McMoRan follows the successful efforts method of accounting for its oil and natural gas activities.
Under this method of accounting, all costs associated with oil and gas lease acquisition, successful
exploratory wells and all development wells are capitalized and amortized on a unit-of-production basis
over the remaining life of proved developed reserves and proved reserves on a field basis. Unproved
leasehold costs are capitalized pending the results of exploration efforts. Exploration costs, including
geological and geophysical expenses, exploratory dry holes and delay rentals, are charged to expense
when incurred. Below is summarized financial information of our proportionate share of McMoRan’s
financial position and results of operations (in thousands):
December 31,
2011
2010
Financial Position
(1)
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 217,063 $ 339,176
Noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
711,729
600,217
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
133,162
135,511
Noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
251,173
245,198
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 544,457 $ 558,684
Year Ended
December 31, 2011
Results of Operations
(1)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
175,511
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
432
Loss from continuing operations . . . . . . . . . . . . . . . . . .
(2,087)
Net loss applicable to common stock . . . . . . . . . . . . . .
(18,571)
(1) Amounts represent our 31.6% and 32.4% equity ownership in McMoRan as of December 31, 2011 and 2010, respectively.
We acquired our McMoRan investment on December 30, 2010. Our proportionate share of McMoRan’s 2010 results of
operations is not presented because it is insignificant as PXP owned the investment for one day and it is not practicable to
determine one day’s results of operations.
Note 8 — Fair Value Measurements of Assets and Liabilities
Authoritative guidance on fair value measurements defines fair value, establishes a framework for
measuring fair value and stipulates the related disclosure requirements. We follow a three-level
hierarchy, prioritizing and defining the types of inputs used to measure fair value.
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