Note 9 - STOCKHOLDERS’ EQUITY

9 Months Ended

Sep. 30, 2011

Stockholders' Equity Note Disclosure [Text Block]

(9)           STOCKHOLDERS’ EQUITY

No changes in the number of preferred shares occurred during the nine months ended September 30, 2011. The changes in the number of common shares held during the nine months ended September 30, 2011 are as follows:

	Number of Common
Description	Shares
Balance as of December 31, 2010		10,026,098
Shares issued for preferred stock dividends		74
Shares issued for purchase of additional BWI ownership interest		1,245,373
Shares issued related to the Rights Offering		7,500,000
Shares repurchased and retired		(331,859	)
Balance as of September 30, 2011		18,439,686

In April 2011, the previously announced rights offering was fully subscribed for, and upon its closing we issued 7.5 million shares of our common stock at the subscription price of $2.00 per share. The net proceeds to the Company from the sale of the shares were approximately $14.7 million.

Treasury Stock – At September 30, 2011 and December 31, 2010, we held no shares of treasury stock. During the nine months ended September 30, 2011, we purchased and retired approximately 332 thousand shares of our common stock. As of September 30, 2011, approximately 126 thousand shares remained available for repurchase under our repurchase program.

Additional Paid in Capital - Additional paid in capital increased by $17 million during the period ended September 30, 2011. This increase consists of $14.7 million related to our rights offering and $3.1 million from the purchase of additional interests in BWI, offset by an $815 thousand decrease due to the purchase and retirement of our common stock.

Our purchase of additional interests in BWI in June 2011 in exchange for the issuance of 1.2 million restricted shares of our common stock resulted in an increase in additional paid in capital. The restricted shares of common stock that we issued were valued at $2.3 million. The difference between the value of the common stock we issued and the resulting decrease to noncontrolling interest equity was recorded in additional paid-in capital.

The following table discloses the effects of changes in HKN’s ownership interest in BWI on HKN's equity.

	Nine months ended September 30, 2011
Net loss attributable to HKN, Inc.	$	(718	)
Transfer from the noncontrolling interest
Increase in HKN's paid-in capital for additional BWI interest purchased		3,135
Net transfers from noncontrolling interest		3,135
Change from net loss attributable to
HKN, Inc. and transfers from noncontrolling interest	$	2,417

Noncontrolling Interest – At December 31, 2010, we recorded the noncontrolling interests related to our investment in BWI of 47.91% in our consolidated condensed balance sheet.

In June 2011, HKN purchased an additional 46.08% of the outstanding units of BWI in exchange for the issuance of 1,245,373 restricted shares of our common stock, bringing HKN’s interest in BWI up to 98.17%. Please see Note 2 –“Investment in BriteWater International, LLC” for additional information regarding our investment in BWI.

The changes in the BWI noncontrolling interest during the nine months ended September 30, 2011 were as follows (in thousands):

Noncontrolling interest at beginning of period	$	3,591
Losses attributable to noncontrolling interest		(326	)
Decrease in noncontrolling ownership due to purchase of additional interest		(3,167	)
Noncontrolling interest at end of period	$	98