Investment in Equity Method Investees

6 Months Ended

Jun. 30, 2020

Investment in Equity Method Investees [Abstract]

Note 9—Investment in Equity Method Investees

Investment in Shoreditch

On July 17, 2017, the Company’s subsidiary, Genie Energy UK Ltd. (“GEUK”), entered into a definitive agreement with Energy Global Investments Pty Ltd (“EGC”) to launch Shoreditch Energy Limited (“Shoreditch”), a joint venture to offer electricity and natural gas service to residential and small business customers in the U.K., under the trade name Orbit Energy. In three and six months ended June 30, 2020, the Company contributed $1.5 million to Shoreditch, which increased GEUK's total contribution to $9.5 million as of June 30, 2020. The Company owns 77.0% of the outstanding equity of Shoreditch.

EGC has significant participation rights in the management of Shoreditch that limits GEUK’s ability to direct the activities that most significantly impact Shoreditch’s economic performance. GEUK, therefore, accounts for its ownership interest in Shoreditch using the equity method since GEUK has the ability to exercise significant influence over its operating and financial matters, although it does not control Shoreditch.

In 2018, the Company extended a $0.2 million loan to EGC (“EGC Loan”), in connection with EGC’s contribution to Shoreditch. The EGC Loan, which is secured by EGC’s interest in Shoreditch, bears a fixed annual interest rate of 2.0% and is due, together with the principal amount, on September 17, 2023. As of June 30, 2020, the outstanding balance, including accrued interest, of the EGC Loan was $0.2 million.

At June 30, 2020, the net book value of the Company's investment in Shoreditch was nil. There were no other arrangements, events or circumstances that could expose the Company to additional loss, aside from the balance of EGC Loan discussed above.

Summarized unaudited statements of operations of Shoreditch are as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2020		2019			2020		2019
	(in thousands)					(in thousands)
Revenues	$	14,845	$	4,793		$	34,515	$	8,704
Operating expenses:
Cost of revenues		13,795		4,491			31,915		8,191
Selling, general and administrative		2,874		2,662			6,696		4,469
Loss from operations		(1,824)		(2,360	)		(4,096)		(3,956	)
Other		—		—			—		—
Net loss	$	(1,824)	$	(2,360	)	$	(4,096)	$	(3,956	)
Genie’s equity in net loss	$	1,502	$	867		$	1,502	$	1,938

Investment in Atid 613

In September 2018, the Company divested a majority interest in Atid Drilling Ltd. in exchange for a 37.5% interest in a contracting drilling company in Israel ("Atid 613") which the Company accounts for using equity method of accounting.

Summarized unaudited statements of operations of Atid 613 are as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020		2019
	(in thousands)						(in thousands)
Revenues	$	1,528		$	670		$	1,760	$	2,725
Operating expenses		927			1,203			1,860		2,543
Income (loss) from operations		601			(533	)		(100)		182
Other		(13	)		(10	)		(6)		(18)
Net income	$	588			(543	)	$	(106)	$	164
Genie’s equity in net income (loss)	$	224			(204	)	$	(36)	$	70

The Company also entered into a Shareholder Agreement with Atid 613's other shareholders to govern certain issues regarding management of the new company. Under the Shareholder Agreement, among other things, Genie Israel has agreed to make available to Atid 613 working capital financing up to $0.4 million ("Credit Facility"). The credit Facility bears a variable interest rate as defined in the Shareholder Agreement. As of June 30, 2020, the outstanding balance of Credit Facility was nil.

On August 12, 2019, the Company, together with the other shareholders of Atid 613 signed a Funding Agreement to provide aggregate loans to Atid 613 in an amount of up to New Israeli Shekel or NIS 5.1 million (equivalent to $1.5 million at June 30, 2020), including the Company's commitment to extend up to NIS1.9 million (equivalent to $0.5 million at June 30, 2020) of such amount. In August 2019, the Company extended NIS 0.8 million (equivalent to $0.2 million) in loans. The loans which are secured by Atid 613’s assets bore no interest until March 1, 2020 and bear interest at 5.5% for all subsequent periods. At June 30, 2020, there were $0.2 million loan receivables from Atid 613, included in other current assets in the Company's consolidated balance sheet.

At June 30, 2020, the Company’s maximum exposure to loss as a result of its involvement with Atid 613 was the minimal net book value of the investment and $0.2 million of notes receivable, since there were no other arrangements, events or circumstances that could expose the Company to additional loss.