Note 7 - Affiliates Balances

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

(7) AFFILIATES BALANCES

We maintained the following balances with our unconsolidated affiliates:

(In thousands)	September 30, 2020		December 31, 2019
Due from affiliates:
Sonatide (Angola)	$	45,627	$	89,246
DTDW (Nigeria)		20,065		36,726
		65,692		125,972
Due to affiliates:
Sonatide (Angola)	$	33,290	$	31,475
DTDW (Nigeria)		20,065		18,711
		53,355		50,186
Net due from affiliates	$	12,337	$	75,786

Amounts due from Sonatide

Amounts due from Sonatide represent cash received by Sonatide from customers and due to us, amounts due from customers that are expected to be remitted to us by Sonatide and costs incurred by us on behalf of Sonatide.

	Nine Months
	Ended
(In thousands)	September 30, 2020
Due from Sonatide at December 31, 2019	$	89,246
Revenue earned by the company through Sonatide		34,378
Less amounts received from Sonatide		(27,761	)
Less amounts used to offset due to Sonatide obligations (A)		(8,145	)
Affiliate credit loss impairment expense		(41,500	)
Other		(591	)
Total due from Sonatide at September 30, 2020	$	45,627

(A) We reduced the respective due from affiliates and due to affiliates balances each period through netting transactions based on agreement with the joint venture.

The amounts due from Sonatide are denominated in U.S. dollars; however, the underlying third-party customer payments to Sonatide were satisfied, in part, in Angolan kwanzas.  In late 2019, we were informed that, as part of a broad privatization program, Sonangol, our partner in Sonatide, intends to seek to divest itself from the Sonatide joint venture.

In the second quarter of 2020 Sonatide declared a $35.0 million dividend.  On June 22, 2020, Sonangol received $17.8 million and we received $17.2 million.  All of our share of the dividend is reflected as dividend income from unconsolidated company in the consolidated statement of operations because (i) our investment in the Sonatide joint venture had previously been written down to zero, (ii) the distributions are not refundable and (iii) we are not liable for the obligations of or committed to provide financial support to the Sonatide joint venture.  In addition, as a result of the aforementioned dividend payment, the cash balances of the joint venture were significantly reduced and we determined that, as a result, a significant portion of our net due from Sonatide balance was compromised.

After offsetting the amounts due to Sonatide, the net amount due from Sonatide at September 30, 2020 was approximately $12.3 million. Sonatide had approximately $8.9 million of cash on hand (approximately $1.0 million denominated in Angolan kwanzas) at September 30, 2020 plus approximately $12.9 million of net trade accounts receivable to satisfy the net due from Sonatide. Given prior discussions with our partner regarding how the net losses from the devaluation of certain Angolan kwanza denominated accounts should be shared, we continue to evaluate our net due from Sonatide balance for possible additional impairment in future periods based in part on available liquidity held by Sonatide. In the nine months ended  September 30, 2020, we recorded $41.5 million in credit loss impairment expense.

Amounts due to Sonatide

Amounts due to Sonatide represent commissions payable and other costs paid by Sonatide on our behalf.

	Nine Months
	Ended
(In thousands)	September 30, 2020
Due to Sonatide at December 31, 2019	$	31,475
Plus additional commissions payable to Sonatide		3,240
Plus amounts paid by Sonatide on behalf of the company		6,763
Less amounts used to offset due from Sonatide obligations (A)		(8,145	)
Other		(43	)
Total due to Sonatide at September 30, 2020	$	33,290

(A) We reduced the respective due from affiliates and due to affiliates balances each period through netting transactions based on agreement with the joint venture.

Sonatide Operations

Sonatide’s principal earnings are from the commissions paid by us to the joint venture for company vessels chartered in Angola. In addition, Sonatide owns two vessels that may generate operating income and cash flow.

Company operations in Angola

Vessel revenues generated by our Angolan operations, percent of consolidated vessel revenues, average number of company owned vessels and average number of stacked company owned vessels of our Angolan operations for the periods indicated were as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Revenues of Angolan operations (in thousands)	$	10,660		$	11,534		$	35,086		$	41,194
Percent of consolidated vessel revenues		12	%		10	%		12	%		11	%
Number of company owned vessels in Angola		24			31			26			33
Number of stacked company owned vessels in Angola		8			14			9			14

Amounts due from DTDW (Nigeria)

We own 40% of the DTDW joint venture in Nigeria.  Our partner, who owns 60%, is a Nigerian national.  DTDW owns one offshore service vessel and has long term debt of $4.7 million which is secured by the vessel and guarantees from the DTDW partners. We also operate company owned vessels in Nigeria for which our partner receives a commission.  As of September 30, 2020, we had no company owned vessels operating in Nigeria and the DTDW owned vessel was not employed.  At the beginning of 2020 we had expected that we would be operating numerous vessels in Nigeria, but in the second quarter of 2020 the COVID-19 pandemic and resulting oil price reduction caused our primary customer in Nigeria to eliminate all planned operations for 2020.  As a result, the near-term cash flow projections indicate that DTDW does not have sufficient funds to meet its obligations to us or to the holder of its long-term debt.  Therefore, we recorded affiliate credit loss impairment expense for the nine months ending September 30, 2020 totaling $12.1 million.  In addition, based on our analysis we have determined that DTDW will be unable to pay its debt obligation and the debt will not be satisfied by liquidating the vessel and, as a result, we recorded additional impairment expense of $2.0 million for our expected share of the obligation guarantee during the nine  months ended September 30, 2020.