Equity Method Investments Disclosure

3 Months Ended

Mar. 31, 2015

Equity Method Investments and Joint Ventures [Abstract]

Investment in Piceance Energy

Note 3—Investment in Piceance Energy

We have a 33.7% ownership interest in Piceance Energy, a joint venture operated by Laramie Energy and 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 March 31, 2015, the balance outstanding on the revolving credit facility was approximately $69.5 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. As a result of our contribution to Piceance Energy, our ownership interest increased from 33.34% to 33.7%. Pursuant to the LLC Agreement, we will contribute an additional $13.8 million on May 29, 2015, which is expected to increase our ownership interest to 34.0%.

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

	Three Months Ended   March 31, 2015
Beginning balance	$	104,657
Equity loss from Piceance Energy	(2,032		)
Accretion of basis difference	206
Capital contributions	13,764
Ending balance	$	116,595

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

	March 31, 2015		December 31, 2014
Current assets	$	10,185	$	13,168
Non-current assets	471,837		468,379
Current liabilities	15,320		17,103
Non-current liabilities	77,944		107,087

	Three Months Ended   March 31, 2015			Three Months Ended   March 31, 2014
Natural gas and oil revenues	$	10,737		$	20,243
Income (loss) from operations	(7,079		)	3,609
Net loss	(6,080		)	(1,091		)

 The net loss for the three months ended March 31, 2015 includes $7.4 million and $0.7 million of depreciation, depletion, and amortization ("DD&A") expense and unrealized losses on derivative instruments, respectively. The net loss for the three months ended March 31, 2014 includes $6.7 million and $1.8 million of DD&A expense and unrealized losses on derivative instruments, respectively.

As of March 31, 2015 and December 31, 2014, our equity in the underlying net assets of Piceance Energy exceeded the carrying value of our investment by approximately $14.5 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.