Predecessor's Unconsolidated Investment In Ute Energy, LLC

12 Months Ended

Dec. 31, 2012

Predecessor's Unconsolidated Investment In Ute Energy, LLC [Abstract]

Predecessor's Unconsolidated Investment In Ute Energy, LLC

NOTE 16 – PREDECESSOR’S UNCONSOLIDATED INVESTMENT IN UTE ENERGY, LLC

Ute Energy, LLC (“Ute”), a Delaware limited liability company, was formed on February 2, 2005 for the purpose of developing the mineral and surface estate of the Ute Indian Tribe by participating in oil and gas exploration and development, as well as the construction and operation of gas gathering and transportation facilities. Ute’s properties are located on the Uintah and Ouray Reservation in northeastern Utah. On July 9, 2007, the Predecessor initially acquired an interest in Ute and accounts for the investment using the equity method of accounting.

There were no impairments during the period from January 1, 2010 to December 21, 2010.

In March 2010, as part of the wider recapitalization of Ute, the Predecessor exchanged its 2,929,471 redeemable units for 2,929,471 common units and was issued an additional 175,126 redeemable units. This share-for-share exchange resulted in a gain of $4.1 million. The non-cash recapitalization converted certain of the redeemable units into Class A common units at a valuation of $10 per unit, with the remaining 175,126 redeemable units that will accrue a return equal to 12% per annum, being retained by the Predecessor. The overall recapitalization resulted in a decrease in the Predecessor’s common unit class ownership from 25% to 23.8%.

The Predecessor’s equity in earnings of Ute was $3.8 million for the period of January 1, 2010 through December 21, 2010.

The following table shows summarized financial information of the Predecessor’s investment in Ute for the period January 1 to December 21, 2010:


	January 1 to
	December 21,
	2010
Revenues	$	37,818
Operating expenses		(27,071)
Operating profit (loss)		10,747
Interest expense		(2,192)
Other income/(expense)		7,163
Net income (loss)	$	15,718

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

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