Derivative Instruments And Hedging Activities

12 Months Ended

Dec. 31, 2013

Derivative Instruments And Hedging Activities [Abstract]

Derivative Instruments And Hedging Activities

Note 16 — Derivative Instruments and Hedging Activities

Derivatives designated as hedging instruments are as follows (inthousands): 

	As of December 31, 2013			As of December 31, 2012
	Balance Sheet		Fair	Balance Sheet		Fair
	Location		Value	Location		Value
Asset Derivatives:
Interest rate swaps	Other assets, net	$	446	Other assets, net	$	-
		$	446		$	-
Liability Derivatives:
Foreign exchange contracts	Accrued liabilities	$	1,905	Accrued liabilities	$	-
Interest rate swaps	Accrued liabilities		746	Accrued liabilities		-
Foreign exchange contracts	Other non-current liabilities		13,166	Other non-current liabilities		-
		$	15,817		$	-

Derivatives that were not designated as hedging instruments are as follows (inthousands): 

	As of December 31, 2013			As of December 31, 2012
	Balance Sheet		Fair	Balance Sheet		Fair
	Location		Value	Location		Value
Asset Derivatives:
Oil contracts	Other current assets	$	-	Other current assets	$	5,800
Foreign exchange contracts	Other current assets		69	Other current assets		146
		$	69		$	5,946
Liability Derivatives:
Oil contracts	Accrued liabilities	$	-	Accrued liabilities	$	15,777
Interest rate swaps	Accrued liabilities		-	Accrued liabilities		489
Interest rate swaps	Other non-current liabilities		-	Other non-current liabilities		32
		$	-		$	16,298

As a result of the announcement in December2012 of the sale of ERT, we de-designated all of our remaining oil and natural gas derivative contracts as hedging instruments.  In addition, under the terms of our former credit agreement (Note7), we were required to use a portion of the proceeds from the sales of ERT, the Caesar and the Express to make payments to reduce our indebtedness.  Because of the probability that the former term loan debt would be totally repaid before the expiration of our then existing interest rate swaps, we also concluded that those swaps no longer qualified as cash flow hedges.  At December31, 2012, we recorded the mark-to-market adjustments for these derivatives to reflect the changes in their fair values and to recognize amounts previously recorded in accumulated other comprehensive income (loss) and related deferred taxes into earnings.  The mark-to-market adjustments related to our commodity derivative contracts and interest rate swaps are reflected in “Loss on commodity derivative contracts” and “Other income (expense), net”, respectively, in the accompanying consolidated statements of operations.  In February2013, we settled all of our remaining commodity derivative contracts and then existing interest rate swap contracts for payments of approximately $22.5 million and $0.6 million, respectively.

In January2013, we entered into foreign currency exchange contracts to hedge through September2017the foreign currency exposure associated with the Grand Canyon charter payments ($104.6 million) denominated in Norwegian kroner (NOK591.3 million).  In February2013, we entered into similar foreign currency exchange contracts for the Grand Canyon II and Grand Canyon III charter payments ($100.4 million and $98.8 million, respectively) denominated in Norwegian kroner (NOK594.7 million and NOK595.0 million, respectively), through July2019 and February2020, respectively.  These contracts currently qualify for hedge accounting treatment.  All of our remaining foreign exchange contracts are not accounted for as hedge contracts and changes in their fair value are marked-to-market in earnings in each reporting period.

In September2013, we entered into interest rate swap contracts to fix the interest rate on $148.1 million of our Term Loan debt.  These monthly contracts began in October2013 and extend through October2016.  These contracts are accounted for under hedge accounting.

The following tables present the impact that derivative instruments designated as cash flow hedges had on our accumulated comprehensive income (loss) and our consolidated statements of operations for the years ended December31, 2013,  2012  and 2011 (inthousands).  The amount of any ineffectiveness associated with our cash flow hedges was immaterial for the years ended December31, 2013, 2012 and 2011. 

		Gain (Loss) Recognized in OCI
		on Derivatives, Net of Tax
		(Effective Portion)
		Year Ended December 31,
		2013		2012		2011
Foreign exchange contracts	$	(9,796)	$	-	$	-
Oil and natural gas commodity contracts		-		(12,860)		28,749
Interest rate swaps		(195)		(81)		1,294
	$	(9,991)	$	(12,941)	$	30,043

			Gain (Loss) Reclassified from
	Location of Gain (Loss)		Accumulated OCI into Income
	Reclassified from		(Effective Portion)
	Accumulated OCI into Income		Year Ended December 31,
	(Effective Portion)		2013		2012		2011
Oil and natural gas commodity contracts	Income from discontinued operations, net of tax	$	-	$	3,184	$	(21,659)
Interest rate swaps	Net interest expense		(152)		(523)		(2,010)
Foreign exchange contracts	Cost of sales		(1,324)		-		-
		$	(1,476)	$	2,661	$	(23,669)

The following table presents the impact that derivative instruments not designated as hedges had on our consolidated statement of operations for the years ended December31, 2013,  2012 and 2011 (inthousands): 

			Gain (Loss) Recognized
	Location of Gain (Loss)		in Income on Derivatives
	Recognized in Income		Year Ended December 31,
	on Derivatives		2013		2012		2011
Oil and natural gas commodity contracts	Income from discontinued operations, net of tax	$	-	$	5,550	$	-
Oil and natural gas commodity contracts	Loss on commodity derivative contracts		(14,113)		(10,507)		-
Interest rate swaps	Other expense, net		(86)		(567)		-
Foreign exchange contracts	Other expense, net		(630)		411		249
		$	(14,829)	$	(5,113)	$	249