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Note 7 - Affiliates Balances

3 Months Ended

Mar. 31, 2022

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)
		March 31, 2022				December 31, 2021
Due from affiliates:
Angolan joint venture (Sonatide)		$	—			$	49,011
Nigerian joint venture (DTDW)			21,191				21,123
			21,191				70,134
Due to affiliates:
Sonatide		$	—			$	40,432
DTDW			21,191				21,123
			21,191				61,555
Net due from affiliates		$	—			$	8,579

Sonatide Acquisition

In January 2022, we acquired the 51% equity interest in the Sonatide joint venture (Sonatide) owned by our former joint venture partner, pursuant to a Sale and Purchase Agreement between Sonangol Holdings, LDA and us for $11.2 million in cash. This acquisition gives us complete control of our operations in Angola.

The acquisition date was January 3, 2022 (Merger Date). However, we used a convenience date of January 1, 2022 for the acquisition and have recorded activity from the beginning of the first quarter of 2022. Revenues and net loss of Sonatide from the Merger Date included in our consolidated statements of operations were $1.0 million and $0.1 million for the three months ended March 31, 2022, respectively.

The acquisition date fair value of the 49% equity interest in Sonatide held by us was zero and we did not recognize a significant gain or loss as a result of remeasuring to the fair value of our equity interest.

Assets acquired and liabilities assumed in the business combination have been recorded at their estimated fair values as of the Merger Date under the acquisition method of accounting. We have not finalized the fair values of the assets acquired and liabilities assumed. The fair value estimates below are subject to adjustment during the measurement period subsequent to the Merger Date. The estimated fair values of certain assets and liabilities including long-lived assets and contingencies require judgments and assumptions. Adjustments might be made to these estimates during the measurement period and those adjustments could be material.

The provisional amounts for assets acquired and liabilities assumed are based on estimates of their fair values as of the Merger Date and were as follows:

(In Thousands)

Assets
Current assets		$	12,894
Net properties and equipment and other assets			2,908
Total assets			15,802
Liabilities
Current liabilities			283
Other liabilities			2,996
Total liabilities			3,279

Net assets acquired			11,223
Bargain purchase gain		$	1,300

The bargain purchase gain of $1.3 million is included in our consolidated statement of operations for the three months ended March 31, 2022 under the caption “Interest income and other, net.” Business combination related costs were expensed as incurred in general and administrative expense and consisted of various advisory, legal, accounting, valuation and other professional fees which were not material to our consolidated results of operations for the year and three months ended December 31, 2021 and March 31, 2022, respectively.

The unaudited supplemental pro forma results present consolidated information as if the business combination was completed on January 1, 2021. The pro forma results include, among others, (i) a reduction in depreciation expense for adjustments to property and equipment and (ii) a reduction in commission expense previously payable to the joint venture which has been eliminated. The pro forma results do not include any potential synergies or non-recurring charges that may result directly from the business combination. The pro forma revenues and net loss, assuming the acquisition had occurred on January 1, 2021, for the twelve months ended December 31, 2021 were $375.4 million and $129.2 million, respectively.

Amounts due from DTDW

We own 40% of DTDW. Our partner, who owns 60%, is a Nigerian national. DTDW owns one offshore service vessel. We also, from time to time, operate company owned vessels in Nigeria for which our partner receives a commission. As of March 31, 2022, we had no company owned vessels operating in Nigeria and the DTDW owned vessel was not employed. As a result, the near-term cash flow projections indicate that DTDW does not have sufficient funds to meet its obligations to us or its vendors. Based on current situations, operations in Nigeria have been severely impacted and we have effectively ceased activity. We have created a fully reserved position in our consolidated balance sheet to account for our expected liabilities related to certain obligations of the joint venture.