Investment in Piceance Energy

12 Months Ended

Dec. 31, 2013

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments Disclosure [Text Block]

Note 3 - Investment in Piceance Energy

We account for our 33.34% ownership interest in Piceance Energy using the equity method of accounting because we are able to exert significant influence but do not control the operating and financial policies. The Piceance Energy  LLC Agreement provides that its sole manager may make a written capital call such that each member shall make additional capital contributions up to an aggregate combined total capital contribution of $60 million ($20 million to our interest), if approved by a majority of its board. If any member does not fund its share of the capital call, its interest may be reduced or diluted by the amount of the shortfall. In addition, Piceance Energy has a $400 million secured revolving credit facility secured by a lien on its natural gas and oil properties and related assets with a borrowing base currently set at $120 million.  As of December 31, 2013, the balance outstanding on the revolving credit facility was approximately $90.2 million. We are guarantors of Piceance Energy’s credit facility, with recourse limited to the pledge of our equity interests of Par Piceance Energy. Under the terms of its credit facility, Piceance Energy is generally prohibited from making future cash distributions to its owners, including us.

The change in our equity investment in Piceance Energy is as follows (in thousands):

			September 1
	Year Ended		through
	December 31, 2013		December 31, 2012
Beginning balance	$	104,434	$	105,344
Loss from unconsolidated affiliates		(3,516)		(1,325)
Accretion of basis difference		575		—
Capitalized drilling costs obligation paid		303		415
Ending balance	$	101,796	$	104,434

Summarized financial information for Piceance Energy is as follows (in thousands):

	December 31, 2013		December 31, 2012
Assets
Current assets	$	5,901	$	6,275
Non-current assets		454,402		460,991
Current liabilities		(13,040)		(11,826)
Non-current liabilities		(96,738)		(94,369)

	Year Ended		September 1 through
	December 31, 2013		December 31, 2012
	100%		100%
Oil, natural gas and natural gas liquids     revenues	$	61,091	$	19,391
Loss from operations		(6,765)		(2,095)
Net loss		(10,546)		(3,975)

The net loss for the year ended December 31, 2013 includes $26.6 million and $770 thousand in DD&A expense and losses on derivative instruments, respectively. The net loss for the period from September 1 through December 31, 2012 include $8.5 million and $917 thousand of DD&A expense and losses on derivative instruments, respectively.

At December 31, 2013 and 2012, our equity in the underlying net assets of Piceance Energy exceeded the carrying value of our investment by approximately $15.1 million and $15.9 million, respectively. This difference arose due to lack of control and marketability discounts and we attributed it to natural gas and oil properties and will amortize the difference over 15 years based on the estimate of proved reserves at the date Piceance Energy was formed.