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Note 2 - Vessel Acquisitions and Dispositions

9 Months Ended

Sep. 30, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

(2) VESSEL ACQUISITIONS AND DISPOSITIONS

In January 2013, we sold a vessel that was being held for sale that was not included in our fleet numbers. The net proceeds totaled $0.7 million and there was no gain or loss on the sale. In August 2013, we sold two vessels in our North Sea region for total proceeds of $10.8 million. In September 2013, we sold one vessel in our Americas region for total proceeds of $2.1 million. We recognized a combined gain on sale of $6.0 million for the three vessels sold in the third quarter.

Interest is capitalized in connection with the construction of vessels. During the three and nine month periods ended September 30, 2013 we capitalized $4.2 million and $10.7 million of interest, respectively. During the three and nine month periods ended September 30, 2012, we capitalized $1.6 million and $3.4 million of interest, respectively.

In the third quarter of 2011, the Company approved the initiation of a new-build construction program. We began the program in the North Sea region where we contracted with three shipyards to build a total of six platform supply vessels (“PSVs”). The estimated total cost of these initial six PSVs is $228.0 million. In addition, in late 2011, we exercised an option with one of the shipyards to build an additional PSV at an estimated cost of $60.0 million. The first PSV was delivered on July 9, 2013 at Remontowa Shipyard in Poland. The second PSV was delivered on July 26, 2013 at Simek Shipyard in Norway. The third and fourth PSVs were delivered on September 13, 2013 and September 26, 2013 at Remontowa Shipyard in Poland. The fifth PSV was delivered in October 2013. The remaining two PSVs are scheduled to be delivered in the first quarter of 2014.

In June 2012, we signed an agreement with a U.S. shipyard (“Thoma-Sea”) to build two U.S. flagged PSVs for the U.S. Gulf of Mexico at an estimated total cost of $72.0 million. In July 2012, we signed agreements with another U.S. shipyard to build an additional two U.S. flagged PSVs at an estimated total cost of $96.0 million. We expect deliveries of these vessels in the first, second, and fourth quarters of 2014, and the second quarter of 2015.

During the third quarter of 2012, we placed $52.4 million in escrow related to the two Thoma-Sea new-builds described above and in the table below. Progress payments will be drawn from escrow as they become due. The amount held in escrow is segregated from cash and cash equivalents and is presented in long-term assets on our September 30, 2013 balance sheet. As of September 30, 2013, the total amount held in escrow was $19.6 million. Funds in the escrow account are invested in United States government securities.

The following tables illustrate the details of the vessels added, under construction, and disposed of as indicated.

Vessel Additions Since December 31, 2012
Vessel	Region	Type⁽¹⁾	Year Built	Length (feet)	BHP⁽²⁾	DWT⁽³⁾	Month Delivered

Highland Defender	N. Sea	LgPSV	2013	291	9,574	5,100	Jul-13
North Pomor	N. Sea	LgPSV	2013	304	11,935	4,700	Jul-13
Highland Chieftain	N. Sea	LgPSV	2013	260	9,574	4,000	Sep-13
Highland Guardian	N. Sea	LgPSV	2013	291	9,574	5,100	Sep-13
Highland Knight	N. Sea	LgPSV	2013	246	8,457	3,000	Oct-13

Vessels Under Construction as of October 22, 2013
Construction Yard	Region	Type⁽¹⁾	Expected Delivery	Length (feet)	BHP⁽²⁾	DWT⁽³⁾	Expected Cost
							(millions)
Rosetti Marino	N. Sea	LgPSV	Q1 2014	246	8,457	3,000	$31.0
Simek	N. Sea	LgPSV	Q1 2014	304	11,935	4,700	$60.0
Thoma-Sea	Americas	LgPSV	Q1 2014	271	9,990	3,600	$36.0
Thoma-Sea	Americas	LgPSV	Q2 2014	271	9,990	3,600	$36.0
BAE Systems	Americas	LgPSV	Q4 2014	286	10,960	5,300	$48.0
BAE Systems	Americas	LgPSV	Q2 2015	286	10,960	5,300	$48.0

Note: Final cost may differ due to foreign currency fluctuations

Vessels Disposed of Since December 31, 2012
Vessel	Region	Type⁽¹⁾	Year Built	Length (feet)	BHP⁽²⁾	DWT⁽³⁾	Month Disposed

Clwyd Supporter	N. Sea	SpV	1984	266	10,700	1,350	Jan-13
Highland Champion	N. Sea	LgPSV	1979	265	4,800	3,910	Aug-13
Highland Pride	N. Sea	LgPSV	1992	265	6,600	3,080	Aug-13
Highland Warrior	Americas	LgPSV	1981	265	5,300	2,450	Sep-13

⁽¹⁾ LgPSV - Large Platform Supply Vessel

SpV - Specialty Vessel

⁽²⁾BHP - Brake Horsepower

⁽³⁾DWT - Deadweight Tons

- Definition

The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures.

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