Note 10 - SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2011

Segment Reporting Disclosure [Text Block]

 (10)           SEGMENT INFORMATION

We engage primarily in oil and gas development and production activities in the onshore and offshore Gulf Coast regions of Louisiana as well as coalbed methane exploration and development activities in Indiana and Ohio.  Our coalbed methane and oil and gas operations efforts are managed and evaluated by us as one operation. We operate primarily through traditional ownership of mineral interests in the states in which we operate.

We have a separate operating segment to reflect the consolidation of our investment in BWI. BWI holds patents and equipment for OHSOL technology which can be used to purify oilfield emulsions by breaking and separating the emulsions into oil, water and solids and to reduce the environmental impact for disposition of residual fuels and waste materials. Please see Note 2 –“Investment in BriteWater International, LLC” for further discussion.

Our accounting policies for each of our operating segments are the same as those for our consolidated condensed financial statements. Intersegment interest income and intersegment expenses between us and BWI under the BWI Loan have been eliminated in consolidation. There were no intersegment sales or transfers for the periods presented.

Our financial information, expressed in thousands, for each of our operating segments for the three and six months ended June 30, 2011 and 2010 is as follows:

	For the Three Months Ended June 30, 2011
	HKN			BWI			Eliminations			Consolidated
Oil and gas revenues	$	2,658		$	-		$	-		$	2,658
Interest and other income		569			-			(38	)		531
Oil and gas operating expenses		(1,986	)		-			-			(1,986	)
General and administrative expenses		(701	)		(398	)		-			(1,099	)
Depreciation, depletion, amortization and accretion		(535	)		(66	)		-			601
Interest expense and other losses		(12	)		(38	)		38			(12	)
Segment loss from continuing operations	$	(7	)	$	(502	)	$	-		$	(509	)
Capital Expenditures	$	428		$	-		$	-		$	428
Total Assets	$	85,307		$	8,867		$	(7,432	)	$	86,742

	For the Three Months Ended June 30, 2010
	HKN			BWI			Eliminations			Consolidated
Oil and gas revenues	$	2,718		$	-		$	-		$	2,718
Interest and other income		355			-			(25	)		330
Oil and gas operating expenses		(1,951	)		-			-			(1,951	)
General and administrative expenses		(590	)		(107	)		-			(697	)
Benefit for doubtful accounts		1			-			-			1
Depreciation, depletion, amortization and accretion		(715	)		-			-			(715	)
Interest expense and other losses		-			(25	)		25			-
Gain on sale of investment		1,878			-			-			1,878
Segment income (loss) from continuing operations	$	1,696		$	(132	)	$	-		$	1,564
Capital Expenditures	$	825		$	69		$	-		$	894
Total Assets	$	64,325		$	8,970		$	(2,754	)	$	70,541

	For the Six Months Ended June 30, 2011
	HKN			BWI			Eliminations			Consolidated
Oil and gas revenues	$	5,017		$	-		$	-		$	5,017
Interest and other income		1,076			-			(76	)		1,000
Oil and gas operating expenses		(3,879	)		-			-			(3,879	)
General and administrative expenses		(1,462	)		(596	)		-			(2,058	)
Provision for doubtful accounts		(6	)		-			-			(6	)
Depreciation, depletion, amortization and accretion		(1,122	)		(117	)		-			(1,239	)
Interest expense and other losses		(24	)		(76	)		76			(24	)
Segment loss from continuing operations	$	(400	)	$	(789	)	$	-		$	(1,189	)
Capital Expenditures	$	623		$	-		$	-		$	623
Total Assets	$	85,307		$	8,867		$	(7,432	)	$	86,742

	For the Six Months Ended June 30, 2010
	HKN			BWI			Eliminations			Consolidated
Oil and gas revenues	$	5,553		$	-		$	-		$	5,553
Interest and other income		814			-			(46	)		768
Oil and gas operating expenses		(3,284	)		-			-			(3,284	)
General and administrative expenses		(1,175	)		(318	)		-			(1,493	)
Benefit for doubtful accounts		21			-			-			21
Depreciation, depletion, amortization and accretion		(1,494	)		-			-			(1,494	)
Interest expense and other losses		(42	)		(46	)		46			(42	)
Equity in losses of Spitfire		(20	)		-			-			(20	)
Gain on sale of investment		1,887			-			-			1,887
Segment income (loss) from continuing operations	$	2,260		$	(364	)	$	-		$	1,896
Capital Expenditures	$	1,316		$	79		$	-		$	1,395
Total Assets	$	64,325		$	8,970		$	(2,754	)	$	70,541