Note 3 - INVESTMENT IN GLOBAL

9 Months Ended

Sep. 30, 2011

Available-for-sale Securities [Table Text Block]

(3)           INVESTMENT IN GLOBAL

Our non-current available-for-sale investment consists of our ownership of approximately 34% of Global’s outstanding ordinary shares. At September 30, 2011 and December 31, 2010, our investment in Global was equal to the market value of Global’s ordinary shares as follows (in thousands, except for the share amounts):

	September 30, 2011		December 31, 2010
Shares of Global Stock held by HKN		12,127,768		11,893,462
Closing price of Global Stock	£	0.86	£	1.09
Foreign Currency Exchange Rate		1.5581		1.5524
Market Value of Investment in Global	$	16,156	$	20,136

The foreign currency translation adjustment of approximately $234 thousand and the unrealized loss on investment of $4.5 million for these changes in market value between the two periods were recorded to other comprehensive income in stockholders’ equity during the nine months ended September 30, 2011.

Global is listed on the Alternative Investment Market (“AIM”), a market operated by the London Stock Exchange. During August 2011, Lyford Investments Enterprises, Ltd., our largest shareholder, and its affiliates, (collectively the “Lyford Group”), purchased 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”) were deemed to be acting in concert. As a result of the acquisition by the Lyford Group, at least one of the Concert Parties were 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 the Offer commenced on September 9, 2011 and closed on September 30, 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. During the quarter, we placed approximately $18.3 million into a restricted cash account which was used to purchase Global shares that were tendered as a result of the offer. At the closing date of the offer, approximately 234 thousand shares were tendered for approximately $261 thousand. The remaining balance of approximately $18 million in restricted cash was returned to us during October 2011 after the tendered shares were transferred to HKN.