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Investment in American Shale Oil, LLC | 9 Months Ended
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Sep. 30, 2013
Investment In American Shale Oil, Llc [Abstract] |
Investment in American Shale Oil, LLC | Note 5—Investment in American Shale Oil, LLC The Company accounts for its 50% ownership interest in AMSO, LLC using the equity method since the Company has the ability to exercise significant influence over its operating and financial matters, although it does not control AMSO, LLC. AMSO, LLC is a variable interest entity, however, the Company has determined that it is not the primary beneficiary, as the Company does not have the power to direct the activities of AMSO, LLC that most significantly impact AMSO, LLC’s economic performance. AMSO has agreed to fund AMSO, LLC’s expenditures as follows: 20% of the initial $50 million of expenditures, 35% of the next $50 million in approved expenditures and 50% of approved expenditures in excess of $100 million. AMSO has also agreed to fund 40% of the costs of the one-time payment for conversion of AMSO, LLC’s research, development and demonstration lease to a commercial lease, in the event AMSO, LLC’s application for conversion is approved. The remaining amounts are to be funded by Total S.A. (“Total”). As of September 30, 2013, the cumulative contributions of AMSO and Total to AMSO, LLC were $68.0 million. AMSO’s allocated share of the net loss of AMSO, LLC, which is currently 35%, is included in “Equity in the net loss of AMSO, LLC” in the accompanying consolidated statements of operations. The following table summarizes the change in the balance of the Company’s investment in AMSO, LLC:
|  | Nine Months Ended September 30, |
|  | 2013 |  |  | 2012 |
|  | (in thousands) |
Balance, beginning of period |  | $ | 242 |  |  | $ | (685 | )
Capital contributions |  |  | 2,345 |  |  |  | 2,925 |
Equity in the net loss of AMSO, LLC |  |  | (2,607 | ) |  |  | (2,252 | )
Balance, end of period |  | $ | (20 | ) |  | $ | (12 | )
At September 30, 2013, the liability for the equity loss in AMSO, LLC was included in “Accrued expenses” in the consolidated balance sheet. At December 31, 2012, the investment in AMSO, LLC was included in “Other assets” in the consolidated balance sheet. AMSO’s share of AMSO, LLC’s approved budget for the year ending December 31, 2013 is $4.2 million, although the Company currently anticipates that total expenditures for 2013 will be below budget. At September 30, 2013, AMSO had funded $2.3 million of its share of the 2013 budget. In October 2013, AMSO contributed $0.4 million to AMSO, LLC. The Company anticipates that AMSO’s total contributions for 2013 will not exceed $2.7 million. AMSO is obligated to fund its share of the expenditures it approves in accordance with the agreement between the parties. Either Total or AMSO may terminate its obligations to make capital contributions and withdraw as a member of AMSO, LLC. Although, subject to certain exceptions, AMSO and Total are not obligated to make additional contributions beyond their respective shares, they could dilute or forfeit their ownership interests in AMSO, LLC if they fail to contribute their respective shares of additional funding. The agreements with Total provide for varying consequences for AMSO’s failure to fund its share at different stages of the project, including dilution of AMSO’s interest in AMSO, LLC or paying interest to Total for expenditures they fund on behalf of AMSO. Additionally, even if AMSO were to withdraw its interest in AMSO, LLC, it will remain liable for its share of expenditures for safety and environmental reclamation related to events occurring prior to its withdrawal. AMSO is evaluating its options with respect to funding AMSO, LLC during 2014, and funding of less than its full share would result in dilution of its interest in AMSO, LLC. At September 30, 2013, the Company’s maximum exposure to additional loss as a result of its required investment in AMSO, LLC was $1.9 million, based on AMSO, LLC’s 2013 budget. The Company’s maximum exposure to additional loss could increase based on the situations described above. The maximum exposure at September 30, 2013 was determined as follows:
|  | (in thousands) |
AMSO’s committed investment in AMSO, LLC based on the 2013 budget |  | $ | 4,249 |
Less: cumulative capital contributions to AMSO, LLC |  |  | (2,345 | )
Less: liability for equity loss in AMSO, LLC at September 30, 2013 |  |  | (20 | )
Maximum exposure to additional loss |  | $ | 1,884 |
Summarized unaudited statements of operations of AMSO, LLC are as follows:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
|  | (in thousands) |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
General and administrative |  | $ | 162 |  |  | $ | 132 |  |  | $ | 435 |  |  | $ | 389 |
Research and development |  |  | 1,758 |  |  |  | 1,320 |  |  |  | 7,055 |  |  |  | 6,046 |
Loss from operations |  |  | 1,920 |  |  |  | 1,452 |  |  |  | 7,490 |  |  |  | 6,435 |
Other income |  |  | — |  |  |  | — |  |  |  | 41 |  |  |  | — |
Net loss |  | $ | (1,920 | ) |  | $ | (1,452 | ) |  | $ | (7,449 | ) |  | $ | (6,435 | )

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32847-111569 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32787-111569 + Details
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