Note 4 - Investment in an Unconsolidated Company

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

NOTE

4

— INVESTMENT IN AN UNCONSOLIDATED COMPANY

Unconsolidated investments consist of the following:

	September 30,		December 31,
	2018		2017
	(Dollars in thousands)
Sarulla	$	67,739	$	34,084

The Sarulla Project

The Company holds a

12.75%

equity interest in a consortium that developed the

330

MW Sarulla geothermal power plant project in Tapanuli Utara, North Sumatra, Indonesia. The Sarulla project is comprised of

three

separately constructed

110

MW units, the most recent of which,

NIL

2,

was completed in

April 2018.

The Sarulla project is owned and operated by the consortium members under the framework of a joint operating contract and energy sales contract that were both executed on

April 4, 2013

.

Under the joint operating contract, PT Pertamina Geothermal Energy, the concession holder for the project, provided the consortium with the right to use the geothermal field, and under the energy sales contract, PT PLN, the state electric utility, is the off-taker at Sarulla for a period of

30

years.

During the

three

and

nine

months ended

September 30, 2018,

the Company made additional cash equity investments in the Sarulla project of approximately

$0

and

$3.8

million, respectively, for a total of

$62.0

million since inception.

The Sarulla consortium entered into interest rate swap agreements with various international banks, effective as of

June 4, 2014,

and accounted for the interest rate swap as a cash flow hedge upon which changes in the fair value of the hedging instrument, relative to the effective portion, are recorded in other comprehensive income. The Company’s share of such gains (losses) recorded in other comprehensive income (loss) are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
	(Dollars in thousands)				(Dollars in thousands)
Change, net of deferred tax, in unrealized gains (losses) in respect of the Company’s share in derivative instruments of unconsolidated investment	$	1,012	$	618	$	4,175	$	271

The related accumulated loss recorded by the Company in other comprehensive income (loss) as of

September 30, 2018

is

$0.9

million.

As further described above under the heading “New accounting pronouncement effective in the

nine

-month period ended

September 30, 2018”

in Note

2

to the condensed consolidated financial statements, the Company adopted ASC

606,

Revenue from Contracts with Customers, on

January 1, 2018.

The impact of the adoption of this standard on its investment in an unconsolidated company amounted to

$24.0

 million at

January 1, 2018.

This impact was a result of the unconsolidated company’s variable consideration related to the construction of its power plant for which, under the new guidance, is probable that a significant reversal in the amount of cumulative revenue recognized will

not

occur when the uncertainty is resolved. The Company adopted the new standard using the modified retrospective approach with a

one

-time cumulative adjustment to the opening balance of retained earnings of approximately

$24.0

million at

January 1, 2018,

the date of initial application.