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Investment in Laramie Energy, LLC
 9 Months Ended
Sep. 30, 2020
Equity Method Investments and Joint Ventures [Abstract]  
Investment in Laramie Energy, LLC Investment in Laramie Energy, LLC
As of September 30, 2020, we had a 46.0% ownership interest in Laramie Energy. Laramie Energy is focused on producing natural gas in Garfield, Mesa, and Rio Blanco Counties, Colorado.
Laramie Energy has a $400 million revolving credit facility with a borrowing base currently set at $200.9 million that is secured by a lien on its natural gas and crude oil properties and related assets. As of September 30, 2020, the balance outstanding on the revolving credit facility was approximately $200.0 million. We are guarantors of Laramie Energy’s credit facility, with recourse limited to the pledge of our equity interest in 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. On April 23, 2020, Laramie Energy extended the credit facility from its original maturity date of December 15, 2020 to December 15, 2021.
At March 31, 2020, we conducted an impairment evaluation of our investment in Laramie Energy because of (i) the global economic impact of the COVID-19 pandemic, (ii) an increase in the weighted-average cost of capital for energy companies, and (iii) continuing declines in natural gas prices through the first quarter of 2020. Based on our evaluation, we determined that the estimated fair value of our investment in Laramie Energy was $1.9 million, compared to a carrying value of $47.2 million at March 31, 2020. The fair value estimate was determined using a discounted cash flow analysis based on natural gas forward strip prices as of March 31, 2020 for the years 2020 and 2021 of the forecast, and a blend of forward strip pricing and third-party analyst pricing for the years 2022 through 2028. Other significant inputs used in the discounted cash flow analysis included proved and unproved reserves information, forecasts of operating expenditures, and the applicable discount rate. As a result, we recorded an other-than temporary impairment charge of $45.3 million in Equity earnings (losses) from Laramie Energy, LLC on our condensed consolidated statement of operations for the three months ended March 31, 2020.
The change in our equity investment in Laramie Energy is as follows (in thousands):
 
Nine Months Ended September 30, 2020
Beginning balance
$
46,905

Equity earnings from Laramie Energy (1)
(1,611
)
Impairment of our investment in Laramie Energy
(45,294
)
Ending balance
$
—


______________________________________________________
(1)
As of June 30, 2020, we have discontinued the application of the equity method of accounting for our investment in Laramie Energy because the book value of such investment has been reduced to zero.
Summarized financial information for Laramie Energy is as follows (in thousands):
 
September 30, 2020
 
December 31, 2019
Current assets
$
23,808

 
$
23,367

Non-current assets
366,610

 
393,575

Current liabilities
23,714

 
229,687

Non-current liabilities
291,138

 
85,287

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2020
 
2019
 
2020
 
2019
Natural gas and oil revenues
$
28,257

 
$
38,967

 
$
86,515

 
$
150,161

Loss from operations
(3,443
)
 
(10,028
)
 
(10,773
)
 
(4,490
)
Net loss
(12,643
)
 
(12,586
)
 
(26,418
)
 
(18,139
)

Laramie Energy’s net loss for the three and nine months ended September 30, 2020 includes $9.0 million and $28.3 million of depreciation, depletion, and amortization (“DD&A”) and $5.9 million and $7.6 million of unrealized losses on derivative instruments, respectively. Laramie Energy’s net loss for the three and nine months ended September 30, 2019 includes $20.7 million and $63.1 million of DD&A and $4.3 million of unrealized losses and $6.8 million of unrealized gains on derivative instruments, respectively.