Note 11 - Derivative Financial Instruments

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 11 — Derivative Financial Instruments

Objective and Strategies for Using Derivative Instruments:

In connection with the $40.0 million secured debt facility and the $75.0 million secured debt facility, the Company and Credit Suisse agreed that a portion of the arranger fee would be based on the performance of oil prices and be payable at each of the principal repayment dates.  The fee is calculated by multiplying the original principal payment amount by the change in oil prices from the loan origination date and the oil price at each original principal repayment date. Additionally, the fee is capped at 18% of the $40.0 million secured debt facility and 12% of the $75.0 million secured debt facility. The Performance Based Arranger Fee is being accounted for as an embedded financing derivative under ASC Topic 815, “Derivatives and Hedging” and, accordingly, is being recorded at fair value with any mark-to-market changes in value reflected as gain or loss on derivatives in the accompanying Consolidated Statements of Operations.

Derivative Financial Instruments Not Designated as Hedging Instruments

Amount of Gain (Loss) on Derivative Instruments Recognized in Income

	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
	(in thousands)					(in thousands)
Realized derivative gain (loss)	$	(497	)	$	-	$	(1,897	)	$	-
Unrealized derivative gain (loss)		1,774			8,407		2,626			2,039
Total gain (loss) on derivative financial instruments	$	1,277		$	8,407	$	729		$	2,039

See Note-13, “Fair Value Measurements and Disclosures,” for a discussion of methods and assumptions used to estimate the fair values of the Company’s derivative instruments.