Discontinued Operations

9 Months Ended

Sep. 30, 2012

Discontinued Operations

Discontinued Operations

Note 4 Discontinued Operations

Assets held for sale included the following:

(In thousands)	September 30,2012		December 31, 2011
Assets Held for Sale
Oil and Gas	$	394,710	$	385,414
Other Rig Services	9,524		16,086
Assets Held for Sale	$	404,234	$	401,500

Our condensed statements of income (loss) from discontinued operations for the three and nine months ended September 30, 2012 and 2011 were as follows:

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	2012			2011			2012			2011
	(In thousands)
Operating revenues and Earnings (losses) from unconsolidated affiliates
Oil and Gas (1)	$	12,859		$	10,630		$	19,079		$	116,046
Other Rig Services (2)	$	8,334		$	9,341		$	18,750		$	21,180
Income (loss) from Oil and Gas discontinued operations:
Income (loss) from discontinued operations	$	5,826		$	(20,167	)	$	(2,095	)	$	42,746
Gain (loss) on sale of wholly owned assets	3,662			—			39,772			39,944
Less: income tax expense (benefit)	(1,604		)	(6,189		)	2,623			(14,752		)
Income (loss) from Oil and Gas discontinued operations, net of tax	$	11,092		$	(13,978	)	$	35,054		$	97,442
Income (loss) from Other Rig Services discontinued operations: (2)
Income (loss) from discontinued operations	$	2,199		$	2,336		$	(3,320	)	$	(1,197	)
Gain (loss) on sale of assets	(2,554		)	—			(7,796		)	—
Less: income tax expense (benefit)	(89		)	584			(2,783		)	(300		)
Income (loss) from Other Rig Services discontinued operations, net of tax	$	(266	)	$	1,752		$	(8,333	)	$	(897	)

(1)Includes approximately $85 million of equity in earnings during the nine months ended September 30, 2011 for our proportionate share of Remora’s net income, inclusive of the gains recognized for asset sales during the first nine months of 2011.

(2)Represents our aircraft logistics operations in Canada included in our Other Rig Services operating segment.

In April 2012, we sold our remaining wholly owned oil and gas business in Colombia to an unrelated third party for a cash purchase price of $72.6 million, which resulted in a pre-tax gain of approximately $48.5 million. This business was included in our assets held for sale as part of our Oil and Gas operating segment.

In May 2012, we sold some of our U.S. wholly owned oil and gas assets in the Fayetteville Shale, Floyd Shale, and Barnett Shale areas to unrelated third parties for cumulative cash receipts of $5.7 million, which did not result in any gain or loss.  In September 2012, we sold additional assets from our U.S. wholly owned oil and gas business for $7.3 million, which resulted in a gain of approximately $3.7 million. These assets were included in our assets held for sale as part of our Oil and Gas operating segment. Based on current market conditions, we adjusted the carrying value of our U.S. wholly owned oil and gas business in the second quarter of 2012 to reflect our assessment of its current fair value.

Our contracts with pipeline companies include pipeline transmission commitments in the Horn River Basin.  During the year ended December 31, 2011, we evaluated current production levels, natural gas prices and the anticipated sales cycle related to the sale of properties corresponding to these commitments.  As a result, we recorded liabilities for excess pipeline capacity. At September 30, 2012, we recorded liabilities of $92.2 million, of which $68.5 million is included in accrued liabilities and $23.7 million is included in other long-term liabilities. At December 31, 2011, we recorded liabilities of $125.7 million, of which $54.3 million is included in accrued liabilities and $71.4 million is included in other long-term liabilities. These amounts represent our best estimate of the excess capacity of the pipeline, based upon the estimated sales date of the properties, as compared to the contractual commitments. Our commitments beyond December 31, 2013 could approximate $274.8 million if the related properties are not sold or developed. Decreases in actual production, natural gas prices or a change in the estimated sales date could result in future charges related to excess capacity of the pipeline that may materially impact our results of operations.

Based on current market conditions, we adjusted the carrying value of our aircraft logistics assets by $7.8 million in 2012 to reflect our assessment of its current fair value.