Business Combinations

12 Months Ended

Dec. 31, 2012

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Note 3 – Business Combinations

On December 23, 2011, we entered into a Sale and Purchase Agreement (the “Purchase Agreement”), through our wholly owned subsidiary EEUK, with ConocoPhillips (U.K.) Limited, ConocoPhillips Petroleum Limited and ConocoPhillips (U.K.) Lambda Limited, subsidiaries of ConocoPhillips (collectively, the “Sellers”), to acquire their interest in three producing U.K. oil fields in the Central North Sea.

On May 31, 2012, we closed the Alba field portion of the acquisition, which consisted of an additional 23.43% interest in the Alba field. This increased our total working interest in the Alba field to 25.68%. The Alba Acquisition was closed for aggregate cash consideration of approximately $229.6 million.

Upon the closing of the Alba Acquisition, the net proceeds from the offering of our 2018 Notes were released from escrow. We used approximately $205 million of the net proceeds from the sale of the Senior Notes due 2018 together with approximately $24 million of borrowings under our Revolving Credit Facility with Cyan, as administrative agent and the other lenders party thereto, to fund the cash consideration for the acquisition of the Alba field portion of the COP Acquisition. Additional information on these related financing transactions is discussed in Note 9.

The acquisition of the additional interest in the Alba field was accounted for using the business combination method. The following summarizes the allocation of the purchase price for the Alba Acquisition:

Purchase Price		$	255,400
Purchase Price adjustments for estimated after-tax cash flows from the acquired asset and
	interest costs from effective date of January 1, 2011 to closing		(25,823)
Total purchase price		$	229,577
Allocation of purchase price:
	Property and equipment	$	186,801
	Goodwill		50,878
	Current assets		24,632
	Current liabilities		(12,815)
	Deferred tax liability		(5,818)
	Other long-term liabilities		(14,101)
Total purchase price		$	229,577

Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from assets acquired that could not be individually identified and separately recognized. The assessments of the fair values of oil and gas properties acquired were based on projections of expected future net cash flows, discounted to present value.

The following table sets forth unaudited pro forma condensed combined financial and operating data which are presented to give effect to the Alba acquisition as if it had occurred January 1, 2011. The information does not purport to be indicative of actual results, if any of these transactions had been in effect for the periods indicated, or future results.

	Year Ended December 31,
		2012		2011
Revenues	$	291,575	$	318,476
Net income (loss) to common shareholders	$	(95,245)	$	(131,881)
Net Income (loss) per share - basic and diluted	$	(2.24)	$	(3.67)

Revenues and income from operations associated with the acquired interest in the Alba field for the period from May 31, 2012 through December 31, 2012 were $ 119.7 million and $ 13.7 million, respectively.

After substantial effort and extensions, we and the Sellers were unable to reach the unanimous agreement and consent required to transfer the interests in the two remaining U.K. oil fields due to failure to agree on certain commercial terms related to the future timing and amount of collateral required to be posted for future decommissioning costs.

As a result of the parties being unable to reach agreement to enable the transfers to occur, the Purchase Agreement terminated in accordance with its terms on December 14, 2012. As previously disclosed, we paid a $10 million deposit in connection with the acquisition of the interests in thetwo remaining fields, which ConocoPhillips retained.