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Note 4 - Inventory

9 Months Ended

Sep. 30, 2013

Note 4 — Inventory

Inventory consists primarily of crude oil, tubular goods, accessories and spare parts for production equipment, stated at the lower of average cost or market.

The Company maintains crude oil inventories in storage vessels until the inventory quantities are at a sufficient level to make a delivery to the refinery in Talara, Peru. Oil inventory is stated at the lower of average cost or market value. Cost is determined on a weighted average basis based on production costs.

Below is a summary of inventory as of September 30, 2013 and December 31, 2012:

	September 30, 2013		December 31, 2012
	(in thousands)
Tubular goods, accessories and spare parts	$	16,426	$	18,343
Crude oil		1,171		1,508
Inventory	$	17,597	$	19,851

	September 30, 2013		December 31, 2012
Crude oil (barrels)		16,133		17,876
Crude oil (cost per barrel)	$	72.58	$	84.34

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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