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Investments in Non-Consolidated Affiliates
 12 Months Ended
Dec. 31, 2011
Investments in Non-Consolidated Affiliates [Abstract]  
Investments in Non-Consolidated Affiliates

7. Investments in Non-Consolidated Affiliates

Investments in affiliates that are not controlled by Exterran but where we have the ability to exercise significant influence over the operations are accounted for using the equity method. Our equity method investments are primarily comprised of entities that own, operate, service and maintain compression and other related facilities.

Our ownership interest and location of each equity method investee at December 31, 2011 are as follows:

 

 

                 
    Ownership
Interest		     Location   Type of Business

PIGAP II

     30.0 %    Venezuela   Gas Compression Plant

El Furrial

     33.3 %    Venezuela   Gas Compression Plant

We also had a 35.5% ownership interest in each of the SIMCO Consortium and Harwat that we sold in November 2009. The SIMCO Consortium and Harwat operate a water injection plant in Venezuela. The summarized financial information in the table below includes the investees listed above as well as the SIMCO Consortium and Harwat through their disposition date in November 2009.

 

Summarized balance sheet information for investees accounted for by the equity method is as follows (on a 100% basis, in thousands):

 

 

                 
    December 31,  
    2011     2010  

Current assets

   $ 928     $ 1,200  

Non-current assets

     23,700       24,421  

Current liabilities, including current debt

     71,512       101,463  

Long-term debt payable

     873       1,203  

Other non-current liabilities

     29,055       29,665  

Owners’ deficit

     (76,812 )      (106,710 ) 

Summarized combined earnings information for these entities consisted of the following amounts (on a 100% basis, in thousands):

 

 

                         
    Years Ended December 31,  
    2011     2010     2009  

Revenues

   $ —       $ —       $ 8,381  

Operating income (loss)

     31,651       41,582       (400,727 ) 

Net income (loss)

     28,269       43,013       (343,680 ) 

Due to unresolved disputes with its only customer, PDVSA, SIMCO sent a notice to PDVSA in the fourth quarter of 2008 stating that SIMCO might not be able to continue to fund its operations if some of its outstanding disputes were not resolved and paid in the near future. On February 25, 2009, the Venezuelan National Guard occupied SIMCO’s facilities and during March 2009 transitioned the operation of SIMCO, including the hiring of SIMCO’s employees, to PDVSA.

During the first quarter of 2009, we determined that the expected proceeds from our investment in the SIMCO Consortium and Harwat would be less than the book value of our investment and, as a result, that the fair value of our investment had declined and the loss in value was not temporary. Therefore, we recorded an impairment charge in the first quarter of 2009 of $6.5 million, which is reflected as a charge in equity in loss of non-consolidated affiliates in our consolidated statements of operations.

Due to lack of payments from their only customer, PDVSA, PIGAP II and El Furrial each sent a notice of default to PDVSA in April 2009. PIGAP II’s and El Furrial’s debt was in technical default triggered by past due payments from their sole customer under their related services contracts. As a result of PDVSA’s nonpayment, in March 2009 these joint ventures recorded impairments on their assets. Accordingly, we reviewed our expected cash flows related to these two joint ventures and determined in March 2009 that the fair value of our investment in PIGAP II and El Furrial had declined and that we had a loss in our investment that was not temporary. Therefore, we recorded an impairment charge of $90.1 million ($81.7 million net of tax) to write-off our investments in PIGAP II and El Furrial. These impairment charges are reflected as a charge in equity in loss of non-consolidated affiliates in our consolidated statements of operations. In May 2009, PDVSA assumed control over the assets of PIGAP II and El Furrial and transitioned the operations of PIGAP II and El Furrial, including the hiring of their employees, to PDVSA. Our non-consolidated affiliates reserve and will continue to reserve the right to seek full compensation for any and all expropriated assets and investments under all applicable legal regimes, including investment treaties and customary international law, as well as to seek resolution through direct discussions with Venezuela and/or PDVSA, which could result in us recording a gain on our investment in future periods. However, we are unable to predict what, if any, compensation we ultimately will receive or when we may receive any such compensation. In this connection, on March 25, 2011, Wilpro Energy Services (El Furrial) Limited and Wilpro Energy Services (PIGAP II) Limited, together with the Netherland’s parent company of our venture partners, filed a request for the institution of an arbitration proceeding against Venezuela with ICSID related to the seized assets and investments, which was registered by ICSID on April 20, 2011.

 

Because the assets and operations of our investments in our remaining non-consolidated affiliates have been expropriated, we currently do not expect to have any meaningful equity earnings in non-consolidated affiliates in the future from these investments, excluding any compensation we may receive related to the expropriation.

We did not receive dividends from our joint ventures in the years ended December 31, 2011, 2010 and 2009.