Equity Investments

6 Months Ended

Jun. 30, 2012

Equity Investments [Abstract]

Equity Investments

Note 6 – Equity Investments

As of June 30, 2012, we had two investments that we account for using the equity method of accounting: Deepwater Gateway and Independence Hub, both of which are included in our Production Facilities segment.

Deepwater Gateway, L.L.C.In June 2002, we, along with Enterprise Products Partners L.P. (”Enterprise”), formed Deepwater Gateway, each with a 50% interest, to design, construct, install, own and operate a tension leg platform production hub primarily for Anadarko Petroleum Corporation's Marco Polo field in the Deepwater Gulf of Mexico. Our investment in Deepwater Gateway totaled $95.0 million and $96.0 million as of June 30, 2012 and December 31, 2011, respectively (including capitalized interest of $1.4 million at June 30, 2012 and December 31, 2011).Our net distributions from Deepwater Gateway totaled $1.3 million and $3.4 million for the three- and six-month periods ended June 30, 2012, respectively.

Independence Hub, LLC. 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 through the facility commenced in July 2007.Our investment in Independence Hub was $78.5 million and $79.7 million as of June 30, 2012 and December 31, 2011, respectively (including capitalized interest of $4.7 million and $4.9 million at June 30, 2012 and December 31, 2011, respectively). Our net distributions from Independence Hub totaled $0.6 million and $4.8 million in the three- and six-month periods ended June 30, 2012, respectively.

As disclosed in our 2011 Form 10-K, we invested in an Australian joint venture that engaged in well intervention operations in the Southeast Asia region.At December 31, 2011, we fully impaired our investment in that joint venture (Note 7 of 2011 Form 10-K).In the first quarter of 2012, we recorded additional losses totaling $3.8 million related to our continued participation in the joint venture, including a $3.0 million negotiated exit fee.In April 2012, we paid this fee and exited the joint venture.In connection with our exit, we were entitled to 50% of certain of the net assets on hand at the time of our departure.We received approximately $3.7 million of proceeds for our pro rata portion of certain of the joint venture’s net assets, which was recorded as income in “Equity in earnings of investments” during the second quarter of 2012.We are no longer a participant in this Australian joint venture.