Note 3 - Vessel Acquisitions and Dispositions

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

(3) VESSEL ACQUISITIONS AND DISPOSITIONS

Interest is capitalized in connection with the construction of vessels. During the three and six months ended June 30, 2016, we capitalized $0.7 million and $1.7 million of interest, respectively. During the three and six months ended June 30, 2015, we capitalized $1.3 million and $2.5 million of interest, respectively.

In May 2016, we sold a vessel in our North Sea region for $1.4 

million and recognized a loss on sale $5.9 

million which is included in our second quarter 2016 results. In July 2016, we sold two vessels in our Southeast Asia region for a combined $3.6 million and do not expect to recognize a significant gain or loss with respect to such sales in the third quarter of 2016.

At December 31, 2015, we had two vessels under construction in the U.S. that were significantly delayed. In March 2016, we resolved certain matters under dispute with the shipbuilder and reset the contract schedules so that we would take delivery of the first vessel in mid-2016 and the second vessel in mid-2017, at which time a final payment of $26.0 million would be due.  We took delivery of the first of these vessels during the second quarter of 2016. Under the settlement, we can elect not to take delivery of the second vessel and forego the final payment, in which case the shipbuilder will retain the vessel.

We have a vessel under construction in Norway that was scheduled to be completed and delivered during the first quarter of 2016; however, in the fourth quarter of 2015, we amended our contract with the shipbuilder to delay delivery of the vessel until January 2017. Concurrently, in order to delay the payment of a substantial portion of the construction costs, we agreed to pay monthly installments through May 2016 totaling 92.2 million NOK (or approximately $11.0 million) and to pay a final installment on delivery in January 2017 of 195.0 million NOK (or approximately $23.3 million at June 30, 2016).

The following tables illustrate the details of vessels under construction, vessels sold and vessels added:

Vessels Under Construction as of June 26, 2016
Construction Yard	Region	Type (1)	Expected Delivery	Length (feet)		BHP (4)		DWT (5)		Expected Cost
										(millions)
Simek	N. Sea	LgPSV	Q1 2017		304		11,935		4,700	$	60.0

Note: Final cost may differ due to foreign currency fluctuations.

Vessel Additions Since December 31, 2015
Vessel	Region	Type (1)	Year Built	Length (feet)		BHP (4)		DWT (5)		Month Delivered
Hercules	Americas	LgPSV	2016		286		10,960		5,300	Jun-16

Vessels Disposed of Since December 31, 2015
Vessel	Region	Type (2)(3)	Year Built	Length (feet)		BHP (4)		DWT (5)		Month Disposed
Highland Spirit	N. Sea	SpV	1998		202		6,000		1,620	May-16
Sea Intrepid	SEA	SmAHTS	2005		193		5,150		1,500	Jul-16
Sea Guardian	SEA	SmAHTS	2006		193		5,150		1,500	Jul-16

(1)

LgPSV - Large Platform Supply Vessel

(2)

SpV - Special Purpose Vessel

(3)

SmAHTS - Small Anchor Handler

(4)

BHP - Brake Horsepower

(5)

DWT - Deadweight Tons