Note 3 - Vessel Acquisitions and Dispositions

9 Months Ended

Sep. 30, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

(3)     VESSEL ACQUISITIONS AND DISPOSITIONS

In the first quarter of 2014, we acquired a vessel we had previously managed, a 2012 built large platform supply vessel (“LgPSV”), for $30.9 million. This vessel was added to our North Sea fleet. In the third quarter of 2014, we sold two of our Southeast Asia region vessels and recorded a net gain of $5.5 million.

Interest is capitalized in connection with the construction of vessels. During the three and nine month periods ended September 30, 2014 we capitalized $1.7 million and $6.6 million of interest, respectively. During the three and nine month periods ended September 30, 2013, we capitalized $4.2 million and $10.7 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”). In late 2011, we exercised an option with one of the shipyards to build an additional PSV. The cost of these seven PSVs was approximately $288.0 million. The first five of these vessels were delivered during 2013, a sixth vessel was delivered in February 2014, and the final vessel was delivered during March 2014. In April 2014, we approved the construction of an additional North Sea PSV with an estimated total cost of $60.0 million and an expected delivery date in the fourth quarter of 2015.

In the second quarter of 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 region. In the third quarter of 2012, we signed agreements with another U.S. shipyard (BAE Systems) to build an additional two U.S. flagged PSVs. The total cost of these four PSVs will be approximately $168.0 million. The first of these vessels delivered in the second quarter of 2014. We expect delivery of the remaining three in the first, second, and third quarters 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 have been drawn from escrow as they became due. There is $3.7 million remaining in escrow, which is presented in long-term assets in the balance sheet as of September 30, 2014. Funds in the escrow account are invested in U.S. government securities.

The following tables illustrate the details of the vessels under construction and the vessels added or acquired:

Vessels Under Construction as of October 20, 2014
Construction Yard	Region	Type(1)	Expected Delivery	Length (feet)		BHP(2)		DWT(3)		Expected Cost
										(millions)
Thoma-Sea	Americas	LgPSV	Q1 2015		271		9,990		3,600	$	36
BAE Systems	Americas	LgPSV	Q2 2015		286		10,960		5,300	$	48
BAE Systems	Americas	LgPSV	Q3 2015		286		10,960		5,300	$	48
Simek	North Sea	LgPSV	Q4 2015		304		11,935		4,700	$	60

Vessel Additions Since December 31, 2013
Vessel	Region	Type(1)	Year Built	Length (feet)		BHP(2)		DWT(3)		Month Delivered/ Acquired
North Cruys	N. Sea	LgPSV	2014		304		11,935		4,700	Feb-14
Highland Princess	N. Sea	LgPSV	2014		246		8,487		3,900	Mar-14
Polaris	Americas	LgPSV	2014		271		9,990		3,600	Apr-14

Vessels Acquired Since December 31, 2013
			Year	Length				Month
Vessel	Region	Type(1)	Built	(feet)		BHP(2)	DWT(3)	Aquired
Highland Duke	N. Sea	LgPSV	2012		246	7,483	3,133	Feb-14

Vessels Disposed of Since December 31, 2013
			Year	Length				Month
Vessel	Region	Type(1)	Built	(feet)		BHP(2)	DWT(3)	Disposed
Highland Piper	SEA	LgPSV	1996		221	5,450	3,115	Jul-14
Highland Legend	SEA	PSV	1986		194	3,600	1,442	Sep-14

⁽¹⁾  LgPSV - Large Platform Supply Vessel

  PSV - Platform Supply Vessel

⁽²⁾ BHP - Brake Horsepower

⁽³⁾ DWT - Deadweight Tons