Deferred Revenue

3 Months Ended

Mar. 31, 2014

Deferred Revenue [Abstract]

Deferred Revenue

Note 4 – Deferred Revenue

For certain of our U.K. fields, we sell production on a monthly basis; however, the production remains in the field’s storage tanks.  The inventory associated with these sales remains on our balance sheet and the revenue is deferred until the production is shipped out of our storage tanks.

In 2013, we entered into two separate forward sale agreements with one of our established purchasers for payments of approximately $22.5 million each.  This effectively hedged a portion of production from our U.K. North Sea assets by locking in pricing for in excess of 200,000 barrels of oil, over a six month delivery period.  Payment for these agreements was received in the first and third quarters of 2013.  The first forward sale commitment was fulfilled in June 2013 and the second forward sale commitment was fulfilled at the end of the first quarter of 2014.  The forward sale liabilities were included in deferred revenue until the purchaser took possession of the product.