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INVESTMENTS IN NON-CONSOLIDATED AFFILIATES
 6 Months Ended
Jun. 30, 2012
INVESTMENTS IN NON-CONSOLIDATED AFFILIATES  
INVESTMENTS IN NON-CONSOLIDATED AFFILIATES

6.  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.

 

We own a minority interest in WilPro Energy Services (PIGAP II) Limited (“PIGAP II”) and WilPro Energy Services (El Furrial) Limited (“El Furrial”), joint ventures that provided natural gas compression and injection services in Venezuela. In March 2009, these joint ventures recorded impairments on their assets due to lack of payments from their only customer, PDVSA. 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. 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. In March 2011, PIGAP II and El Furrial, together with the Netherlands’ parent company of our joint 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 in April 2011.

 

In March 2012, PIGAP II and El Furrial completed the sale of their assets to PDVSA Gas, S.A. We received an initial payment of approximately $37.6 million in March 2012, and received an installment payment of $4.7 million in June 2012. We are due to receive an additional approximately $70.0 million in periodic cash payments through the first quarter of 2016. Payments we receive from the sale will be recognized in Equity in income of non-consolidated affiliates in our condensed consolidated statements of operations in the period such payments are received. In connection with the sale of the PIGAP II and El Furrial assets, the WilPro joint ventures and our joint venture partners have agreed to suspend their previously filed arbitration proceeding against Venezuela pending payment in full by PDVSA Gas of the purchase price for the assets.