EARNINGS PER SHARE

Earnings per share is calculated based on income from continuing and discontinued operations less any income attributable to the noncontrolling interest. Income attributable to noncontrolling interests represents third party limited partner unitholders' interests in the earnings of our consolidated subsidiary, Rose Rock. Rose Rock allocates net income to its limited partners based on the distributions pertaining to the current period's available cash as defined by Rose Rock's partnership agreement. After adjusting for the appropriate period's distributions, the remaining undistributed earnings or excess distributions over earnings, if any, are allocated to Rose Rock's general partner, limited partners and participating securities in accordance with the contractual terms of Rose Rock's partnership agreement and as further prescribed under the two-class method. Incentive distribution rights do not participate in undistributed earnings.

Basic earnings (loss) per share (“Basic EPS”) is calculated based on the weighted average shares outstanding during the period. Diluted earnings (loss) per share (“Diluted EPS”) includes the dilutive effect of warrants and unvested equity compensation awards.

The following summarizes the calculation of basic earnings (loss) per share for the three months and nine months ended September 30, 2013 and 2012 (in thousands, except per share amounts):



	Three Months Ended September 30, 2013									Three Months Ended September 30, 2012
	Continuing Operations			Discontinued Operations			Net			Continuing Operations			Discontinued Operations			Net
Income	$	3,137		$	(2	)	$	3,135		$	(167	)	$	(265	)	$	(432	)
less: Income attributable to noncontrolling interests	5,054			—			5,054			2,336			—			2,336
Numerator	$	(1,917	)	$	(2	)	$	(1,919	)	$	(2,503	)	$	(265	)	$	(2,768	)
Common stock issued and to be issued pursuant to Plan of Reorganization	41,400			41,400			41,400			41,400			41,400			41,400
Weighted average common stock outstanding issued under compensation plans and warrant exercises	1,128			1,128			1,128			549			549			549
Denominator	42,528			42,528			42,528			41,949			41,949			41,949
Basic earnings (loss) per share	$	(0.05	)	$	—		$	(0.05	)	$	(0.06	)	$	(0.01	)	$	(0.07	)



	Nine Months Ended September 30, 2013						Nine Months Ended September 30, 2012
	Continuing Operations		Discontinued Operations		Net		Continuing Operations		Discontinued Operations			Net
Income	$	59,148	$	65	$	59,213	$	9,377	$	(456	)	$	8,921
less: Income attributable to noncontrolling interests	14,429		—		14,429		7,915		—			7,915
Numerator	$	44,719	$	65	$	44,784	$	1,462	$	(456	)	$	1,006
Common stock issued and to be issued pursuant to Plan of Reorganization	41,400		41,400		41,400		41,400		41,400			41,400
Weighted average common stock outstanding issued under compensation plans and warrant exercises	874		874		874		530		530			530
Denominator	42,274		42,274		42,274		41,930		41,930			41,930
Basic earnings (loss) per share	$	1.06	$	—	$	1.06	$	0.03	$	(0.01	)	$	0.02

The following summarizes the calculation of diluted earnings (loss) per share for the three months and nine months ended September 30, 2013 and 2012 (in thousands, except per share amounts):



	Three Months Ended September 30, 2013									Three Months Ended September 30, 2012
	Continuing Operations			Discontinued Operations			Net			Continuing Operations			Discontinued Operations			Net
Income	$	3,137		$	(2	)	$	3,135		$	(167	)	$	(265	)	$	(432	)
less: Income attributable to noncontrolling interests	5,054			—			5,054			2,336			—			2,336
Numerator	$	(1,917	)	$	(2	)	$	(1,919	)	$	(2,503	)	$	(265	)	$	(2,768	)
Common stock issued and to be issued pursuant to Plan of Reorganization	41,400			41,400			41,400			41,400			41,400			41,400
Weighted average common stock outstanding issued under compensation plans and warrant exercises	1,128			1,128			1,128			549			549			549
Effect of dilutive securities	—			—			—			—			—			—
Denominator	42,528			42,528			42,528			41,949			41,949			41,949
Diluted earnings (loss) per share	$	(0.05	)	$	—		$	(0.05	)	$	(0.06	)	$	(0.01	)	$	(0.07	)



	Nine Months Ended September 30, 2013						Nine Months Ended September 30, 2012
	Continuing Operations		Discontinued Operations		Net		Continuing Operations		Discontinued Operations			Net
Income	$	59,148	$	65	$	59,213	$	9,377	$	(456	)	$	8,921
less: Income attributable to noncontrolling interests	14,429		—		14,429		7,915		—			7,915
Numerator	$	44,719	$	65	$	44,784	$	1,462	$	(456	)	$	1,006
Common stock issued and to be issued pursuant to Plan of Reorganization	41,400		41,400		41,400		41,400		41,400			41,400
Weighted average common stock outstanding issued under compensation plans and warrant exercises	874		874		874		530		530			530
Effect of dilutive securities	270		270		270		252		252			252
Denominator	42,544		42,544		42,544		42,182		42,182			42,182
Diluted earnings (loss) per share	$	1.05	$	—	$	1.05	$	0.03	$	(0.01	)	$	0.02

During the three months and nine months ended September 30, 2013, we recorded expenses of $4.8 million and $37.0 million, respectively, related to the change in fair value of the warrants. During the three months and nine months ended September 30, 2012, we recorded expenses of $9.5 million and $17.1 million related to the change in fair value of the warrants. Because the mark to market valuation of the warrants resulted in losses, the warrants would have been antidilutive and, therefore, were not included in the computation of diluted earnings per share.

As we experienced losses from continuing operations for the three months ended September 30, 2013 and 2012, the equity based compensation (described in Note 10) did not cause any dilution.