Investment in Piceance Energy

6 Months Ended

Jun. 30, 2015

Equity Method Investments and Joint Ventures [Abstract]

Note 3—Investment in Piceance Energy

We have a 34.0% ownership interest in Piceance Energy, a joint venture entity focused on producing natural gas in Garfield and Mesa Counties, Colorado. Piceance Energy has a $400 million revolving credit facility secured by a lien on its natural gas and oil properties and related assets with a borrowing base currently set at $110 million. As of June 30, 2015, the balance outstanding on the revolving credit facility was approximately $48.5 million. We are guarantors of Piceance Energy’s credit facility, with recourse limited to the pledge of our equity interest of our wholly-owned subsidiary, Par Piceance Energy Equity, LLC. Under the terms of its credit facility, Piceance Energy is generally prohibited from making future cash distributions to its owners, including us.

On March 9, 2015, we amended the Limited Liability Company Agreement of Piceance Energy LLC ("LLC Agreement") and made a cash capital contribution of $13.8 million to Piceance Energy. On May 29, 2015, we made an additional cash capital contribution of $13.8 million. As a result of our contributions to Piceance Energy, our ownership interest increased from 33.34% to 34.0%.

The change in our equity investment in Piceance Energy is as follows (in thousands):



	Six Months Ended June 30, 2015
Beginning balance	$	104,657
Equity loss from Piceance Energy	(5,186		)
Accretion of basis difference	410
Capital contributions	27,529
Ending balance	$	127,410

Summarized financial information for Piceance Energy is as follows (in thousands):



	June 30, 2015		December 31, 2014
Current assets	$	6,396	$	13,168
Non-current assets	481,955		468,379
Current liabilities	16,347		17,103
Non-current liabilities	55,118		107,087



	Three Months Ended June 30, 2015			Three Months Ended June 30, 2014		Six Months Ended June 30, 2015			Six Months Ended June 30, 2014
Natural gas and oil revenues	$	10,486		$	20,725	$	21,223		$	40,968
Income (loss) from operations	(8,207		)	1,989		(15,286		)	5,598
Net income (loss)	(9,329		)	1,815		(15,409		)	724

The net loss for the three and six months ended June 30, 2015 includes $8.4 million and $15.8 million of depreciation, depletion, and amortization ("DD&A") expense and $3.7 million and $4.4 million of unrealized losses on derivative instruments, respectively. The net income for the three and six months ended June 30, 2014 includes $8.6 million and $15.3 million of DD&A and $1.7 million and $157 thousand of unrealized losses on derivative instruments, respectively.

As of June 30, 2015 and December 31, 2014, our equity in the underlying net assets of Piceance Energy exceeded the carrying value of our investment by approximately $14.3 million and $14.7 million, respectively. This difference arose due to lack of control and marketability discounts. We attributed this difference to natural gas and oil properties and are amortizing the difference over 15 years based on the estimated proved reserves at the date Piceance Energy was formed.