Discontinued Operations

12 Months Ended

Dec. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

3. Discontinued Operations

On February 22, 2013, the Company closed the sale of Carrizo UK, including it’s 15% non-operated working interest and certain overriding royalty interests in the Huntington Field discovery, to a subsidiary of Iona Energy Inc. (“Iona Energy”). Net proceeds received from the sale were approximately $144.1 million, which represents an agreed-upon price of $184.0 million, including the assumption and repayment by Iona Energy of the $55.0 million of borrowings outstanding as of the closing date under Carrizo UK’s senior secured multicurrency credit facility, less net purchase price adjustments (primarily related to working capital) and deferred consideration. The Company recognized a pre-tax gain of approximately $37.3 million, net of transaction costs and a $30.5 million accrual for estimated future obligations related to the sale. By the end of the third quarter of 2013, the Company had received the deferred consideration of $18.5 million, in accordance with the sale and purchase agreement, as amended.

The Company’s current liabilities of discontinued operations of $10.9 million and long-term liabilities of discontinued operations of $17.3 million as of December 31, 2013 relate to estimated future obligations related to the sale. See “Note 2. Summary of Significant Accounting Policies-Use of Estimates” for further discussion of estimates and assumptions that may affect the reported amounts of assets and liabilities related to the sale of Carrizo UK.

As a result of the sale of Carrizo UK, the Company reclassified the balances associated with our U.K. North Sea operations from held for sale as of December 31, 2012 to discontinued operations as of December 31, 2013.

The following table summarizes the amounts included in net income (loss) from discontinued operations, net of income taxes presented in the consolidated statements of income for the years ended December 31, 2013, 2012 and 2011:

	For the Years Ended December 31,
	2013			2012			2011
	(In thousands)
OIL AND GAS REVENUES	$	—		$	—		$	—
COSTS AND EXPENSES
General and administrative	916			62			242
Accretion related to asset retirement obligations	36			363			76
TOTAL COST AND EXPENSES	952			425			318
OPERATING LOSS	(952		)	(425		)	(318		)
OTHER INCOME AND EXPENSES
Gain on sale of discontinued operations	37,294			—			—
Adjustment of estimated future obligations	(44		)	—			—
Gain (loss) on derivative instruments, net	(109		)	258			(1,432		)
Interest expense	(253		)	(3,556		)	(1,805		)
Capitalized interest	253			3,556			—
Other income (expense), net	438			(591		)	259
INCOME (LOSS) FROM DISCONTINUED OPERATIONS BEFORE INCOME TAXES	36,627			(758		)	(3,296		)
DEFERRED INCOME TAX (EXPENSE) BENEFIT	(14,802		)	5,068			7,391
NET INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES	$	21,825		$	4,310		$	4,095

Income Taxes

Carrizo UK is a disregarded entity for U.S. income tax purposes. Accordingly, the income tax (expense) benefit reflected above includes the Company’s U.S. (expense) benefit associated with the income (loss) from discontinued operations before income taxes. The related U.S. deferred tax assets and liabilities have been classified as deferred income taxes of continuing operations in the consolidated balance sheets.