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Investment in American Shale Oil, LLC | 6 Months Ended
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Jun. 30, 2014
Investment In American Shale Oil, LLC [Abstract] |
Investment in American Shale Oil, LLC | Note 4—Investment in American Shale Oil, LLC The Company accounts for its 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. Except as set forth below, AMSO is responsible for funding 20% of the initial $50 million of AMSO, LLC’s expenditures, 35% of the next $50 million in approved expenditures and 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, with the remaining amounts of such expenditures to be funded by Total S.A. (“Total”). All other expenditures are to be borne in proportion to equity ownership. The percentages for expenditures are subject to adjustment in connection with certain changes in the equity ownership of AMSO LLC. As of June 30, 2014, the cumulative contributions of AMSO and Total to AMSO, LLC were $74.0 million. AMSO’s allocated share of the net loss of AMSO, LLC is included in “Equity in the net loss of AMSO, LLC” in the accompanying consolidated statements of operations. AMSO has the right to decide at each capital call whether or not to fund AMSO, LLC, and will make a determination at that time. AMSO did not fund the capital calls for the first, second and third quarters of 2014. Total funded AMSO’s share in an aggregate amount of $2.7 million. Because of AMSO’s decisions not to fund its share of AMSO, LLC’s expenditures, AMSO’s ownership interest in AMSO, LLC was reduced to 44.9% and Total’s ownership interest increased to 55.1%. In addition, AMSO’s share of future funding of AMSO, LLC up to a cumulative $100 million was reduced to 31.4% and Total’s share increased to 68.6%. AMSO is evaluating its options with respect to funding AMSO, LLC during the remainder of 2014, and funding of less than its full share would result in further dilution of its interest in AMSO, LLC. 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. Either Total or AMSO may terminate its obligations to make capital contributions and withdraw as a member of AMSO, LLC. 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. The following table summarizes the change in the balance of the Company’s investment in AMSO, LLC:
|  | Six Months Ended June 30, |
|  | 2014 |  |  | 2013 |
|  | (in thousands) |
Balance, beginning of period |  | $ | (252 | ) |  | $ | 242 |
Capital contributions |  |  | — |  |  |  | 1,825 |
Equity in the net loss of AMSO, LLC |  |  | — |  |  |  | (1,935 | )
Balance, end of period |  | $ | (252 | ) |  | $ | 132 |
At June 30, 2014 and December 31, 2013, the liability for equity loss in AMSO, LLC was included in “Accrued expenses” in the consolidated balance sheet. Because of AMSO’s decisions not to fund its share of AMSO, LLC’s expenditures, AMSO, LLC allocates its net loss beginning January 2014 as follows: the first $7.9 million of losses are allocated to Total, then it allocates any remaining losses proportionately such that AMSO and Total’s capital accounts as a percentage of AMSO, LLC’s total capital equals their ownership interests. At June 30, 2014, the Company’s maximum exposure to additional loss because of its required investment in AMSO, LLC was $0.2 million, based on AMSO, LLC’s budget for the remainder of 2014. The Company’s maximum exposure to additional loss could increase based on the situations described above. The maximum exposure at June 30, 2014 was determined as follows:
|  | (in thousands) |
AMSO’s committed investment in AMSO, LLC based on the budget for the remainder of 2014 |  | $ | 445 |
Less: cumulative capital contributions to AMSO, LLC |  |  | — |
Less: liability for equity loss in AMSO, LLC at June 30, 2014 |  |  | (252 | )
MMaximum exposure to additional loss |  | $ | 193 |
Summarized unaudited statements of operations of AMSO, LLC are as follows:
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
|  | (in thousands) |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
General and administrative |  | $ | 111 |  |  | $ | 124 |  |  | $ | 234 |  |  | $ | 273 |
Research and development |  |  | 2,534 |  |  |  | 2,219 |  |  |  | 4,046 |  |  |  | 5,297 |
Loss from operations |  |  | 2,645 |  |  |  | 2,343 |  |  |  | 4,280 |  |  |  | 5,570 |
Other income |  |  | — |  |  |  | 41 |  |  |  | — |  |  |  | 41 |
Net loss |  | $ | (2,645 | ) |  | $ | (2,302 | ) |  | $ | (4,280 | ) |  | $ | (5,529 | )

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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 32 -URI http://asc.fasb.org/extlink&oid=35687916&loc=d3e32787-111569 Reference 4: 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=35687916&loc=d3e32847-111569 + Details
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