Investment in Laramie Energy, LLC

3 Months Ended

Mar. 31, 2017

Equity Method Investments and Joint Ventures [Abstract]

Note 3—Investment in Laramie Energy, LLC

We have a 42.3% ownership interest in Laramie Energy. Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco Counties, Colorado. We acquired our equity interest in Laramie Energy as a result of (1) the contribution of certain natural gas and oil interests to Laramie Energy in conjunction with our corporate reorganization in August 2012 and (2) cash contributions of $27.5 million in 2015 and $55.0 million in 2016.

Laramie Energy has a $400 million revolving credit facility secured by a lien on its natural gas and crude oil properties and related assets with a borrowing base currently set at $210 million. As of March 31, 2017, the balance outstanding on the revolving credit facility was approximately $121 million. We are guarantors of Laramie 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, Laramie Energy is generally prohibited from making future cash distributions to its owners, including us.

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



	Three Months Ended March 31, 2017
Beginning balance	$	108,823
Equity earnings from Laramie	7,415
Accretion of basis difference	1,331
Ending balance	$	117,569

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



	March 31, 2017		December 31, 2016
Current assets	$	10,084	$	12,199
Non-current assets	654,719		655,022
Current liabilities	41,336		58,067
Non-current liabilities	181,746		186,631



	Three Months Ended March 31,
	2017		2016
Natural gas and oil revenues	$	40,612	$	14,693
Income (loss) from operations	1,163		(11,124		)
Net income (loss)	17,528		(2,579		)

Laramie Energy's net income for the three months ended March 31, 2017 includes $13.3 million of depreciation, depletion, and amortization ("DD&A") and $24.2 million of unrealized gain on derivative instruments. Laramie Energy's net loss for the three months ended March 31, 2016 includes $7.6 million of DD&A and $5.9 million of unrealized gain on derivative instruments.

At March 31, 2017 and December 31, 2016, our equity in the underlying net assets of Laramie Energy exceeded the carrying value of our investment by approximately $66.5 million and $67.8 million, respectively. This difference arose due to lack of control and marketability discounts and an other-than-temporary impairment of our equity investment in Laramie Energy in 2015. We attributed this difference to natural gas and crude oil properties and are amortizing the difference over 15 years based on the estimated timing of production of proved reserves.