 10-K. Because of these material weaknesses, management has concluded that the Company did not maintain effective internal control over financial reporting as of September 30, 2014.

Changes in Internal Control Over Financial Reporting.

As a result of the material weaknesses identified during the period covered by this Form 10-Q, management has implemented and will continue to implement changes to our internal controls that are both organizational and process-focused in an effort to improve the control environment, including as it relates to our application of accounting principles regarding our financial reporting process and review and approval of certain routine transactions. The changes to our control environment through the date of this Form 10-Q include, among others:

• Re-evaluation of key processes that support our financial reporting function;

• Changes in certain process owners due to turnover and reduction in force.

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We will continue our efforts to improve our control environment and to focus on improving our processes and systems to help ensure that our financial reporting, operational and business requirements are met in a timely manner going forward.

Due to the downsize of operation in third quarter 2014, we continue to re-evaluate our key processes that support our financial function. Our Chief Executive Officer / Chief Financial Officer will continue to seek for opportunities to mitigate our risks.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

West Delta 32 Block Platform Incident. On November 16, 2012, an explosion and fire occurred on our West Delta 32-E platform, located in the Gulf of Mexico approximately 17 miles southeast of Grand Isle, Louisiana (“West Delta 32 Incident”). At the time of the explosion, production on the platform had been shut in while crews of independent contractors performed maintenance and construction on the platform.

On November 4, 2013, BSEE issued its investigative report (the “BSEE Panel Report 2013-002”) on the West Delta 32 Incident. The report recommends that contractors Wood Group Production Service Network, Grand Isle Shipyard, and Compass Engineering Consultants, as well as Black Elk Energy be issued the following types of Incidents of Non-Compliance: G-110, G-112, G-116, G-303, G-310, G-311, G-312, and E-100. The report also recommends that contractor Wood Group Production Service Network and Black Elk Energy be issued the additional following types of Incidents of Non-Compliance: G-309 and G-317. The report states that BSEE will issue Incidents of Non-Compliance based upon evidence contained in the report and/or other relevant evidence. No Incidents of Non-Compliance have been issued yet, and Black Elk Energy has and will continue to fully cooperate with BSEE. Black Elk Energy will be carefully reviewing the BSEE Panel Report 2013-002 over the coming weeks.

On October 15, 2013, the Department of Justice, U.S. Attorney’s Office issued a subpoena pertaining to all physical evidence collected and maintained by Black Elk Energy and ABS Consulting as part the investigation of the WD-32 platform incident. Further, on March 25, 2014, a second subpoena was issued by the U.S. Attorney’s Office requesting records and documents for specific time periods still part of their investigation of the WD-32 incident. We are fully cooperating with all government agencies.

On November 21, 2012, BSEE sent us a letter requiring us to take certain actions and to improve our performance. The letter made reference to, among other things, the explosion and fire that occurred on our West Delta 32-E platform on November 16, 2012. BSEE stated in the letter that if we did not improve our performance, we would be subject to additional enforcement action up to and including possible referral to the Bureau of Ocean Energy Management to revoke our status as an operator on all of our existing facilities. We have undertaken the actions BSEE required of us in the November 21 letter and have been regularly reporting our progress on those required improvements to BSEE.

In a meeting held at the BSEE Regional Office on October 30, 2013, BEEOO shared with BSEE representatives that implementation of corrective actions (18 elements and 58 tasks) associated with the Performance Improvement Plan ("PIP") has been 100% completed. Other essential work control processes such as our Project Execution Plans and Contractor Bridging Agreements have been improved to provide better guidelines and procedures for hazard assessment and work controls. Training in Hazard Recognition, National Pollutant Discharge Elimination System ("NPDES"), Job Safety Analysis ("JSA") and Stop Work Authority ("SWA") will be ongoing and has been incorporated into our training matrix.

Based on the receipt of requested work and operation permits along with our interactions with BSEE and our corrective actions discussed above, we believe that we have improved our safety and compliance performance.

Civil Litigation.

West Delta 32 As of August 14, 2014, several civil lawsuits have been filed as a result of the West Delta 32 Incident. The lawsuits that were filed in Texas have been transferred to the United States District Court for the Eastern District of Louisiana, and all cases have been consolidated for discovery purposes in that Court. The first plaintiff’s case will be tried in either December of 2014 or January of 2015. All civil cases filed as a result of the West Delta 32 Incident are being defended by insurance defense counsel. We believe we have strong defenses and cross-claims and intend to defend ourselves vigorously.

Thomas Andrus, et al As previously reported, six investors in Black Elk Energy, LLC (“BEE”) filed a purported derivative complaint on behalf of BEE in the Supreme Court of the State of New York, County of New York, against the Company, John Hoffman, Iron Island Technologies Inc., and various entities and individuals associated with the Company’s majority unit owner (the “Platinum Defendants”). The lawsuit seeks unspecified damages allegedly arising from (1) the dilution of BEE’s ownership interest in the Company through various financing transactions with the Platinum Defendants and the issuance of membership units under management and employee incentive programs; and (2) the alleged mismanagement of the Company in connection with certain alleged safety violations and the West Delta 32 Incident. We believe there are strong defenses to the claims asserted in the lawsuit, and the Company intends to defend the case vigorously.

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On or about September 24, 2013, Plaintiffs filed a motion for a preliminary injunction to restrain a portion of the proceeds of the Company’s proposed sale of certain oil fields in the Gulf of Mexico. The Court denied the motion on November 15, 2013. On or about November 20, 2013, we filed a motion to dismiss the complaint in its entirety, inter alia, on the grounds that (i) the claims fail to state a cause of action; (ii) the claims are refuted by documentary evidence; (iii) plaintiffs, who are not members of the Company, lack standing to assert a claim for mismanagement of the Company; and (iv) certain claims are barred by the statute of limitations. The Court denied the motion on November 15, 2013. On or about November 20, 2013, we filed a motion to dismiss the complaint in its entirety, inter alia, on the grounds that (i) the claims fail to state a cause of action; (ii) the claims are refuted by documentary evidence; (iii) plaintiffs, who are not members of the Company, lack standing to assert a claim for mismanagement of the Company; and (iv) certain claims are barred by the statute of limitations.

We had Oral Arguments in the Andrus matter on July 24, 2014. At that time, the judge has asked for additional briefing on the Conflicts of Law issue. We had a conference call with the Court on Friday, September 5, 2014 to set a schedule for the supplemental briefs the Court has requested. Our revised brief was due and submitted on or about September 10, 2014. Oral arguments on the motions to dismiss are scheduled for November 6, 2014.

Grand Isle Shipyard ("GIS") Matters On April 29, 2013, Grand Isle Shipyards, Inc. (“GIS”) sued BEEOO, Enviro Tech Systems, LLC, Wood Group USA, Inc., and Compass Engineering & Consultants, LLC in the United States District Court for the Eastern District of Louisiana for damages it alleged incurred in connection with the West Delta 32 Incident. GIS specifically sought damages for loss of property and equipment, expenses in the form of indemnity and medical benefits paid to or on behalf of its employees, and for unpaid invoices in connection with the work it performed at West Delta 32. Upon motion by BEEOO, however, the court dismissed GIS’ lawsuit and ordered GIS and BEEOO to first attempt to resolve their claims through mediation which took place on November 12, 2013.  Since the mediation was unsuccessful, the Parties have now agreed to enter into binding Arbitration pursuant to and in accordance with the MSA.

Invoice Arbitration - On October 8, 2014, Black Elk submitted to the Arbitrator its initial briefing on all affirmative claims and defenses.  This briefing was drafted and submitted pursuant to an order from the Arbitrator.  GIS ignored this order to some degree and submitted Motions for summary Judgment on that date instead.  GIS asked for summary judgment on all of its claims and confusingly argued that Black Elk is not entitled to summary judgment on its affirmative claims (Black Elk obviously has not sought summary judgment on its affirmative claims).  On October 17, 2014, the parties participated in a telephonic hearing with the Arbitrator regarding the briefing and preexisting motions.  The Arbitrator (1) granted Black Elk the right to conduct an audit pursuant to the MSA between the parties, (2) granted Black Elk limited discovery concerning the use of D&R workers on Black Elk platforms, and (3) stated that he would not be granting any dispositive motions in the case (i.e. GIS’ Motions for Summary Judgment).

The arbitration, currently scheduled for December 1, 2014, has been delayed until the new year.  This was a necessary step as both parties will need to take depositions and aggregate discovery before an arbitration can take place.

Platform Arbitration - The arbitration case for damages to the West Delta 32 Platform is scheduled for hearing before a three-arbitrator panel on May 12, 2015. The arbitration proceeding initiated by Black Elk against Compass Engineering & Consultants, LLC for damages arising from the explosion of the WD-32 Platform has been abated pending resolution of Compass’ separate lawsuit filed in the United States District for the Western District of Louisiana seeking a declaration that it was not subjected to arbitration. We are currently in the process of drafting discovery to GIS concerning D&R Resources, LLC's employees' rates, duties, and training. We will continue to defend ourselves vigorously.

Vistar Oil Texas, LLC Joint Venture On April 16, 2014, Vistar Oil Texas LLC (“Vistar”) filed a petition against Black Elk in Harris County District Court. This suit alleges that Black Elk breached an Acquisition and Participation Agreement and a Joint Operating Agreement between the parties, primarily by failing to provide Vistar with the funds required to bring several wells into operation in Wilson County, Texas. Vistar alleges damages of approximately $6,500,000, certain lease acquisition costs and promissory note payments required to cover liens placed on the wells. Vistar further alleges that Black Elk is in breach by refusing to provide approximately $10,350,000 to Vistar to acquire additional property. This case is in discovery. We believe we have strong potential defenses and have submitted counterclaims, and intend to defend ourselves vigorously.

Arthur Garza IIIOn August 31, 2014, Arthur Garza, former Chief Technical Officer of Black Elk Energy Offshore Operations, LLC, filed suit against Black Elk Energy Offshore Operations for payment of severance under his Employment Agreement. This case is in discovery. We believe we have strong potential defenses and intend to defend ourselves vigorously.

Other Regulatory Items. We are party to various other litigation matters arising in the ordinary course of business. We do not believe the outcome of these disputes or legal actions will have a material adverse effect on our financial statements.

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Item 1A. Risk Factors

We are subject to certain risks and hazards due to the nature of the business activities we conduct. For a discussion of

these risks, see “Risk Factors” in our 2013 Form 10-K and the risk factor set forth below. The risks described in the 2013 Form 10-K and below could materially and adversely affect our business, financial condition, cash flows, and results of operations. Except as set forth below, there have been no material changes to the risks described in the 2013 Form 10-K. We may experience additional risks and uncertainties not currently known to us, or, as a result of developments occurring in the future, conditions that we currently deem to be immaterial may also materially and adversely affect our business, financial

condition, cash flows and results of operations.

We may not be able to generate sufficient cash flow to meet our debt service obligations.

Our ability to make payments on the Notes and to fund planned capital expenditures will depend on our ability to generate cash in the future. We cannot assure you that our business will generate sufficient cash flow from operations to service the remaining Notes, or that future borrowings will be available to us in an amount sufficient to enable us to make payments on such Notes or to fund our other capital needs. If our business does not generate sufficient cash flow from operations to service the Notes, we may be required to:

• refinance all or a portion of the Notes;

• obtain additional financing;

• sell some of our assets or operations; reduce or delay capital expenditures, research and development efforts and acquisitions; or

• revise or delay our strategic plans.

However, we cannot assure you that we would be able to implement alternative financing plans, if necessary, on commercially reasonable terms or at all, or that implementing any such alternative financing plans would allow us to meet our payment obligations under the Notes. Our inability to generate sufficient cash flow to satisfy our payment obligations under the Notes or to obtain alternative financings, could materially and adversely affect our business, financial condition, results of operations and prospects.

If we default on the remaining Notes, holders of the Notes will be secured only to the extent of the value of the assets underlying their security interest. To prevent foreclosure, we may be motivated to commence voluntary bankruptcy proceedings or holders of Notes or various other interested persons may be motivated to institute bankruptcy proceedings against us. The commencement of such bankruptcy proceedings would expose the holders to additional risks, including additional restrictions on exercising rights against collateral. To the extent that the claims of the holders exceed the value of the assets securing the Notes and other liabilities, those claims will rank equally with the claims of the holders of any outstanding senior unsecured indebtedness. As a result, if the value of the assets pledged as security for the Notes and other liabilities is less than the value of the claims of the holders and other liabilities, those claims may not be satisfied in full before the claims of our unsecured creditors are paid.

We have doubt on our ability to continue as a going concern.

The Company has a going concern risk. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a

going concern. As of September 30, 2014, there have been no notices of foreclosures on the Company’s assets. We arecurrently evaluating our consolidated financial position, results of operations and cash flows. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Item 6. Exhibits

The exhibits marked with the asterisk symbol (*) are filed (or furnished in the case of Exhibits 31.1 and 32.1) with this

Form 10-Q.

Exhibit Number	Description
3.1	Certificate of Formation of Black Elk Energy Offshore Operations, LLC, dated as of November 20, 2007 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on May 16, 2011, File No. 333-174226).
3.2	Certificate of Amendment of Black Elk Energy Offshore Operations, LLC, dated as of January 29, 2008 (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on May 16, 2011, File No. 333-174226).
3.3	Second Amended and Restated Limited Liability Company Operating Agreement of Black Elk Energy Offshore Operations, LLC, dated as of July 13, 2009 (incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on May 16, 2011, File No. 333-174226).
3.4	First Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC, dated August 19, 2010 (incorporated by reference to Exhibit 3.5 to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on May 16, 2011, File No. 333-174226).
3.5	Second Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC dated as of May 31, 2011 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Securities and Exchange Commission on June 3, 2011, File No. 333-174226).
3.6	Third Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC dated as of January 25, 2013 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Securities and Exchange Commission on January 31, 2013, File No. 333-174226).
3.7	Fourth Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC dated as of February 12, 2013 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Securities and Exchange Commission on February 19, 2013, File No. 333-174226).
3.8	Fifth Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC dated as of April 9, 2013 (incorporated by reference to Exhibit 3.10 to the Form 10-K filed with the Securities and Exchange Commission on April 15, 2013, File No. 333-174226).
3.9	Sixth Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC dated as of May 3, 2013 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Securities and Exchange Commission on May 9, 2013, File No. 333-174226).
4.1	Second Supplemental Indenture, dated as of August 19, 2014, by and among Black Elk Energy Offshore Operations, LLC and Black Elk Energy Finance Corp. as issuers, Black Elk Energy Land Operations, LLC as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (incorporated by reference from Exhibit 4.1 of the Current Report on Form 8-K filed on August 21, 2014).
10.1	Purchase and Sale Agreement by and between Black Elk Energy Offshore Operations, LLC and Renaissance Offshore, LLC, dated July 10, 2014 (incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K filed on July 16, 2014).

39

Exhibit Number	Description
*31.1	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer / Principal Financial Officer.
*32.1	Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer and Principal Financial Officer.
101.INS§	XBRL Instance Document
101.SCH§	XBRL Taxonomy Extension Schema Document
101.CAL§	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB§	XBRL Taxonomy Extension Label Linkbase Document
101.PRE§	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF§	XBRL Taxonomy Extension Definition Linkbase Document

 * Filed herewith.

§ Furnished with this Form 10-Q. In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		BLACK ELK ENERGY OFFSHORE OPERATIONS, LLC (Registrant)
Date:	November 19, 2014	By:	/s/ Jeffrey Shulse
			Jeffrey Shulse
			Chief Executive Officer / Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

41

EXHIBIT INDEX

The exhibits marked with the asterisk symbol (*) are filed (or furnished in the case of Exhibits 31.1 and 32.1) with this

Form 10-Q.

Exhibit Number	Description
3.1	Certificate of Formation of Black Elk Energy Offshore Operations, LLC, dated as of November 20, 2007 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on May 16, 2011, File No. 333-174226).
3.2	Certificate of Amendment of Black Elk Energy Offshore Operations, LLC, dated as of January 29, 2008 (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on May 16, 2011, File No. 333-174226).
3.3	Second Amended and Restated Limited Liability Company Operating Agreement of Black Elk Energy Offshore Operations, LLC, dated as of July 13, 2009 (incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on May 16, 2011, File No. 333-174226).
3.4	First Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC, dated August 19, 2010 (incorporated by reference to Exhibit 3.5 to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission on May 16, 2011, File No. 333-174226).
3.5	Second Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC dated as of May 31, 2011 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Securities and Exchange Commission on June 3, 2011, File No. 333-174226).
3.6	Third Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC dated as of January 25, 2013 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Securities and Exchange Commission on January 31, 2013, File No. 333-174226).
3.7	Fourth Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC dated as of February 12, 2013 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Securities and Exchange Commission on February 19, 2013, File No. 333-174226).
3.8	Fifth Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC dated as of April 9, 2013 (incorporated by reference to Exhibit 3.10 to the Form 10-K filed with the Securities and Exchange Commission on April 15, 2013, File No. 333-174226).
3.9	Sixth Amendment to Second Amended and Restated Operating Agreement of Black Elk Energy Offshore Operations, LLC dated as of May 3, 2013 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed with the Securities and Exchange Commission on May 9, 2013, File No. 333-174226).
4.1	Second Supplemental Indenture, dated as of August 19, 2014, by and among Black Elk Energy Offshore Operations, LLC and Black Elk Energy Finance Corp. as issuers, Black Elk Energy Land Operations, LLC as guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (incorporated by reference from Exhibit 4.1 of the Current Report on Form 8-K filed on August 21, 2014).
10.1	Purchase and Sale Agreement by and between Black Elk Energy Offshore Operations, LLC and Renaissance Offshore, LLC, dated July 10, 2014 (incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K filed on July 16, 2014).

42

*31.1	Certification (pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act) by Principal Executive Officer / Principal Financial Officer.
*32.1	Section 1350 Certification (pursuant to Sarbanes-Oxley Section 906) by Principal Executive Officer / Principal Financial Officer.
101.INS§	XBRL Instance Document
101.SCH§	XBRL Taxonomy Extension Schema Document
101.CAL§	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB§	XBRL Taxonomy Extension Label Linkbase Document
101.PRE§	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF§	XBRL Taxonomy Extension Definition Linkbase Document

 * Filed herewith.

§ Furnished with this Form 10-Q. In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Jeffrey Shulse, certify that:

1. I have reviewed this Form 10-Q of Black Elk Energy Offshore Operations, LLC (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 19, 2014	By:	/s/ Jeffrey Shulse
		Name:	Jeffrey Shulse
		Title:	President and Chief Executive Officer / Chief Financial Officer (Principal Executive Officer / Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION

In connection with the Form 10-Q of Black Elk Energy Offshore Operations, LLC (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Jeffrey Shulse, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his or her knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	November 19, 2014	By:	/s/ Jeffrey Shulse
		Name:	Jeffrey Shulse
		Title:	President and Chief Executive Officer / Chief Financial Officer (Principal Executive Officer / Principal Financial Officer)

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Related Party Transactions - Additional Information (Details) (USD $)	0 Months Ended			0 Months Ended
	Aug. 30, 2013	Sep. 30, 2014	Dec. 31, 2013	May 28, 2013 Pea and Eigh Company, LLC [Member]	Sep. 30, 2014 Pea and Eigh Company, LLC [Member]	May 28, 2013 Pea and Eigh Company, LLC [Member]
Related Party Transaction [Line Items]
Receivables from Black Elk Energy, LLC		$ 273,430	$ 273,430
Commitment fee	300,000
Lease monthly installments						35,000
Lease maturing				Dec. 31, 2013
Option to purchase equipment						1,500,000
Restricted cash for additional equipment purchased					$ 600,000

XML

Debt and Notes Payable - Schedule of Debt and Notes Payable (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Total debt	$ 138,532	$ 184,186
Less: current portion	(340)	(257)
Total long-term debt	138,192	183,929
Senior Secured Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Total debt	0	34,500
13.75% Senior Secured Notes, net of discount [Member]
Debt Instrument [Line Items]
Total debt	138,169	149,383
Other debt [Member]
Debt Instrument [Line Items]
Total debt	$ 363	$ 303

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Oil and Gas Properties - Capitalized Costs Related to Oil and Gas Properties (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Property, Plant and Equipment [Abstract]
Proved properties	$ 260,726	$ 490,109
Accumulated depreciation, depletion, amortization and impairment	(217,526)	(293,973)
Oil and gas properties, net	$ 43,200	$ 196,136

XML

Commitments and Contingencies - Additional Information (Details) (USD $)	9 Months Ended				9 Months Ended		9 Months Ended	0 Months Ended	9 Months Ended		0 Months Ended
	Sep. 30, 2014 escrow_account	Sep. 30, 2014 W&T Total [Member]	Sep. 30, 2014 W&T Operating Properties [Member]	Nov. 30, 2010 W&T Operating Properties [Member]	Sep. 30, 2014 W&T Non-operating Properties [Member]	Dec. 19, 2012 ARGO [Member]	Sep. 30, 2014 Maritech [Member]	Jun. 01, 2011 Merit [Member] Installment	Sep. 30, 2014 Merit [Member]	Sep. 30, 2014 Purported Derivative Action [Member] investor	Apr. 16, 2014 Vistar Oil Texas LLC [Member]
Long-term Purchase Commitment [Line Items]
Number of escrow accounts	2
Escrow to be funded		$ 63,800,000	$ 32,600,000		$ 31,200,000		$ 13,100,000		$ 60,000,000
Number of monthly installments to be deposited in escrow account								30
Escrow paid/funded				32,600,000	20,500,000
Remaining balance of escrow to be paid					10,700,000
Payments for surety bonds									33,000,000
Issuance of performance bonds						32,600,000
Number of plaintiffs										6
Damages sought											6,500,000
Funding in dispute											$ 10,350,000

XML

OIL AND GAS PROPERTIES

9 Months Ended

Sep. 30, 2014

Property, Plant and Equipment [Abstract]

OIL AND GAS PROPERTIES

OIL AND GAS PROPERTIES

The following table reflects capitalized costs related to our oil and gas properties:

	September 30, 2014			December 31, 2013
	(Unaudited)
	(in thousands)
Proved properties	$	260,726		$	490,109
Accumulated depreciation, depletion, amortization and impairment	(217,526		)	(293,973		)
Oil and gas properties, net	$	43,200		$	196,136

The following table describes the changes to our asset retirement obligations (unaudited):

	(in thousands)
Balance at December 31, 2013	$	276,732
Liabilities settled	(17,717		)
Liabilities relieved due to sale of properties	(67,051		)
Accretion expense	3,536
Balance at September 30, 2014	195,500
Less: current portion	(32,839		)
Total Long-Term Asset Retirement Obligations	$	162,661

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Derivative Instruments - Fair Values, on a Gross Basis, of Derivatives Not Designated as Hedging Instruments Recorded in the Consolidated Balance Sheet (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Derivatives, Fair Value [Line Items]
Asset Derivatives	$ 270	$ 1,370
Liability Derivatives	(1,179)	(9,859)
Commodity Contracts [Member] | Derivatives Not Designated as Hedging Instruments under Accounting Guidance [Member]
Derivatives, Fair Value [Line Items]
Asset (Liability) Derivatives Total	(909)	(8,489)
Commodity Contracts [Member] | Derivatives Not Designated as Hedging Instruments under Accounting Guidance [Member] | Asset (Liability) Derivatives, Current [Member]
Derivatives, Fair Value [Line Items]
Asset (Liability) Derivatives Total	(909)	(8,458)
Commodity Contracts [Member] | Derivatives Not Designated as Hedging Instruments under Accounting Guidance [Member] | Asset (Liability) Derivatives, Non-current [Member]
Derivatives, Fair Value [Line Items]
Asset (Liability) Derivatives Total	0	(31)
Commodity Contracts [Member] | Derivatives Not Designated as Hedging Instruments under Accounting Guidance [Member] | Current Assets Derivatives [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives	270	1,370
Commodity Contracts [Member] | Derivatives Not Designated as Hedging Instruments under Accounting Guidance [Member] | Current Liability Derivatives [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives	(1,179)	(9,828)
Commodity Contracts [Member] | Derivatives Not Designated as Hedging Instruments under Accounting Guidance [Member] | Non-current Assets Derivatives [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives	0	0
Commodity Contracts [Member] | Derivatives Not Designated as Hedging Instruments under Accounting Guidance [Member] | Non-current Liability Derivatives [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives	0	(31)
Commodity Contracts [Member] | Derivatives Not Designated as Hedging Instruments under Accounting Guidance [Member] | Assets Derivatives [Member]
Derivatives, Fair Value [Line Items]
Asset Derivatives	270	1,370
Commodity Contracts [Member] | Derivatives Not Designated as Hedging Instruments under Accounting Guidance [Member] | Liability Derivatives [Member]
Derivatives, Fair Value [Line Items]
Liability Derivatives	$ (1,179)	$ (9,859)

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Derivative Instruments - Commodity Derivative Instruments (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Derivative [Line Items]
Asset (Liability)	$ (909)
Crude Oil [Member]
Derivative [Line Items]
Asset (Liability)	(1,162)
Natural Gas [Member]
Derivative [Line Items]
Asset (Liability)	253
10/14 - 12/14
Derivative [Line Items]
Asset (Liability)	(1,122)
Fair Value Gain (Loss)	(1,122)
10/14 - 12/14 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	15,000
Contract Price ($/Bbl)	65.00
Asset (Liability)	(1,122)
Fair Value Gain (Loss)	(1,122)
10/14 - 12/14 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
10/14 - 10/14
Derivative [Line Items]
Asset (Liability)	(14)
Fair Value Gain (Loss)	(14)
10/14 - 10/14 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	5,525
Contract Price ($/Bbl)	87.75
Asset (Liability)	(17)
Fair Value Gain (Loss)	(17)
10/14 - 10/14 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	28,635
Contract Price ($/Bbl)	4.09
Asset (Liability)	3
Fair Value Gain (Loss)	3
11/14 - 11/14
Derivative [Line Items]
Asset (Liability)	(14)
Fair Value Gain (Loss)	(14)
11/14 - 11/14 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	5,525
Contract Price ($/Bbl)	87.75
Asset (Liability)	(13)
Fair Value Gain (Loss)	(13)
11/14 - 11/14 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	27,081
Contract Price ($/Bbl)	4.09
Asset (Liability)	(1)
Fair Value Gain (Loss)	(1)
12/14 - 12/14
Derivative [Line Items]
Asset (Liability)	(13)
Fair Value Gain (Loss)	(13)
12/14 - 12/14 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	5,525
Contract Price ($/Bbl)	87.75
Asset (Liability)	(10)
Fair Value Gain (Loss)	(10)
12/14 - 12/14 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	34,114
Contract Price ($/Bbl)	4.09
Asset (Liability)	(3)
Fair Value Gain (Loss)	(3)
1/15 - 1/15
Derivative [Line Items]
Asset (Liability)	(4)
Fair Value Gain (Loss)	(4)
1/15 - 1/15 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
1/15 - 1/15 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	27,838
Contract Price ($/Bbl)	4.09
Asset (Liability)	(4)
Fair Value Gain (Loss)	(4)
2/15 - 2/15
Derivative [Line Items]
Asset (Liability)	(4)
Fair Value Gain (Loss)	(4)
2/15 - 2/15 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
2/15 - 2/15 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	24,461
Contract Price ($/Bbl)	4.09
Asset (Liability)	(4)
Fair Value Gain (Loss)	(4)
3/15 - 3/15
Derivative [Line Items]
Asset (Liability)	(2)
Fair Value Gain (Loss)	(2)
3/15 - 3/15 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
3/15 - 3/15 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	26,443
Contract Price ($/Bbl)	4.09
Asset (Liability)	(2)
Fair Value Gain (Loss)	(2)
10/14 -10/14
Derivative [Line Items]
Asset (Liability)	6
Fair Value Gain (Loss)	6
10/14 -10/14 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
10/14 -10/14 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	29,753
Contract Price ($/Bbl)	4.19
Asset (Liability)	6
Fair Value Gain (Loss)	6
11/14 - 11/14
Derivative [Line Items]
Asset (Liability)	2
Fair Value Gain (Loss)	2
11/14 - 11/14 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
11/14 - 11/14 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	28,635
Contract Price ($/Bbl)	4.19
Asset (Liability)	2
Fair Value Gain (Loss)	2
12/14 -12/14
Derivative [Line Items]
Asset (Liability)	0
Fair Value Gain (Loss)	0
12/14 -12/14 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
12/14 -12/14 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	27,081
Contract Price ($/Bbl)	4.19
Asset (Liability)	0
Fair Value Gain (Loss)	0
1/15 - 1/15
Derivative [Line Items]
Asset (Liability)	(2)
Fair Value Gain (Loss)	(2)
1/15 - 1/15 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
1/15 - 1/15 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	34,114
Contract Price ($/Bbl)	4.19
Asset (Liability)	(2)
Fair Value Gain (Loss)	(2)
2/15 - 2/15
Derivative [Line Items]
Asset (Liability)	(1)
Fair Value Gain (Loss)	(1)
2/15 - 2/15 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
2/15 - 2/15 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	27,838
Contract Price ($/Bbl)	4.19
Asset (Liability)	(1)
Fair Value Gain (Loss)	(1)
10/14 -10/14
Derivative [Line Items]
Asset (Liability)	1
Fair Value Gain (Loss)	1
10/14 -10/14 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
10/14 -10/14 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	24,461
Contract Price ($/Bbl)	4.19
Asset (Liability)	1
Fair Value Gain (Loss)	1
10/14 - 10/14
Derivative [Line Items]
Asset (Liability)	94
Fair Value Gain (Loss)	94
10/14 - 10/14 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
10/14 - 10/14 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	192,799
Contract Price ($/Bbl)	4.47
Asset (Liability)	94
Fair Value Gain (Loss)	94
11/14 - 11/14
Derivative [Line Items]
Asset (Liability)	64
Fair Value Gain (Loss)	64
11/14 - 11/14 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
11/14 - 11/14 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	186,296
Contract Price ($/Bbl)	4.47
Asset (Liability)	64
Fair Value Gain (Loss)	64
12/14 - 12/14
Derivative [Line Items]
Asset (Liability)	52
Fair Value Gain (Loss)	52
12/14 - 12/14 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
12/14 - 12/14 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	189,992
Contract Price ($/Bbl)	4.47
Asset (Liability)	52
Fair Value Gain (Loss)	52
1/15 - 1/15
Derivative [Line Items]
Asset (Liability)	12
Fair Value Gain (Loss)	12
1/15 - 1/15 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
1/15 - 1/15 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	58,684
Contract Price ($/Bbl)	4.47
Asset (Liability)	12
Fair Value Gain (Loss)	12
2/15 - 2/15
Derivative [Line Items]
Asset (Liability)	15
Fair Value Gain (Loss)	15
2/15 - 2/15 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
2/15 - 2/15 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	68,337
Contract Price ($/Bbl)	4.47
Asset (Liability)	15
Fair Value Gain (Loss)	15
3/15 - 3/15
Derivative [Line Items]
Asset (Liability)	21
Fair Value Gain (Loss)	21
3/15 - 3/15 | Crude Oil [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	0
Contract Price ($/Bbl)	0
Asset (Liability)	0
Fair Value Gain (Loss)	0
3/15 - 3/15 | Natural Gas [Member]
Derivative [Line Items]
Monthly Volume (Bbls)	69,732
Contract Price ($/Bbl)	4.47
Asset (Liability)	21
Fair Value Gain (Loss)	21
Fair Value [Member]
Derivative [Line Items]
Fair Value Gain (Loss)	(909)
Fair Value [Member] | Crude Oil [Member]
Derivative [Line Items]
Fair Value Gain (Loss)	(1,162)
Fair Value [Member] | Natural Gas [Member]
Derivative [Line Items]
Fair Value Gain (Loss)	$ 253

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Derivative Instruments - Fair Values, on a Gross Basis, of Derivatives Not Designated as Hedging Instruments Recorded in the Statement of Operations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Derivative Instruments, Gain (Loss) [Line Items]
Total derivative instruments	$ 4,883	$ (7,868)	$ (3,593)	$ (8,562)
Gain (Loss) on Derivative Instruments, Net, Pretax
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) on derivative financial instruments	(2,316)	(2,725)	(11,174)	(2,573)
Gain (loss) on derivative financial instruments	$ 7,199	$ (5,143)	$ 7,581	$ (5,989)

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Fair Value Measurements - Fair Value of Assets and Liabilities by Level within Fair Value Hierarchy Table (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of derivative assets	$ 270	$ 1,370
Fair value of derivative liabilities	(1,179)	(9,859)
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of derivative assets	0	0
Fair value of derivative liabilities	0	0
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of derivative assets	270	1,370
Fair value of derivative liabilities	(1,179)	(9,859)
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of derivative assets	0	0
Fair value of derivative liabilities	0	0
Oil and Natural Gas Derivatives [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of derivative assets	270	1,370
Fair value of derivative liabilities	(1,179)	(9,859)
Oil and Natural Gas Derivatives [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of derivative assets	0	0
Fair value of derivative liabilities	0	0
Oil and Natural Gas Derivatives [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of derivative assets	270	1,370
Fair value of derivative liabilities	(1,179)	(9,859)
Oil and Natural Gas Derivatives [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of derivative assets	0	0
Fair value of derivative liabilities	$ 0	$ 0

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LIQUIDITY RISKS AND UNCERTAINTIES

9 Months Ended

Sep. 30, 2014

Risks and Uncertainties [Abstract]

LIQUIDITY RISKS AND UNCERTAINTIES

LIQUIDITY, RISKS AND UNCERTAINTIES

                  The Company currently faces significant challenges with our cash flow and our need to pay for operating expenses, including our debt service obligations. The Company's cash position raises substantial doubt about the Company's ability to continue as a going concern. We will need to seek additional working capital through the sale of equity or assets and potentially refinance our debt in an effort to improve our liquidity position.

We routinely monitor and adjust our capital expenditures in response to changes in prices, availability of financing, drilling and acquisition costs, industry conditions, the timing of regulatory approvals, the availability of rigs, success or lack of success in drilling activities, contractual obligations, internally generated cash flows and other factors both within and outside our control.

Virtually all of our current production is concentrated in the Gulf of Mexico, which is characterized by production declines more rapid than those of conventional onshore properties. As a result, we are particularly vulnerable to a near-term severe impact resulting from unanticipated complications in the development of, or production from, any single material well or infrastructure installation, including lack of sufficient capital, delays in receiving necessary drilling and operating permits, increased regulation, reduced access to equipment and services, mechanical or operational failures, and severe weather. Any unanticipated significant disruption to, or decline in, our current production levels or prolonged negative changes in commodity prices or operating cost levels could have a material adverse effect on our financial position, results of operations, cash flows, the quantity of proved reserves that we report, and our ability to meet our commitments as they come due.

As an oil and gas company, our revenue, profitability, cash flows, proved reserves and future rate of growth are substantially dependent on prevailing prices for oil and natural gas. Historically, the energy markets have been very volatile, and we expect such price volatility to continue. Any extended decline in oil or gas prices could have a material adverse effect on our financial position, results of operations, cash flows, the quantities of oil and gas reserves that we can economically produce, and may restrict our ability to obtain additional financing or to meet the contractual requirements of our debt and other obligations.

XML

Fair Value Measurements - Additional Information (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt, fair value	$ 121,500,000		$ 121,500,000
Oil and gas properties, fair value	43,200,000		43,200,000		196,136,000
Impairment charge	11,395,000	402,000	14,469,000	55,779,000
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Oil and gas properties with a carrying value	57,700,000	290,700,000	57,700,000	290,700,000
Oil and gas properties, fair value	43,200,000	234,900,000	43,200,000	234,900,000
Impairment charge	$ 11,400,000	$ 400,000	$ 14,500,000	$ 55,800,000

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
CURRENT ASSETS:
Cash and cash equivalents	$ 5,467	$ 6,227
Restricted cash	675	775
Accounts receivable, net of allowance for doubtful accounts of $826 and $811 at September 30, 2014 and December 31, 2013, respectively	29,452	61,747
Due from affiliates	273	273
Prepaid expenses and other current assets	6,811	7,109
Current portion of escrow for abandonment costs	25,872	21,976
Derivative assets	270	1,370
TOTAL CURRENT ASSETS	68,820	99,477
OIL AND GAS PROPERTIES, successful efforts method of accounting, net of accumulated depreciation, depletion, amortization and impairment of $217,526 and $293,973 at September 30, 2014 and December 31, 2013, respectively	43,200	196,136
OTHER PROPERTY AND EQUIPMENT, net of accumulated depreciation of $6,112 and $5,350 at September 30, 2014 and December 31, 2013, respectively	2,962	4,862
OTHER ASSETS
Debt issue costs, net	557	1,488
Asset retirement obligation escrow receivable	20,348	20,348
Escrow for abandonment costs, net of current portion	196,262	235,473
Other assets	7,548	7,830
TOTAL OTHER ASSETS	224,715	265,139
TOTAL ASSETS	339,697	565,614
CURRENT LIABILITIES:
Accounts payable and accrued expenses	96,366	155,880
Derivative liabilities	1,179	9,828
Asset retirement obligations	32,839	43,109
Current portion of debt and notes payable	340	257
TOTAL CURRENT LIABILITIES	130,724	209,074
LONG-TERM LIABILITIES
Gas imbalance payable	727	1,888
Derivative liabilities	0	31
Asset retirement obligations, net of current portion	162,661	233,623
Debt, net of current portion, net of unamortized discount of $398 and $617 at September 30, 2014 and December 31, 2013, respectively	138,192	183,929
TOTAL LONG-TERM LIABILITIES	301,580	419,471
TOTAL LIABILITIES	432,304	628,545
CLASS E PREFERRED UNITS	7,936	109,744
COMMITMENTS AND CONTINGENCIES
MEMBERS’ DEFICIT	(100,543)	(172,675)
TOTAL LIABILITIES AND MEMBERS’ DEFICIT	$ 339,697	$ 565,614

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

Nature of Operations: Black Elk Energy Offshore Operations, LLC and our wholly-owned subsidiaries (collectively, “Black Elk”, "BEEOO", “we”, “our” or “us”) is a Houston-based oil and natural gas company engaged in the exploration, development, production and exploitation of oil and natural gas properties. We were formed on November 20, 2007 for the purpose of acquiring oil and natural gas producing properties within the Outer Continental Shelf of the United States in the Gulf of Mexico.

Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation of our interim and prior period results have been included in the accompanying consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for any other interim period or for the entire fiscal year. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”).

Reclassifications: Certain reclassifications have been made to conform 2013 balances to our 2014 presentation. Such reclassifications had no effect on net income (loss) or cash flow.

Principles of Consolidation: The consolidated financial statements include the accounts of Black Elk Energy Offshore Operations, LLC and our wholly-owned subsidiaries, Black Elk Energy Land Operations, LLC and Black Elk Energy Finance Corp. Effective January 1, 2013, in accordance with accounting guidelines for consolidation of variable interest entities, we consolidated Freedom Well Services, LLC (“FWS”), as we determined that we are the primary beneficiary of FWS and will have the power to direct the activities of FWS. All material inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates in Preparation of Financial Statements: The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses recognized during the reporting period. We analyze our estimates based on historical experience, current factors and various other assumptions that we believe to be reasonable under the circumstances. However, actual results could differ from such estimates.

Recent Accounting Pronouncements: In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 narrows the definition of “discontinued operations” to dispositions that represent a strategic shift that has or will have a significant impact on the entity’s operations and financial results. The ASU requires additional disclosures regarding assets and liabilities held for sale, and income and losses, including gain or loss on sale, and cash flows from discontinued operations. In addition, the ASU requires disclosures for disposals of individually significant components of the business which do not qualify as discontinued operations, including general information about the disposition and disclosure of the pretax profit or loss from the component for the period of disposal and all comparable historic periods presented. ASU 2014-08 is effective for all fiscal years beginning after December 15, 2014, and can be adopted early for certain asset dispositions and reclassifications of assets from “held and used” to “held for sale.” We are evaluating the impact this standard will have on our consolidated financial statements and related disclosures.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606).  The update provides guidance concerning the recognition and measurement of revenue from contracts with customers.  Its objective is to increase the usefulness of information in the financial statements regarding the nature, timing and uncertainty of revenues.  The update is effective for the Company beginning in calendar year 2017.  We are evaluating the impact this standard will have on our consolidated financial statements and related disclosures.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires management to assess an entity’s ability tocontinue as a going concern, and to provide related footnote disclosures in certain circumstances. The standard is effective for annual financial statement starting period ending December 15, 2016, with early adoption permitted. We arecurrently evaluating the provisions of ASU 2014-15 and assessing the impact, if any, it may have on our consolidated financial position, results of operations or cash flows.

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Debt and Notes Payable - Scheduled Maturities of Principal Amounts of Debt Obligations (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Debt Disclosure [Abstract]
2015	$ 340
2016	138,590
Notes and loans payable	138,930
Unamortized discount on 13.75% Senior Secured Notes	(398)	(617)
Total debt	$ 138,532	$ 184,186

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DEBT AND NOTES PAYABLE (Tables)

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Debt and Notes Payable

Our debt and notes payable are summarized as follows:

	September 30, 2014			December 31, 2013
	(in thousands)
	(unaudited)
Senior Secured Revolving Credit Facility	$	—		$	34,500
13.75% Senior Secured Notes, net of discount	138,169			149,383
Other debt	363			303
Total debt	138,532			184,186
Less: current portion	(340		)	(257		)
Total long-term debt	$	138,192		$	183,929

Scheduled Maturities of Principal Amounts of Debt Obligations

The amounts of required principal payments based on our outstanding debt amounts as of September 30, 2014, were as follows:

Period Ending September 30,	(in thousands)
2015	$	340
2016	138,590
	$	138,930
Unamortized discount on 13.75% Senior Secured Notes	(398		)
Total debt	$	138,532

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Members Deficit - Additional Information (Details) (USD $)	0 Months Ended			0 Months Ended	1 Months Ended	3 Months Ended			3 Months Ended	0 Months Ended	9 Months Ended
	Feb. 12, 2013	Sep. 30, 2014	Dec. 31, 2013	Mar. 25, 2014 Class E units [Member]	Aug. 31, 2014 Class E units [Member]	Mar. 31, 2013 Class E units [Member]	Mar. 31, 2013 Class D Preferred Units [Member]	Sep. 30, 2014 Preferred Units, Class E [Member]	Mar. 31, 2013 PPBE [Member] Class E units [Member]	Mar. 24, 2014 AQR Diversified Arbitrage Fund [Member] Class E units [Member]	Sep. 30, 2014 AQR Diversified Arbitrage Fund [Member] Preferred Units, Class E [Member]	Mar. 31, 2013 Capital Unit Class B [Member] PPBE [Member] Class B units [Member]	Feb. 12, 2013 Capital Unit Class B [Member] PPVA (Equity) [Member]
Class of Stock [Line Items]
Additional units issued												3,800,000	1,131,458.5
Temporary Units Issued									50,000,000
Capital contribution									$ 50,000,000
Class D Units Exchanged for Class E Units						43,000,000
Value of Class D units exchanged for Class E units							30,000,000
Paid-in-kind dividends converted to Class E stock							13,000,000				10,200,000
Rate of accruing dividends payable in kind				36.00%		20.00%
Payments for Repurchase of Preferred Units					96,000,000					14,000,000
Series E preferred units outstanding		$ 7,936,000	$ 109,744,000					$ 7,900,000
Stock Split ratio	10,000

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Going Concern Consideration (Details) (USD $)			0 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Aug. 15, 2014 Renaissance Sale [Member] asset	Sep. 30, 2014 13.75% Senior Secured Notes, net of discount [Member]	Jul. 16, 2014 13.75% Senior Secured Notes, net of discount [Member]	Nov. 23, 2010 13.75% Senior Secured Notes, net of discount [Member]
Going Concern [Line Items]
Working capital deficit	$ (61,900,000)
Accumulated deficit	(100,543,000)	(172,675,000)
Accounts payable and accrued liabilities	$ 96,300,000
Interest rate on notes/Fee percentage on letter of credit				13.75%	13.75%	13.75%
Number of operated assets sold			7
Number of non-operated assets sold			1

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GOING CONCERN CONSIDERATION

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GOING CONCERN CONSIDERATION

GOING CONCERN CONSIDERATION

The consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of September 30, 2014, the Company had a net working capital deficit of approximately $61.9 million and a members' deficit of approximately $100.5 million. The net working capital deficit at September 30, 2014 is primarily the result of the Company's accounts payable and accrued expenses of $96.3 million. Additionally, the Company’s 13.75% Senior Secured Notes will mature in December 2015 (see “Note 8 - Debt and Notes Payable” for further discussion). We cannot assure that the Company will generate sufficient cash flow from operations to service the remaining Notes. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Our primary cash flow for the first nine months of 2014 was from divestiture of assets (see “Note 5 - Acquisitions and Divestitures” for further discussion). The combination of restricted credit availability, lower production since the fourth quarter of 2013, settlement of our plugging and abandonment ("P&A") liabilities and additional collateral requirements related to our surety bonds that secure our P&A obligations led to significant cash reductions in the fourth quarter of 2013 and the first nine months of 2014. To increase liquidity, we continue to manage accounts payable, aggressively pursue accounts receivable and seek opportunities to sell non-core assets.

Our primary use of capital has been for collateral to secure our P&A obligations. As we plug and abandon certain fields and meet the various criteria related to the corresponding escrow accounts, we expect to release funds from the escrow accounts. On August 15, 2014, the Company closed the sale of seven operated and one non-operated assets to Renaissance Offshore, LLC (the “Renaissance Sale”). The net proceeds of the Renaissance Sale were used primarily to fund our purchase of the Notes validly tendered and not withdrawn pursuant to the tender offer on July 16, 2014 and to re-purchase Series E preferred units.

The Company may continue to liquidate additional oil and natural gas properties to meet its liquidity needs; however, there is no certainty that this would generate the cash necessary to meet our obligation. Additionally, this could affect the Company’s long-term strategic plan and require the Company to liquidate certain oil and gas properties at an amount less than would normally be achieved if sold in the ordinary course of business (see “Note 3 - Liquidity, Risks and Uncertainties” for further discussion).

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Please refer to Item1A. Risk Factors for detail discussions of our risk factors.

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CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE SHEET (PARENTHETICALS) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 826	$ 811
Accumulated depreciation, depletion, amortization and impairment	217,526	293,973
Accumulated depreciation for other property and equipment	6,112	5,350
Unamortized discount of debt	$ 398	$ 617

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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

9 Months Ended

Sep. 30, 2014

Cautionary Note Regarding Forward Looking Statements Disclosure [Abstract]

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact included in this Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Form 10-Q, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements may include statements that relate to, among other things, our:

• Financial data, including production, costs, revenues and operating income;

• Future financial and operating performance and results;

• Business strategy and budgets;

• Market prices;

• Expected plugging and abandonment obligations and other expected asset retirement obligations;

• Technology;

• Financial strategy;

• Amount, nature and timing of capital expenditures;

• Drilling of wells and the anticipated results thereof;

• Oil and natural gas reserves;

• Timing and amount of future production of oil and natural gas;

• Competition and government regulations;

• Operating costs and other expenses;

• Cash flow and anticipated liquidity;

• Prospect development;

• Property acquisitions and sales; and

• Plans, forecasts, objectives, expectations and intentions.

These forward-looking statements are based on our current expectations and assumptions about future events and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisition. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause our actual results to differ from those in the forward-looking statements are described in “Item 1A. Risk Factors” in this Form 10-Q and our 2013 Form 10-K.

These factors include risks summarized below:

• Low and/or declining prices for oil and natural gas;

• Oil and natural gas price volatility;

• Risks associated with drilling, including completion risks, cost overruns and the drilling of non-economic wells or dry holes;

• Ability to raise additional capital to fund future capital expenditures;

• Ability to post additional collateral as required by surety companies;

• Cash flow and liquidity;

• Ability to find, acquire, market, develop and produce new oil and natural gas properties;

• Uncertainties in the estimation of proved reserves and in the projection of future rates of production and timing of development expenditures;

• Geological concentration of our reserves;

• Discovery, acquisition, development and replacement of oil and natural gas reserves;

• Operating hazards attendant to the oil and natural gas business;

• Down hole drilling and completion risks that are generally not recoverable from third parties or insurance;

• Potential mechanical failure or underperformance of significant wells or pipeline mishaps;

• Potential increases in plugging and abandonment and other asset retirement costs as a result of new regulations;

• Weather conditions;

• Availability and cost of material and equipment;

• Delays in anticipated drilling start-up dates;

• Actions or inactions of third-party operators of our properties;

• Ability to find and retain skilled personnel;

• Strength and financial resources of competitors;

• Potential defects in title to our properties;

• Federal and state regulatory developments and approvals, including the adoption of new regulatory requirements;

• Losses possible from current litigation matters as a result of the explosion and fire on the West Delta 32-E Platform and other future litigation;

• Environmental risks;

• Changes in interest rates;

• Developments in oil and natural gas-producing countries;

• Events similar to those of September 11, 2001, Hurricanes Katrina, Rita, Gustav and Ike and the Deepwater Horizon explosion; and

• Worldwide political and economic conditions.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no responsibility to publicly release the results of any revisions of our forward-looking statements after the date they are made.

Should one or more of the risks or uncertainties described in “Item 1A. Risk Factors” in this Form 10-Q and our 2013 Form 10-K occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statement.

All forward-looking statements, express or implied, included in this Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as required by law, we undertake no obligations to update, revise or release any revisions to any forward-looking statements to reflect events or circumstances occurring after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factors, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 19, 2014 Common Class A	Nov. 19, 2014 Common Class B	Nov. 19, 2014 Common Class C	Nov. 19, 2014 Common Class E
Document Information [Line Items]
Entity Registrant Name	Black Elk Energy Offshore Operations, LLC
Trading Symbol	CK0001518909
Entity Central Index Key	0001518909
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		1,361,300.0	114,277,308.5	12,031,250	7,935,670

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BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Nature of Operations

Nature of Operations: Black Elk Energy Offshore Operations, LLC and our wholly-owned subsidiaries (collectively, “Black Elk”, "BEEOO", “we”, “our” or “us”) is a Houston-based oil and natural gas company engaged in the exploration, development, production and exploitation of oil and natural gas properties. We were formed on November 20, 2007 for the purpose of acquiring oil and natural gas producing properties within the Outer Continental Shelf of the United States in the Gulf of Mexico.

Basis of Presentation

Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation of our interim and prior period results have been included in the accompanying consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that will be realized for any other interim period or for the entire fiscal year. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”).

Reclassifications

Reclassifications: Certain reclassifications have been made to conform 2013 balances to our 2014 presentation. Such reclassifications had no effect on net income (loss) or cash flow.

Principles of Consolidation

Principles of Consolidation: The consolidated financial statements include the accounts of Black Elk Energy Offshore Operations, LLC and our wholly-owned subsidiaries, Black Elk Energy Land Operations, LLC and Black Elk Energy Finance Corp. Effective January 1, 2013, in accordance with accounting guidelines for consolidation of variable interest entities, we consolidated Freedom Well Services, LLC (“FWS”), as we determined that we are the primary beneficiary of FWS and will have the power to direct the activities of FWS. All material inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates in Preparation of Financial Statements

Use of Estimates in Preparation of Financial Statements: The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses recognized during the reporting period. We analyze our estimates based on historical experience, current factors and various other assumptions that we believe to be reasonable under the circumstances. However, actual results could differ from such estimates.

Recent Accounting Pronouncements

Recent Accounting Pronouncements: In April 2014, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 narrows the definition of “discontinued operations” to dispositions that represent a strategic shift that has or will have a significant impact on the entity’s operations and financial results. The ASU requires additional disclosures regarding assets and liabilities held for sale, and income and losses, including gain or loss on sale, and cash flows from discontinued operations. In addition, the ASU requires disclosures for disposals of individually significant components of the business which do not qualify as discontinued operations, including general information about the disposition and disclosure of the pretax profit or loss from the component for the period of disposal and all comparable historic periods presented. ASU 2014-08 is effective for all fiscal years beginning after December 15, 2014, and can be adopted early for certain asset dispositions and reclassifications of assets from “held and used” to “held for sale.” We are evaluating the impact this standard will have on our consolidated financial statements and related disclosures.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606).  The update provides guidance concerning the recognition and measurement of revenue from contracts with customers.  Its objective is to increase the usefulness of information in the financial statements regarding the nature, timing and uncertainty of revenues.  The update is effective for the Company beginning in calendar year 2017.  We are evaluating the impact this standard will have on our consolidated financial statements and related disclosures.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires management to assess an entity’s ability tocontinue as a going concern, and to provide related footnote disclosures in certain circumstances. The standard is effective for annual financial statement starting period ending December 15, 2016, with early adoption permitted. We arecurrently evaluating the provisions of ASU 2014-15 and assessing the impact, if any, it may have on our consolidated financial position, results of operations or cash flows.

Liquidity, Risks and Uncertainties

LIQUIDITY, RISKS AND UNCERTAINTIES

                  The Company currently faces significant challenges with our cash flow and our need to pay for operating expenses, including our debt service obligations. The Company's cash position raises substantial doubt about the Company's ability to continue as a going concern. We will need to seek additional working capital through the sale of equity or assets and potentially refinance our debt in an effort to improve our liquidity position.

We routinely monitor and adjust our capital expenditures in response to changes in prices, availability of financing, drilling and acquisition costs, industry conditions, the timing of regulatory approvals, the availability of rigs, success or lack of success in drilling activities, contractual obligations, internally generated cash flows and other factors both within and outside our control.

Virtually all of our current production is concentrated in the Gulf of Mexico, which is characterized by production declines more rapid than those of conventional onshore properties. As a result, we are particularly vulnerable to a near-term severe impact resulting from unanticipated complications in the development of, or production from, any single material well or infrastructure installation, including lack of sufficient capital, delays in receiving necessary drilling and operating permits, increased regulation, reduced access to equipment and services, mechanical or operational failures, and severe weather. Any unanticipated significant disruption to, or decline in, our current production levels or prolonged negative changes in commodity prices or operating cost levels could have a material adverse effect on our financial position, results of operations, cash flows, the quantity of proved reserves that we report, and our ability to meet our commitments as they come due.

As an oil and gas company, our revenue, profitability, cash flows, proved reserves and future rate of growth are substantially dependent on prevailing prices for oil and natural gas. Historically, the energy markets have been very volatile, and we expect such price volatility to continue. Any extended decline in oil or gas prices could have a material adverse effect on our financial position, results of operations, cash flows, the quantities of oil and gas reserves that we can economically produce, and may restrict our ability to obtain additional financing or to meet the contractual requirements of our debt and other obligations.

Fair Value Measurement

FAIR VALUE MEASUREMENTS

Accounting guidance for fair value measurements clarifies the definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about fair value measurements. The three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is:

• Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

• Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

• Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

As required by accounting guidance for fair value measurements, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
REVENUES:
Oil sales	$ 7,811	$ 50,479	$ 70,692	$ 136,415
Natural gas sales	4,718	12,600	26,192	40,046
Plant product sales	(101)	1,457	3,032	5,831
Gain (loss) on derivative financial instruments	4,883	(7,868)	(3,593)	(8,562)
Other revenues	2,441	7,089	15,830	16,389
TOTAL REVENUES	19,752	63,757	112,153	190,119
OPERATING EXPENSES:
Lease operating	12,744	51,168	66,753	141,657
Workover	1,431	1,028	2,050	7,312
Depreciation, depletion and amortization	2,537	10,027	24,476	32,727
Impairment of oil and gas properties	11,395	402	14,469	55,779
General and administrative	8,901	9,621	21,630	28,250
Gain on involuntary conversion of asset	0	(7,194)	0	(17,827)
Accretion of asset retirement obligations	551	4,458	3,536	19,551
(Gain) loss on sale of assets	(98,526)	424	(133,077)	(35,367)
Other operating expenses	1,062	2,704	6,413	5,117
TOTAL OPERATING EXPENSES	(59,905)	72,638	6,250	237,199
INCOME (LOSS) FROM OPERATIONS	79,657	(8,881)	105,903	(47,080)
OTHER INCOME (EXPENSE):
Interest income	10	30	45	81
Miscellaneous expense	(1,312)	(2,674)	(5,778)	(7,620)
Interest expense	(5,459)	(6,890)	(17,733)	(19,526)
TOTAL OTHER EXPENSE, NET	(6,761)	(9,534)	(23,466)	(27,065)
NET INCOME (LOSS)	72,896	(18,415)	82,437	(74,145)
LESS: PREFERRED UNIT DIVIDENDS	2,033	4,755	10,233	12,581
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON UNIT HOLDERS	$ 70,863	$ (23,170)	$ 72,204	$ (86,726)

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Accounting guidance for fair value measurements clarifies the definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value, and expands disclosures about fair value measurements. The three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies, is:

• Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

• Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

• Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

As required by accounting guidance for fair value measurements, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The following tables present information about our assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013 and indicate the fair value hierarchy of the valuation techniques utilized by us to determine such fair value (in thousands) (unaudited):

	Fair Value Measurements at September 30, 2014 Using Fair Value Hierarchy
	Fair Value as of September 30, 2014			Level 1		Level 2			Level 3
Assets
Oil and Natural Gas Derivatives	$	270		$	—	$	270		$	—
	$	270		$	—	$	270		$	—
Liabilities
Oil and Natural Gas Derivatives	$	(1,179	)	$	—	$	(1,179	)	$	—
	$	(1,179	)	$	—	$	(1,179	)	$	—
	Fair Value Measurements at December 31, 2013 Using Fair Value Hierarchy
	Fair Value as of December 31, 2013			Level 1		Level 2			Level 3
Assets
Oil and Natural Gas Derivatives	$	1,370		$	—	$	1,370		$	—
	$	1,370		$	—	$	1,370		$	—
Liabilities
Oil and Natural Gas Derivatives	$	(9,859	)	$	—	$	(9,859	)	$	—
	$	(9,859	)	$	—	$	(9,859	)	$	—

We estimated the fair value of derivative instruments using internally-developed models that use as their basis readily observable market parameters.

The determination of the fair values above incorporates various factors required under accounting guidance for fair value measurements. These factors include not only the impact of our nonperformance risk but also the credit standing of the counter-parties involved in our derivative contracts.

As of September 30, 2014, the estimated fair value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and other current liabilities approximated their carrying value due to their short-term nature. The estimated fair value of our debt was primarily based on quoted market prices as well as prices for similar debt based on recent market transactions. The fair value of debt at September 30, 2014 was $121.5 million.

Fair Value on a Non-Recurring Basis

Oil and gas properties with a carrying value of $57.7 million were written down to their fair value of $43.2 million, resulting in an impairment charge of $11.4 million and $14.5 million for the three and nine months ended September 30, 2014, which is recognized under “ Impairment of oil and gas properties” in the consolidated statements of operations. As of September 30, 2013, oil and gas properties with a carrying value of $290.7 million were written down to their fair value of $234.9 million, resulting in an impairment charge of $0.4 million and $55.8 million for the three and nine months ended September 30, 2013, respectively. The impairment analysis is based on the estimated discounted future cash flows for those properties. Significant Level 3 assumptions used in the calculation of estimated discounted cash flows included our estimate of future oil and gas prices, production costs, development expenditures, estimated quantities and timing of production of proved reserves, appropriate risk-adjusted discount rates, and other relevant data.

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DERIVATIVE INSTRUMENTS

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS

We enter into hedging transactions with major financial institutions to reduce exposure to fluctuations in the price of oil and natural gas. We use financially settled crude oil and natural gas swaps. With a swap, the counterparty is required to make a payment to us if the settlement price for a settlement period is below the hedged price for the transaction, and we are required to make a payment to the counter-party if the settlement price for any settlement period is above the hedged price for the transaction. We elected not to designate any of our derivative contracts as qualifying hedges for financial reporting purposes, therefore all of the derivative instruments are categorized as standalone derivatives and are being marked-to-market with “Unrealized (loss) gain on derivative financial instruments” recorded in the consolidated statements of operations.

At September 30, 2014, we had the following contracts outstanding (Asset (Liability) and Fair Value Gain (Loss) (unaudited)):

	Crude Oil								Natural Gas								Total
Period	Monthly Volume (Bbls)	Contract Price ($/Bbl)	Asset (Liability)			Fair  Value Gain (Loss)			Monthly Volume (MMBtu)	Contract Price ($/MMBtu)	Asset (Liability)			Fair  Value Gain (Loss)			Asset (Liability)			Fair  Value Gain (Loss)
Swaps:			(in thousands)								(in thousands)						(in thousands)
10/14 - 12/14	15,000	65.00	$	(1,122	)	$	(1,122	)	—	—	$	—		$	—		$	(1,122	)	$	(1,122	)
10/14 - 10/14	5,525	87.75	(17		)	(17		)	28,635	4.09	3			3			(14		)	(14		)
11/14 - 11/14	5,525	87.75	(13		)	(13		)	27,081	4.09	(1		)	(1		)	(14		)	(14		)
12/14 - 12/14	5,525	87.75	(10		)	(10		)	34,114	4.09	(3		)	(3		)	(13		)	(13		)
1/15 - 1/15	—	—	—			—			27,838	4.09	(4		)	(4		)	(4		)	(4		)
2/15 - 2/15	—	—	—			—			24,461	4.09	(4		)	(4		)	(4		)	(4		)
3/15 - 3/15	—	—	—			—			26,443	4.09	(2		)	(2		)	(2		)	(2		)
10/14 -10/14	—	—	—			—			29,753	4.19	6			6			6			6
11/14 - 11/14	—	—	—			—			28,635	4.19	2			2			2			2
12/14 -12/14	—	—	—			—			27,081	4.19	—			—			—			—
1/15 - 1/15	—	—	—			—			34,114	4.19	(2		)	(2		)	(2		)	(2		)
2/15 - 2/15	—	—	—			—			27,838	4.19	(1		)	(1		)	(1		)	(1		)
3/15 - 3/15	—	—	—			—			24,461	4.19	1			1			1			1
10/14 - 10/14	—	—	—			—			192,799	4.47	94			94			94			94
11/14 - 11/14	—	—	—			—			186,296	4.47	64			64			64			64
12/14 - 12/14	—	—	—			—			189,992	4.47	52			52			52			52
1/15 - 1/15	—	—	—			—			58,684	4.47	12			12			12			12
2/15 - 2/15	—	—	—			—			68,337	4.47	15			15			15			15
3/15 - 3/15	—	—	—			—			69,732	4.47	21			21			21			21
			$	(1,162	)	$	(1,162	)			$	253		$	253		$	(909	)	$	(909	)

The fair values of derivative instruments in our consolidated balance sheets were as follows (in thousands) (unaudited):

	Asset Derivatives			Liability Derivatives				Asset (Liability) Derivatives Total
Derivatives Not  Designated as Hedging Instruments under Accounting Guidance	Balance Sheet Location	Fair Value at September 30, 2014		Balance Sheet Location	Fair Value at September 30, 2014			Balance Sheet Location	Fair Value at September 30, 2014
Commodity Contracts	Derivative  financial instruments			Derivative  financial instruments				Derivative  financial instruments
	Current	$	270	Current	$	(1,179	)	Current	$	(909	)
	Non-current	—		Non-current	—			Non-current	—
Total derivative instruments		$	270		$	(1,179	)		$	(909	)
	Asset Derivatives			Liability Derivatives				Asset (Liability) Derivatives Total
Derivatives Not  Designated as Hedging Instruments under Accounting Guidance	Balance Sheet Location	Fair Value at December 31, 2013		Balance Sheet Location	Fair Value at December 31, 2013			Balance Sheet Location	Fair Value at December 31, 2013
Commodity Contracts	Derivative financial instruments			Derivative financial instruments				Derivative financial instruments
	Current	$	1,370	Current	$	(9,828	)	Current	$	(8,458	)
	Non-current	—		Non-current	(31		)	Non-current	(31		)
Total derivative instruments		$	1,370		$	(9,859	)		$	(8,489	)

We have a netting agreement with our financial institution that permits net settlement of gross commodity derivative assets against gross commodity derivative liabilities, and we routinely exercise our contractual right to offset realized gains against realized losses when settling with our derivative counter-party.

The effect of derivate instruments on our consolidated statements of operations was as follows (in thousands) (unaudited):

		Three Months Ended   September 30,						Nine Months Ended   September 30,
Derivatives Not  Designated as Hedging Instruments under Accounting Guidance	Statements of Operations Location	2014			2013			2014			2013
Realized Commodity Contracts	Gain (loss) on derivative financial instruments	$	(2,316	)	$	(2,725	)	$	(11,174	)	$	(2,573	)
Unrealized Commodity Contracts	Gain (loss) on derivative financial instruments	7,199			(5,143		)	7,581			(5,989		)
Total derivative instruments		$	4,883		$	(7,868	)	$	(3,593	)	$	(8,562	)

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Future Minimum Lease Payments Table

Approximate future minimum lease payments for operating leases at September 30, 2014 were as follows:

Period Ending September 30,	(in thousands)
2015	$	4,056
2016	2,072
2017	1,784
2018	1,655
2019	1,590
Thereafter	1,941
	$	13,098

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OIL AND GAS PROPERTIES (Tables)

9 Months Ended

Sep. 30, 2014

Property, Plant and Equipment [Abstract]

Capitalized Costs Related to Oil and Gas Properties

The following table reflects capitalized costs related to our oil and gas properties:

	September 30, 2014			December 31, 2013
	(Unaudited)
	(in thousands)
Proved properties	$	260,726		$	490,109
Accumulated depreciation, depletion, amortization and impairment	(217,526		)	(293,973		)
Oil and gas properties, net	$	43,200		$	196,136

Schedules of Change to Our Asset Retirement Obligations

The following table describes the changes to our asset retirement obligations (unaudited):

	(in thousands)
Balance at December 31, 2013	$	276,732
Liabilities settled	(17,717		)
Liabilities relieved due to sale of properties	(67,051		)
Accretion expense	3,536
Balance at September 30, 2014	195,500
Less: current portion	(32,839		)
Total Long-Term Asset Retirement Obligations	$	162,661

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

General

Due to the nature of our business, some contamination of the real estate property owned or leased by us is possible. Environmental site assessment of the property would be necessary to adequately determine remediation costs, if any. Management does not consider the amounts that would result from any environmental site assessments to be significant to the consolidated financial position or results of our operations. Accordingly, no provision for potential remediation costs is reflected in the accompanying consolidated financial statements. We are subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on our consolidated financial position or results of operations.

West Delta 32

We continue to go through the discovery phases of the civil litigation of the personal injury lawsuits filed as a result of the November 16, 2012, explosion and fire which occurred on our West Delta 32-E platform, located in the Gulf of Mexico approximately 17 miles southeast of Grand Isle, Louisiana. Several civil lawsuits have been filed as a result of the West Delta 32 Incident. The lawsuits that were filed in Texas have been transferred to the United States District Court for the Eastern District of Louisiana, and all cases have been consolidated for discovery purposes in that Court. The first plaintiff’s case will be tried in either December of 2014 or January of 2015. All civil cases filed as a result of the West Delta 32 Incident are being defended by insurance defense counsel. We believe we have strong defenses and cross-claims and intend to defend ourselves.

Thomas Andrus, et al

As previously reported, six investors in Black Elk Energy, LLC (“BEE”) filed a purported derivative complaint on behalf of BEE in the Supreme Court of the State of New York, County of New York, against the Company, John Hoffman, Iron Island Technologies Inc., and various entities and individuals associated with the Company’s majority unit owner (the “Platinum Defendants”). The lawsuit seeks unspecified damages allegedly arising from (1) the dilution of BEE’s ownership interest in the Company through various financing transactions with the Platinum Defendants and the issuance of membership units under management and employee incentive programs; and (2) the alleged mismanagement of the Company in connection with certain alleged safety violations and the West Delta 32 Incident. We believe there are strong defenses to the claims asserted in the lawsuit, and the Company intends to defend the case vigorously.

On or about September 24, 2013, Plaintiffs filed a motion for a preliminary injunction to restrain a portion of the proceeds of the Company’s proposed sale of certain oil fields in the Gulf of Mexico. The Court denied the motion on November 15, 2013. On or about November 20, 2013, we filed a motion to dismiss the complaint in its entirety, inter alia, on the grounds that (i) the claims fail to state a cause of action; (ii) the claims are refuted by documentary evidence; (iii) plaintiffs, who are not members of the Company, lack standing to assert a claim for mismanagement of the Company; and (iv) certain claims are barred by the statute of limitations.

Oral arguments were heard on July 24, 2014. At that time, the judge has asked for additional briefing on the Conflicts of Law issue. We had a conference call with the Court on Friday, September 5, 2014 to set a schedule for the supplemental briefs the Court has requested. Our revised brief was due and submitted on or about September 10, 2014. Oral arguments on the motions to dismiss were heard on November 6, 2014 and we are awaiting the judge's ruling.

Grand Isle Shipyard ("GIS") Matters

On April 29, 2013, Grand Isle Shipyards, Inc. (“GIS”) sued BEEOO, Enviro Tech Systems, LLC, Wood Group USA, Inc., and Compass Engineering & Consultants, LLC in the United States District Court for the Eastern District of Louisiana for damages it alleged incurred in connection with the West Delta 32 Incident. GIS specifically sought damages for loss of property and equipment, expenses in the form of indemnity and medical benefits paid to or on behalf of its employees, and for unpaid invoices in connection with the work it performed at West Delta 32. Upon motion by BEEOO, however, the court dismissed GIS’ lawsuit and ordered GIS and BEEOO to first attempt to resolve their claims through mediation which took place on November 12, 2013.  Since the mediation was unsuccessful, the Parties have now agreed to enter into binding Arbitration pursuant to and in accordance with the MSA.

Invoice Arbitration - On October 8, 2014, Black Elk submitted to the Arbitrator its initial briefing on all affirmative claims and defenses.  This briefing was drafted and submitted pursuant to an order from the Arbitrator.  GIS ignored this order to some degree and submitted Motions for summary Judgment on that date instead.  GIS asked for summary judgment on all of its claims and confusingly argued that Black Elk is not entitled to summary judgment on its affirmative claims (Black Elk obviously has not sought summary judgment on its affirmative claims).  On October 17, 2014, the parties participated in a telephonic hearing with the Arbitrator regarding the briefing and preexisting motions.  The Arbitrator (1) granted Black Elk the right to conduct an audit pursuant to the MSA between the parties, (2) granted Black Elk limited discovery concerning the use of D&R workers on Black Elk platforms, and (3) stated that he would not be granting any dispositive motions in the case (i.e. GIS’ Motions for Summary Judgment).

The arbitration, currently scheduled for December 1, 2014, has been delayed until the new year.  This was a necessary step as both parties will need to take depositions and aggregate discovery before an arbitration can take place.

Platform Arbitration - The arbitration case for damages to the West Delta 32 Platform is scheduled for hearing before a three-arbitrator panel on May 12, 2015. The arbitration proceeding initiated by Black Elk against Compass Engineering & Consultants, LLC for damages arising from the explosion of the WD-32 Platform has been abated pending resolution of Compass’ separate lawsuit filed in the United States District for the Western District of Louisiana seeking a declaration that it was not subjected to arbitration. We are currently in the process of drafting discovery to GIS concerning D&R Resources, LLC's employees' rates, duties, and training. We will continue to defend ourselves vigorously.

Vistar Oil Texas, LLC Joint Venture

On April 16, 2014, Vistar Oil Texas LLC (“Vistar”) filed a petition against Black Elk in Harris County District Court. This suit alleges that Black Elk breached an Acquisition and Participation Agreement and a Joint Operating Agreement between the parties, primarily by failing to provide Vistar with the funds required to bring several wells into operation in Wilson County, Texas. Vistar alleges damages of approximately $6,500,000, certain lease acquisition costs and promissory note payments required to cover liens placed on the wells. Vistar further alleges that Black Elk is in breach by refusing to provide approximately $10,350,000 to Vistar to acquire additional property. This case is in discovery. We believe we have strong potential defenses and have submitted counterclaims, and intend to defend ourselves vigorously.

Arthur Garza III

On August 31, 2014, Arthur Garza, former Chief Technical Officer of Black Elk Energy Offshore Operations, LLC, filed suit against Black Elk Energy Offshore Operations for payment of severance under his employment agreement. This case is in discovery. We believe we have strong potential defenses and intend to defend ourselves vigorously.

Operating Leases

We lease office space and certain equipment under non-cancellable operating lease agreements that expire on various dates through 2020.

Approximate future minimum lease payments for operating leases at September 30, 2014 were as follows:

Period Ending September 30,	(in thousands)
2015	$	4,056
2016	2,072
2017	1,784
2018	1,655
2019	1,590
Thereafter	1,941
	$	13,098

Escrow Accounts

Pursuant to the purchase agreement from W&T Offshore, Inc. (the “W&T Acquisition”), we are required to fund two escrow accounts (the “W&T Escrow Accounts”), relating to the operating and non-operating properties that were acquired in maximum aggregate amount of $63.8 million ($32.6 million operated and $31.2 million non-operated) for future P&A costs that may be incurred on such properties. As of November 2010, we fully funded the operating escrow account in the amount of $32.6 million and the payment schedule for the Non-Operated Properties Escrow Account was amended and commenced on December 2011. As of September 30, 2014, we have funded $20.5 million into the non-operating escrow account, leaving $10.7 million to be funded through May 1, 2017.

The obligations under the W&T Escrow Accounts are fully guaranteed by an affiliate of Platinum. W&T Offshore Inc. (“W&T”) has a first lien on the entirety of the W&T Escrow Accounts, and BP Corporation North America Inc. and Platinum are pari passu second lien holders. Once P&A obligations with respect to the interest in properties acquired from the W&T Acquisition have been fully satisfied, the lien on the W&T Escrow Accounts will be automatically extinguished. W&T also has a second priority lien with respect to the interest in properties acquired from the W&T Acquisition (with Platinum and BNP Paribas sharing a first priority lien), which lien will be released once the W&T Escrow Accounts have been fully funded.

On December 19, 2012, we entered into a Third Amendment to Purchase and Sale Agreement (the “Third Amendment”) with W&T. Pursuant to the Third Amendment, we caused performance bonds (the “ARGO Bonds”) in an aggregate amount of $32.6 million to be issued by Argonaut Insurance Company to W&T to guaranty our performance of certain plugging and abandonment obligations. Upon receipt of the ARGO Bonds, W&T (i) released its rights to any money held in an escrow account established to secure our performance of certain plugging and abandonment obligations with respect to the Operated Properties Escrow Account, (ii) released the security interest and deposit account control agreement formerly securing its rights in the Operated Properties Escrow Account and (iii) authorized the escrow agent to release such funds from the Operated Properties Escrow Account to or at our direction. In addition, we and W&T agreed that until the funding of an escrow account established to our performance of certain plugging and abandonment obligations with respect to certain non-operated properties is complete, we may not obtain reductions of the ARGO Bonds under any circumstances without W&T’s consent. As of September 30, 2014, we no longer use ARGO Bonds as these are now backed by cash collateral.

Pursuant to the purchase agreement for the Maritech acquisition, we are required to fund an escrow account (the “Maritech Escrow Account”), relating to the properties that were acquired, of $13.1 million to be used for future P&A costs that may be incurred on such properties. This escrow obligation was fully funded in February 2014.

In regards to the Merit acquisition, we are required to establish an escrow account to secure the performance of our P&A obligations and other indemnity obligations with respect to P&A and/or decommissioning of the acquired wells and facilities. We paid $33 million in surety bonds at closing and are required to, over time, deposit in the escrow account an amount equal to $60 million, which is to be paid in 30 equal monthly installments payable on the first day of each month commencing on June 1, 2011. This escrow obligation was fully funded in November 2013.

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DEBT AND NOTES PAYABLE

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

DEBT AND NOTES PAYABLE

DEBT AND NOTES PAYABLE

Our debt and notes payable are summarized as follows:

	September 30, 2014			December 31, 2013
	(in thousands)
	(unaudited)
Senior Secured Revolving Credit Facility	$	—		$	34,500
13.75% Senior Secured Notes, net of discount	138,169			149,383
Other debt	363			303
Total debt	138,532			184,186
Less: current portion	(340		)	(257		)
Total long-term debt	$	138,192		$	183,929

Senior Secured Revolving Credit Facility

Our Credit Facility was paid in full on March 17, 2014. As of September 30, 2014, we had zero borrowings outstanding in letters of credit issued under the Credit Facility. Our letters of credit were paid in full and terminated on June 8, 2014.

13.75% Senior Secured Notes

On November 23, 2010, we issued $150 million face value of 13.75% Notes discounted at 99.109% (the "Notes"). The net proceeds were used to repay all of the outstanding indebtedness under our prior revolving Credit Facility, to fund BOEM collateral requirements, and to prefund our escrow accounts. We pay interest on the Notes semi-annually in arrears, on June 1 and December 1 of each year, which commenced on June 1, 2011. The Notes will mature on December 1, 2015, at which time all principal then outstanding will be due. As of September 30, 2014, the recorded value of the Notes was $138.2 million, which includes the unamortized discount of $0.4 million. We incurred underwriting and debt issue costs of $7.2 million, which have been capitalized and are being amortized over the life of the Notes.

The Notes are secured by a security interest in our and the guarantors’ assets (excluding the W&T Escrow Accounts (as defined below)).

We have the right to redeem the Notes under various circumstances. If we experience a change of control, the holders of the Notes may require us to repurchase the Notes at 101% of the principal amount thereof, plus accrued unpaid interest. We also have an optional redemption in which we may redeem up to 35% of the aggregate principal amount of the Notes at a price equal to 110% of the principal amount, plus accrued interest and unpaid interest to the date of redemption, with the net cash proceeds of certain equity offerings until December 1, 2013. From December 1, 2013 until December 1, 2014, we may redeem some or all of the Notes at an initial redemption price equal to par value plus one-half the coupon which equals 106.875% plus accrued and unpaid interest to the date of the redemption. On or after December 1, 2014, we may redeem some or all of the Notes at a redemption price equal to par plus accrued and unpaid interest to the date of redemption.

On May 23, 2011, we commenced a Consent Solicitation that resulted in our entry into the First Supplemental Indenture. We paid a consent solicitation fee of $4.5 million. The First Supplemental Indenture amended the Indenture, among other things, to: (1) increase the amount of capital expenditures permitted to be made by us on an annual basis, (2) enable us to obtain financial support from our majority equity holder by way of a $30 million investment in Sponsor Preferred Stock, which can be repaid over time, and (3) obligate us to make an offer to repurchase the Notes semi-annually at an offer price equal to 103% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest to the extent we meet certain defined financial tests and as permitted by our credit facilities.

On July 16, 2014, each of Black Elk Energy Offshore Operations, LLC and Black Elk Energy Finance Corp. announced that it has commenced a cash tender offer to purchase its outstanding $150,000,000 aggregate principal amount of 13.75% senior secured notes due 2015. The Offer and the Consent Solicitation were being made in connection with our proposed disposition of certain assets pursuant to a Purchase and Sale Agreement between the Company and Renaissance Offshore, LLC, dated July 10, 2014. The offer expired on August 13, 2014. As of the expiration of the offer, $11,333,000 principal amount of the Notes validly tendered and not withdrawn, and holders of $110,565,000 principal amount of the Notes, or 73.71% of the Notes, validly consented to the Consent Solicitation and not revoked such consent.

On August 15, 2014, we announced the closing of the Renaissance sale of seven operated and one non-operated assets. Based on the consents received and the conditions to effectiveness, including the Renaissance Sale, having been satisfied or waived in connection with the announced tender offer and consent solicitation, the guarantor and the trustee under the indenture governing the Notes entered into a Second Supplemental Indenture in order to effect the proposed amendments to the indenture governing the Notes effective as of August 19, 2014. At the effective time, the Second Supplemental Indenture was binding on all holders of Notes, including those who did not deliver a consent. All Notes validly tendered and not withdrawn by 5 P.M ET on August 13, 2014 were accepted for payment and the Company promptly paid for such Notes, using Renaissance proceeds, in accordance with the terms of the Company’s Offer to Purchase and Consent Solicitation Statement dated July 16, 2014, and in the related Letter of Transmittal and Consent to Tender and to Give Consent.

The Notes require us to maintain certain financial covenants. Specifically, we may not permit our SEC PV-10 to consolidated leverage to be less than 1.4 to 1.0 as of the last day of each fiscal year. In addition, we and our subsidiaries (excluding FWS) are subject to various covenants, including restricted payments, incurrence of indebtedness and issuance of preferred stock, liens, dividends and other payments, merger, consolidation or sale of assets, transactions with affiliates, designation of restricted and unrestricted subsidiaries, and a maximum limit for capital expenditures. Amended in conjunction with the Consent Solicitation on May 31, 2011 (the “Indenture”), our limitation on capital expenditures of a maximum limit of $60 million for the fiscal year ending December 31, 2012 and 30% of consolidated earnings before interest expense, income taxes, DD&A and impairment, and exploration expense for any year thereafter. This covenant limiting capital expenditures was removed in the Supplemental Indenture described below.

On August 19, 2014, as supplemented by the First Supplemental Indenture, entered into a Second Supplemental Indenture (the “Supplemental Indenture”) in order to effect the proposed amendments to the Indenture effective as of August 19, 2014 (the “Effective Time”). At the Effective Time, the Supplemental Indenture will be binding on all holders of the Notes, including those who did not deliver a consent or who validly revoked their consent before the Expiration Time.

Among other things, the Supplemental Indenture (i) allowed the Company to apply the net proceeds from the Renaissance Sale to consummate the Offer and to use any remaining proceeds from the Renaissance Sale to purchase preferred equity issued by the Company; (ii) permitted the incurrence of indebtedness arising from the performance of the Company’s plugging and abandonment obligations and liens on the Company’s oil and gas properties to secure such indebtedness; and (iii) removed the covenant prohibiting the Company and its Restricted Subsidiaries (as defined in the Indenture) from incurring aggregate capital expenditures in excess of 30% of Consolidated EBITDAX (as defined in the Indenture) in any fiscal year.

The amounts of required principal payments based on our outstanding debt amounts as of September 30, 2014, were as follows:

Period Ending September 30,	(in thousands)
2015	$	340
2016	138,590
	$	138,930
Unamortized discount on 13.75% Senior Secured Notes	(398		)
Total debt	$	138,532

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MEMBERS DEFICIT

9 Months Ended

Sep. 30, 2014

Equity [Abstract]

MEMBERS DEFICIT

MEMBERS' DEFICIT

The Member Agreement (the “Agreement”) has four (Class A, B, C, and E) classes of members. Net income (loss) is allocated to the members in accordance with the terms set forth in the Agreement. The Agreement allows for preferred returns to certain members after internal rate of return and return of investment hurdles are met.

In the first quarter of 2013, we entered into contribution agreements with PPVA (Equity) and Platinum Partners Black Elk Opportunities Fund LLC (“PPBE”) or entities designated by PPBE (together, the “Platinum Group”) pursuant to which we have issued 50.0 million additional Class E Preferred Units (the “Class E Units”) and 3.8 million additional Class B Units to the Platinum Group for an aggregate offering price of $50.0 million. The Class E Units are recorded under "Preferred Units" and the Class B Units are included in "Members' Deficit" in the consolidated balance sheets. In addition, we also agreed to issue an additional 43 million Class E Units in exchange for $30.0 million of outstanding Class D Preferred Units and $13.0 million of paid-in-kind dividends. The Class D Preferred Units were recorded under "Preferred Units" in the consolidated balance sheets. The Class E Units had a preferred return of 20% per annum, which was set to increase to 36% on March 25, 2014. On March 24, 2014, AQR Diversified Arbitrage Fund exercised its right, and we complied, requiring us and PPVA to repurchase all of its Class E Preferred Units for $14.0 million. We obtained waivers to the Class E Preferred Units waiving the incremental preferred return. As a result of the waivers obtained, we issued Class E Units of approximately $10.2 million as paid-in-kind dividends for the nine months ended September 30, 2014.

In August 2014, we re-purchased $96 million of our Series E Preferred units using proceeds of the Renaissance Sale reflected in our Consolidated Statement of Cash Flows. As of September 30, 2014, we have $7.9 million Series E Preferred units outstanding.

On February 12, 2013, we entered into an agreement with Platinum under which we agreed to issue Class B Units to Platinum in exchange for financial consulting services, including (1) analysis and assessment of our business and financial condition and compliance with financial covenants in our Credit Facility, (2) discussion with us and senior bank lenders regarding capital contributions and divestitures of non-core assets, and (3) coordination with our attorneys, accountants, and other professionals. On February 12, 2013, we issued 1,131,458.5 Class B Units to PPVA Black Elk (Equity) LLC, an affiliate of Platinum, pursuant to such agreement.

On February 12, 2013, we entered into the Fourth Amendment to the Second Amended and Restated Limited Liability Operating Agreement of the Company (the “Fourth Amendment”). The Fourth Amendment amended the Company’s operating agreement to effectuate a 10,000 to 1 unit split for each of the Class A Units, Class B Units and Class C Units.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2014

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

We pay for certain operating and general and administration expenses on behalf of Black Elk Energy, LLC. At both September 30, 2014 and December 31, 2013, we had receivables from Black Elk Energy, LLC in the amount of $273,430.

On August 30, 2013, we consented to the assignment by Capital One Bank, N.A. and the other lenders of all of their rights and obligations under our Credit Facility to White Elk LLC, as Administrative Agent and Lender, and Resource Value Group LLC, as Lender. Resource Value Group LLC is affiliated with Platinum. As part of this transaction, we paid a required $0.3 million purchase fee on behalf of Platinum pursuant to the Loan Purchase Agreement.

During 2011, we entered into a contribution agreement with Platinum. We also entered into additional contributions with (PPVA (Equity)) and the Platinum Group in 2013. Please see "Notes to Consolidated Financial Statements - Note 9 - Members' Deficit" in this Form 10-Q for additional discussion regarding members' contributions.

On May 28, 2013, FWS entered into an equipment lease agreement with Pea and Eigh Company, LLC (“Pea and Eigh”), a related party of Platinum. The lease began on July 1, 2013 and is payable in monthly installments of approximately $35,000, maturing on December 31, 2013, with an option to purchase the equipment for $1.5 million. As of September 30, 2014, we have not purchased all of the equipment. We currently have restricted cash of $0.6 million for the additional equipment to be purchased as well as advances due to Pea and Eigh, which is included in “Accounts payable and accrued expenses”.

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Debt and Notes Payable - Additional Information (Details) (USD $)			0 Months Ended	9 Months Ended				12 Months Ended	9 Months Ended	0 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	May 23, 2011 13.75% Senior Secured Notes, net of discount [Member]	Sep. 30, 2014 13.75% Senior Secured Notes, net of discount [Member]	Jul. 16, 2014 13.75% Senior Secured Notes, net of discount [Member]	Nov. 23, 2010 13.75% Senior Secured Notes, net of discount [Member]	Sep. 30, 2014 Secured Letter of Credit Facility [Member] Letter of Credit [Member]	Dec. 31, 2012 Thirteen Point Seven Five Percent Senior Secured Notes [Member] 13.75% Senior Secured Notes, net of discount [Member]	Sep. 30, 2014 Thirteen Point Seven Five Percent Senior Secured Notes [Member] Maximum [Member] 13.75% Senior Secured Notes, net of discount [Member]	Aug. 15, 2014 Renaissance Sale [Member] asset
Line of Credit Facility [Line Items]
Outstanding balance							$ 0
Debt instrument face value						150,000,000
Interest rate on notes/Fee percentage on letter of credit				13.75%	13.75%	13.75%
Issue price of 13.75% senior secured notes debt instruments as percentage of face amount						99.109%
Credit facility date in original agreement				Dec. 01, 2015
Long-term Debt				138,200,000
Unamortized discount on 13.75% Senior Secured Notes	398,000	617,000		400,000
Underwriting and debt issue costs capitalized				7,200,000
Repurchase percentage for 13.75% Senior Secured Notes for a Change of Control				101.00%
Percentage of the 13.75% Senior Secured Notes redeemable until December 1, 2013				35.00%
Redeemable amount as a percentage of principal amount				110.00%
Optional redemption repurchase percentage for the 13.75% Senior Secured Notes from December 1, 2013 until December 1, 2014				106.875%
Consent solicitation fee			4,500,000
Contribution from our majority equity holder			30,000,000
Repurchase percentage for 13.75% Senior Secured Notes			103.00%
Outstanding aggregate principal amount of 13.75% Senior Notes					150,000,000
Principal amount of notes tendered and not withdrawn					11,333,000
Principal amount of notes consented to Consent Solicitation, not revoked					110,565,000
Percent of notes consented to Consent Solicitation, not revoked					73.71%
Number of operated assets sold										7
Number of non-operated assets sold										1
Leverage ratio									1.4
Amended capital expenditure maximum limit value								$ 60,000,000
Maximum percent limit on capital expenditure covenant								30.00%

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities by Level within Fair Value Hierarchy Table

The following tables present information about our assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013 and indicate the fair value hierarchy of the valuation techniques utilized by us to determine such fair value (in thousands) (unaudited):

	Fair Value Measurements at September 30, 2014 Using Fair Value Hierarchy
	Fair Value as of September 30, 2014			Level 1		Level 2			Level 3
Assets
Oil and Natural Gas Derivatives	$	270		$	—	$	270		$	—
	$	270		$	—	$	270		$	—
Liabilities
Oil and Natural Gas Derivatives	$	(1,179	)	$	—	$	(1,179	)	$	—
	$	(1,179	)	$	—	$	(1,179	)	$	—
	Fair Value Measurements at December 31, 2013 Using Fair Value Hierarchy
	Fair Value as of December 31, 2013			Level 1		Level 2			Level 3
Assets
Oil and Natural Gas Derivatives	$	1,370		$	—	$	1,370		$	—
	$	1,370		$	—	$	1,370		$	—
Liabilities
Oil and Natural Gas Derivatives	$	(9,859	)	$	—	$	(9,859	)	$	—
	$	(9,859	)	$	—	$	(9,859	)	$	—

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Oil and Gas Properties - Schedules of Change to Our Asset Retirement Obligations (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Movement in Property, Plant and Equipment [Roll Forward]
Balance at December 31, 2013			$ 276,732
Liabilities settled			17,717
Liabilities relieved due to sale of properties			67,051
Accretion expense	551	4,458	3,536	19,551
Balance at September 30, 2014	195,500		195,500
Less: current portion	(32,839)		(32,839)		(43,109)
Total Long-Term Asset Retirement Obligations	$ 162,661		$ 162,661		$ 233,623

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 82,437	$ (74,145)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation, depletion, and amortization	24,476	32,727
Impairment of oil and gas properties	14,469	55,779
Accretion of asset retirement obligations	3,536	19,551
Amortization of debt issue costs	4,520	4,595
Accretion of debt discount	219	195
Gain (loss) on derivative financial instruments	(3,593)	(8,562)
Settlement of derivative financial instruments	(11,174)	(2,573)
Gain on sale of assets	(133,077)	(35,367)
Provision on doubtful accounts	16	308
Gain on involuntary conversion of asset	0	(17,827)
Changes in operating assets and liabilities:
Accounts receivable	31,370	(13,086)
Escrow receivable, short term	(29,525)	0
Due from affiliates, net	0	74
Prepaid expenses and other assets	(3,290)	16,440
Other assets	310	464
Accounts payable and accrued liabilities	(36,290)	74,560
Gas imbalance	(1,198)	(16)
Settlement of asset retirement obligations	(17,717)	(41,512)
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(67,325)	28,729
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and gas properties	(11,150)	(112,719)
Acquisition of oil and gas properties	0	(3,250)
Sale of oil and gas properties	170,698	65,741
Additions to property and equipment	(10)	(683)
Cash assumed in consolidation of Freedom Well Services, LLC	0	473
Proceeds received from insurance recovery	0	23,837
Deposits	0	(9)
Restricted cash	100	(694)
Escrow payments, net	5,817	(23,394)
Escrow released	59,024	0
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	224,479	(50,698)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds on short term notes	2,818	348
Payments on short term notes	(2,758)	(3,827)
Borrowing on bank debt	0	23,168
Payments on bank debt	(45,933)	(40,168)
Debt issuance costs	0	(2,249)
Contributions from members	0	50,000
Distributions to members	(112,041)	0
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(157,914)	27,272
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(760)	5,303
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	6,227	1,383
CASH AND CASH EQUIVALENTS - END OF PERIOD	5,467	6,686
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	10,983	11,773
NONCASH INVESTING AND FINANCING ACTIVITIES:
Asset retirement obligations relieved due to sale of properties	(67,051)	(22,999)
Increase in asset retirement due to revaluation	0	2,341
Paid-in-kind dividends on preferred equity and accrued distributions to members	$ 10,233	$ 12,581

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ACQUISITIONS AND DIVESTITURES

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

ACQUISITIONS AND DIVESTITURES

ACQUISITIONS AND DIVESTITURES

On August 15, 2014, the Company closed the sale of seven operated and one non-operated assets to Renaissance Offshore, LLC (the “Renaissance Sale”). After customary purchase price adjustments, the Company received $125.1 million in net proceeds from the Renaissance Sale. The assets sold in the Renaissance Sale represent a significant amount of the Company’s cash flow, proved reserves and production. Reflected in our September 30, 2014 consolidated financial statements is a preliminary gain of $98.5 million related to the Renaissance sale. The net proceeds of the Renaissance Sale was used primarily to fund our purchase of the Notes validly tendered and not withdrawn pursuant to the tender offer on August 13, 2014 and to re-purchase Series E preferred units.

On March 13, 2014 , the Company entered into a Purchase and Sale Agreement (the “PSA”) with a wholly owned subsidiary of Fieldwood Energy LLC (“Fieldwood”). Pursuant to the PSA, Fieldwood acquired all of the Company’s interest in one operated and 15 non-operated fields in the offshore Gulf of Mexico, for $50 million, prior to normal purchase price adjustments (the “Sale”). The Sale closed on March 17, 2014. Reflected in our September 30, 2014 consolidated financial statements is a preliminary gain of $34.5 million related to Fieldwood.

On March 26, 2013, we completed the sale of four fields to Renaissance Offshore, LLC for approximately $52.5 million prior to normal purchase price adjustments. The proceeds were used to reduce the amount borrowed under the Credit Facility. Reflected in our September 30, 2013 consolidated financial statements is a gain of $35.8 million.

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Acquisitions and Divestitures (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		0 Months Ended	9 Months Ended	0 Months Ended	9 Months Ended	0 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Aug. 15, 2014 Renaissance Sale [Member] asset	Sep. 30, 2014 Renaissance Sale [Member]	Mar. 13, 2014 Fieldwood Sale [Member] field	Sep. 30, 2014 Fieldwood Sale [Member]	Mar. 26, 2013 Renaissance Offshore, LLC [Member] field	Sep. 30, 2013 Renaissance Offshore, LLC [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of operated assets sold					7
Number of non-operated assets sold					1
Proceeds from sale of oil fields			$ 170,698	$ 65,741	$ 125,100		$ 50,000		$ 52,500
Gain (loss) on sale of assets	$ 98,526	$ (424)	$ 133,077	$ 35,367		$ 98,500		$ 34,500		$ 35,800
Number of operated fields sold							1
Number of non-operated fields sold							15
Number of fields sold to Renaissance									4

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Commitments and Contingencies - Future Minimum Lease Payments Table (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]
2015	$ 4,056
2016	2,072
2017	1,784
2018	1,655
2019	1,590
Thereafter	1,941
Operating lease, total	$ 13,098

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DERIVATIVE INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Commodity Derivative Instruments

At September 30, 2014, we had the following contracts outstanding (Asset (Liability) and Fair Value Gain (Loss) (unaudited)):

	Crude Oil								Natural Gas								Total
Period	Monthly Volume (Bbls)	Contract Price ($/Bbl)	Asset (Liability)			Fair  Value Gain (Loss)			Monthly Volume (MMBtu)	Contract Price ($/MMBtu)	Asset (Liability)			Fair  Value Gain (Loss)			Asset (Liability)			Fair  Value Gain (Loss)
Swaps:			(in thousands)								(in thousands)						(in thousands)
10/14 - 12/14	15,000	65.00	$	(1,122	)	$	(1,122	)	—	—	$	—		$	—		$	(1,122	)	$	(1,122	)
10/14 - 10/14	5,525	87.75	(17		)	(17		)	28,635	4.09	3			3			(14		)	(14		)
11/14 - 11/14	5,525	87.75	(13		)	(13		)	27,081	4.09	(1		)	(1		)	(14		)	(14		)
12/14 - 12/14	5,525	87.75	(10		)	(10		)	34,114	4.09	(3		)	(3		)	(13		)	(13		)
1/15 - 1/15	—	—	—			—			27,838	4.09	(4		)	(4		)	(4		)	(4		)
2/15 - 2/15	—	—	—			—			24,461	4.09	(4		)	(4		)	(4		)	(4		)
3/15 - 3/15	—	—	—			—			26,443	4.09	(2		)	(2		)	(2		)	(2		)
10/14 -10/14	—	—	—			—			29,753	4.19	6			6			6			6
11/14 - 11/14	—	—	—			—			28,635	4.19	2			2			2			2
12/14 -12/14	—	—	—			—			27,081	4.19	—			—			—			—
1/15 - 1/15	—	—	—			—			34,114	4.19	(2		)	(2		)	(2		)	(2		)
2/15 - 2/15	—	—	—			—			27,838	4.19	(1		)	(1		)	(1		)	(1		)
3/15 - 3/15	—	—	—			—			24,461	4.19	1			1			1			1
10/14 - 10/14	—	—	—			—			192,799	4.47	94			94			94			94
11/14 - 11/14	—	—	—			—			186,296	4.47	64			64			64			64
12/14 - 12/14	—	—	—			—			189,992	4.47	52			52			52			52
1/15 - 1/15	—	—	—			—			58,684	4.47	12			12			12			12
2/15 - 2/15	—	—	—			—			68,337	4.47	15			15			15			15
3/15 - 3/15	—	—	—			—			69,732	4.47	21			21			21			21
			$	(1,162	)	$	(1,162	)			$	253		$	253		$	(909	)	$	(909	)

Fair Values, on a Gross Basis, of Derivatives Not Designated as Hedging Instruments Recorded in the Consolidated Balance Sheet

The fair values of derivative instruments in our consolidated balance sheets were as follows (in thousands) (unaudited):

	Asset Derivatives			Liability Derivatives				Asset (Liability) Derivatives Total
Derivatives Not  Designated as Hedging Instruments under Accounting Guidance	Balance Sheet Location	Fair Value at September 30, 2014		Balance Sheet Location	Fair Value at September 30, 2014			Balance Sheet Location	Fair Value at September 30, 2014
Commodity Contracts	Derivative  financial instruments			Derivative  financial instruments				Derivative  financial instruments
	Current	$	270	Current	$	(1,179	)	Current	$	(909	)
	Non-current	—		Non-current	—			Non-current	—
Total derivative instruments		$	270		$	(1,179	)		$	(909	)
	Asset Derivatives			Liability Derivatives				Asset (Liability) Derivatives Total
Derivatives Not  Designated as Hedging Instruments under Accounting Guidance	Balance Sheet Location	Fair Value at December 31, 2013		Balance Sheet Location	Fair Value at December 31, 2013			Balance Sheet Location	Fair Value at December 31, 2013
Commodity Contracts	Derivative financial instruments			Derivative financial instruments				Derivative financial instruments
	Current	$	1,370	Current	$	(9,828	)	Current	$	(8,458	)
	Non-current	—		Non-current	(31		)	Non-current	(31		)
Total derivative instruments		$	1,370		$	(9,859	)		$	(8,489	)

Fair Values, on a Gross Basis, of Derivatives Not Designated as Hedging Instruments Recorded in the Statement of Operations

The effect of derivate instruments on our consolidated statements of operations was as follows (in thousands) (unaudited):

		Three Months Ended   September 30,						Nine Months Ended   September 30,
Derivatives Not  Designated as Hedging Instruments under Accounting Guidance	Statements of Operations Location	2014			2013			2014			2013
Realized Commodity Contracts	Gain (loss) on derivative financial instruments	$	(2,316	)	$	(2,725	)	$	(11,174	)	$	(2,573	)
Unrealized Commodity Contracts	Gain (loss) on derivative financial instruments	7,199			(5,143		)	7,581			(5,989		)
Total derivative instruments		$	4,883		$	(7,868	)	$	(3,593	)	$	(8,562	)