Note 12 - RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2011

Related Party Transactions Disclosure [Text Block]

(12)         RELATED PARTY TRANSACTIONS

In September 2010, we issued the Global Note Receivable. See Note 4 – “Senior Secured Global Note Receivable” for details of the agreement. As of September 30, 2011, the outstanding principal amount of the Global Note Receivable was $5 million and Global paid $131 thousand and $392 thousand in interest under the note receivable agreement during the three and nine months ended September 30, 2011, respectively. In addition to our ownership of 34% of Global’s ordinary shares, one of our directors serves as a director of Global.

As a result of the Global mandatory offer, we incurred legal and regulatory costs. A portion of these costs are to be reimbursed by the Concert Parties. Approximately $106 thousand is due from these related parties and are classified as Accounts Receivable from affiliates in our consolidated condensed balance sheet. For additional information on the Global mandatory offer, please see Note 3 – “Investment in Global”.

As described in Note 2 – “Investment in BriteWater International, LLC”, at September 30, 2011, we hold a 98.17% ownership interest in BWI. In June 2011, HKN purchased an additional 46.08% of the outstanding units of BWI from Quadrant in exchange for the issuance of 1,245,373 restricted shares of our common stock. Quadrant is an affiliate of the Quasha Family. Mr. Alan Quasha is the Chairman of the Board of Directors of HKN.