Note 3 - INVESTMENT IN GLOBAL

6 Months Ended

Jun. 30, 2011

Available-for-sale Securities [Table Text Block]

(3)           INVESTMENT IN GLOBAL

Investment in Global – Our non-current available-for-sale investment consists of our ownership of approximately 33% of Global’s outstanding ordinary shares.  At June 30, 2011 and December 31, 2010, our investment in Global was equal to the market value of our 11.9 million shares of Global’s ordinary shares as follows (in thousands, except for the share amounts):

	June 30, 2011		December 31, 2010
Shares of Global Stock held by HKN		11,893,462		11,893,462
Closing price of Global Stock	£	0.80	£	1.09
Foreign Currency Exchange Rate		1.6014		1.5524
Market Value of Investment in Global	$	15,141	$	20,136

The foreign currency translation adjustment of approximately $739 thousand and the unrealized loss on investment of $5.7 million for these changes in market value between the two periods were recorded to other comprehensive income in stockholders’ equity during the six months ended June 30, 2011.

Global is listed on the Alternative Investment Market (“AIM”), a market operated by the London Stock Exchange. Lyford Investments Enterprises, Ltd., our largest stockholder, and its affiliates, (collectively the “Lyford Group”), has agreed to acquire approximately 10% of Global’s outstanding shares. Pursuant to the applicable City Code on Takeovers and Mergers (the “Code”), HKN and the Lyford Group (the “Concert Parties”) are deemed to be acting in concert.  As a result of the additional acquisition by the Lyford Group, at least one of the Concert Parties is required under Rule 9 of the Code to make a mandatory cash offer (the “Offer”) to acquire the outstanding shares not owned by the Concert Parties. Strictly for purposes of complying with the Code, we elected to make the Offer at a price of 72 pence per share and announced the Offer on June 16, 2011 pursuant to the Code and the rules of the AIM exchange.

We would not have elected to make the Offer without the Rule 9 requirement, and do not anticipate that a significant number of Global shares will be tendered pursuant to the Offer. If the Offer is fully accepted, we will be required to pay approximately $18 million in cash.