Equity Investments

12 Months Ended

Dec. 31, 2011

Equity Investments [Abstract]

Equity Investments

Note 7 — Equity Investments

In June 2002, we formed Deepwater Gateway with Enterprise Products Partners, L.P., in which we each own a 50% interest, to design, construct, install, own and operate a tension leg platform ("TLP") production hub in deepwater of the Gulf of Mexico.  Deepwater Gateway primarily services the Marco Polo field, which is owned and operated by Anadarko Petroleum Corporation.  Our share of the Deepwater Gateway construction costs was approximately $120 million and our investment totaled $96.0 million and $99.8 million as of December 31, 2011 and 2010, respectively, and was included in our Production Facilities business segment.  The investment balance at December 31, 2011 and 2010 included approximately $1.4 million and $1.5 million, respectively, of capitalized interest and insurance paid by us.

In December 2004, we acquired a 20% interest in Independence Hub, an affiliate of Enterprise. Independence Hub owns the Independence Hub platform located in Mississippi Canyon Block 920 in a water depth of 8,000 feet.  First production began in July 2007. Our investment in Independence Hub was $79.7 million and $82.4 million as of December 31, 2011 and 2010, respectively (including capitalized interest of $4.9 million and $5.2 million at December 31, 2011 and 2010, respectively), and was included in our Production Facilities business segment.

We made the following contributions to our equity investments during the years ended December 31, 2011, 2010 and 2009 (in thousands):

		Year Ended December 31,
		2011		2010		2009
Clough Helix Pty Ltd. (see below)	$	2,699	$	8,253	$	—
Other		—		—		1,657
Total	$	2,699	$	8,253	$	1,657

We received the following distributions from our equity investments during the years ended December 31, 2011, 2010 and 2009 (in thousands):

		Year Ended December 31,
		2011		2010		2009
Deepwater Gateway	$	7,600	$	8,125	$	6,750
Independence Hub		18,580		21,615		26,000
Other		—		268		—
Total	$	26,180	$	30,008	$	32,750

In February 2010, we announced the formation of a joint venture with Australian-based engineering and construction company, Clough Limited ("Clough"), to provide a range of subsea services to offshore operators in the Asia Pacific region. The joint venture, then named Clough Helix Pty Ltd, was to perform its services using the Normand Clough, a 118-meter long multi service vessel that is under charter to the joint venture until November 2013.  The joint venture also utilized each member's personnel and equipment to perform its subsea services as provided in the joint venture agreement.   In 2011, our share of the income associated with the Australian joint venture's operations was $2.1 million; while our share of its losses was $3.6 million in 2010, which primarily reflects the cost associated with the commencement of its operations.

In December 2011, the marine construction and offshore engineering operations of Clough were acquired by SapuraCrest Petroleum Berhad ("Sapura").  Sapura acquired Clough's 50% ownership interest in the joint venture in this transaction.  The joint venture is continuing; however, there is now considerable uncertainty on whether the term of the joint venture will continue subsequent to the expiration of the original charter of the Normand Clough in November 2013.   Separately, at December 31, 2011, the limited backlog of work indicated that earnings and resulting cash flow from the joint venture was at best expected to break even during 2012.  Because of these indicators, we conducted an impairment assessment of our investment in the joint venture.  We concluded that the $10.6 million carrying amount of the investment in the joint venture was fully impaired and recorded a $10.6 million other than temporary impairment charge in the accompanying consolidated statements of operations.

The summarized aggregated financial information related to the subsidiaries we record using the  equity investment is as follows (in thousands)

		Year Ended December 31,
		2011		2010		2009
Revenues	$	193,521	$	141,705	$	141,664
Operating income		97,954		93,324		118,566
Net income		93,215		93,005		118,602

		At December 31,
		2011		2010		2009
Current assets	$	39,754	$	25,352	$	18,620
Total assets		591,761		594,645		602,413
Current liabilities		11,012		6,434		415
Total liabilities		27,163		19,695		734

(1)   Results do not include any amounts associated with Cal Dive.  We accounted for our investment in Cal Dive under the equity method from June 10, 2009 to September 23, 2009 (Note 3).