CORENERGY INFRASTRUCTURE TRUST, INC., 10-K/A filed on 3/19/2014
Amended Annual Report
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2013
Feb. 28, 2014
Jun. 28, 2013
Document and Entity Information [Abstract]
 
 
 
Entity Registrant Name
CorEnergy Infrastructure Trust, Inc. 
 
 
Entity Central Index Key
0001347652 
 
 
Document Type
10-K/A 
 
 
Document Period End Date
Dec. 31, 2013 
 
 
Amendment Flag
true 
 
 
Amendment Description
CorEnergy Infrastructure Trust, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to the Annual Report on Form 10-K for the year ended December 31, 2013, which received an official filing date of March 18, 2014 (the “Original Filing”) to include the full version of the annual report and the required exhibits. While attempting to identify and correct an inadvertent error in the XBRL exhibits, mistakes were made in attempting to transmit the Original Filing submission, such that the Company inadvertently transmitted a version of the submission file that did not include the final edits to the Form 10-K or any of the required exhibits. Accordingly, this Amendment No. 1 amends and restates the Original Filing in its entirety to include the selected financial data, management’s discussion and analysis of the financial condition and results of operations, financial statements, exhibits and other information required by Items 1, 1A, 2, 5, 6, 7, 7A, 8 and 15 of Form 10-K. 
 
 
Document Fiscal Year Focus
2013 
 
 
Document Fiscal Period Focus
FY 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Filer Category
Accelerated Filer 
 
 
Entity Public Float
 
 
$ 167,051,416 
Entity Common Stock, Shares Outstanding
 
31,635,537 
 
Consolidated Balance Sheets (USD $)
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Assets
 
 
 
Leased property, net of accumulated depreciation of $12,754,588, $1,131,680, and $1,607,624 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
$ 232,220,618 
$ 243,078,709 
$ 12,995,169 
Other equity securities, at fair value
23,304,321 
19,707,126 
19,866,621 
Cash and cash equivalents
17,963,266 
17,680,783 
14,333,456 
Trading securities, at fair value
4,318,398 
55,219,411 
Property and equipment, net of accumulated depreciation of $2,037,685, $1,751,202, and $1,774,616 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
3,318,483 
3,566,030 
3,589,022 
Escrow receivable
698,729 
698,729 
Accounts receivable
2,068,193 
922,894 
1,570,257 
Lease receivable
711,229 
Intangible lease asset, net of accumulated amortization of $729,847, $413,580, and $437,908 at December 31, 2013, November 30, 2012, and December 31, 2012 respectively
364,924 
656,863 
681,191 
Deferred debt issuance costs, net of accumulated amortization of $572,830, $0 and $16,350 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
1,225,524 
1,520,823 
Deferred lease costs, net of accumulated amortization of $63,272, $0, and $1,967 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
857,190 
912,875 
Hedged derivative asset
680,968 
Income tax receivable
834,382 
Prepaid expenses and other assets
326,561 
598,755 
2,477,977 
Total Assets
283,875,659 
293,661,985 
111,431,833 
Liabilities and Equity
 
 
 
Long-term debt
70,000,000 
70,000,000 
Accounts payable and other accrued liabilities
2,920,267 
4,413,420 
2,885,631 
Lease obligation
20,698 
27,522 
Income tax liability
3,855,947 
Deferred tax liability
5,332,087 
2,396,043 
7,172,133 
Line of credit
81,935 
120,000 
Unearned revenue
2,133,685 
2,370,762 
Total Liabilities
78,334,289 
82,819,793 
12,576,048 
Equity
 
 
 
Warrants, no par value; 945,594 issued and outstanding at December 31, 2013, November 30, 2012, and December 31, 2012 (5,000,000 authorized)
1,370,700 
1,370,700 
1,370,700 
Capital stock, non-convertible, $0.001 par value; 24,156,163 shares issued and outstanding at December 31, 2013, 9,190,667 shares issued and outstanding at November 30, 2012, and 24,140,667 shares issued and outstanding at December 31, 2012 (100,000,000 shares authorized)
24,156 
24,141 
9,191 
Additional paid-in capital
173,441,019 
175,256,675 
91,763,475 
Accumulated retained earnings
1,580,062 
4,209,023 
5,712,419 
Accumulated other comprehensive income
777,403 
Total CorEnergy Equity
177,193,340 
180,860,539 
98,855,785 
Non-controlling Interest
28,348,030 
29,981,653 
Total Equity
205,541,370 
210,842,192 
98,855,785 
Total Liabilities and Equity
$ 283,875,659 
$ 293,661,985 
$ 111,431,833 
Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Statement of Financial Position [Abstract]
 
 
 
Accumulated depreciation, leased property
$ 12,754,588 
$ 1,607,624 
$ 1,131,680 
Accumulated depreciation, property and equipment
2,037,685 
1,774,616 
1,751,202 
Accumulated amortization, intangible lease asset
729,847 
437,908 
413,580 
Accumulated amortization, deferred debt
572,830 
16,350 
Accumulated amortization, deferred lease
$ 63,272 
$ 1,967 
$ 0 
Warrants, par value
$ 0 
$ 0 
$ 0 
Warrants, issued
945,594 
945,594 
945,594 
Warrants, outstanding
945,594 
945,594 
945,594 
Warrants, authorized
5,000,000 
5,000,000 
5,000,000 
Capital stock non-convertible, par value
$ 0.001 
$ 0.001 
$ 0.001 
Capital stock non-convertible, shares issued
24,156,163 
24,140,667 
9,190,667 
Capital stock non-convertible, shares outstanding
24,156,163 
24,140,667 
9,190,667 
Capital stock non-convertible, shares authorized
100,000,000 
100,000,000 
100,000,000 
Consolidated Statements of Income and Comprehensive Income (USD $)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Revenue
 
 
 
 
Lease revenue
$ 857,909 
$ 22,552,976 
$ 2,552,975 
$ 1,063,740 
Sales revenue
868,992 
8,733,044 
8,021,022 
2,161,723 
Total Revenue
1,726,901 
31,286,020 
10,573,997 
3,225,463 
Expenses
 
 
 
 
Cost of sales (excluding depreciation expense)
686,976 
6,734,665 
6,078,102 
1,689,374 
Management fees, net of expense reimbursements
155,242 
2,637,265 
1,046,796 
968,163 
Asset acquisition expenses
64,733 
806,083 
377,834 
638,185 
Professional fees
333,686 
1,678,137 
1,141,045 
548,759 
Depreciation expense
499,357 
11,429,980 
1,118,269 
364,254 
Amortization expense
1,967 
61,305 
Operating expenses
48,461 
924,571 
739,519 
196,775 
Directors’ fees
8,500 
178,196 
85,050 
70,192 
Other expenses
27,500 
580,183 
231,086 
183,674 
Total Expenses
1,826,422 
25,030,385 
10,817,701 
4,659,376 
Operating Income (Loss)
(99,521)
6,255,635 
(243,704)
(1,433,913)
Other Income (Expense)
 
 
 
 
Net distributions and dividend income
2,325 
584,814 
(279,395)
651,673 
Net realized and unrealized gain (loss) on trading securities
(1,769,058)
(251,213)
4,009,933 
2,299,975 
Net realized and unrealized gain (loss) on other equity securities
(159,495)
5,617,766 
16,171,944 
2,283,773 
Other Income
40,000 
Interest expense
(416,137)
(3,288,378)
(81,123)
(36,508)
Total Other Income (Expense)
(2,342,365)
2,662,989 
19,821,359 
5,238,913 
Income (Loss) before income taxes
(2,441,886)
8,918,624 
19,577,655 
3,805,000 
Taxes
 
 
 
 
Current tax expense
3,855,947 
13,474 
29,265 
253,650 
Deferred tax expense (benefit)
(4,776,090)
2,936,044 
7,199,669 
629,207 
Income tax expense (benefit), net
(920,143)
2,949,518 
7,228,934 
882,857 
Net Income (Loss)
(1,521,743)
5,969,106 
12,348,721 
2,922,143 
Less: Net Income (Loss) attributable to non-controlling interest
(18,347)
1,466,767 
Net Income (Loss) attributable to CORR Stockholders
(1,503,396)
4,502,339 
12,348,721 
2,922,143 
Other comprehensive income:
 
 
 
 
Changes in fair value of qualifying hedges attributable to CORR Stockholders
777,403 
Changes in fair value of qualifying hedges attributable to non-controlling interest
181,762 
Net Change in Other Comprehensive Income
959,165 
Total Comprehensive Income (Loss)
(1,521,743)
6,928,271 
12,348,721 
2,922,143 
Less: Comprehensive income attributable to non-controlling interest
1,648,529 
Comprehensive Income (Loss) attributable to CORR Stockholders
$ (1,521,743)
$ 5,279,742 
$ 12,348,721 
$ 2,922,143 
Earnings (Loss) Per Common Share:
 
 
 
 
Basic and Diluted (in dollars per share)
$ (0.10)
$ 0.19 
$ 1.34 
$ 0.32 
Weighted Average Shares of Common Stock Outstanding:
 
 
 
 
Basic and Diluted (in dollars per share)
15,564,861 1
24,149,396 1
9,182,425 1
9,159,809 1
Dividends declared per share (in dollars per share)
$ 0.000 
$ 0.375 
$ 0.440 
$ 0.410 
Consolidated Statements of Equity (USD $)
Total
Capital Stock [Member]
Warrants [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Retained Earnings (Accumulated Deficit) [Member]
Non-Controlling Interest [Member]
Beginning balance at Nov. 30, 2010
$ 95,479,173 
$ 9,147 
$ 1,370,700 
$ 98,444,952 
 
$ (4,345,626)
 
Beginning balance, shares at Nov. 30, 2010
 
9,146,506 
 
 
 
 
 
Net Income (Loss)
2,922,143 
 
 
 
 
2,922,143 
 
Distributions to stockholders sourced as return of capital
(3,755,607)
 
 
(3,755,607)
 
 
 
Reinvestment of distributions to stockholders, shares
 
30,383 
 
 
 
 
 
Reinvestment of distributions to stockholders
252,242 
30 
 
252,212 
 
 
 
Consolidation of wholly-owned subsidiary
(4,471,638)
 
 
741,181 
 
(5,212,819)
 
Comprehensive Income (Loss) attributable to CORR Stockholders
2,922,143 
 
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest
2,922,143 
 
 
 
 
 
 
Ending balance at Nov. 30, 2011
90,426,313 
9,177 
1,370,700 
95,682,738 
 
(6,636,302)
 
Ending balance, shares at Nov. 30, 2011
 
9,176,889 
 
 
 
 
 
Net Income (Loss)
12,348,721 
 
 
 
 
12,348,721 
 
Distributions to stockholders sourced as return of capital
(4,040,273)
 
 
(4,040,273)
 
 
 
Reinvestment of distributions to stockholders, shares
 
13,778 
 
 
 
 
 
Reinvestment of distributions to stockholders
121,024 
14 
 
121,010 
 
 
 
Comprehensive Income (Loss) attributable to CORR Stockholders
12,348,721 
 
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest
12,348,721 
 
 
 
 
 
 
Ending balance at Nov. 30, 2012
98,855,785 
9,191 
1,370,700 
91,763,475 
 
5,712,419 
 
Ending balance, shares at Nov. 30, 2012
9,190,667 
9,190,667 
 
 
 
 
 
Net Income (Loss)
(1,521,743)
 
 
 
 
(1,503,396)
(18,347)
Shares issued during period
14,950,000 
14,950,000 
 
 
 
 
 
Net offering proceeds
83,508,150 
14,950 
 
83,493,200 
 
 
 
Contributions from Noncontrolling Interests
30,000,000 
 
 
 
 
 
30,000,000 
Comprehensive Income (Loss) attributable to CORR Stockholders
(1,521,743)
 
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest
(1,521,743)
 
 
 
 
 
 
Ending balance at Dec. 31, 2012
210,842,192 
24,141 
1,370,700 
175,256,675 
 
4,209,023 
29,981,653 
Ending balance, shares at Dec. 31, 2012
24,140,667 
24,140,667 
 
 
 
 
 
Net Income (Loss)
5,969,106 
 
 
 
 
4,502,339 
1,466,767 
Distributions to stockholders sourced as return of capital
(9,055,060)
 
 
(1,923,760)
 
(7,131,300)
 
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders
(3,282,152)
 
 
 
 
 
(3,282,152)
Reinvestment of distributions to stockholders, shares
 
15,496 
 
 
 
 
 
Reinvestment of distributions to stockholders
108,119 
15 
 
108,104 
 
 
 
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Net of Tax
959,165 
 
 
 
777,403 
 
181,762 
Comprehensive Income (Loss) attributable to CORR Stockholders
5,279,742 
 
 
 
 
 
 
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest
6,928,271 
 
 
 
777,403 
4,502,339 
1,648,529 
Ending balance at Dec. 31, 2013
$ 205,541,370 
$ 24,156 
$ 1,370,700 
$ 173,441,019 
$ 777,403 
$ 1,580,062 
$ 28,348,030 
Ending balance, shares at Dec. 31, 2013
24,156,163 
24,156,163 
 
 
 
 
 
Consolidated Statements of Cash Flows (USD $)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Nov. 30, 2011
Net Income (Loss)
$ (1,521,743)
$ 5,969,106 
 
$ 12,348,721 
$ 2,922,143 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
Distributions received from investment securities
(567,276)
 
4,985,370 
2,845,434 
Deferred income tax, net
(4,776,090)
2,936,044 
 
7,199,669 
629,207 
Depreciation
499,357 
11,429,980 
 
1,118,269 
364,254 
Amortization
42,645 
909,724 
 
200,056 
27,030 
Realized and unrealized (gain) loss on trading securities
1,769,058 
251,213 
 
(4,009,933)
(2,299,975)
Realized and unrealized (gain) loss on other equity securities
159,495 
(5,617,766)
 
(16,171,944)
(2,283,773)
Unrealized (gain) loss on derivative contract
316,756 
(11,095)
 
Changes in assets and liabilities:
 
 
 
 
 
(Increase) decrease in accounts receivable
647,363 
(1,145,299)
 
(167,302)
(49,695)
(Increase) decrease in lease receivable
(711,229)
 
474,152 
237,077 
(Increase) decrease in prepaid expenses and other assets
(177,521)
272,194 
 
(233,272)
70,109 
Increase in accounts payable and other accrued liabilities
122,445 
816,430 
 
1,533,944 
300,635 
Increase (decrease) in current income tax liability
3,922,682 
(4,690,329)
 
Increase (decrease) in unearned revenue
(237,077)
(2,133,685)
 
2,370,762 
Net cash provided by operating activities
767,370 
7,708,012 
 
9,648,492 
2,762,446 
Investing Activities
 
 
 
 
 
Purchases of long-term investments of trading and other equity securities
 
(38,060,281)
Proceeds from sale of long-term investment of trading and other equity securities
26,085,740 
5,580,985 
 
9,983,169 
53,950,583 
Deferred lease costs
(796,649)
(74,037)
 
Acquisition expenditures
205,706,823 
1,834,036 
 
942,707 
Purchases of property and equipment
(421)
(40,670)
 
(30,321)
Cash paid in business combination
 
(12,250,000)
Proceeds from sale of property and equipment
5,201 
 
3,076 
(1,045)
Return of capital on distributions received
1,772,776 
 
Net cash provided by (used in) investing activities
(180,418,153)
5,410,219 
 
9,013,217 
3,639,257 
Financing Activities
 
 
 
 
 
Payments on lease obligation
(6,824)
(20,698)
 
(80,028)
(44,816)
Debt financing costs
(1,391,846)
(144,798)
 
(1,054,302)
Net offering proceeds
84,516,780 
(523,094)
 
Debt issuance
70,000,000 
 
Proceeds from non-controlling interest
30,000,000 
 
Dividends paid
(8,946,941)
 
(3,919,249)
(3,503,365)
Distributions to non-controlling interest
(3,282,152)
 
Advances on revolving line of credit
530,000 
221,332 
 
5,285,000 
Advances on revolving line of credit
(650,000)
(139,397)
 
(5,165,000)
(400,000)
Payments on long-term debt
 
(2,188,000)
(1,221,000)
Net cash used in financing activities
182,998,110 
(12,835,748)
 
(7,121,579)
(5,169,181)
Net Change in Cash and Cash Equivalents
3,347,327 
282,483 
 
11,540,130 
1,232,522 
Consolidation of wholly-owned subsidiary
 
 
 
94,611 
Cash and Cash Equivalents at beginning of period
14,333,456 
17,680,783 
 
2,793,326 
1,466,193 
Cash and Cash Equivalents at end of period
17,680,783 
17,963,266 
17,680,783 
14,333,456 
2,793,326 
Supplemental Disclosure of Cash Flow Information
 
 
 
 
 
Interest paid
2,765 
2,651,355 
 
203,611 
176,595 
Income taxes paid (net of refunds)
4,637,068 
 
96,000 
253,650 
Non-Cash Investing Activities
 
 
 
 
 
Security proceeds from sale in long-term investment of other equity securities
23,046,215 
 
26,565,400 
Reclassification of prepaid expenses and other assets to deferred lease costs
753,940 
 
Reclassification of prepaid expenses and other assets to acquisition expenditures
181,766 
 
Change in accounts payable and accrued expenses related to deferred lease costs
(653,747)
(68,417)
 
Change in accounts payable and accrued expenses related to acquisition expenditures
1,624,680 
(1,545,163)
 
Non-Cash Financing Activities
 
 
 
 
 
Reclassification of prepaid expenses and other assets to issuance of equity
617,308 
 
Reclassification of prepaid expenses and other assets to debt financing costs
436,994 
 
Change in accounts payable and accrued expenses related to the issuance of equity
391,322 
(523,094)
 
Change in accounts payable and accrued expenses related to debt financing costs
(291,667)
116,383 
 
Reinvestment of distributions by common stockholders in additional common shares
$ 0 
$ 108,119 
 
$ 121,024 
$ 252,242 
Introduction and Basis of Presentation
INTRODUCTION AND BASIS OF PRESENTATION
INTRODUCTION AND BASIS OF PRESENTATION
Introduction
CorEnergy Infrastructure Trust, Inc. ("CorEnergy"), was organized as a Maryland corporation and commenced operations on December 8, 2005. Prior to December 3, 2012, our name was Tortoise Capital Resources Corporation. CorEnergy's shares are listed on the New York Stock Exchange under the symbol “CORR.” As used in this report, the terms "we", "us", "our" and the "Company" refer to CorEnergy and its subsidiaries.
Our assets are generally leased to energy companies via long-term triple net participating leases. The lease structure requires that the tenant pay all operating expenses of the business conducted by the tenant, including real estate taxes, insurance, utilities, and expenses of maintaining the asset in good working order.
Our long-term participating lease structures provide us base rents that are fixed and determinable, with escalators dependent upon increases in the Consumer Price Index. Leases may also include features that allow us to participate in the financial performance or value of the energy infrastructure asset.
The assets we own and seek to acquire include pipelines, storage tanks, transmission lines and gathering systems, among others. We intend to acquire assets that are accretive to our shareholders and allow us to become a diversified energy infrastructure real estate investment trust (REIT).
The Company's consolidated financial statements include the Company's direct or indirect wholly-owned subsidiaries. In connection with our decision to structure ourselves as a REIT in December 2012, we created taxable REIT subsidiaries to hold our remaining securities portfolio (Corridor Public Holdings, Inc. and its wholly-owned subsidiary Corridor Private Holdings, Inc.) and to hold our operating business (Mowood Corridor, Inc. and its wholly-owned subsidiary, Mowood, LLC ("Mowood"), which is the holding company for Omega Pipeline Company, LLC (“Omega”)). Omega owns and operates a natural gas distribution system in Fort Leonard Wood, Missouri. Omega is responsible for purchasing and coordinating delivery of natural gas to Fort Leonard Wood, as well as performing maintenance and expansion of the facilities. In addition, Omega provides gas marketing services to local commercial end users. Also consolidated as a wholly-owned subsidiary is Pinedale GP, Inc., owner of the general partner interest in the entity that owns the Pinedale LGS (see Note 3 for additional information). All significant intercompany balances and transactions have been eliminated in consolidation. The Company's financial statements also present minority interests in the case of entities that are not wholly-owned subsidiaries of the Company.
Consolidation of Mowood was initiated at the time the Company withdrew its election to be treated as a BDC (September 21, 2011) and began reporting its financial results in accordance with general corporate reporting guidelines instead of under the AICPA Investment Company Audit Guide (the “Guide”). At that time, the presentation of the Company’s financial statements changed.
The accompanying consolidated financial statements reflect the results of the Company’s operations for the period from December 1, 2010 to September 21, 2011, during which time the Company reported under the Guide, and therefore reported and accounted for Mowood as an investment carried at fair value. Subsequent to September 21, 2011, the Company ceased reporting under the Guide. The results of operations for Mowood for the years ended December 31, 2013, November 30, 2012, the one-month transition period ended December 31, 2012, and for the period from September 21, 2011 to November 30, 2011, and related balances at December 31, 2013, December 31, 2012 and November 30, 2012, are included in the Company’s consolidated financial statements as of and for the years ended December 31, 2013 and November 30, 2012 and as of and for the one-month transition period ended December 31, 2012.
Change in Fiscal Year End
On February 5, 2013, the Board of Directors of the Company approved a change in the Company's fiscal year end from November 30 to December 31. This change to the calendar year reporting cycle began January 1, 2013. As a result of the change, the Company reported a December 2012 fiscal month transition period, which was reported in the Quarterly Report on Form 10-Q for the calendar quarter ended March 31, 2013 and is included in this Annual Report on Form 10-K for the calendar year ending December 31, 2013.
Financial information for the years ended December 31, 2012 and 2011 has not been included in this Form 10-K for the following reasons: (i) the years ended November 30, 2012 and 2011 provide as meaningful a comparison to the year ended December 31, 2013 as would the years ended December 31, 2012 and 2011; (ii) there are no significant factors, seasonal or other, that would impact the comparability of information if the results for the years ended December 31, 2012 and 2011 were presented in lieu of results for the years ended November 30, 2012 and 2011; and (iii) it was not practicable or cost justified to prepare this information.
Basis of Presentation and Use of Estimates
The accompanying consolidated financial statements include our accounts and the accounts of our wholly owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) set forth in the Accounting Standards Codification (“ASC”), as published by the Financial Accounting Standards Board (“FASB”), and with the Securities and Exchange Commission (“SEC”) instructions to Form 10-K. The accompanying consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the Company's financial position, results of operations and cash flows for the periods presented. There were no adjustments that, in the opinion of management, were not of a normal and recurring nature. All intercompany transactions and balances have been eliminated in consolidation, and our net earnings are reduced by the portion of net earnings attributable to noncontrolling interests.
The financial statements included in this report are based on the selection and application of critical accounting policies, which require management to make significant estimates and assumptions. Critical accounting policies are those that are both important to the presentation of our financial condition and results of operations and require management's most difficult, complex or subjective judgments. Note 2 to the Consolidated Financial Statements, included in this report, further details information related to our significant accounting policies.
Significant Accounting Policies
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES
A. Use of Estimates – The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, recognition of distribution income and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual results could differ from those estimates.
B. Leased Property – The Company includes assets subject to lease arrangements within Leased property, net of accumulated depreciation, in the Consolidated Balance Sheets. Lease payments received are reflected in lease revenue on the Consolidated Statements of Income, net of amortization of any off-market adjustments. Costs in connection with the creation and execution of a lease are capitalized and amortized over the lease term. See Note 4 for further discussion.
C. Cash and Cash Equivalents – The Company maintains cash balances at financial institutions in amounts that regularly exceed FDIC insured limits. The Company’s cash equivalents are comprised of short-term, liquid money market instruments.
D. Long-Lived Assets and Intangibles – Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the asset. Expenditures for repairs and maintenance are charged to operations as incurred, and improvements, which extend the useful lives of assets, are capitalized and depreciated over the remaining estimated useful life of the asset.
The Company initially records long-lived assets at their acquisition cost, unless the transaction is accounted for as a business combination. If the transaction is accounted for as a business combination, the Company allocates the purchase price to the acquired tangible and intangible assets and liabilities based on their estimated fair values. The Company determines the fair values of assets and liabilities based on discounted cash flow models using current market assumptions, appraisals, recent transactions involving similar assets or liabilities and other objective evidence, and depreciates the asset values over the estimated remaining useful lives.
The Company may acquire long-lived assets that are subject to an existing lease contract with the seller or other lessee party and the Company may assume outstanding debt of the seller as part of the consideration paid. If, at the time of acquisition, the existing lease or debt contract is not at current market terms, the Company will record an asset or liability at the time of acquisition representing the amount by which the fair value of the lease or debt contract differs from its contractual value. Such amount is then amortized over the remaining contract term as an adjustment to the related lease revenue or interest expense. The Company periodically reviews its long-lived assets, primarily real estate, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company’s review involves comparing current and future operating performance of the assets, the most significant of which is undiscounted operating cash flows, to the carrying value of the assets. Based on this analysis, a provision for possible loss is recognized, if any. No impairment write-downs were recognized during the years ended December 31, 2013 and November 30, 2012 or during the one-month transition period ended December 31, 2012.
Costs in connection with the direct acquisition of a new asset are capitalized as a component of the purchase price and depreciated over the life of the asset. See Note 4 for further discussion.
E. Investment Securities – The Company’s investments in securities are classified as either trading or other equity securities:
Trading securities – The Company’s publicly traded equity securities are classified as trading securities and are reported at fair value as of November 30, 2012 because the Company intended to sell these securities in order to acquire real asset investments. As of March 31, 2013, all trading securities had been sold.
Other equity securities – The Company’s other equity securities represent interests in private companies which the Company has elected to report at fair value under the fair value option.
Realized and unrealized gains and losses on trading securities and other equity securities – Changes in the fair values of the Company’s securities during the period reported and the gains or losses realized upon sale of securities during the period are reflected as other income or expense within the accompanying Consolidated Statements of Income.
F. Security Transactions and Fair Value – Security transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains and losses are reported on an identified cost basis.
For equity securities that are freely tradable and listed on a securities exchange or over-the-counter market, the Company values those securities at their last sale price on that exchange or over-the-counter market on the valuation date. If the security is listed on more than one exchange, the Company will use the price from the exchange that it considers to be the principal, which may not necessarily represent the last sale price. If there has been no sale on such exchange or over-the-counter market on such day, the security will be valued at the mean between the last bid price and last ask price on such day.

The major components of net realized and unrealized gain or loss on trading securities for the years ended December 31, 2013, November 30, 2012 and November 30, 2011, and for the one-month transition period ended December 31, 2012, are as follows:
Major Components of Net Realized and Unrealized Gain (Loss) on Trading Securities
 
 
For the Years Ended
 
For the One-Month Transition Period Ended
 
 
December 31,
2013
 
November 30,
2012
 
November 30,
2011
 
December 31,
2012
Net unrealized gain on trading securities
 
$

 
$
3,985,269

 
$
238,617

 
$
4,663,211

Net realized gain (loss) on trading securities
 
(251,213
)
 
24,664

 
2,061,358

 
(6,432,269
)
Total net realized and unrealized gain (loss) on trading securities
 
$
(251,213
)
 
$
4,009,933

 
$
2,299,975

 
$
(1,769,058
)

The Company holds investments in illiquid securities including debt and equity securities of privately-held companies. These investments generally are subject to restrictions on resale, have no established trading market and are valued on a quarterly basis. Because of the inherent uncertainty of valuation, the fair values of such investments, which are determined in accordance with procedures approved by the Company’s Board of Directors, may differ materially from the values that would have been used had a ready market existed for the investments.
The Company determines fair value to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has determined the principal market, or the market in which the Company exits its private portfolio investments with the greatest volume and level of activity, to be the private secondary market. Typically, private companies are bought and sold based on multiples of EBITDA, cash flows, net income, revenues, or in limited cases, book value.
For private company investments, value is often realized through a liquidity event of the entire company. Therefore, the value of the company as a whole (enterprise value) at the reporting date often provides the best evidence of the value of the investment and is the initial step for valuing the Company’s privately issued securities. For any one company, enterprise value may best be expressed as a range of fair values, from which a single estimate of fair value will be derived. In determining the enterprise value of a portfolio company, an analysis is prepared consisting of traditional valuation methodologies including market and income approaches. The Company considers some or all of the traditional valuation methods based on the individual circumstances of the portfolio company in order to derive its estimate of enterprise value.
The fair value of investments in private portfolio companies is determined based on various factors, including enterprise value, observable market transactions, such as recent offers to purchase a company, recent transactions involving the purchase or sale of the equity securities of the company, or other liquidation events. The determined equity values may be discounted when the Company has a minority position, or is subject to restrictions on resale, has specific concerns about the receptivity of the capital markets to a specific company at a certain time, or other comparable factors exist.
The Company undertakes a multi-step valuation process each quarter in connection with determining the fair value of private investments. We have retained an independent valuation firm to provide third party valuation consulting services based on procedures that the Company has identified and may ask them to perform from time to time on all or a selection of private investments as determined by the Company. The multi-step valuation process is specific to the level of assurance that the Company requests from the independent valuation firm. For positive assurance, the process is as follows:
The independent valuation firm prepares the valuations and the supporting analysis.
The Investment Committee of the Board of Directors reviews the valuations and supporting analysis, prior to approving the valuations.
G. Accounts Receivable – Accounts receivable are presented at face value net of an allowance for doubtful accounts. Accounts are considered past due based on the terms of sale with the customers. The Company reviews accounts for collectibility based on an analysis of specific outstanding receivables, current economic conditions and past collection experience. At December 31, 2013, December 31, 2012 and November 30, 2012 management determined that an allowance for doubtful accounts related to our leases was not required. Lease payments by our tenants, as discussed within Note 4, have remained timely and without lapse.
H. Derivative Instruments and Hedging Activities - FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company's objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. Accordingly, the Company's derivative assets and liabilities are presented on a gross basis.
As required by ASC 815, the Company records all derivatives on the balance sheet at fair value.  The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
FASB ASC 820, Fair Value Measurements and Disclosure ("ASC 820"), defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. In accordance with ASC 820, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.
I. Fair Value Measurements - Various inputs are used in determining the fair value of the Company’s assets and liabilities. These inputs are summarized in the three broad levels listed below:
Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.)
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)
ASC 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
The following section describes the valuation methodologies used by the Company for estimating fair value for financial instruments not recorded at fair value, but fair value is included for disclosure purposes only, as required under disclosure guidance related to the fair value of financial instruments.
Cash and Cash Equivalents — The carrying value of cash, amounts due from banks, federal funds sold and securities purchased under resale agreements approximates fair value.
Escrow Receivable — The escrow receivable due the Company as of November 30, 2012, which relates to the sale of International Resource Partners, LP, was settled during the second quarter of 2013 upon satisfaction of certain post-closing obligations. The fair value of the escrow receivable reflected a discount for the potential that the full amount due to the Company would not be realized. The actual payment received in the amount of $1.006 million exceeded the balance recorded of $699 thousand, resulting in a gain of approximately $307 thousand.
Long-term Debt — The fair value of the Company’s long-term debt is calculated, for disclosure purposes, by discounting future debt service requirements by a rate equal to the Company’s current expected rate for an equivalent transaction.
Line of Credit — The carrying value of the line of credit approximates the fair value due to its short term nature.
J. Revenue Recognition – Specific recognition policies for the Company’s revenue items are as follows:
Lease Revenue – Income related to the Company’s leased property is recognized on a straight-line basis over the term of the lease when collectibility is reasonably assured. Rental payments on the Pinedale LGS leased property are typically received on a monthly basis. Prior to November 2012, rental payments on the EIP leased property were typically received on a semi-annual basis and were included as lease revenue within the accompanying Consolidated Statements of Income. Upon execution of the November 2012 Purchase Agreement related to the EIP leased property (the "Purchase Agreement"), rental payments received in advance are classified as unearned revenue and included in liabilities within the Consolidated Balance Sheets. Unearned revenue is amortized ratably over the lease period as revenue recognition criteria are met. Rental payments received in arrears are accrued and classified as Lease Receivable and included in assets within the Consolidated Balance Sheets.
Sales Revenue – Revenues related to natural gas distribution and performance of management services are recognized in accordance with GAAP upon delivery of natural gas and upon the substantial performance of management and supervision services related to the expansion of the natural gas distribution system. Omega, acting as a principal, provides for transportation services and natural gas supply for its customers on a firm basis. In addition, Omega is paid fees for the operation and maintenance of its natural gas distribution system, including any necessary expansion of the distribution system. Omega is responsible for the coordination, supervision and quality of the expansions while actual construction is generally performed by third party contractors. Revenues from expansion efforts are recognized in accordance with GAAP using either a completed contract or percentage of completion method based on the level and volume of estimates utilized, as well as the certainty or uncertainty of our ability to collect those revenues.
K. Cost of Sales – Included in the Company’s cost of sales are the amounts paid for gas and propane, along with related transportation, which are delivered to customers, as well as the cost of material and labor related to the expansion of the natural gas distribution system.
L. Asset Acquisition Expenses – Costs in connection with the research of real property acquisitions not expected to be accounted for as business combinations are expensed as incurred until determination that the acquisition of the real property is probable. Upon such determination, costs in connection with the acquisition of the property are capitalized as described in paragraph (D) above.
M. Offering Costs – Offering costs related to the issuance of common stock are charged to additional paid-in capital when the stock is issued.
N. Debt Issuance Costs – Costs in connection with the issuance of new debt are capitalized and amortized over the debt term. See Note 11 for further discussion.
O. Distributions to Stockholders – The amount of any distributions to stockholders will be determined by the Board of Directors. Distributions to stockholders are recorded on the ex-dividend date.
P. Other Income Recognition Specific policies for the Company’s other income items are as follows:
Securities Transactions and Investment Income Recognition – Securities transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains and losses are reported on an identified cost basis. Distributions received from our equity investments are generally comprised of ordinary income, capital gains and distributions received from investment securities from the portfolio company. The Company records investment income and return of capital based on estimates made at the time such distributions are received. Such estimates are based on information available from each portfolio company and other industry sources. These estimates may subsequently be revised based on information received from the portfolio companies after their tax reporting periods are concluded, as the actual character of these distributions are not known until after our fiscal year end.
Subsequent to November 30, 2012, the Company reallocated the amount of 2012 income and return of capital it recognized for the period December 1, 2011 to November 30, 2012 based on the 2012 tax reporting information received from the individual portfolio companies. This reclassification amounted to an increase in net distributions and dividend income on securities of $567 thousand or $0.06 per share; a decrease in net realized and unrealized gains on trading and other equity securities of $567 thousand or $0.06 per share for the year ended November 30, 2012.
Dividends and distributions from investments – Dividends and distributions from investments are recorded on their ex-dates and are reflected as other income within the accompanying Consolidated Statements of Income. Distributions received from the Company’s investments are generally characterized as ordinary income, capital gains and distributions received from investment securities. The portion characterized as return of capital is paid by our investees from their cash flow from operations. The Company records investment income, capital gains and distributions received from investment securities based on estimates made at the time such distributions are received. Such estimates are based on information available from each company and other industry sources. These estimates may subsequently be revised based on information received from the entities after their tax reporting periods are concluded, as the actual character of these distributions is not known until after the fiscal year end of the Company.
Q. Federal and State Income Taxation – We have elected to be treated as a REIT for federal income tax purposes (which we refer to as the “REIT Election”) for the calendar and tax year ended December 31, 2013. We determined that the Company satisfied the annual income test and the quarterly asset tests necessary for us to qualify and elect to be taxed as a REIT for 2013. Because certain of our assets may not produce REIT-qualifying income or be treated as interests in real property, during December 2012 we contributed those assets into wholly-owned Taxable REIT Subsidiaries ("TRSs"). This was done in 2012 in order to limit the potential that such assets and income would prevent us from qualifying as a REIT for 2013. Due to the REIT Election, we changed our fiscal year end from November 30 to December 31.
As to the year ended November 30, 2012 and one month period ended December 31, 2012, the Company is treated as a C corporation and is obligated to pay federal and state income tax on its taxable income. Currently, the highest regular marginal federal income tax rate for a corporation is 35 percent. The Company may be subject to a 20 percent federal alternative minimum tax on its federal alternative minimum taxable income to the extent that its alternative minimum tax exceeds its regular federal income tax. For years ended in 2012 and before, the distributions we made to our stockholders from our earnings and profits were treated as qualified dividend income ("QDI") and return of capital. QDI is taxed to our individual shareholders at the maximum rate for long-term capital gains, which through tax year 2012 was 15 percent and beginning in tax year 2013 will be 20 percent.
The Company's trading securities and other equity securities are limited partnerships or limited liability companies which are treated as partnerships for federal and state income tax purposes. As a limited partner, the Company reports its allocable share of taxable income in computing its own taxable income. The Company's tax expense or benefit is included in the Consolidated Statements of Income based on the component of income or gains and losses to which such expense or benefit relates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized. Due to our decision to structure ourselves as a REIT in December 2012, it is expected that for the year ended December 31, 2013 and future periods, any deferred tax liability or asset will be related entirely to the assets and activities of the Company's TRSs.
The Company has elected to be taxed as a REIT for 2013 rather than a C corporation and generally will not pay federal income tax on taxable income that is distributed to our stockholders. As a REIT, our distributions from earnings and profits will be treated as ordinary income and a return of capital, and generally will not qualify as QDI. To the extent that the REIT had accumulated C corporation earnings and profits from the periods prior to 2013, we have distributed such earnings and profits in 2013. A portion of our normal distribution was characterized for federal income tax purposes as a distribution of those earnings and profits from non-REIT years and have been treated as QDI.
As a REIT, the Company holds and operates certain of our assets through one or more wholly-owned TRSs. A TRS is a subsidiary of a REIT that is subject to applicable corporate income tax. Our use of TRSs enables us to continue to engage in certain businesses while complying with REIT qualification requirements and also allows us to retain income generated by these businesses for reinvestment without the requirement of distributing those earnings. In the future, we may elect to reorganize and transfer certain assets or operations from our TRSs to the Company or other subsidiaries, including qualified REIT subsidiaries.
If we cease to qualify as a REIT, the Company, as a C corporation, would be obligated to pay federal and state income tax on its taxable income. Currently, the highest regular marginal federal income tax rate for a corporation is 35 percent. The Company may be subject to a 20 percent federal alternative minimum tax on its federal alternative minimum taxable income to the extent that its alternative minimum tax exceeds its regular federal income tax.
R. Recent Accounting Pronouncements – In July 2013, the FASB issued ASU No. 2013-11 "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists". ASU No. 2013-11 amends FASB ASC Topic 740 Income taxes, to include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU No. 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Management is evaluating this amendment and does not expect adoption to have a material impact on the Company's consolidated financial statements.
In July 2013, the FASB issued ASU No. 2013-10 "Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes". ASU No. 2013-10 amends FASB ASC Topic 815 Derivatives and Hedging, to permit Fed Funds Effective Swap Rate (OIS) to be used as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, in addition to UST and LIBOR. The amendment also removes the restriction on using different benchmark rates for similar hedges. ASU No. 2013-10 is effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The Company has adopted this amendment and it did not have a material impact on the Company's consolidated financial statements.
In June 2011, the FASB issued ASU No. 2011-05 "Presentation of Comprehensive Income". ASU No. 2011-05 amends FASB ASC Topic 220, Presentation of Comprehensive Income, to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. ASU No. 2011-05 is effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The Company has adopted this amendment and has elected to present a single continuous statement of comprehensive income.
In December 2011, the FASB issued ASU No. 2011-12 "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05". ASU No. 2011-12 amends FASB ASC Topic 220, Presentation of Comprehensive Income, to defer only those changes in Update 2011-05 that relate to the presentation of reclassification adjustments. ASU No. 2011-12 is effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The adoption of this amendment did not have a material impact on the Company's consolidated financial statements.
In February 2013, the FASB issued ASU No. 2013-02 "Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income". ASU No. 2013-02 amends FASB ASC Topic 220, Presentation of Comprehensive Income, to improve the reporting of reclassifications out of accumulated other comprehensive income. ASU No. 2013-02 is effective prospectively for reporting periods beginning after December 15, 2012. Management has adopted this amendment and this did not have a material impact on the Company's consolidated financial statements.
In December 2011, the FASB issued ASU No. 2011-11 "Disclosure about Offsetting Assets and Liabilities". ASU No. 2011-11 amends FASB ASC Topic 210, Balance Sheet, to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. ASU No. 2011-11 is effective for fiscal years beginning after January 1, 2013 and for interim periods within those fiscal years. In January 2013, the FASB issued ASU No. 2013-01 "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities". ASU No. 2013-01 amends FASB ASC Topic 210, Balance Sheet, to address implementation issues about the scope of ASU No. 2011-11. The amendment, which clarifies the scope of Update 2011-11, applies to derivatives accounted for in accordance with FASB ASC Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or are subject to an enforceable master netting arrangement or similar agreement. ASU No. 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. The adoption of these amendments did not have a material impact on the Company's consolidated financial statements.
In January 2010, the FASB issued ASU No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU No. 2010-06 amends FASB ASC Topic 820, Fair Value Measurements and Disclosures, to require new disclosures for transfers in and out of Levels 1 and 2 and activity in Level 3 fair value measurements. and to clarify existing disclosures. ASU No. 2010-06 is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Management has adopted this amendment and this did not have a material impact on the Company's consolidated financial statements.
Leased Properties
LEASED PROPERTIES
LEASED PROPERTIES
Pinedale LGS
On December 20, 2012, our subsidiary, Pinedale Corridor, LP ("Pinedale LP"), closed on a Purchase and Sale Agreement with an indirect wholly-owned subsidiary of Ultra Petroleum Corp. ("Ultra Petroleum"). Pinedale LP acquired a system of gathering, storage, and pipeline facilities (the "Liquids Gathering System" or "Pinedale LGS"), with associated real property rights in the Pinedale Anticline in Wyoming for $205 million in cash and certain investment securities having an approximate market value of $23 million. The asset purchase price was funded in part by the issuance of 13 million shares of common stock with net proceeds of $73.6 million after the underwriters discount.
Physical Assets
Construction of the Pinedale LGS was completed by Ultra Petroleum in 2010. It consists of more than 150 miles of pipelines with 107 receipt points and four above-ground central gathering facilities. The system is used by Ultra Petroleum as a method of separating water, condensate and associated flash gas from a unified stream and subsequently selling or treating and disposing of the separated products. Prior to entering the Pinedale LGS, a commingled hydrocarbon stream is separated into wellhead natural gas and a liquids stream. The wellhead natural gas is transported to market by a third party. The remaining liquids, primarily water, are transported by the Pinedale LGS to one of its four central gathering facilities where they pass through a three-phase separator which separates condensate, water and associated natural gas. Condensate is a valuable hydrocarbon commodity that is sold by Ultra Petroleum; water is transported to disposal wells or a treatment facility for re-use; and the natural gas is sold or otherwise used by Ultra Petroleum for fueling on-site operational equipment. To date, no major operational issues have been reported with respect to the Pinedale LGS.
The asset is depreciated for book purposes over an estimated useful life of 26 years. The amount of depreciation recognized for the leased property for the years ended December 31, 2013, November 30, 2012 and 2011, and for the one-month transition period ended December 31, 2012 was $8.9 million, $0, $0, and $286 thousand, respectively.
See Note 4 for further information regarding the Pinedale Lease Agreement.
Non-Controlling Interest Partner
Prudential Financial, Inc. ("Prudential") funded a portion of the acquisition of the Pinedale LGS by investing $30 million in cash in Pinedale LP. Pinedale GP, a wholly-owned subsidiary of CorEnergy, funded a portion of the acquisition by contributing to Pinedale LP approximately $108.3 million in cash and certain equity securities valued at $20 million. Those investments were made on December 20, 2012. As a limited partner, Prudential holds 18.95 percent of the economic interest in Pinedale LP, while the general partner, Pinedale GP, holds the remaining 81.05 percent of the economic interest.
Debt
On December 20, 2012, Pinedale LP borrowed $70 million pursuant to a secured term credit facility with KeyBank National Association ("KeyBank") serving as a lender and the administrative agent on behalf of other lenders participating in the credit facility. The credit facility will remain in effect through December 2015, with an option to extend through December 2016. The credit facility is secured by the Pinedale LGS. See Note 11 for further information regarding the credit facility.
Eastern Interconnect Project (EIP)
Physical Assets
The EIP transmission assets are utilized by the lessee to move electricity across New Mexico between Albuquerque and Clovis. The physical assets include 216 miles of 345 kilovolt transmission lines, towers, easement rights, converters and other grid support components. Originally, the assets were depreciated for book purposes over an estimated useful life of 20 years. Pursuant to the Purchase Agreement discussed in Note 4, the Company reevaluated the residual value used to calculate its depreciation of the EIP, and determined that a change in estimate was necessary. The change in estimate resulted in higher depreciation expenses beginning in November of 2012 through the expiration of the lease in April 2015.
The amount of depreciation expense related to the EIP leased property for the years ended December 31, 2013 and November 30, 2012 and 2011 and for the one-month transition period ended December 31, 2012 was $2.3 million, $837 thousand, $294 thousand and $190 thousand, respectively. The December 31, 2013 and December 31, 2012 amounts include one year and one month of incremental depreciation of approximately $1.6 million and $131 thousand, respectively.
See Note 4 for further information regarding the PNM Lease Agreement (as defined therein).
Debt
The Company assumed a note with an outstanding principal balance of $3.4 million. The debt was collateralized by the EIP transmission assets. The note, which accrued interest at an annual rate of 10.25 percent, and had principal and interest payments due on a semi-annual basis, was paid in full on October 1, 2012.
Leases
LEASES
LEASES
As of December 31, 2013 the Company had two significant leases. The table below displays the impact of each lease on total leased properties and total lease revenues for the periods presented. As of November 30, 2012, the Company's only lease was with the Public Service Company of New Mexico, which therefore comprised 100 percent of the Company's leased properties and lease revenues.

 
As a Percentage of
 
 
Leased Properties
 
Lease Revenues

 
As of December 31, 2013
 
For the Year Ended December 31, 2013
 
For the One-Month Transition Period December 31, 2012
Pinedale LGS
 
94.23%
 
88.68%
 
75.20%
Public Service of New Mexico
 
5.77%
 
11.32%
 
24.80%


Pinedale LGS
Pinedale LP entered into a long-term triple net Lease Agreement on December 20, 2012, relating to the use of the Pinedale LGS (the “Pinedale Lease Agreement”) with Ultra Wyoming LGS, LLC (“Ultra Wyoming”), another indirect wholly-owned subsidiary of Ultra Petroleum. Ultra Wyoming utilizes the Pinedale LGS to gather and transport a commingled stream of oil, natural gas and water, then further utilizes the Pinedale LGS to separate this stream into its separate components. Ultra Wyoming's obligations under the Pinedale Lease Agreement are guaranteed by Ultra Petroleum and Ultra Petroleum's operating subsidiary, Ultra Resources, Inc. (“Ultra Resources”), pursuant to the terms of a related parent guaranty. Annual rent for the initial term under the Pinedale Lease Agreement is a minimum of $20 million (as adjusted annually for changes based on the Consumer Price Index (“CPI”), subject to annual maximum adjustments of 2 percent), with the exact rental amount determined by the actual volume of the components handled by the Pinedale LGS, subject to Pinedale LP not being in default under the Pinedale Lease Agreement. Total annual rent may not exceed $27.5 million.
As of December 31, 2013, November 30, 2012 and December 31, 2012, approximately $857 thousand, $0, and $913 thousand, respectively, of net deferred lease costs are included in the accompanying Consolidated Balance Sheets. The deferred costs are amortized over the 15 year life of the Pinedale LGS lease. For the years ended December 31, 2013, November 30, 2012 and 2011, and the one-month transition period ended December 31, 2012, $61 thousand, $0, $0, and $2 thousand, respectively, is included in amortization expense within the Consolidated Statements of Income. Approximately $2.6 million in gross asset acquisition costs related to the Pinedale LGS acquisition is included in Leased Property within the Consolidated Balance Sheets. The asset acquisition costs will be depreciated over the anticipated 26 year life of the newly acquired asset and will be included in depreciation expense within the Consolidated Statements of Income.

The assets which comprise the Pinedale LGS include real property and land rights to which the purchase consideration was allocated based on relative fair values and equaled $122.3 million and $105.7 million, respectively.   The land rights are being depreciated over the 26 year life of the related land lease with associated depreciation expense expected to be approximately $4.1 million for each of the next five years.

In view of the fact that Ultra Petroleum leases a substantial portion of the Company's net leased property, which is a significant source of revenues and operating income, its financial condition and ability and willingness to satisfy its obligations under its lease with the Company are expected to have a considerable impact on the results of operation going forward.
Ultra Petroleum is currently subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and is required to file with the SEC annual reports containing audited financial statements and quarterly reports containing unaudited financial statements. The audited financial statements and unaudited financial statements of Ultra Petroleum can be found on the SEC's website at www.sec.gov. The Company makes no representation as to the accuracy or completeness of the audited and unaudited financial statements of Ultra Petroleum, but has no reason not to believe the accuracy or completeness of such information. In addition, Ultra Petroleum has no duty, contractual or otherwise, to advise the Company of any events that might have occurred subsequent to the date of such financial statements which could affect the significance or accuracy of such information. Summary Consolidated Balance Sheets and Consolidated Statements of Operations for Ultra Petroleum are provided below.
Ultra Petroleum Corp.
Summary Consolidated Balance Sheets
(in thousands)
 
December 31, 2013
 
December 31, 2012
 
 
Current assets
$
128,631

 
$
125,848

Non-current assets
2,656,688

 
1,881,497

Total Assets
$
2,785,319

 
$
2,007,345

 
 
 
 
Current liabilities
407,476

 
514,092

Non-current liabilities
2,709,333

 
2,071,120

Total Liabilities
$
3,116,809

 
$
2,585,212

 
 
 
 
Shareholder's (deficit)
(331,490
)
 
(577,867
)
Total Liabilities and Shareholder's Equity
$
2,785,319

 
$
2,007,345

 
 
 
 

Ultra Petroleum Corp.
Summary Consolidated Statements of Operations
(in thousands)
 
For the Years Ended December 31,
 
2013
 
2012
Revenues
$
933,404

 
$
809,974

Expenses
561,138

 
3,655,252

Operating Income (Loss)
372,266

 
(2,845,278
)
Other Income (Expense), net
(138,044
)
 
(31,833
)
Income (Loss) before income tax provision (benefit)
234,222

 
(2,877,111
)
Income tax provision (benefit)
(3,616
)
 
(700,213
)
Net Income (Loss)
$
237,838

 
$
(2,176,898
)

Public Service Company of New Mexico ("PNM")
EIP is leased on a triple net basis through April 1, 2015 (the "PNM Lease Agreement") to PNM, an independent electric utility company serving approximately 500 thousand customers in New Mexico. PNM is a subsidiary of PNM Resources Inc. (NYSE: PNM) ("PNM Resources"). Per the PNM Lease Agreement, at the time of expiration of the PNM Lease Agreement, the Company could choose to renew the PNM Lease Agreement with the lessee, the lessee could offer to repurchase the EIP, or the PNM Lease Agreement could be allowed to expire and the Company could find another lessee. Under the terms of the PNM Lease Agreement, the Company was to receive semi-annual lease payments.
At the time of acquisition, the rate of the PNM Lease Agreement was determined to be above market rates for similar leased assets and the Company recorded an intangible asset of $1.1 million for this premium which is being amortized as a reduction to lease revenue over the remaining lease term. See Note 10 below for further information as to the intangible asset.
On November 1, 2012 the Company entered into a definitive Purchase Agreement with PNM to sell the Company’s 40 percent undivided interest in the EIP upon termination of the PNM Lease Agreement on April 1, 2015 for $7.68 million. Upon execution of the Agreement, the schedule of the lease payments under the PNM Lease Agreement was changed so PNM's remaining basic lease payments due to the Company were accelerated. The semi-annual payments of approximately $1.4 million that were originally scheduled to be paid on April 1, and October 1, 2013, respectively, were received by the Company on November 1, 2012. Therefore, as of November 30, 2012, PNM had paid $2.4 million in future minimum lease payments in advance. The amount is reported as an unearned revenue liability within the Consolidated Balance Sheets. As of December 31, 2013 there were no remaining advance payments included in unearned revenue. The three remaining lease payments due April 1, 2014, October 1, 2014 and April 1, 2015 were paid in full on January 2, 2014, in accordance with the purchase agreement with PNM.
In conjunction with the November 1, 2012 Purchase Agreement, the Company reevaluated the residual value used to calculate its depreciation of the EIP, and determined that a change in estimate was necessary. The change in estimate resulted in higher depreciation expenses beginning in November of 2012 through the expiration of the lease in April 2015. The incremental depreciation amounts to approximately $1.6 million per year.
In view of the fact that the PNM Lease Agreement is a significant source of revenue and operating income, its financial condition and ability and willingness to satisfy its obligations under its lease with the Company have a considerable impact on the results of operations.
PNM Resources is currently subject to the reporting requirements of the Exchange Act and is required to file with the SEC annual reports containing audited financial statements and quarterly reports containing unaudited financial statements. The audited financial statements and unaudited financial statements of PNM Resources can be found on the SEC's web site at www.sec.gov. The Company makes no representation as to the accuracy or completeness of the audited and unaudited financial statements of PNM Resources but has no reason not to believe the accuracy or completeness of such information. In addition, PNM Resources has no duty, contractual or otherwise, to advise the Company of any events that might have occurred subsequent to the date of such financial statements which could affect the significance or accuracy of such information. None of the information in the public reports of PNM Resources that are filed with the SEC is incorporated by reference into, or in any way, form a part of this filing.

Future Minimum Lease Receipts
The future contracted minimum rental receipts for all net leases as of December 31, 2013 are as follows:
Future Minimum Lease Receipts
Years Ending December 31,
 
Amount
2014
 
$
24,573,005

2015
 
20,000,000

2016
 
20,000,000

2017
 
20,000,000

2018
 
20,000,000

Thereafter
 
180,000,000

Total
 
$
284,573,005

Income Taxes
INCOME TAXES
INCOME TAXES
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting and tax purposes. Components of the Company’s deferred tax assets and liabilities as of December 31, 2013, November 30, 2012 and December 31, 2012 are as follows:
Deferred Tax Assets and Liabilities
 
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
Deferred Tax Assets:
 
 
 
 
 

Organization costs
 
$

 
$
(17,668
)
 
$
(27,188
)
Net operating loss carryforwards
 
(65,248
)
 
(6,411,230
)
 

Net unrealized loss on investment securities
 

 

 
(143,822
)
Cost recovery of leased and fixed assets
 
(966,914
)
 
(36,443
)
 

Asset acquisition costs
 

 
(134,415
)
 
(158,535
)
AMT and State of Kansas credit
 

 
(196,197
)
 

Sub-total
 
$
(1,032,162
)
 
$
(6,795,953
)
 
$
(329,545
)
Deferred Tax Liabilities:
 
 
 
 
 

Basis reduction of investment in partnerships
 
$
6,335,805

 
$
11,655,817

 
$
2,675,142

Net unrealized gain on investment securities
 
28,444

 
2,312,269

 

Cost recovery of leased assets
 

 

 
50,446

Sub-total
 
6,364,249

 
13,968,086

 
2,725,588

Total net deferred tax liability
 
$
5,332,087

 
$
7,172,133

 
$
2,396,043


For the period ended December 31, 2013, the total deferred tax liability presented above relates to assets held in the Company's TRSs. The Company recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. The Company’s policy is to record interest and penalties on uncertain tax positions as part of tax expense. As of December 31, 2013, the Company had no uncertain tax positions and no penalties and interest were accrued. Tax years subsequent to the year ending November 30, 2007 remain open to examination by federal and state tax authorities.
Total income tax expense differs from the amount computed by applying the federal statutory income tax rate of 35 percent for the years ended December 31, 2013, November 30, 2012, November 30, 2011 and for the one-month transition period ended December 31, 2012 to income or loss from operations and other income and expense for the years presented, as follows:
Income Tax Expense (Benefit)
 
 
For the Years Ended
 
For the One-Month Transition Period Ended
 
 
December 31, 2013
 
November 30, 2012
 
November 30, 2011
 
December 31, 2012
Application of statutory income tax rate
 
$
2,608,151

 
$
6,852,179

 
$
1,331,750

 
$
(848,239
)
State income taxes, net of federal tax benefit
 
273,174

 
442,455

 
133,158

 
(64,771
)
Dividends received deduction
 

 
(1,221
)
 
(86
)
 
(7,133
)
Income of Real Estate Investment Trust not subject to tax
 
(927,254
)
 

 

 

Impact of effective tax rate change due to REIT election
 
995,447

 

 

 

Other
 

 
(64,479
)
 
(581,965
)
 

Total income tax expense
 
$
2,949,518

 
$
7,228,934

 
$
882,857

 
$
(920,143
)

Total income taxes are computed by applying the federal statutory rate of 35 percent plus a blended state income tax rate, which was approximately 3.11 percent for the year ended December 31, 2013 and 2.26 percent for the other periods presented above. As a REIT, we hold and operate certain of our assets through one or more TRSs. A TRS is a subsidiary of a REIT that is subject to applicable corporate income tax. For the year ended December 31, 2013, all of the income tax expense presented above relates to the assets and activities held in the Company's TRSs. The components of income tax expense include the following for the periods presented:
Components of Income Tax Expense (Benefit)
 
 
For the Years Ended
 
For the One-Month Transition Period Ended
 
 
December 31, 2013
 
November 30, 2012
 
November 30, 2011
 
December 31, 2012
Current tax expense (benefit)
 
 
 
 
 
 
 
 
Federal
 
$
(7,139
)
 
$

 
$

 
$
3,610,165

State (net of federal tax benefit)
 
20,613

 
38,107

 
53,650

 
245,782

AMT benefit
 

 
(8,842
)
 
200,000

 

Total current tax expense (benefit)
 
13,474

 
29,265

 
253,650

 
3,855,947

Deferred tax expense (benefit)
 
 
 
 
 

 
 
Federal
 
2,683,483

 
6,762,974

 
585,386

 
(4,465,104
)
State (net of federal tax benefit)
 
252,561

 
436,695

 
43,821

 
(310,986
)
Total deferred tax expense (benefit)
 
2,936,044

 
7,199,669

 
629,207

 
(4,776,090
)
Total income tax expense (benefit), net
 
$
2,949,518

 
$
7,228,934

 
$
882,857

 
$
(920,143
)

As of November 30, 2012, the Company had a net operating loss for federal income tax purposes of approximately $17.2 million. The net operating loss may be carried forward for 20 years. If not utilized, this net operating loss would have expired as follows: $8 thousand, $4.0 million, $3.4 million, $24 thousand and $9.8 million in the years ending November 30, 2028, 2029, 2030, 2031 and 2032, respectively. In the period ending December 31, 2012, all Net Operating Losses of the Company were utilized to reduce the Company's current tax liability. A Net Operating Loss of $160 thousand has been incurred by a TRS for the year ended December 31, 2013. As of November 30, 2012, an alternative minimum tax credit of $194 thousand was available, which was fully utilized as of December 31, 2012.
The aggregate cost of securities for federal income tax purposes and securities with unrealized appreciation and depreciation, were as follows:
Aggregate Cost of Securities for Income Tax Purposes
 
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
Aggregate cost for federal income tax purposes
 
$
6,604,636

 
$
41,995,195

 
$
22,007,069

Gross unrealized appreciation
 
16,699,686

 
33,892,176

 
2,018,455

Gross unrealized depreciation
 

 
(801,340
)
 

Net unrealized appreciation
 
$
16,699,686

 
$
33,090,836

 
$
2,018,455


The Company provides the following tax information to its common stockholders pertaining to the character of distributions paid during tax year 2013, 2012, and 2011. For a stockholder that received all distributions in cash during 2013, 43 percent will be treated as qualified dividend income and 57 percent will be treated as return of capital. The per share characterization by quarter is reflected in the following table:
2013 Common Stock Tax Information
Record Date
 
Ex-Dividend Date
 
Payable Date
 
Total Distribution per Share
 
Total Ordinary Dividends
 
Qualified Dividends
 
Capital Gain Distributions
 
Nondividend Distributions
03/08/2013
 
03/06/2013
 
03/19/2013
 
$
0.1250

 
$
0.1250

 
$
0.1250

 
$

 
$

06/28/2013
 
06/26/2013
 
07/05/2013
 
0.1250

 
0.0367

 
0.0367

 

 
0.0883

09/30/2013
 
09/26/2013
 
10/04/2013
 
0.1250

 

 

 

 
0.1250

Total 2013 Distributions
 
$
0.3750

 
$
0.1617

 
$
0.1617

 
$

 
$
0.2133

2012 Common Stock Tax Information
Record Date
 
Ex-Dividend Date
 
Payable Date
 
Total Distribution per Share
 
Total Ordinary Dividends
 
Qualified Dividends
 
Capital Gain Distributions
 
Nondividend Distributions
02/22/2012
 
02/17/2012
 
03/01/2012
 
$
0.1100

 
$

 
$

 
$

 
$
0.1100

05/23/2012
 
05/21/2012
 
06/01/2012
 
0.1100

 

 

 

 
0.1100

08/24/2012
 
08/22/2012
 
09/04/2012
 
0.1100

 

 

 

 
0.1100

11/23/2012
 
11/20/2012
 
11/30/2012
 
0.1100

 

 

 

 
0.1100

Total 2012 Distributions
 
$
0.4400

 
$

 
$

 
$

 
$
0.4400

2011 Common Stock Tax Information
Record Date
 
Ex-Dividend Date
 
Payable Date
 
Total Distribution per Share
 
Total Ordinary Dividends
 
Qualified Dividends
 
Capital Gain Distributions
 
Nondividend Distributions
02/18/2011
 
02/16/2011
 
03/01/2011
 
$
0.1000

 
$
0.1000

 
$
0.1000

 
$

 
$

05/24/2011
 
05/20/2011
 
06/01/2011
 
0.1000

 
0.1000

 
0.1000

 

 

08/24/2011
 
08/22/2011
 
09/01/2011
 
0.1000

 
0.1000

 
0.1000

 

 

11/22/2011
 
11/18/2011
 
11/30/2011
 
0.1100

 
0.1100

 
0.1100

 

 

Total 2011 Distributions
 
$
0.4100

 
$
0.4100

 
$
0.4100

 
$

 
$



We elected to be treated as a REIT for federal income tax purposes (which we refer to as the “REIT Election”) for the calendar and tax year ended December 31, 2013. The Company satisfied the annual income test and the quarterly assets tests necessary for us to qualify to be taxed as a REIT for 2013. Distributions made during 2013 and treated as qualifying dividend income relate to pre-REIT tax years earnings and profits that were required to be distributed by calendar year end 2013.
Property and Equipment
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
Property and Equipment
 
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
Natural gas pipeline
 
$
5,215,424

 
$
5,215,424

 
$
5,215,424

Vehicles and trailers
 
125,117

 
110,782

 
110,782

Computers
 
15,627

 
14,018

 
14,440

Gross property and equipment
 
5,356,168

 
5,340,224

 
5,340,646

Less: accumulated depreciation
 
(2,037,685
)
 
(1,751,202
)
 
(1,774,616
)
Net property and equipment
 
$
3,318,483

 
$
3,589,022

 
$
3,566,030



The amounts of depreciation of property and equipment recognized for the years ended December 31, 2013 and November 30, 2012 and the one-month transition period ended December 31, 2012 were $283 thousand, $281 thousand, and $23 thousand, respectively. The amount depreciation of property and equipment recognized for the period from September 21, 2011 through November 30, 2011 was $70 thousand.
Concentrations
CONCENTRATIONS
CONCENTRATIONS
Prior to 2013, the Company had historically invested in securities of privately-held and publicly-traded companies in the midstream and downstream segments of the U.S. energy infrastructure sector. As of December 31, 2013, investments in securities of energy infrastructure companies represented approximately 8.21 percent of the Company’s total assets. The Company is now focused on identifying and acquiring real property assets in the U.S. energy infrastructure sector that are REIT-qualified.
Mowood, the Company’s wholly-owned subsidiary, has a ten-year contract, expiring in 2015, with the Department of Defense (“DOD”) to provide natural gas supply and distribution services to Fort Leonard Wood. Revenue related to the DOD contract accounted for 80 percent, 71 percent, 88 percent and 84 percent of our sales revenue for the years ended December 31, 2013, November 30, 2012, the period from September 21, 2011 through November 30, 2011, and for the one-month transition period ended December 31, 2012, respectively. Mowood, through its wholly-owned subsidiary Omega, performs management and supervision services related to the expansion of the natural gas distribution system used by the DOD. The amount due from the DOD accounts for 91 percent, 84 percent and 79 percent of the consolidated accounts receivable balances as of December 31, 2013 and November 30, 2012, and for the one-month transition period ended December 31, 2012, respectively.
Mowood’s contracts for its supply of natural gas are concentrated among select providers. Purchases from its largest supplier of natural gas accounted for 41 percent of our cost of sales for the year ended December 31, 2013. This compares to 29 percent and 58 percent for the year ended November 30, 2012 and the one-month transition period ended December 31, 2012, respectively.
Management's Agreements
MANAGEMENT AGREEMENT
MANAGEMENT AND ADVISORY AGREEMENTS
On December 1, 2011, the Company executed a Management Agreement with Corridor InfraTrust Management, LLC (“Corridor”). Under the Management Agreement, Corridor (i) presents the Company with suitable acquisition opportunities consistent with the investment policies and objectives of the Company, (ii) is responsible for the day-to-day operations of the Company, and (iii) performs such services and activities relating to the assets and operations of the Company as may be appropriate. The terms of the Management Agreement include a quarterly management fee equal to 0.25 percent (1.00 percent annualized) of the value of the Company’s average monthly Managed Assets for such quarter. For purposes of the Management Agreement, “Managed Assets” means all of the securities of the Company and all of the real property assets of the Company (including any securities or real property assets purchased with or attributable to any borrowed funds) minus all of the accrued liabilities other than (1) deferred taxes and (2) debt entered into for the purpose of leverage. For purposes of the definition of Managed Assets, “securities” includes the Company’s security portfolio, valued at then current market value. For purposes of the definition of Managed Assets, “real property assets” includes the assets of the Company invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and acquisition costs that may be allocated to intangibles or are unallocated), valued at the aggregate historical cost, before reserves for depreciation, amortization, impairment charges or bad debts or other similar noncash reserves.
The Management Agreement also includes a quarterly incentive fee of 10 percent of the increase in distributions paid over a threshold distribution equal to $0.125 per share per quarter. The Management Agreement also requires at least half of any incentive fees to be reinvested in the Company’s common stock. A new Management Agreement between the Company and Corridor was approved by the Board of Directors and became effective July1, 2013. The new agreement does not change in any respect the terms for determination or payment of compensation for the Manager, does not have a specific term, and will remain in place unless terminated by the Company or the Manager in the manner permitted pursuant to the agreement.
During the fourth quarter of 2012, Corridor assumed the TCA’s Administrative Agreement, retroactive to August 7, 2012. Tortoise Capital Advisors, L.L.C. (“TCA”) served as the Company’s administrator until that date. The Company pays the administrator a fee equal to an annual rate of 0.04 percent of aggregate average daily managed assets, with a minimum annual fee of $30 thousand.
On December 1, 2011, we entered into an Advisory Agreement by and among the Company, TCA and Corridor, under which TCA provided certain securities focused investment services necessary to evaluate, monitor and liquidate the Company’s remaining securities portfolio (“Designated Advisory Services”), and also provided the Company with certain operational (i.e. non-investment) services (“Designated Operational Services”). Effective December 21, 2012, that agreement was replaced by an Amended Advisory Agreement pursuant to which TCA provides investment services related to the monitoring and disposition of our current securities portfolio.
U.S. Bancorp Fund Services, LLC serves as the Company’s fund accounting services provider. The Company pays the provider a monthly fee computed at an annual rate of $24 thousand on the first $50 million of the Company’s Net Assets, 0.0125 percent on the next $200 million of the Company's Net Assets, 0.0075 percent on the next $250 million of the Company's Net Assets and 0.0025 percent on the balance of the Company’s Net Assets.
Fair Value
FAIR VALUE OF OTHER SECURITIES
FAIR VALUE
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following tables provide the fair value measurements of applicable Company assets and liabilities by level within the fair value hierarchy as of December 31, 2013, November 30, 2012, and December 31, 2012. These assets and liabilities are measured on a recurring basis.
December 31, 2013
 
 
December 31, 2013
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Trading securities
 
$

 
$

 
$

 
$

Other equity securities
 
23,304,321

 

 

 
23,304,321

Total Assets
 
$
23,304,321

 
$

 
$

 
$
23,304,321

November 30, 2012
 
 
November 30, 2012
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Trading securities
 
$
55,219,411

 
$
27,480,191

 
$
27,739,220

 
$

Other equity securities
 
19,866,621

 

 

 
19,866,621

Total Assets
 
$
75,086,032

 
$
27,480,191

 
$
27,739,220

 
$
19,866,621

December 31, 2012
 
 
December 31, 2012
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Trading securities
 
$
4,318,398

 
$
4,318,398

 
$

 
$

Other equity securities
 
19,707,126

 

 

 
19,707,126

Total Assets
 
$
24,025,524

 
$
4,318,398

 
$

 
$
19,707,126



The changes for all Level 3 securities measured at fair value on a recurring basis using significant unobservable inputs for the years ended December 31, 2012, November 30, 2012, and for the one-month transition period ended December 31, 2012 are as follows:
 
For the Years Ended
 
For the One-Month Transition Period Ended
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
Fair value beginning balance
$
19,707,126

 
$
41,856,730

 
$
19,866,621

Total realized and unrealized gains (losses) included in net income
5,292,890

 
16,190,428

 
(159,495
)
Sales

 
(35,919,672
)
 

Return of capital adjustments impacting cost basis of securities
(1,695,695
)
 
(2,260,865
)
 

Fair value ending balance
$
23,304,321

 
$
19,866,621

 
$
19,707,126

Changes in unrealized gains, included in net income, relating to securities still held (1)
$
5,292,890

 
$
5,018,152

 
$
(159,495
)

(1) Located in Net realized and unrealized gain (loss) on other equity securities in the Consolidated Statements of Income
As of November 30, 2011, the Company’s other equity securities, which represented equity interests in private companies, and were classified as Level 3 assets, included High Sierra Energy, LP. On June 19, 2012, NGL Energy Partners, LP and certain of its affiliates (collectively “NGL”) acquired High Sierra Energy, LP and High Sierra Energy GP, LLC (collectively “High Sierra”) pursuant to which NGL, a New York Stock Exchange listed company, paid to the limited partners of High Sierra approximately $9.4 million in cash and approximately 1.2 million newly issued units of NGL. A realized gain of $15.8 million was recognized during the third quarter of 2012 upon the sale. These NGL units are classified as a Level 2 Trading security above as of November 30, 2012. The Company had liquidated all its NGL holdings by March 31, 2013.
The Company utilizes the beginning of reporting period method for determining transfers between levels. There were no transfers between levels 1, 2 or 3 for the years ended December 31, 2013, November 30, 2012, or the period from December 1, 2012 through December 31, 2012.
In accordance with ASC 820, The Company fair values their derivative financial instruments. Please refer to Footnote 12, Interest Rate Hedge Swaps, for more information.
Valuation Techniques and Unobservable Inputs
An equity security of a publicly traded company acquired in a private placement transaction without registration under the Securities Act of 1933, as amended (the “1933 Act”), is subject to restrictions on resale that can affect the security’s liquidity (and hence its fair value). If the security has a common share counterpart trading in a public market, the Company generally determines an appropriate percentage discount for the security in light of the restrictions that apply to its resale (taking into account, for example, whether the resale restrictions of Rule 144 under the 1933 Act apply). This pricing methodology applies to the Company’s Level 2 trading securities.
The Company’s other equity securities, which represent securities issued by private companies, are classified as Level 3 assets. Valuation of these investments is determined by weighting various valuation metrics for each security. If the Company holds an investment in a private company, who holds restricted shares in a publicly traded company, the same pricing methodology that applies to the Company's level 2 trading securities mentioned above would apply. Significant judgment is required in selecting the assumptions used to determine the fair values of these investments. See Note 2, Significant Accounting Policies.
The Company’s investments in private companies are typically valued using one of or a combination of the following valuation techniques: (i) analysis of valuations for publicly traded companies in a similar line of business (“public company analysis”), (ii) analysis of valuations for comparable M&A transactions (“M&A analysis”) and (iii) discounted cash flow analysis. The table entitled “Quantitative Table for Valuation Techniques” outlines the valuation technique(s) used for each asset category.
The public company analysis utilizes valuation multiples for publicly traded companies in a similar line of business as the portfolio company to estimate the fair value of such investment. Typically, the Company’s analysis focuses on the ratio of enterprise value ("EV") to earnings before interest expense, income tax expense, depreciation and amortization (“EBITDA”) which is commonly referred to as an EV/EBITDA multiple. The Company selects a range of multiples given the trading multiples of similar publicly traded companies and applies such multiples to the portfolio company’s EBITDA to estimate the portfolio company’s trailing, proforma, projected or average (as appropriate) EBITDA to estimate the portfolio company’s enterprise value and equity value. The Company also selects a range of trading market yields of similar public companies and applies such yields to the portfolio company’s estimated distributable cash flow. When calculating these values, the Company applies a discount, when applicable, to the portfolio company’s estimated equity value for the size of the company and the lack of liquidity in the portfolio company’s securities.
The M&A analysis utilizes valuation multiples for historical M&A transactions for companies or assets in a similar line of business as the portfolio company to estimate the fair value of such investment. Typically, the Company’s analysis focuses on EV/EBITDA multiples. The Company selects a range of multiples based on EV/EBITDA multiples for similar M&A transactions or similar companies and applies such ranges to the portfolio company’s analytical EBITDA to estimate the portfolio company’s enterprise value.
The discounted cash flow ("DCF") analysis is used to estimate the equity value for the portfolio company based on estimated DCF of such portfolio company. Such cash flows include an estimate of terminal value for the portfolio company. A present value of these cash flows is determined by using estimated discount rates (based on the Company’s estimate for weighted average cost of capital for such portfolio company).
Under all of these valuation techniques, the Company estimates operating results of its portfolio companies (including EBITDA). These estimates utilize unobservable inputs such as historical operating results, which may be unaudited, and projected operating results, which will be based on expected operating assumptions for such portfolio company. The Company also consults with management of the portfolio companies to develop these financial projections. These estimates will be sensitive to changes in assumptions specific to such portfolio company as well as general assumptions for the industry. Other unobservable inputs utilized in the valuation techniques outlined above include: possible discounts for lack of marketability, selection of publicly-traded companies, selection of similar M&A transactions, selected ranges for valuation multiples, selected range of yields and expected required rates of return and weighted average cost of capital. The various inputs will be weighted as appropriate, and other factors may be weighted into the valuation, including recent capital transactions of the Company.
Changes in EBITDA multiples, or discount rates may change the fair value of the Company’s portfolio investments. Generally, a decrease in EBITDA multiples or DCF multiples, or an increase in discount rates, when applicable, may result in a decrease in the fair value of the Company’s portfolio investments.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may fluctuate from period to period. Additionally, the fair value of the Company’s investments may differ from the values that would have been used had a ready market existed for such investments and may differ materially from the values that the Company may ultimately realize.
The following table summarizes the significant unobservable inputs that the Company uses to value its portfolio investments categorized as Level 3 as of December 31, 2013, November 30, 2012 and December 31, 2012.
Quantitative Table for Valuation Techniques 
Significant Unobservable Inputs Used To Value Portfolio Investments
December 31, 2013
 
 
 
 
 
 
Unobservable Inputs
 
Range
 
Weighted Average
Assets at Fair Value
 
Fair Value
 
Valuation Technique
 
 
Low
 
High
 
Other equity securities, at fair value
 
$
23,304,321

 
Public company historical EBITDA analysis
 
Historical EBITDA Valuation Multiples
 
9.6x
 
10.6x
 
10.1x
 
 
 
 
Public company projected EBITDA analysis
 
Projected EBITDA Valuation Multiples
 
8.3x
 
9.3x
 
8.8x
 
 
 
 
M&A company analysis
 
EV/LTM 2012 EBITDA
 
8.3x
 
9.3x
 
8.8x
 
 
 
 
Discounted cash flow
 
Weighted Average Cost of Capital
 
9.5%
 
14.0%
 
11.8%
 
November 30, 2012
 
 
 
 
 
 
Unobservable Inputs
 
Range
 
Weighted Average
Assets at Fair Value
 
Fair Value
 
Valuation Technique
 
 
Low
 
High
 
Other equity securities, at fair value
 
$
19,866,621

 
Public company historical EBITDA analysis
 
Historical EBITDA Valuation Multiples
 
9.4x
 
10.4x
 
9.95x
 
 
 
 
Public company projected EBITDA analysis
 
Projected EBITDA Valuation Multiples
 
8.1x
 
9.8x
 
8.95x
 
 
 
 
Public company yield analysis
 
Distributable Cash Flow Yield
 
8.11%
 
9.11%
 
8.61%
 
 
 
 
M&A company analysis
 
EV/LTM 2012 EBITDA
 
9.3x
 
9.9x
 
9.6x
 
 
 
 
Discounted cash flow
 
Weighted Average Cost of Capital
 
9.5%
 
13.0%
 
11.25%

December 31, 2012
 
 
 
 
 
 
Unobservable Inputs
 
Range
 
Weighted Average
Assets at Fair Value
 
Fair Value
 
Valuation Technique
 
 
Low
 
High
 
Other equity securities, at fair value
 
$
19,707,126

 
Public company historical EBITDA analysis
 
Historical EBITDA Valuation Multiples
 
9.5x
 
11.6x
 
10.6x
 
 
 
 
Public company projected EBITDA analysis
 
Projected EBITDA Valuation Multiples
 
8.8x
 
10.1x
 
9.5x
 
 
 
 
M&A company analysis
 
EV/LTM 2012 EBITDA
 
8.9x
 
10.3x
 
9.6x
 
 
 
 
Discounted cash flow
 
Weighted Average Cost of Capital
 
9.5%
 
13.0%
 
11.3%


As of December 31, 2013, November 30, 2012, and December 31, 2012 the Company held a 6.7 percent equity interest in Lightfoot Capital Partners LP and an 11.1 percent equity interest in VantaCore Partners LP.

Certain condensed financial information of the unconsolidated affiliates follows. The information is the most recently available financial information for these companies, which is the last twelve months ending September 30, 2013 for Lightfoot Capital Partners LP (6.7 percent) and the last twelve months ending November 30, 2013 for VantaCore Partners LP (11.1 percent).

Revenues
 
$
127,356,000

 
Current assets
 
$
36,726,000

Operating expenses
 
$
66,167,000

 
Noncurrent assets
 
$
417,998,000

Net income
 
$
33,360,000

 
Current liabilities
 
$
28,285,000

 
 
 
 
Noncurrent liabilities
 
$
191,405,000

 
 
 
 
Partner's equity
 
$
235,034,000




The following section describes the valuation methodologies used by the Company for estimating fair value for financial instruments not recorded at fair value, but fair value is included for disclosure purposes only, as required under disclosure guidance related to the fair value of financial instruments.
Cash and Cash Equivalents — The carrying value of cash, amounts due from banks, federal funds sold and securities purchased under resale agreements approximates fair value.

Escrow Receivable — The escrow receivable due to the Company as of November 30, 2012, which relates to the sale of International Resource Partners, LP, was anticipated to be released upon satisfaction of certain post-closing obligations and/or the expiration of certain time periods (the shortest of which was to be 14 months from the April 2011 closing date of the sale). As of November 30, 2012, the fair value of the escrow receivable reflected a discount for the potential that the full amount due to the Company would not be realized. No clear agreement had been reached as to the remaining escrow balance and management anticipated that it may take more than a year to satisfy other post-closing obligations, prior to receiving the approximately $699 thousand escrow balance. The final payment from the sale was received as of June 30, 2013.
Long-term Debt — The fair value of the Company’s long-term debt is calculated, for disclosure purposes, by discounting future cash flows by a rate equal to the Company’s current expected rate for an equivalent transaction.
Line of Credit — The carrying value of the line of credit approximates the fair value due to its short term nature.
Carrying and Fair Value Amounts
 
 
Level within fair value hierarchy
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
 
 
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Financial Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
Level 1
 
$
17,963,266

 
$
17,963,266

 
$
14,333,456

 
$
14,333,456

 
$
17,680,783

 
$
17,680,783

Escrow receivable
 
Level 2
 
$

 
$

 
$
698,729

 
$
698,729

 
$
698,729

 
$
698,729

Financial Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
Level 2
 
$
70,000,000

 
$
70,000,000

 
$

 
$

 
$
70,000,000

 
$
70,000,000

Line of credit
 
Level 1
 
$
81,935

 
$
81,935

 
$
120,000

 
$
120,000

 
$

 
$

Intangibles
INTANGIBLES
INTANGIBLES
The Company has recorded an intangible lease asset, related to the PNM Lease Agreement, for the fair value of the amount by which the remaining contractual lease payments exceed market lease rates at the time of acquisition. The intangible lease asset is being amortized on a straight-line basis over the life of the lease term, which expires on April 1, 2015. Annual amortization of the intangible lease asset totaling $292 thousand for the years ended December 31, 2013 and November 30, 2012, $122 thousand for the year ended November 30, 2011, and monthly amortization of $24 thousand for the one-month transition period ended December 31, 2012, is reflected in the accompanying Consolidated Statements of Income as a reduction to lease revenue. These same amounts are included in Amortization expense in the accompanying Consolidated Statements of Cash Flows.
Intangible Lease Asset
 
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
Intangible lease asset
 
$
1,094,771

 
$
1,094,771

 
$
1,094,771

Accumulated amortization
 
(729,847
)
 
(413,580
)
 
(437,908
)
Net intangible lease asset
 
$
364,924


$
681,191

 
$
656,863



Remaining Estimated Amortization On Intangibles
Year ending December 31,
 
Amount
2014
 
291,939

2015
 
72,985

Total
 
$
364,924

Credit Facilities
CREDIT FACILITIES
CREDIT FACILITIES
On December 20, 2012, Pinedale LP closed on a $70 million secured term credit facility with KeyBank serving as a lender and as administrative agent on behalf of other lenders participating in the credit facility. Funding of the credit facility was conditioned on our contribution of the proceeds of the stock issuance to Pinedale LP and the receipt by Pinedale LP of the $30 million co-investment funds from Prudential. Outstanding balances under the credit facility will generally accrue interest at a variable annual rate equal to LIBOR plus 3.25 percent (3.42 percent as of December 31, 2013). The credit facility will remain in effect through December 2015, with an option to extend through December 2016. The credit facility is secured by the Pinedale LGS. Pinedale LP is obligated to pay all accrued interest quarterly and is further obligated to make monthly principal payments, beginning March 7, 2014, in the amount of $294 thousand or 0.42 percent of the principal balance as of March 1, 2014. Principal payment of $2.9 million and $3.5 million are required in 2014 and 2015, respectively. The registrant has provided to KeyBank a guarantee against certain inappropriate conduct by or on behalf of Pinedale LP or us. The credit agreement contains, among other restrictions, specific financial covenants including the maintenance of certain financial coverage ratios and a minimum net worth requirement. The Company is required to maintain a restricted collateral account into which Ultra Wyoming makes all lease payments under the Pinedale Lease Agreement. Payments of principal and interest pursuant to the credit facility are drawn by KeyBank directly from the restricted collateral account prior to transferring the remaining cash to the Pinedale LP operating account. The balance in the restricted collateral account at December 31, 2013 was $0. As of December 31, 2013, Pinedale LP was in compliance with all of the financial covenants of the secured term credit facility.

Pinedale LP's credit facility with KeyBank limits distributions by Pinedale LP to the Company until the Company has qualified as a REIT under the Code.  The KeyBank credit facility also requires that Pinedale maintain minimum net worth levels and certain leverage ratios, which along with other provisions of the credit facility limit cash dividends and loans to the Company.  At December 31, 2013, restricted net assets were $93.2 million.  Under the most restrictive covenants, consolidated retained earnings in the amount of $22.9 million were free of limitations on the payment of dividends on December 31, 2013.
As of December 31, 2013, November 30, 2012, and December 31, 2012, approximately $1.0 million, $0 and $1.5 million, respectively, in net deferred debt issuance costs are included in the accompanying Consolidated Balance Sheets. The deferred costs will be amortized over the anticipated three-year term of the KeyBank credit facility. For the years ended December 31, 2013, November 30, 2012 and 2011 and the one-month transition period ended December 31, 2012, $515 thousand, $0, $0, and $17 thousand, respectively, is included in interest expense within the accompanying Consolidated Statements of Income.
We have executed interest rate swap derivatives to add stability to our interest expense and to manage our exposure to interest rate movements on our LIBOR based borrowings. Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. See Note 12 for further information regarding interest rate swap derivatives.
On May 8, 2013, the registrant entered into a $20 million revolving line of credit with KeyBank (the "Revolver"). The primary term of the facility is three years with the option for a one-year extension. Outstanding balances under Revolver will accrue interest at a variable annual rate equal to LIBOR plus 4.0 percent or the Prime Rate plus 2.75 percent at our election. We intend to use the facility to fund general working capital needs and if necessary, to provide short-term financing for the acquisition of additional real property assets. The amount available to be drawn under this facility is subject to a borrowing base limitation. If we were to use the Revolver to provide short-term financing for an acquisition, we would expect the assets acquired to be taken into consideration in determining the borrowing base. As of December 31, 2013 there had been no borrowings against the Revolver and $20 million in unused capacity available.
As of December 31, 2013, November 30, 2012, and December 31, 2012, approximately $208 thousand, $0 and $0 in net deferred debt issuance costs are included in the accompanying Consolidated Balance Sheets. The deferred costs will be amortized over the anticipated four-year term of the Revolver facility. For the years ended December 31, 2013, November 30, 2012 and 2011 and the one-month transition period ended December 31, 2012, $41.7 thousand, $0, $0, and $0 is included in interest expense within the accompanying Consolidated Statements of Income.
On October 29, 2010, Mowood entered into a Revolving Note Payable Agreement (“2010 Note Payable Agreement”) with a financial institution with a maximum borrowing base of $1.3 million. The 2010 Note Payable Agreement was amended and restated on October 29, 2011, was again amended and restated on October 29, 2012 and was terminated effective October 29, 2013. Borrowings on the 2010 Note Payable Agreement was secured by all of Mowood’s assets. Interest accrued at LIBOR, plus 4 percent, was payable monthly, with all outstanding principal and accrued interest payable on the termination date of October 29, 2013. The 2010 Note Payable Agreement contained various restrictive covenants, with the most significant relating to minimum consolidated fixed charge ratio, the incidence of additional indebtedness, member distributions, extension of guaranties, future investments in other subsidiaries and change in ownership.

On October 15, 2013, Mowood entered into a Revolving Note Payable Agreement (“2013 Note Payable Agreement”) with a financial institution with a maximum borrowing base of $1.5 million. Borrowings on the 2013 Note Payable Agreement are secured by Mowood’s assets. Interest accrues at Prime Lending Rate as published in the Wall Street Journal, plus 0.5 percent (3.75% as of December 31, 2013), is payable monthly, with all outstanding principal and accrued interest payable on the termination date of October 15, 2014. As of December 31, 2013 there were $82 thousand in outstanding borrowings under this 2013 Note Payable Agreement. The 2013 Note Payable Agreement contains various restrictive covenants, with the most significant relating to minimum consolidated fixed charge ratio, the incidence of additional indebtedness, member distributions, extension of guaranties, future investments in other subsidiaries and change in ownership. Mowood was in compliance with the various covenants of the 2013 Note Payable Agreement as of December 31, 2013.
On November 30, 2011, the Company entered into a 180-day rolling evergreen Margin Loan Facility Agreement (“Margin Loan Agreement”) with Bank of America, N.A. The terms of the Margin Loan Agreement provided for a $10 million facility that was secured by certain of the Company’s assets. Outstanding balances generally accrued interest at a variable rate equal to one-month LIBOR plus 0.75 percent and unused portions of the facility accrued a fee equal to an annual rate of 0.25 percent. In December of 2012, the assets which secured this facility were sold, and as a result, this Margin Loan Agreement was terminated effective December 20, 2012.
Interest Rate Hedge Swaps
INTEREST RATE HEDGE SWAPS
INTEREST RATE HEDGE SWAPS
Derivative Financial Instruments
Currently, the Company uses interest rate swaps to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including forward interest rate curves. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts.  The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate forward curves.
To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. In conjunction with the FASB's fair value measurement guidance in ASC 820, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2013, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
The table below presents the Company's assets and liabilities measured at fair value on a recurring basis as well as their classification on the Consolidated Balance Sheets as of December 31, 2013 and December 31, 2012, aggregated by the level in the fair value hierarchy within which those measurements fall. Hedges that are valued as receivable by the Company are considered Asset Derivatives and those that are valued as payable by the Company are considered Liability Derivatives. There were no outstanding derivative financial instruments as of November 30, 2012.
Derivative Financial Instruments Measured At Fair Value on a Recurring Basis
 
 
Balance Sheet
Classification
 
 
Fair Value Hierarchy
Balance Sheet Line Item
 
 
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
December 31, 2013
Hedged derivative asset
 
Assets
 
 
$

 
$
680,968

 
$

Hedged derivative liability
 
Liabilities
 
 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
Prepaid expenses and other assets
 
Assets
 
 
$

 
$

 
$

Accounts payable and other accrued liabilities
 
Liabilities
 
 
$

 
$
316,756

 
$

 
 
 
 
 
 
 
 
 
 
Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.)
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)

Risk Management Objective of Using Derivatives
The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected cash receipts and its known or expected cash payments principally related to the Company's investments and borrowings.
Cash Flow Hedges of Interest Rate Risk
The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an upfront premium.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated Other Comprehensive Income (“AOCI”) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company elected to designate its interest rate swaps as cash flow hedges in April 2013. During the year ended December 31, 2013, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the year ended December 31, 2013 there was a gain of approximately $6,000, due to ineffectiveness, recorded in earnings. Ineffectiveness resulted from interest rate swaps that did not have a fair value of zero at inception of the hedging relationship. The Company did not have any derivatives designated as Cash Flow Hedges during the years ended November 30, 2012 or 2011 or the one-month transition period ended December 31, 2012.

Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. Over the next 12 months, the Company estimates that an additional $264 thousand will be reclassified as an increase to interest expense.

As of December 31, 2013, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
Outstanding Derivatives Designated as Cash Flow Hedges of Interest Rate Risk
Interest Rate Derivative
 
Number of Instruments
 
Notional Amount Outstanding
 
 
 
 
 
Floating Rate Received
 
Fixed Rate Paid
 
 
 
Effective Date
 
Termination Date
 
 
Interest Rate Swap
 
2
 
$52,500,000
 
February 5, 2013
 
December 5, 2017
 
1-month US Dollar LIBOR
 
0.865%

Non-Designated Hedges

Derivatives not designated as hedges are not speculative and are used to manage the Company's exposure to interest rate movements and other identified risks. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings and were equal to net losses of approximately $75 thousand and $317 thousand for the year ended December 31, 2013 and the one-month transition period ended December 31, 2012. The Company did not have any derivatives during the year ended November 30, 2012 or 2011.

As the Company elected to designate its interest rate swaps in cash flow hedging relationships in April 2013 (see Cash Flow Hedges of Interest Rate Risk above), the Company did not have any instruments not designated as hedges as of December 31, 2013.

Tabular Disclosure of the Effect of Derivative Instruments on the Income Statement
The tables below present the effect of the Company's derivative financial instruments on the Income Statement for the years ended December 31, 2013 and November 30, 2012, and for the one-month transition period ended December 31, 2012.
Effect of Derivative Financial Instruments on Income Statement
Derivatives in Cash Flow Hedging Relationships
 
Amount of Gain (Loss) Recognized in AOCI
on Derivative
(Effective Portion)
 
Location of
Gain (Loss) Reclassified from AOCI into Net Income (Effective Portion)
 
Amount of Gain (Loss) Reclassified from AOCI on Derivatives (Effective Portion) Recognized in Net Income *
 
Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion, Amounts Excluded from Effectiveness Testing)
 
 
 
 
 
For the years ended:
 
December 31, 2013
 
November 30, 2012
 
 
December 31, 2013
 
November 30, 2012
 
 
December 31, 2013
 
November 30, 2012
Interest Rate Swaps
 
$
741,344

 
$

 
Interest Expense
 
$
(217,821
)
 
$

 
Interest Expense
 
$
5,969

 
$

For the one-month transition period ended:
 
December 31, 2012
 
 
 
 
 
December 31, 2012
 
 
 
 
 
December 31, 2012
 
 
Interest Rate Swaps
 
$

 
 
 
 
 
$

 
 
 
 
 
$

 
 
Derivatives Not Designated as Hedging Instruments
 
Location of
Gain (Loss) Recognized in Income on Derivative
 
Amount of Gain (Loss) Recognized in Income on Derivative *
 
 
 
 
 
 
 
 
For the Years Ended
 
For the One-Month transition Period Ended December 31, 2012
 
 
 
 
 
 
December 31, 2013
 
November 30, 2012
 
 
 
 
 
 
 
Interest Rate Swaps
 
Interest Expense
 
$
(75,200
)
 
$

 
$
(316,756
)
 
 
 
 
 
 
* The gain or (loss) recognized in income on derivatives includes changes in fair value of the derivatives as
    well as the periodic cash settlements and interest accruals for derivatives not designated as hedging
    instruments


Tabular Disclosure of Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company's derivatives as of December 31, 2013 and December 31, 2012. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Balance Sheet. There were no offsetting derivative liabilities as of December 31, 2013 and no offsetting derivative assets as of December 31, 2012.
Offsetting Derivatives
 
 
Gross Amounts of Recognized Assets
 
Gross Amounts Offset in the Statement of Financial Position
 
Net Amounts of Assets presented in the Statement of Financial Position
 
Gross Amounts Not
Offset in the Statement
of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Instruments
 
Cash Collateral Received
 
Net Amount
Offsetting Derivative Assets as of December 31, 2013
 
$
680,968

 
$

 
$
680,968

 
$

 
$

 
$
680,968

 
 
 
 
 
 
 
 
 
 
 
 
 
Offsetting Derivative Liabilities as of December 31, 2012
 
$
316,756

 
$

 
$
316,756

 
$

 
$

 
$
316,756


Credit-Risk Related Contingent Features
The Company has agreements with some of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the company could also be declared in default on its derivative obligations.
As of December 31, 2013, the Company did not have any derivatives that were in a net liability position. Therefore, the credit risk-related contingent features discussed above would not apply as of December 31, 2013.
Warrants
WARRANTS
WARRANTS
At December 31, 2013 and 2012 and November 30, 2012, the Company had 945,594 warrants issued and outstanding. The warrants were issued to stockholders who invested in the Company’s initial private placements and became exercisable on February 7, 2007 (the closing date of the Company’s initial public offering of common shares), subject to a lock-up period with respect to the underlying common shares. Each warrant entitled the holder to purchase one common share at the exercise price of $11.41 per common share. Warrants were issued as separate instruments from the common shares and are permitted to be transferred independently from the common shares. The warrants had no voting rights and the common shares underlying the unexercised warrants had no voting rights until such common shares were received upon exercise of the warrants. All warrants expired on February 6, 2014.
Earnings Per Share
EARNINGS PER SHARE
EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:
Earnings Per Share
 
For the Years Ended
 
For the One-Month Transition Period Ended December 31, 2012
 
December 31, 2013
 
November 30, 2012
 
November 30, 2011
 
Net income attributable to CORR Stockholders
$
4,502,339

 
$
12,348,721

 
$
2,922,143

 
$
(1,503,396
)
Basic and diluted weighted average shares (1)
24,149,396

 
9,182,425

 
9,159,809

 
15,564,861

Basic and diluted earnings per share attributable to CORR Stockholders
$
0.19

 
$
1.34

 
$
0.32

 
$
(0.10
)
(1)
Warrants to purchase shares of common stock were outstanding during the periods reflected in the table above, but were not included in the computation of diluted earnings per share because the warrants’ exercise price was greater than the average market value of the common shares and, therefore, the effect would be anti-dilutive.
The decrease in earnings per share for the year ended December 31, 2013 as compared to the year ended November 30, 2012 reflects the overall change in the business structure as the Company transitions out of securities-based transactions and into ownership and leasing of real property assets. Additionally, 14,950,000 shares were issued in the one-month transition period ended December 31, 2012.
Quarterly Financial Data (Unaudited) (Notes)
Quarterly Financial Data (Unaudited)
Quarterly Financial Data (Unaudited) 
 
 
For the Fiscal Quarters Ended
 
 
March 31, 2013
 
June 30, 2013
 
September 30, 2013
 
December 31, 2013
Lease revenue
 
$
5,638,244

 
$
5,638,244

 
$
5,638,244

 
$
5,638,244

Sales revenue
 
2,515,573

 
1,929,772

 
1,935,868

 
2,351,831

Total revenue
 
8,153,817

 
7,568,016

 
7,574,112

 
7,990,075

Cost of sales
 
2,003,639

 
1,476,348

 
1,411,318

 
1,843,360

Management fees, net of expense reimbursements
 
643,814

 
646,394

 
647,380

 
699,677

All other expenses
 
3,705,925

 
3,845,005

 
4,227,013

 
3,880,512

Total expenses
 
6,353,378

 
5,967,747

 
6,285,711

 
6,423,549

Income (loss) from operations, before income taxes
 
1,800,439

 
1,600,269

 
1,288,401

 
1,566,526

Realized and unrealized gain (loss) on securities transactions, before income taxes
 
2,742,049

 
(30,976
)
 
872,020

 
1,783,460

Distributions and income from investments, net
 
13,124

 
2,701

 
568,332

 
657

Income tax expense, net
 
(737,381
)
 
(907,275
)
 
(818,134
)
 
(825,588
)
Total other income (loss) and expense, net, before income taxes
 
2,017,792

 
(935,550
)
 
622,218

 
958,529

Income (loss) before income taxes
 
3,818,231

 
664,719

 
1,910,619

 
2,525,055

Current and deferred tax expense, net
 
1,020,944

 
241,754

 
1,105,125

 
581,695

Net income
 
$
2,797,287

 
$
422,965

 
$
805,494

 
$
1,943,360

Net income attributable to non-controlling interest
 
$
384,534

 
$
352,893

 
$
366,042

 
$
363,298

Net income attributable to CORR stockholders
 
$
2,412,753

 
$
70,072

 
$
439,452

 
$
1,580,062

Basic and diluted earnings per share
 
$
0.10

 
$0.00
 
$
0.02

 
$
0.06

 
 
For the Fiscal Quarters Ended
 
 
February 28,
2012
 
May 31,
2012
 
August 31,
2012
 
November 30,
2012
Lease income
 
$
638,244

 
$
638,244

 
$
638,244

 
$
638,243

Sales revenue
 
2,437,310

 
1,439,958

 
1,927,626

 
2,216,128

Total revenue
 
3,075,554

 
2,078,202

 
2,565,870

 
2,854,371

Cost of sales
 
2,004,672

 
1,031,114

 
1,381,161

 
1,661,155

Management fees, net of expense reimbursements
 
247,381

 
254,965

 
298,051

 
246,399

All other expenses
 
599,865

 
892,759

 
1,082,911

 
1,117,268

Total expenses
 
2,851,918

 
2,178,838

 
2,762,123

 
3,024,822

Income (loss) from operations, before income taxes
 
223,636

 
(100,636
)
 
(196,253
)
 
(170,451
)
Realized and unrealized gain (loss) on securities transactions, before income taxes
 
8,931,466

 
3,237,325

 
8,492,502

 
(479,416
)
Distributions and income from investments, net
 
85,262

 
55,462

 
(502,176
)
 
82,057

Interest Expense
 
(27,409
)
 
(25,229
)
 
(16,780
)
 
(11,705
)
Total other income (loss) and expense, net, before income taxes
 
8,989,319

 
3,267,558

 
7,973,546

 
(409,064
)
Income (loss) before income taxes
 
9,212,955

 
3,166,922

 
7,777,293

 
(579,515
)
Current and deferred tax expense, net
 
(3,465,914
)
 
(1,190,162
)
 
(2,788,785
)
 
215,927

Net income
 
$
5,747,041

 
$
1,976,760

 
$
4,988,508

 
$
(363,588
)
Basic and diluted earnings (loss) per share
 
$
0.63

 
$
0.21

 
$
0.54

 
$
(0.04
)

On February 5, 2013, the Board of Directors of the Company approved a change in the Company's fiscal year end from November 30 to December 31. This change to the calendar year reporting cycle began January 1, 2013. Financial information for the years ended December 31, 2012 and 2011 has not been included in this Form 10-K for the following reasons: (i) the years ended November 30, 2012 and 2011 provide as meaningful a comparison to the year ended December 31, 2013 as would the years ended December 31, 2012 and 2011; (ii) there are no significant factors, seasonal or other, that would impact the comparability of information if the results for the years ended December 31, 2012 and 2011 were presented in lieu of results for the years ended November 30, 2012 and 2011; and (iii) it was not practicable or cost justified to prepare this information.
CorEnergy Historical Summary Financial
CORENERGY HISTORICAL FINANCIALS
CORENERGY HISTORICAL FINANCIALS

Summary Balance Sheets and Statements of Income for the one-month transition period ending December 31, 2012 and the comparative one-month period ended December 31, 2011 are presented below. For further information please refer to the section with Management's Discussion and Analysis.

CorEnergy Historical Summary Consolidated Balance Sheets
 
December 31, 2012
 
December 31, 2011
(Unaudited)
Current assets
$
19,202,432

 
$
5,307,970

Non-current assets
274,459,553

 
90,623,108

Total Assets
$
293,661,985

 
$
95,931,078

 
 
 
 
Current liabilities
$
8,290,065

 
$
1,552,281

Non-current liabilities
74,529,728

 
2,894,200

Total Liabilities
82,819,793

 
4,446,481

Shareholder's equity
210,842,192

 
91,484,597

Total Liabilities and Shareholder's Equity
$
293,661,985

 
$
95,931,078

 
 
 
 
 
CorEnergy Historical Summary Consolidated Statements of Income
 
For the One-
Month Transition Period Ended December 31, 2012
 
For the One-
Month Period Ended December 31, 2011
(Unaudited)
Revenues
$
1,726,901

 
$
1,079,612

Expenses
1,826,422

 
993,919

Operating Income (Loss)
(99,521
)
 
85,693

Other Income (Expense), net
(2,342,365
)
 
1,601,084

Income (Loss) before income tax benefit (provision)
(2,441,886
)
 
1,686,777

Income tax benefit (provision)
920,143

 
(628,493
)
Net Income (Loss)
(1,521,743
)
 
1,058,284

Less: Net Income (Loss) attributable to non-controlling interest
(18,347
)
 

Net Income (Loss) attributable to CORR Stockholders
$
(1,503,396
)
 
$
1,058,284


Subsequent Events
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS
The Company performed an evaluation of subsequent events through the date of the issuance of these financial statements and determined that no additional items require recognition or disclosure, except for the following:
Dividend
The 2013 fourth quarter dividend was paid in the first quarter of 2014. On January 3, 2014, our Board declared a dividend of $0.125 per share, payable January 23, 2014 to common stockholders of record as of January 13, 2014.
Lease Agreement with Arc Terminals
On January 21, 2014, our subsidiary, LCP Oregon, closed on a Purchase and Sale Agreement. LCP Oregon acquired the Portland Terminal Facility, with certain associated real property rights (the “Acquisition”) for $40 million in cash.
LCP Oregon entered into a long-term triple net Lease Agreement on January 21, 2014, relating to the use of the Portland Terminal Facility (the “Portland Lease Agreement”) with Arc Terminals Holdings LLC ("Arc Terminals"), an indirect wholly-owned subsidiary of Arc Logistics. Arc Logistics will guaranty the obligations of Arc Terminals under the Portland Lease Agreement. The Portland Lease Agreement grants Arc Terminals substantially all authority to operate, and imposes on them the responsibility for the operation of, the Portland Terminal Facility. During the initial term, Arc Terminals will make base monthly rental payments (to be increased on the fifth anniversary by the change in the consumer price index for the prior five years, and every year thereafter by the greater of 2 percent or the change in the consumer price index) and variable rent payments based on the volume of liquid hydrocarbons that flowed through the Portland Terminal Facility in the prior month. The base rent in the initial year of the Portland Lease Agreement increases to approximately $417,522 per month starting with August 2014 and each month thereafter. The base rent is also expected to increase during the initial year of the Portland Lease Agreement based on a percentage of specified construction costs at the Portland Terminal Facility incurred by LCP Oregon, estimated at $10 million. Variable rent is capped at 30 percent of total rent, which would be the equivalent of the Portland Terminal Facility’s expected throughput capacity.
On January 21, 2014, we closed a follow on public offering of 7,475,000 shares of common stock, raising approximately $49 million in gross proceeds at $6.50 per share (net proceeds of approximately $46 million after underwriters’ discount). The number of shares includes additional shares that were sold pursuant to an over-allotment option granted to the underwriters of CorEnergy’s public offering of 6,500,000 shares. The net proceeds from this offering were used to finance the Acquisition.
We financed the Acquisition with cash. Currently, the Portland Terminal Facility accounts for a significant portion of our total assets and the lease payments under the Portland Lease Agreement accounts for a significant portion of our total revenue.
Loan Agreement with Black Bison
On March 13, 2014, our subsidiary Corridor Bison, LLC ("Corridor Bison") entered into a Loan Agreement with Black Bison Water Services, LLC ("Water Services"), pursuant to which Corridor Bison agreed to loan to Water Services up to $11,500,000 (the "Loan"). The proceeds of the Loan are to be used by Water Services and its affiliates to finance the acquisition and development of real property that will provide water sourcing, water disposal, or water treating and recycling services for the oil and natural gas industry. Water Services' initial Loan draw in the amount of $4,265,000 was used to acquire real property in Wyoming and to pay Loan transaction expenses.
Interest will initially accrue on the outstanding principal amount of the Loan at an annual base rate of 12 percent, which base rate will increase by 2 percent of the current base rate per year. In addition, starting in April 2015 and continuing for each month thereafter, the outstanding principal of the Loan will bear variable interest calculated as a function of the increase in volume of water treated by Water Services during the particular month. The base rent plus variable rent is capped at 19 percent per annum. The Loan matures on March 31, 2024 and is to be amortized by quarterly payments beginning March 31, 2015 and annual prepayments based upon free cash flows of the Borrower and its affiliates commencing in April 2015. The Loan is secured by the real property and equipment held by Water Services and the outstanding equity in Water Services and its affiliates. The Loan is also guarantied by all affiliates of Water Services.
As a condition to the Loan, Corridor Bison acquired a Warrant to purchase up to 15 percent of the outstanding equity of Black Bison Intermediate Holdings, LLC ("Intermediate Holdings"). Corridor Bison paid $34,000 for the Warrant, which amount was determined to represent the fair value of the Warrant as of the date of purchase. The exercise price of the Warrant, $3.16 per Unit, was determined based on the value of 15 percent of the contributed capital of Intermediate Holdings as of the date of purchase and increases at a rate of 12 percent per annum. The Warrant grants to Corridor Bison certain rights with respect to the management of the Intermediate Holdings and Water Services.


CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Notes)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CorEnergy Infrastructure Trust, Inc.
CONDENSED BALANCE SHEETS
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
Assets
 
 
 
 
 
Leased property, net of accumulated depreciation of $3,790,570, $1,131,680, and $1,327,517 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
$
15,374,167

 
$
12,995,169

 
$
17,592,988

Investments
135,574,270

 
20,697,003

 
151,857,174

Cash and cash equivalents
16,649,618

 
14,289,425

 
16,504,354

Trading securities, at fair value

 
55,219,411

 

Due from subsidiary
3,972,006

 

 

Note receivable from subsidiary
5,300,000

 
3,800,000

 
5,300,000

Escrow receivable

 
698,729

 

Lease receivable
711,229

 

 

Intangible lease asset, net of accumulated amortization of $729,847, $413,580, and $437,908 at December 31, 2013, November 30, 2012, and December 31, 2012 respectively
364,924

 
681,191

 
656,863

Deferred debt issuance costs, net of accumulated amortization of $56,019, $0 and $448 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
235,693

 

 
41,262

Deferred lease costs, net of accumulated amortization of $5,490, $0, and $172 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
74,286

 

 
79,604

Income tax receivable
512,060

 

 

Prepaid expenses and other assets
156,153

 
2,078,724

 
75,665

Total Assets
$
178,924,406

 
$
110,459,652

 
$
192,107,910

Liabilities and Equity
 
 
 
 
 
Long-term debt
$

 
$

 
$

Accounts payable and other accrued liabilities
1,731,066

 
2,060,972

 
2,861,696

Distributions payable to non-controlling interest

 

 

Lease obligation

 

 

Income tax liability

 

 
3,855,947

Deferred tax liability

 
7,172,133

 
2,396,043

Line of credit

 

 

Unearned revenue

 
2,370,762

 
2,133,685

Total Liabilities
$
1,731,066

 
$
11,603,867

 
$
11,247,371

Equity

 

 

Warrants, no par value; 945,594 issued and outstanding at December 31, 2013, November 30, 2012, and December 31, 2012 (5,000,000 authorized)
$
1,370,700

 
$
1,370,700

 
$
1,370,700

Capital stock, non-convertible, $0.001 par value; 24,156,163 shares issued and outstanding at December 31, 2013, 9,190,667 shares issued and outstanding at November 30, 2012, and 24,140,667 shares issued and outstanding at December 31, 2012 (100,000,000 shares authorized)
24,156

 
9,191

 
24,141

Additional paid-in capital
173,441,019

 
91,763,475

 
175,256,675

Accumulated retained earnings
1,580,062

 
5,712,419

 
4,209,023

Accumulated other comprehensive income
777,403

 

 

Total Equity
177,193,340

 
98,855,785

 
180,860,539

Total Liabilities and Equity
$
178,924,406

 
$
110,459,652

 
$
192,107,910


SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CorEnergy Infrastructure Trust, Inc. - Continued
CONDENSED STATEMENTS OF INCOME AND CONSOLIDATED INCOME
 
For the Years Ended
 
For the One-Month Transition Period Ended
December 31, 2012
 
December 31, 2013
 
November 30, 2012
 
November 30, 2011
 
Revenue
 
 
 
 
 
 
 
Lease revenue
$
2,552,976

 
$
2,552,975

 
$
1,063,740

 
$
212,748

Earnings (loss) from subsidiary
5,720,413

 
356,336

 
86,967

 
(22,313
)
Total Revenue
8,273,389

 
2,909,311

 
1,150,707

 
190,435

Expenses
 
 
 
 
 
 
 
Management fees, net of expense reimbursements
366,863

 
1,046,796

 
968,163

 
155,242

Asset acquisition expenses
806,083

 
377,834

 
638,185

 
64,734

Professional fees
198,562

 
1,141,045

 
548,759

 
282,303

Depreciation expense
2,463,052

 
837,371

 
294,309

 
195,838

Amortization expense
5,320

 

 

 
172

Directors’ fees
24,788

 
85,050

 
70,192

 
6,000

Other expenses
113,001

 
232,248

 
205,795

 
27,500

Total Expenses
3,977,669

 
3,720,344

 
2,725,403

 
731,789

Operating Income (Loss)
$
4,295,720

 
$
(811,033
)
 
$
(1,574,696
)
 
$
(541,354
)
Other Income (Expense)

 

 

 

Net distributions and dividend income
$
6,681

 
$
261,472

 
$
786,151

 
$
48,136

Net realized and unrealized gain (loss) on trading securities

 
4,009,933

 
2,299,975

 
(1,769,058
)
Net realized and unrealized gain (loss) on other equity securities

 
16,171,944

 
2,283,773

 
(159,495
)
Other Income

 

 
40,000

 

Interest expense (income)
(703,091
)
 
54,661

 
30,203

 
1,768

Total Other Income (Expense)
709,772

 
20,388,688

 
5,379,696

 
(1,882,185
)
Income (Loss) before income taxes
5,005,492

 
19,577,655

 
3,805,000

 
(2,423,539
)
Taxes

 

 

 

Current tax expense (benefit)
(540,111
)
 
29,265

 
253,650

 
3,855,947

Deferred tax expense (benefit)
1,043,264

 
7,199,669

 
629,207

 
(4,776,090
)
Income tax expense (benefit), net
503,153

 
7,228,934

 
882,857

 
(920,143
)
Net Income (Loss)
4,502,339

 
12,348,721

 
2,922,143

 
(1,503,396
)



 


 


 


Other comprehensive income:


 


 


 


Changes in fair value of qualifying hedges
777,403

 

 

 

Total Comprehensive Income
$
5,279,742

 
$

 
$

 
$


SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CorEnergy Infrastructure Trust, Inc. - Continued

CONDENSED STATEMENTS OF CASH FLOW
 
For the Years Ended
 
For the One-Month Transition Period Ended
December 31, 2012
 
December 31, 2013
 
November 30, 2012
 
November 30, 2011
 
Net cash provided by operating activities
$
(8,040,654
)
 
$
9,391,301

 
$
2,284,927

 
$
223,494

Investing Activities
 
 
 
 
 
 
 
Purchases of long-term investments of trading and other equity securities

 

 
(38,060,281
)
 

Proceeds from sale of long-term investment of trading and other equity securities

 
9,983,169

 
53,950,583

 
26,085,740

Deferred lease costs

 

 

 
(796,649
)
Investment in consolidated subsidiaries

 

 

 
(108,300,100
)
Cash distributions from consolidated subsidiaries
19,337,911

 
281,133

 
71,023

 
483,346

Acquisition expenditures
(1,651,956
)
 
(942,707
)
 

 
2,318

Cash paid in business combination

 

 
(12,250,000
)
 

Net cash provided by investing activities
$
17,685,955

 
$
9,321,595

 
$
3,711,325

 
$
(82,525,345
)
Financing Activities
 
 
 
 
 
 
 
Debt financing costs
(30,002
)
 
(1,054,302
)
 

 

Net offering proceeds
(523,094
)
 

 

 
84,516,780

Dividends
(8,946,941
)
 
(3,919,249
)
 
(3,503,365
)
 

Payments on long-term debt

 
(2,188,000
)
 
(1,221,000
)
 

Net cash used in financing activities
$
(9,500,037
)
 
$
(7,161,551
)
 
$
(4,724,365
)
 
$
84,516,780

Net Change in Cash and Cash Equivalents
$
145,264

 
$
11,551,345

 
$
1,271,887

 
$
2,214,929

Cash and Cash Equivalents at beginning of period
16,504,354

 
2,738,080

 
1,466,193

 
14,289,425

Cash and Cash Equivalents at end of period
$
16,649,618

 
$
14,289,425

 
$
2,738,080

 
$
16,504,354

See accompanying notes to condensed financial statements.
 
 
 
 
 
 
 
Supplemental Disclosure of Cash Flow Information
 
 
 
 
 
 
 
Interest paid
$

 
$
176,595

 
$
176,595

 
$
2,765

Income taxes paid (net of refunds)
$
3,761,161

 
$
96,000

 
$
253,650

 
$

Non-Cash Investing Activities
 
 
 
 
 
 
 
Security proceeds from sale in long-term investment of other equity securities
$

 
$
26,565,400

 
$

 
$
23,046,215

Reclassification of prepaid expenses and other assets to deferred lease costs
$

 
$

 
$

 
$
753,940

Reclassification of prepaid expenses and other assets to acquisition expenditures
$

 
$

 
$

 
$
188,766

Change in accounts payable and accrued expenses related to deferred lease costs
$

 
$

 
$

 
$
(704,164
)
Change in accounts payable and accrued expenses related to acquisition expenditures
$
(1,407,724
)
 
$

 
$

 
$
1,560,993

Non-Cash Financing Activities
 
 
 
 
 
 
 
Reclassification of prepaid expenses and other assets to issuance of equity
$

 
$

 
$

 
$
617,308

Reclassification of prepaid expenses and other assets to deferred loan costs
$

 
$

 
$

 
$
436,994

Change in accounts payable and accrued expenses related to the issuance of equity
$
(523,094
)
 
$

 
$

 
$
391,322

Change in accounts payable and accrued expenses related to debt financing costs
$
220,000

 
$

 
$

 
$
(395,284
)
Reinvestment of distributions by common stockholders in additional common shares
$
108,119

 
$
121,024

 
$
252,242

 
$

NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
In the parent-company-only financial statements, the Company's investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date of acquisition. The parent-company-only financial statements should be read in conjunction with the Company's consolidated financial statements.
NOTE B - DIVIDENDS FROM SUBSIDIARIES
Cash dividends paid to CorEnergy Infrastructure Trust, Inc. from the Company's consolidated subsidiaries were $19,337,911, $281,133, $71,023 and $483,346 for the years ended December 31, 2013, November 30, 2012 November 30, 2011 and for the one-month transition period ended December 31, 2012, respectively.
REAL ESTATE AND ACCUMULATED DEPRECIATION (Notes)
Real Estate and Accumulated Depreciation Disclosure [Text Block]
 
 
 
 
 
 
Initial Cost to Company
 
Gross Amount Carried at Close of Period 12/31/13
 
 
 
 
 
 
Description
 
Location
 
Date Acquired
 
Land
 
Building & Fixtures
 
Land
 
Building & Fixtures
 
Total
 
Accumulated Depreciation
 
Investment in Real Estate, Net at 12/31/13
 
Encumbrances
Pinedale LGS1
 
Pinedale, WY
 
2012
 
$
105,485,063

 
$
125,119,062

 
$
105,485,063

 
$
125,119,062

 
$
230,604,125

 
$
9,154,337

 
$
221,449,788

 
$
70,000,000

Eastern Interconnect Project
 
Albuquerque, NM
 
2011
 

 
14,126,849

 

 
14,126,849

 
14,126,849

 
3,600,251

 
10,526,598

 

 
 
 
 
 
 
$
105,485,063

 
$
139,245,911

 
$
105,485,063

 
$
139,245,911

 
$
244,730,974

 
$
12,754,588

 
$
231,976,386

 
$
70,000,000

Pre-Acquisition Costs
 
 
 
 
 
$

 
$
244,232

 
$

 
$
244,232

 
$
244,232

 
$

 
$
244,232

 
$

 
 
 
 
 
 
$
105,485,063

 
$
139,490,143

 
$
105,485,063

 
$
139,490,143

 
$
244,975,206

 
$
12,754,588

 
$
232,220,618

 
$
70,000,000

(1) In connection with the asset acquisition, CorEnergy and Pinedale LP incurred acquisition costs in connection with the transaction in the amount of $2,557,910.


NOTES TO SCHEDULE III - CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

(a) Reconciliation of "Real Estate and Accumulated Depreciation"
 
For the Years Ended
 
For the One-Month Transition Period Ended December 31, 2012
 
December 31, 2013
 
November 30, 2012
 
November 30, 2011
 
Investment in real estate:
 
 
 
 
 
 
 
Balance, beginning of year
$
244,686,333

 
$
14,126,849

 
$

 
$
14,126,849

Addition: Acquisitions and developments
288,873

 

 
14,126,849

 
230,559,484

Deduction: Dispositions and other

 

 

 

Balance, end of year
$
244,975,206

 
$
14,126,849

 
$
14,126,849

 
$
244,686,333

Accumulated depreciation:
 
 
 
 
 
 
 
Balance, beginning of year
$
1,607,624

 
$
294,309

 
$

 
$
1,131,680

Addition: Depreciation
11,146,964

 
837,371

 
294,309

 
475,944

Deduction: Dispositions and other

 

 

 

Balance, end of year
$
12,754,588

 
$
1,131,680

 
$
294,309

 
$
1,607,624


The aggregate cost of the properties is approximately $11,378,747 lower for federal income tax purposes at December 31, 2013.
Significant Accounting Policies (Policies)
A. Use of Estimates – The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, recognition of distribution income and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Actual results could differ from those estimates.
B. Leased Property – The Company includes assets subject to lease arrangements within Leased property, net of accumulated depreciation, in the Consolidated Balance Sheets. Lease payments received are reflected in lease revenue on the Consolidated Statements of Income, net of amortization of any off-market adjustments. Costs in connection with the creation and execution of a lease are capitalized and amortized over the lease term. See Note 4 for further discussion.
C. Cash and Cash Equivalents – The Company maintains cash balances at financial institutions in amounts that regularly exceed FDIC insured limits. The Company’s cash equivalents are comprised of short-term, liquid money market instruments.
D. Long-Lived Assets and Intangibles – Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the asset. Expenditures for repairs and maintenance are charged to operations as incurred, and improvements, which extend the useful lives of assets, are capitalized and depreciated over the remaining estimated useful life of the asset.
The Company initially records long-lived assets at their acquisition cost, unless the transaction is accounted for as a business combination. If the transaction is accounted for as a business combination, the Company allocates the purchase price to the acquired tangible and intangible assets and liabilities based on their estimated fair values. The Company determines the fair values of assets and liabilities based on discounted cash flow models using current market assumptions, appraisals, recent transactions involving similar assets or liabilities and other objective evidence, and depreciates the asset values over the estimated remaining useful lives.
The Company may acquire long-lived assets that are subject to an existing lease contract with the seller or other lessee party and the Company may assume outstanding debt of the seller as part of the consideration paid. If, at the time of acquisition, the existing lease or debt contract is not at current market terms, the Company will record an asset or liability at the time of acquisition representing the amount by which the fair value of the lease or debt contract differs from its contractual value. Such amount is then amortized over the remaining contract term as an adjustment to the related lease revenue or interest expense. The Company periodically reviews its long-lived assets, primarily real estate, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company’s review involves comparing current and future operating performance of the assets, the most significant of which is undiscounted operating cash flows, to the carrying value of the assets. Based on this analysis, a provision for possible loss is recognized, if any. No impairment write-downs were recognized during the years ended December 31, 2013 and November 30, 2012 or during the one-month transition period ended December 31, 2012.
Costs in connection with the direct acquisition of a new asset are capitalized as a component of the purchase price and depreciated over the life of the asset. See Note 4 for further discussion.
E. Investment Securities – The Company’s investments in securities are classified as either trading or other equity securities:
Trading securities – The Company’s publicly traded equity securities are classified as trading securities and are reported at fair value as of November 30, 2012 because the Company intended to sell these securities in order to acquire real asset investments. As of March 31, 2013, all trading securities had been sold.
Other equity securities – The Company’s other equity securities represent interests in private companies which the Company has elected to report at fair value under the fair value option.
Realized and unrealized gains and losses on trading securities and other equity securities – Changes in the fair values of the Company’s securities during the period reported and the gains or losses realized upon sale of securities during the period are reflected as other income or expense within the accompanying Consolidated Statements of Income.
F. Security Transactions and Fair Value – Security transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains and losses are reported on an identified cost basis.
For equity securities that are freely tradable and listed on a securities exchange or over-the-counter market, the Company values those securities at their last sale price on that exchange or over-the-counter market on the valuation date. If the security is listed on more than one exchange, the Company will use the price from the exchange that it considers to be the principal, which may not necessarily represent the last sale price. If there has been no sale on such exchange or over-the-counter market on such day, the security will be valued at the mean between the last bid price and last ask price on such day.

The major components of net realized and unrealized gain or loss on trading securities for the years ended December 31, 2013, November 30, 2012 and November 30, 2011, and for the one-month transition period ended December 31, 2012, are as follows:
Major Components of Net Realized and Unrealized Gain (Loss) on Trading Securities
 
 
For the Years Ended
 
For the One-Month Transition Period Ended
 
 
December 31,
2013
 
November 30,
2012
 
November 30,
2011
 
December 31,
2012
Net unrealized gain on trading securities
 
$

 
$
3,985,269

 
$
238,617

 
$
4,663,211

Net realized gain (loss) on trading securities
 
(251,213
)
 
24,664

 
2,061,358

 
(6,432,269
)
Total net realized and unrealized gain (loss) on trading securities
 
$
(251,213
)
 
$
4,009,933

 
$
2,299,975

 
$
(1,769,058
)

The Company holds investments in illiquid securities including debt and equity securities of privately-held companies. These investments generally are subject to restrictions on resale, have no established trading market and are valued on a quarterly basis. Because of the inherent uncertainty of valuation, the fair values of such investments, which are determined in accordance with procedures approved by the Company’s Board of Directors, may differ materially from the values that would have been used had a ready market existed for the investments.
The Company determines fair value to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company has determined the principal market, or the market in which the Company exits its private portfolio investments with the greatest volume and level of activity, to be the private secondary market. Typically, private companies are bought and sold based on multiples of EBITDA, cash flows, net income, revenues, or in limited cases, book value.
For private company investments, value is often realized through a liquidity event of the entire company. Therefore, the value of the company as a whole (enterprise value) at the reporting date often provides the best evidence of the value of the investment and is the initial step for valuing the Company’s privately issued securities. For any one company, enterprise value may best be expressed as a range of fair values, from which a single estimate of fair value will be derived. In determining the enterprise value of a portfolio company, an analysis is prepared consisting of traditional valuation methodologies including market and income approaches. The Company considers some or all of the traditional valuation methods based on the individual circumstances of the portfolio company in order to derive its estimate of enterprise value.
The fair value of investments in private portfolio companies is determined based on various factors, including enterprise value, observable market transactions, such as recent offers to purchase a company, recent transactions involving the purchase or sale of the equity securities of the company, or other liquidation events. The determined equity values may be discounted when the Company has a minority position, or is subject to restrictions on resale, has specific concerns about the receptivity of the capital markets to a specific company at a certain time, or other comparable factors exist.
The Company undertakes a multi-step valuation process each quarter in connection with determining the fair value of private investments. We have retained an independent valuation firm to provide third party valuation consulting services based on procedures that the Company has identified and may ask them to perform from time to time on all or a selection of private investments as determined by the Company. The multi-step valuation process is specific to the level of assurance that the Company requests from the independent valuation firm. For positive assurance, the process is as follows:
The independent valuation firm prepares the valuations and the supporting analysis.
The Investment Committee of the Board of Directors reviews the valuations and supporting analysis, prior to approving the valuations.
G. Accounts Receivable – Accounts receivable are presented at face value net of an allowance for doubtful accounts. Accounts are considered past due based on the terms of sale with the customers. The Company reviews accounts for collectibility based on an analysis of specific outstanding receivables, current economic conditions and past collection experience. At December 31, 2013, December 31, 2012 and November 30, 2012 management determined that an allowance for doubtful accounts related to our leases was not required. Lease payments by our tenants, as discussed within Note 4, have remained timely and without lapse.
H. Derivative Instruments and Hedging Activities - FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company's objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments. Accordingly, the Company's derivative assets and liabilities are presented on a gross basis.
As required by ASC 815, the Company records all derivatives on the balance sheet at fair value.  The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
FASB ASC 820, Fair Value Measurements and Disclosure ("ASC 820"), defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. In accordance with ASC 820, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.
I. Fair Value Measurements - Various inputs are used in determining the fair value of the Company’s assets and liabilities. These inputs are summarized in the three broad levels listed below:
Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.)
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)
ASC 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances. ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity's own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity's own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.
The following section describes the valuation methodologies used by the Company for estimating fair value for financial instruments not recorded at fair value, but fair value is included for disclosure purposes only, as required under disclosure guidance related to the fair value of financial instruments.
Cash and Cash Equivalents — The carrying value of cash, amounts due from banks, federal funds sold and securities purchased under resale agreements approximates fair value.
Escrow Receivable — The escrow receivable due the Company as of November 30, 2012, which relates to the sale of International Resource Partners, LP, was settled during the second quarter of 2013 upon satisfaction of certain post-closing obligations. The fair value of the escrow receivable reflected a discount for the potential that the full amount due to the Company would not be realized. The actual payment received in the amount of $1.006 million exceeded the balance recorded of $699 thousand, resulting in a gain of approximately $307 thousand.
Long-term Debt — The fair value of the Company’s long-term debt is calculated, for disclosure purposes, by discounting future debt service requirements by a rate equal to the Company’s current expected rate for an equivalent transaction.
Line of Credit — The carrying value of the line of credit approximates the fair value due to its short term nature.
J. Revenue Recognition – Specific recognition policies for the Company’s revenue items are as follows:
Lease Revenue – Income related to the Company’s leased property is recognized on a straight-line basis over the term of the lease when collectibility is reasonably assured. Rental payments on the Pinedale LGS leased property are typically received on a monthly basis. Prior to November 2012, rental payments on the EIP leased property were typically received on a semi-annual basis and were included as lease revenue within the accompanying Consolidated Statements of Income. Upon execution of the November 2012 Purchase Agreement related to the EIP leased property (the "Purchase Agreement"), rental payments received in advance are classified as unearned revenue and included in liabilities within the Consolidated Balance Sheets. Unearned revenue is amortized ratably over the lease period as revenue recognition criteria are met. Rental payments received in arrears are accrued and classified as Lease Receivable and included in assets within the Consolidated Balance Sheets.
Sales Revenue – Revenues related to natural gas distribution and performance of management services are recognized in accordance with GAAP upon delivery of natural gas and upon the substantial performance of management and supervision services related to the expansion of the natural gas distribution system. Omega, acting as a principal, provides for transportation services and natural gas supply for its customers on a firm basis. In addition, Omega is paid fees for the operation and maintenance of its natural gas distribution system, including any necessary expansion of the distribution system. Omega is responsible for the coordination, supervision and quality of the expansions while actual construction is generally performed by third party contractors. Revenues from expansion efforts are recognized in accordance with GAAP using either a completed contract or percentage of completion method based on the level and volume of estimates utilized, as well as the certainty or uncertainty of our ability to collect those revenues.
K. Cost of Sales – Included in the Company’s cost of sales are the amounts paid for gas and propane, along with related transportation, which are delivered to customers, as well as the cost of material and labor related to the expansion of the natural gas distribution system.
L. Asset Acquisition Expenses – Costs in connection with the research of real property acquisitions not expected to be accounted for as business combinations are expensed as incurred until determination that the acquisition of the real property is probable. Upon such determination, costs in connection with the acquisition of the property are capitalized as described in paragraph (D) above.
M. Offering Costs – Offering costs related to the issuance of common stock are charged to additional paid-in capital when the stock is issued.
N. Debt Issuance Costs – Costs in connection with the issuance of new debt are capitalized and amortized over the debt term. See Note 11 for further discussion.
O. Distributions to Stockholders – The amount of any distributions to stockholders will be determined by the Board of Directors. Distributions to stockholders are recorded on the ex-dividend date.
P. Other Income Recognition Specific policies for the Company’s other income items are as follows:
Securities Transactions and Investment Income Recognition – Securities transactions are accounted for on the date the securities are purchased or sold (trade date). Realized gains and losses are reported on an identified cost basis. Distributions received from our equity investments are generally comprised of ordinary income, capital gains and distributions received from investment securities from the portfolio company. The Company records investment income and return of capital based on estimates made at the time such distributions are received. Such estimates are based on information available from each portfolio company and other industry sources. These estimates may subsequently be revised based on information received from the portfolio companies after their tax reporting periods are concluded, as the actual character of these distributions are not known until after our fiscal year end.
Subsequent to November 30, 2012, the Company reallocated the amount of 2012 income and return of capital it recognized for the period December 1, 2011 to November 30, 2012 based on the 2012 tax reporting information received from the individual portfolio companies. This reclassification amounted to an increase in net distributions and dividend income on securities of $567 thousand or $0.06 per share; a decrease in net realized and unrealized gains on trading and other equity securities of $567 thousand or $0.06 per share for the year ended November 30, 2012.
Dividends and distributions from investments – Dividends and distributions from investments are recorded on their ex-dates and are reflected as other income within the accompanying Consolidated Statements of Income. Distributions received from the Company’s investments are generally characterized as ordinary income, capital gains and distributions received from investment securities. The portion characterized as return of capital is paid by our investees from their cash flow from operations. The Company records investment income, capital gains and distributions received from investment securities based on estimates made at the time such distributions are received. Such estimates are based on information available from each company and other industry sources. These estimates may subsequently be revised based on information received from the entities after their tax reporting periods are concluded, as the actual character of these distributions is not known until after the fiscal year end of the Company.
Q. Federal and State Income Taxation – We have elected to be treated as a REIT for federal income tax purposes (which we refer to as the “REIT Election”) for the calendar and tax year ended December 31, 2013. We determined that the Company satisfied the annual income test and the quarterly asset tests necessary for us to qualify and elect to be taxed as a REIT for 2013. Because certain of our assets may not produce REIT-qualifying income or be treated as interests in real property, during December 2012 we contributed those assets into wholly-owned Taxable REIT Subsidiaries ("TRSs"). This was done in 2012 in order to limit the potential that such assets and income would prevent us from qualifying as a REIT for 2013. Due to the REIT Election, we changed our fiscal year end from November 30 to December 31.
As to the year ended November 30, 2012 and one month period ended December 31, 2012, the Company is treated as a C corporation and is obligated to pay federal and state income tax on its taxable income. Currently, the highest regular marginal federal income tax rate for a corporation is 35 percent. The Company may be subject to a 20 percent federal alternative minimum tax on its federal alternative minimum taxable income to the extent that its alternative minimum tax exceeds its regular federal income tax. For years ended in 2012 and before, the distributions we made to our stockholders from our earnings and profits were treated as qualified dividend income ("QDI") and return of capital. QDI is taxed to our individual shareholders at the maximum rate for long-term capital gains, which through tax year 2012 was 15 percent and beginning in tax year 2013 will be 20 percent.
The Company's trading securities and other equity securities are limited partnerships or limited liability companies which are treated as partnerships for federal and state income tax purposes. As a limited partner, the Company reports its allocable share of taxable income in computing its own taxable income. The Company's tax expense or benefit is included in the Consolidated Statements of Income based on the component of income or gains and losses to which such expense or benefit relates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized. Due to our decision to structure ourselves as a REIT in December 2012, it is expected that for the year ended December 31, 2013 and future periods, any deferred tax liability or asset will be related entirely to the assets and activities of the Company's TRSs.
The Company has elected to be taxed as a REIT for 2013 rather than a C corporation and generally will not pay federal income tax on taxable income that is distributed to our stockholders. As a REIT, our distributions from earnings and profits will be treated as ordinary income and a return of capital, and generally will not qualify as QDI. To the extent that the REIT had accumulated C corporation earnings and profits from the periods prior to 2013, we have distributed such earnings and profits in 2013. A portion of our normal distribution was characterized for federal income tax purposes as a distribution of those earnings and profits from non-REIT years and have been treated as QDI.
As a REIT, the Company holds and operates certain of our assets through one or more wholly-owned TRSs. A TRS is a subsidiary of a REIT that is subject to applicable corporate income tax. Our use of TRSs enables us to continue to engage in certain businesses while complying with REIT qualification requirements and also allows us to retain income generated by these businesses for reinvestment without the requirement of distributing those earnings. In the future, we may elect to reorganize and transfer certain assets or operations from our TRSs to the Company or other subsidiaries, including qualified REIT subsidiaries.
If we cease to qualify as a REIT, the Company, as a C corporation, would be obligated to pay federal and state income tax on its taxable income. Currently, the highest regular marginal federal income tax rate for a corporation is 35 percent. The Company may be subject to a 20 percent federal alternative minimum tax on its federal alternative minimum taxable income to the extent that its alternative minimum tax exceeds its regular federal income tax.
R. Recent Accounting Pronouncements – In July 2013, the FASB issued ASU No. 2013-11 "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists". ASU No. 2013-11 amends FASB ASC Topic 740 Income taxes, to include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU No. 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Management is evaluating this amendment and does not expect adoption to have a material impact on the Company's consolidated financial statements.
In July 2013, the FASB issued ASU No. 2013-10 "Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes". ASU No. 2013-10 amends FASB ASC Topic 815 Derivatives and Hedging, to permit Fed Funds Effective Swap Rate (OIS) to be used as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, in addition to UST and LIBOR. The amendment also removes the restriction on using different benchmark rates for similar hedges. ASU No. 2013-10 is effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The Company has adopted this amendment and it did not have a material impact on the Company's consolidated financial statements.
In June 2011, the FASB issued ASU No. 2011-05 "Presentation of Comprehensive Income". ASU No. 2011-05 amends FASB ASC Topic 220, Presentation of Comprehensive Income, to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. ASU No. 2011-05 is effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The Company has adopted this amendment and has elected to present a single continuous statement of comprehensive income.
In December 2011, the FASB issued ASU No. 2011-12 "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05". ASU No. 2011-12 amends FASB ASC Topic 220, Presentation of Comprehensive Income, to defer only those changes in Update 2011-05 that relate to the presentation of reclassification adjustments. ASU No. 2011-12 is effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The adoption of this amendment did not have a material impact on the Company's consolidated financial statements.
In February 2013, the FASB issued ASU No. 2013-02 "Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income". ASU No. 2013-02 amends FASB ASC Topic 220, Presentation of Comprehensive Income, to improve the reporting of reclassifications out of accumulated other comprehensive income. ASU No. 2013-02 is effective prospectively for reporting periods beginning after December 15, 2012. Management has adopted this amendment and this did not have a material impact on the Company's consolidated financial statements.
In December 2011, the FASB issued ASU No. 2011-11 "Disclosure about Offsetting Assets and Liabilities". ASU No. 2011-11 amends FASB ASC Topic 210, Balance Sheet, to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. ASU No. 2011-11 is effective for fiscal years beginning after January 1, 2013 and for interim periods within those fiscal years. In January 2013, the FASB issued ASU No. 2013-01 "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities". ASU No. 2013-01 amends FASB ASC Topic 210, Balance Sheet, to address implementation issues about the scope of ASU No. 2011-11. The amendment, which clarifies the scope of Update 2011-11, applies to derivatives accounted for in accordance with FASB ASC Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or are subject to an enforceable master netting arrangement or similar agreement. ASU No. 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. The adoption of these amendments did not have a material impact on the Company's consolidated financial statements.
In January 2010, the FASB issued ASU No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU No. 2010-06 amends FASB ASC Topic 820, Fair Value Measurements and Disclosures, to require new disclosures for transfers in and out of Levels 1 and 2 and activity in Level 3 fair value measurements. and to clarify existing disclosures. ASU No. 2010-06 is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Management has adopted this amendment and this did not have a material impact on the Company's consolidated financial statements.
Significant Accounting Policies (Tables)
Major components of net realized and unrealized gain on trading securities
The major components of net realized and unrealized gain or loss on trading securities for the years ended December 31, 2013, November 30, 2012 and November 30, 2011, and for the one-month transition period ended December 31, 2012, are as follows:
Major Components of Net Realized and Unrealized Gain (Loss) on Trading Securities
 
 
For the Years Ended
 
For the One-Month Transition Period Ended
 
 
December 31,
2013
 
November 30,
2012
 
November 30,
2011
 
December 31,
2012
Net unrealized gain on trading securities
 
$

 
$
3,985,269

 
$
238,617

 
$
4,663,211

Net realized gain (loss) on trading securities
 
(251,213
)
 
24,664

 
2,061,358

 
(6,432,269
)
Total net realized and unrealized gain (loss) on trading securities
 
$
(251,213
)
 
$
4,009,933

 
$
2,299,975

 
$
(1,769,058
)
Leases (Tables)

 
As a Percentage of
 
 
Leased Properties
 
Lease Revenues

 
As of December 31, 2013
 
For the Year Ended December 31, 2013
 
For the One-Month Transition Period December 31, 2012
Pinedale LGS
 
94.23%
 
88.68%
 
75.20%
Public Service of New Mexico
 
5.77%
 
11.32%
 
24.80%
The future contracted minimum rental receipts for all net leases as of December 31, 2013 are as follows:
Future Minimum Lease Receipts
Years Ending December 31,
 
Amount
2014
 
$
24,573,005

2015
 
20,000,000

2016
 
20,000,000

2017
 
20,000,000

2018
 
20,000,000

Thereafter
 
180,000,000

Total
 
$
284,573,005

Ultra Petroleum Corp.
Summary Consolidated Balance Sheets
(in thousands)
 
December 31, 2013
 
December 31, 2012
 
 
Current assets
$
128,631

 
$
125,848

Non-current assets
2,656,688

 
1,881,497

Total Assets
$
2,785,319

 
$
2,007,345

 
 
 
 
Current liabilities
407,476

 
514,092

Non-current liabilities
2,709,333

 
2,071,120

Total Liabilities
$
3,116,809

 
$
2,585,212

 
 
 
 
Shareholder's (deficit)
(331,490
)
 
(577,867
)
Total Liabilities and Shareholder's Equity
$
2,785,319

 
$
2,007,345

 
 
 
 

Ultra Petroleum Corp.
Summary Consolidated Statements of Operations
(in thousands)
 
For the Years Ended December 31,
 
2013
 
2012
Revenues
$
933,404

 
$
809,974

Expenses
561,138

 
3,655,252

Operating Income (Loss)
372,266

 
(2,845,278
)
Other Income (Expense), net
(138,044
)
 
(31,833
)
Income (Loss) before income tax provision (benefit)
234,222

 
(2,877,111
)
Income tax provision (benefit)
(3,616
)
 
(700,213
)
Net Income (Loss)
$
237,838

 
$
(2,176,898
)
Income Taxes (Tables)
Deferred Tax Assets and Liabilities
 
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
Deferred Tax Assets:
 
 
 
 
 

Organization costs
 
$

 
$
(17,668
)
 
$
(27,188
)
Net operating loss carryforwards
 
(65,248
)
 
(6,411,230
)
 

Net unrealized loss on investment securities
 

 

 
(143,822
)
Cost recovery of leased and fixed assets
 
(966,914
)
 
(36,443
)
 

Asset acquisition costs
 

 
(134,415
)
 
(158,535
)
AMT and State of Kansas credit
 

 
(196,197
)
 

Sub-total
 
$
(1,032,162
)
 
$
(6,795,953
)
 
$
(329,545
)
Deferred Tax Liabilities:
 
 
 
 
 

Basis reduction of investment in partnerships
 
$
6,335,805

 
$
11,655,817

 
$
2,675,142

Net unrealized gain on investment securities
 
28,444

 
2,312,269

 

Cost recovery of leased assets
 

 

 
50,446

Sub-total
 
6,364,249

 
13,968,086

 
2,725,588

Total net deferred tax liability
 
$
5,332,087

 
$
7,172,133

 
$
2,396,043

Income Tax Expense (Benefit)
 
 
For the Years Ended
 
For the One-Month Transition Period Ended
 
 
December 31, 2013
 
November 30, 2012
 
November 30, 2011
 
December 31, 2012
Application of statutory income tax rate
 
$
2,608,151

 
$
6,852,179

 
$
1,331,750

 
$
(848,239
)
State income taxes, net of federal tax benefit
 
273,174

 
442,455

 
133,158

 
(64,771
)
Dividends received deduction
 

 
(1,221
)
 
(86
)
 
(7,133
)
Income of Real Estate Investment Trust not subject to tax
 
(927,254
)
 

 

 

Impact of effective tax rate change due to REIT election
 
995,447

 

 

 

Other
 

 
(64,479
)
 
(581,965
)
 

Total income tax expense
 
$
2,949,518

 
$
7,228,934

 
$
882,857

 
$
(920,143
)
Components of Income Tax Expense (Benefit)
 
 
For the Years Ended
 
For the One-Month Transition Period Ended
 
 
December 31, 2013
 
November 30, 2012
 
November 30, 2011
 
December 31, 2012
Current tax expense (benefit)
 
 
 
 
 
 
 
 
Federal
 
$
(7,139
)
 
$

 
$

 
$
3,610,165

State (net of federal tax benefit)
 
20,613

 
38,107

 
53,650

 
245,782

AMT benefit
 

 
(8,842
)
 
200,000

 

Total current tax expense (benefit)
 
13,474

 
29,265

 
253,650

 
3,855,947

Deferred tax expense (benefit)
 
 
 
 
 

 
 
Federal
 
2,683,483

 
6,762,974

 
585,386

 
(4,465,104
)
State (net of federal tax benefit)
 
252,561

 
436,695

 
43,821

 
(310,986
)
Total deferred tax expense (benefit)
 
2,936,044

 
7,199,669

 
629,207

 
(4,776,090
)
Total income tax expense (benefit), net
 
$
2,949,518

 
$
7,228,934

 
$
882,857

 
$
(920,143
)
Aggregate Cost of Securities for Income Tax Purposes
 
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
Aggregate cost for federal income tax purposes
 
$
6,604,636

 
$
41,995,195

 
$
22,007,069

Gross unrealized appreciation
 
16,699,686

 
33,892,176

 
2,018,455

Gross unrealized depreciation
 

 
(801,340
)
 

Net unrealized appreciation
 
$
16,699,686

 
$
33,090,836

 
$
2,018,455

2013 Common Stock Tax Information
Record Date
 
Ex-Dividend Date
 
Payable Date
 
Total Distribution per Share
 
Total Ordinary Dividends
 
Qualified Dividends
 
Capital Gain Distributions
 
Nondividend Distributions
03/08/2013
 
03/06/2013
 
03/19/2013
 
$
0.1250

 
$
0.1250

 
$
0.1250

 
$

 
$

06/28/2013
 
06/26/2013
 
07/05/2013
 
0.1250

 
0.0367

 
0.0367

 

 
0.0883

09/30/2013
 
09/26/2013
 
10/04/2013
 
0.1250

 

 

 

 
0.1250

Total 2013 Distributions
 
$
0.3750

 
$
0.1617

 
$
0.1617

 
$

 
$
0.2133

2012 Common Stock Tax Information
Record Date
 
Ex-Dividend Date
 
Payable Date
 
Total Distribution per Share
 
Total Ordinary Dividends
 
Qualified Dividends
 
Capital Gain Distributions
 
Nondividend Distributions
02/22/2012
 
02/17/2012
 
03/01/2012
 
$
0.1100

 
$

 
$

 
$

 
$
0.1100

05/23/2012
 
05/21/2012
 
06/01/2012
 
0.1100

 

 

 

 
0.1100

08/24/2012
 
08/22/2012
 
09/04/2012
 
0.1100

 

 

 

 
0.1100

11/23/2012
 
11/20/2012
 
11/30/2012
 
0.1100

 

 

 

 
0.1100

Total 2012 Distributions
 
$
0.4400

 
$

 
$

 
$

 
$
0.4400

2011 Common Stock Tax Information
Record Date
 
Ex-Dividend Date
 
Payable Date
 
Total Distribution per Share
 
Total Ordinary Dividends
 
Qualified Dividends
 
Capital Gain Distributions
 
Nondividend Distributions
02/18/2011
 
02/16/2011
 
03/01/2011
 
$
0.1000

 
$
0.1000

 
$
0.1000

 
$

 
$

05/24/2011
 
05/20/2011
 
06/01/2011
 
0.1000

 
0.1000

 
0.1000

 

 

08/24/2011
 
08/22/2011
 
09/01/2011
 
0.1000

 
0.1000

 
0.1000

 

 

11/22/2011
 
11/18/2011
 
11/30/2011
 
0.1100

 
0.1100

 
0.1100

 

 

Total 2011 Distributions
 
$
0.4100

 
$
0.4100

 
$
0.4100

 
$

 
$

Property and Equipment (Tables)
Property and Equipment
Property and Equipment
 
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
Natural gas pipeline
 
$
5,215,424

 
$
5,215,424

 
$
5,215,424

Vehicles and trailers
 
125,117

 
110,782

 
110,782

Computers
 
15,627

 
14,018

 
14,440

Gross property and equipment
 
5,356,168

 
5,340,224

 
5,340,646

Less: accumulated depreciation
 
(2,037,685
)
 
(1,751,202
)
 
(1,774,616
)
Net property and equipment
 
$
3,318,483

 
$
3,589,022

 
$
3,566,030

Fair Value (Tables)
December 31, 2013
 
 
December 31, 2013
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Trading securities
 
$

 
$

 
$

 
$

Other equity securities
 
23,304,321

 

 

 
23,304,321

Total Assets
 
$
23,304,321

 
$

 
$

 
$
23,304,321

November 30, 2012
 
 
November 30, 2012
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Trading securities
 
$
55,219,411

 
$
27,480,191

 
$
27,739,220

 
$

Other equity securities
 
19,866,621

 

 

 
19,866,621

Total Assets
 
$
75,086,032

 
$
27,480,191

 
$
27,739,220

 
$
19,866,621

December 31, 2012
 
 
December 31, 2012
 
Fair Value
 
 
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Trading securities
 
$
4,318,398

 
$
4,318,398

 
$

 
$

Other equity securities
 
19,707,126

 

 

 
19,707,126

Total Assets
 
$
24,025,524

 
$
4,318,398

 
$

 
$
19,707,126

 
For the Years Ended
 
For the One-Month Transition Period Ended
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
Fair value beginning balance
$
19,707,126

 
$
41,856,730

 
$
19,866,621

Total realized and unrealized gains (losses) included in net income
5,292,890

 
16,190,428

 
(159,495
)
Sales

 
(35,919,672
)
 

Return of capital adjustments impacting cost basis of securities
(1,695,695
)
 
(2,260,865
)
 

Fair value ending balance
$
23,304,321

 
$
19,866,621

 
$
19,707,126

Changes in unrealized gains, included in net income, relating to securities still held (1)
$
5,292,890

 
$
5,018,152

 
$
(159,495
)
Significant Unobservable Inputs Used To Value Portfolio Investments
December 31, 2013
 
 
 
 
 
 
Unobservable Inputs
 
Range
 
Weighted Average
Assets at Fair Value
 
Fair Value
 
Valuation Technique
 
 
Low
 
High
 
Other equity securities, at fair value
 
$
23,304,321

 
Public company historical EBITDA analysis
 
Historical EBITDA Valuation Multiples
 
9.6x
 
10.6x
 
10.1x
 
 
 
 
Public company projected EBITDA analysis
 
Projected EBITDA Valuation Multiples
 
8.3x
 
9.3x
 
8.8x
 
 
 
 
M&A company analysis
 
EV/LTM 2012 EBITDA
 
8.3x
 
9.3x
 
8.8x
 
 
 
 
Discounted cash flow
 
Weighted Average Cost of Capital
 
9.5%
 
14.0%
 
11.8%
 
November 30, 2012
 
 
 
 
 
 
Unobservable Inputs
 
Range
 
Weighted Average
Assets at Fair Value
 
Fair Value
 
Valuation Technique
 
 
Low
 
High
 
Other equity securities, at fair value
 
$
19,866,621

 
Public company historical EBITDA analysis
 
Historical EBITDA Valuation Multiples
 
9.4x
 
10.4x
 
9.95x
 
 
 
 
Public company projected EBITDA analysis
 
Projected EBITDA Valuation Multiples
 
8.1x
 
9.8x
 
8.95x
 
 
 
 
Public company yield analysis
 
Distributable Cash Flow Yield
 
8.11%
 
9.11%
 
8.61%
 
 
 
 
M&A company analysis
 
EV/LTM 2012 EBITDA
 
9.3x
 
9.9x
 
9.6x
 
 
 
 
Discounted cash flow
 
Weighted Average Cost of Capital
 
9.5%
 
13.0%
 
11.25%

December 31, 2012
 
 
 
 
 
 
Unobservable Inputs
 
Range
 
Weighted Average
Assets at Fair Value
 
Fair Value
 
Valuation Technique
 
 
Low
 
High
 
Other equity securities, at fair value
 
$
19,707,126

 
Public company historical EBITDA analysis
 
Historical EBITDA Valuation Multiples
 
9.5x
 
11.6x
 
10.6x
 
 
 
 
Public company projected EBITDA analysis
 
Projected EBITDA Valuation Multiples
 
8.8x
 
10.1x
 
9.5x
 
 
 
 
M&A company analysis
 
EV/LTM 2012 EBITDA
 
8.9x
 
10.3x
 
9.6x
 
 
 
 
Discounted cash flow
 
Weighted Average Cost of Capital
 
9.5%
 
13.0%
 
11.3%
Carrying and Fair Value Amounts
 
 
Level within fair value hierarchy
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
 
 
 
Carrying
Amount
 
Fair Value
 
Carrying
Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Financial Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
Level 1
 
$
17,963,266

 
$
17,963,266

 
$
14,333,456

 
$
14,333,456

 
$
17,680,783

 
$
17,680,783

Escrow receivable
 
Level 2
 
$

 
$

 
$
698,729

 
$
698,729

 
$
698,729

 
$
698,729

Financial Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
Level 2
 
$
70,000,000

 
$
70,000,000

 
$

 
$

 
$
70,000,000

 
$
70,000,000

Line of credit
 
Level 1
 
$
81,935

 
$
81,935

 
$
120,000

 
$
120,000

 
$

 
$

Revenues
 
$
127,356,000

 
Current assets
 
$
36,726,000

Operating expenses
 
$
66,167,000

 
Noncurrent assets
 
$
417,998,000

Net income
 
$
33,360,000

 
Current liabilities
 
$
28,285,000

 
 
 
 
Noncurrent liabilities
 
$
191,405,000

 
 
 
 
Partner's equity
 
$
235,034,000

Intangibles (Tables)
Intangible Lease Asset
 
 
December 31, 2013
 
November 30, 2012
 
December 31, 2012
Intangible lease asset
 
$
1,094,771

 
$
1,094,771

 
$
1,094,771

Accumulated amortization
 
(729,847
)
 
(413,580
)
 
(437,908
)
Net intangible lease asset
 
$
364,924


$
681,191

 
$
656,863

Remaining Estimated Amortization On Intangibles
Year ending December 31,
 
Amount
2014
 
291,939

2015
 
72,985

Total
 
$
364,924

Interest Rate Hedge Swaps (Tables)
The tables below present the effect of the Company's derivative financial instruments on the Income Statement for the years ended December 31, 2013 and November 30, 2012, and for the one-month transition period ended December 31, 2012.
Effect of Derivative Financial Instruments on Income Statement
Derivatives in Cash Flow Hedging Relationships
 
Amount of Gain (Loss) Recognized in AOCI
on Derivative
(Effective Portion)
 
Location of
Gain (Loss) Reclassified from AOCI into Net Income (Effective Portion)
 
Amount of Gain (Loss) Reclassified from AOCI on Derivatives (Effective Portion) Recognized in Net Income *
 
Location of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
Amount of Gain (Loss) Recognized in Income on Derivative (Ineffective Portion, Amounts Excluded from Effectiveness Testing)
 
 
 
 
 
For the years ended:
 
December 31, 2013
 
November 30, 2012
 
 
December 31, 2013
 
November 30, 2012
 
 
December 31, 2013
 
November 30, 2012
Interest Rate Swaps
 
$
741,344

 
$

 
Interest Expense
 
$
(217,821
)
 
$

 
Interest Expense
 
$
5,969

 
$

For the one-month transition period ended:
 
December 31, 2012
 
 
 
 
 
December 31, 2012
 
 
 
 
 
December 31, 2012
 
 
Interest Rate Swaps
 
$

 
 
 
 
 
$

 
 
 
 
 
$

 
 
Derivatives Not Designated as Hedging Instruments
 
Location of
Gain (Loss) Recognized in Income on Derivative
 
Amount of Gain (Loss) Recognized in Income on Derivative *
 
 
 
 
 
 
 
 
For the Years Ended
 
For the One-Month transition Period Ended December 31, 2012
 
 
 
 
 
 
December 31, 2013
 
November 30, 2012
 
 
 
 
 
 
 
Interest Rate Swaps
 
Interest Expense
 
$
(75,200
)
 
$

 
$
(316,756
)
 
 
 
 
 
 
* The gain or (loss) recognized in income on derivatives includes changes in fair value of the derivatives as
    well as the periodic cash settlements and interest accruals for derivatives not designated as hedging
    instruments
The table below presents the Company's assets and liabilities measured at fair value on a recurring basis as well as their classification on the Consolidated Balance Sheets as of December 31, 2013 and December 31, 2012, aggregated by the level in the fair value hierarchy within which those measurements fall. Hedges that are valued as receivable by the Company are considered Asset Derivatives and those that are valued as payable by the Company are considered Liability Derivatives. There were no outstanding derivative financial instruments as of November 30, 2012.
Derivative Financial Instruments Measured At Fair Value on a Recurring Basis
 
 
Balance Sheet
Classification
 
 
Fair Value Hierarchy
Balance Sheet Line Item
 
 
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
December 31, 2013
Hedged derivative asset
 
Assets
 
 
$

 
$
680,968

 
$

Hedged derivative liability
 
Liabilities
 
 
$

 
$

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
Prepaid expenses and other assets
 
Assets
 
 
$

 
$

 
$

Accounts payable and other accrued liabilities
 
Liabilities
 
 
$

 
$
316,756

 
$

 
 
 
 
 
 
 
 
 
 
Level 1 – quoted prices in active markets for identical investments
Level 2 – other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.)
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments)
As of December 31, 2013, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
Outstanding Derivatives Designated as Cash Flow Hedges of Interest Rate Risk
Interest Rate Derivative
 
Number of Instruments
 
Notional Amount Outstanding
 
 
 
 
 
Floating Rate Received
 
Fixed Rate Paid
 
 
 
Effective Date
 
Termination Date
 
 
Interest Rate Swap
 
2
 
$52,500,000
 
February 5, 2013
 
December 5, 2017
 
1-month US Dollar LIBOR
 
0.865%
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company's derivatives as of December 31, 2013 and December 31, 2012. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Balance Sheet. There were no offsetting derivative liabilities as of December 31, 2013 and no offsetting derivative assets as of December 31, 2012.
Offsetting Derivatives
 
 
Gross Amounts of Recognized Assets
 
Gross Amounts Offset in the Statement of Financial Position
 
Net Amounts of Assets presented in the Statement of Financial Position
 
Gross Amounts Not
Offset in the Statement
of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Instruments
 
Cash Collateral Received
 
Net Amount
Offsetting Derivative Assets as of December 31, 2013
 
$
680,968

 
$

 
$
680,968

 
$

 
$

 
$
680,968

 
 
 
 
 
 
 
 
 
 
 
 
 
Offsetting Derivative Liabilities as of December 31, 2012
 
$
316,756

 
$

 
$
316,756

 
$

 
$

 
$
316,756

Earnings Per Share (Tables)
Computation of basic and diluted earnings per share
The following table sets forth the computation of basic and diluted earnings per share:
Earnings Per Share
 
For the Years Ended
 
For the One-Month Transition Period Ended December 31, 2012
 
December 31, 2013
 
November 30, 2012
 
November 30, 2011
 
Net income attributable to CORR Stockholders
$
4,502,339

 
$
12,348,721

 
$
2,922,143

 
$
(1,503,396
)
Basic and diluted weighted average shares (1)
24,149,396

 
9,182,425

 
9,159,809

 
15,564,861

Basic and diluted earnings per share attributable to CORR Stockholders
$
0.19

 
$
1.34

 
$
0.32

 
$
(0.10
)
(1)
Warrants to purchase shares of common stock were outstanding during the periods reflected in the table above, but were not included in the computation of diluted earnings per share because the warrants’ exercise price was greater than the average market value of the common shares and, therefore, the effect would be anti-dilutive.
Quarterly Financial Data (Unaudited) (Tables)
Schedule of Quarterly Financial Information
 
 
For the Fiscal Quarters Ended
 
 
March 31, 2013
 
June 30, 2013
 
September 30, 2013
 
December 31, 2013
Lease revenue
 
$
5,638,244

 
$
5,638,244

 
$
5,638,244

 
$
5,638,244

Sales revenue
 
2,515,573

 
1,929,772

 
1,935,868

 
2,351,831

Total revenue
 
8,153,817

 
7,568,016

 
7,574,112

 
7,990,075

Cost of sales
 
2,003,639

 
1,476,348

 
1,411,318

 
1,843,360

Management fees, net of expense reimbursements
 
643,814

 
646,394

 
647,380

 
699,677

All other expenses
 
3,705,925

 
3,845,005

 
4,227,013

 
3,880,512

Total expenses
 
6,353,378

 
5,967,747

 
6,285,711

 
6,423,549

Income (loss) from operations, before income taxes
 
1,800,439

 
1,600,269

 
1,288,401

 
1,566,526

Realized and unrealized gain (loss) on securities transactions, before income taxes
 
2,742,049

 
(30,976
)
 
872,020

 
1,783,460

Distributions and income from investments, net
 
13,124

 
2,701

 
568,332

 
657

Income tax expense, net
 
(737,381
)
 
(907,275
)
 
(818,134
)
 
(825,588
)
Total other income (loss) and expense, net, before income taxes
 
2,017,792

 
(935,550
)
 
622,218

 
958,529

Income (loss) before income taxes
 
3,818,231

 
664,719

 
1,910,619

 
2,525,055

Current and deferred tax expense, net
 
1,020,944

 
241,754

 
1,105,125

 
581,695

Net income
 
$
2,797,287

 
$
422,965

 
$
805,494

 
$
1,943,360

Net income attributable to non-controlling interest
 
$
384,534

 
$
352,893

 
$
366,042

 
$
363,298

Net income attributable to CORR stockholders
 
$
2,412,753

 
$
70,072

 
$
439,452

 
$
1,580,062

Basic and diluted earnings per share
 
$
0.10

 
$0.00
 
$
0.02

 
$
0.06

 
 
For the Fiscal Quarters Ended
 
 
February 28,
2012
 
May 31,
2012
 
August 31,
2012
 
November 30,
2012
Lease income
 
$
638,244

 
$
638,244

 
$
638,244

 
$
638,243

Sales revenue
 
2,437,310

 
1,439,958

 
1,927,626

 
2,216,128

Total revenue
 
3,075,554

 
2,078,202

 
2,565,870

 
2,854,371

Cost of sales
 
2,004,672

 
1,031,114

 
1,381,161

 
1,661,155

Management fees, net of expense reimbursements
 
247,381

 
254,965

 
298,051

 
246,399

All other expenses
 
599,865

 
892,759

 
1,082,911

 
1,117,268

Total expenses
 
2,851,918

 
2,178,838

 
2,762,123

 
3,024,822

Income (loss) from operations, before income taxes
 
223,636

 
(100,636
)
 
(196,253
)
 
(170,451
)
Realized and unrealized gain (loss) on securities transactions, before income taxes
 
8,931,466

 
3,237,325

 
8,492,502

 
(479,416
)
Distributions and income from investments, net
 
85,262

 
55,462

 
(502,176
)
 
82,057

Interest Expense
 
(27,409
)
 
(25,229
)
 
(16,780
)
 
(11,705
)
Total other income (loss) and expense, net, before income taxes
 
8,989,319

 
3,267,558

 
7,973,546

 
(409,064
)
Income (loss) before income taxes
 
9,212,955

 
3,166,922

 
7,777,293

 
(579,515
)
Current and deferred tax expense, net
 
(3,465,914
)
 
(1,190,162
)
 
(2,788,785
)
 
215,927

Net income
 
$
5,747,041

 
$
1,976,760

 
$
4,988,508

 
$
(363,588
)
Basic and diluted earnings (loss) per share
 
$
0.63

 
$
0.21

 
$
0.54

 
$
(0.04
)
CorEnergy Historical Summary Financial (Tables)
Summary balance sheet and Income Statement

Summary Balance Sheets and Statements of Income for the one-month transition period ending December 31, 2012 and the comparative one-month period ended December 31, 2011 are presented below. For further information please refer to the section with Management's Discussion and Analysis.

CorEnergy Historical Summary Consolidated Balance Sheets
 
December 31, 2012
 
December 31, 2011
(Unaudited)
Current assets
$
19,202,432

 
$
5,307,970

Non-current assets
274,459,553

 
90,623,108

Total Assets
$
293,661,985

 
$
95,931,078

 
 
 
 
Current liabilities
$
8,290,065

 
$
1,552,281

Non-current liabilities
74,529,728

 
2,894,200

Total Liabilities
82,819,793

 
4,446,481

Shareholder's equity
210,842,192

 
91,484,597

Total Liabilities and Shareholder's Equity
$
293,661,985

 
$
95,931,078

 
 
 
 
 
CorEnergy Historical Summary Consolidated Statements of Income
 
For the One-
Month Transition Period Ended December 31, 2012
 
For the One-
Month Period Ended December 31, 2011
(Unaudited)
Revenues
$
1,726,901

 
$
1,079,612

Expenses
1,826,422

 
993,919

Operating Income (Loss)
(99,521
)
 
85,693

Other Income (Expense), net
(2,342,365
)
 
1,601,084

Income (Loss) before income tax benefit (provision)
(2,441,886
)
 
1,686,777

Income tax benefit (provision)
920,143

 
(628,493
)
Net Income (Loss)
(1,521,743
)
 
1,058,284

Less: Net Income (Loss) attributable to non-controlling interest
(18,347
)
 

Net Income (Loss) attributable to CORR Stockholders
$
(1,503,396
)
 
$
1,058,284


Significant Accounting Policies (Details) (USD $)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Major components of net realized and unrealized gain on trading securities
 
 
 
 
Trading Securities, Unrealized Holding Gain
$ 4,663,211 
$ 0 
$ 3,985,269 
$ 238,617 
Trading Securities, Realized Gain (Loss)
(6,432,269)
(251,213)
24,664 
2,061,358 
Total net realized and unrealized gain (loss) on trading securities
$ (1,769,058)
$ (251,213)
$ 4,009,933 
$ 2,299,975 
Significant Accounting Policies (Details Textual) (USD $)
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Dec. 31, 2012
Aug. 31, 2012
Aug. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Nov. 30, 2011
Proceeds from Escrow Receivable
 
 
 
$ 1,006,000 
 
 
 
Other Interest and Dividend Income
2,325 
 
 
584,814 
 
(279,395)
651,673 
Remaining amount of escrow receivable
 
 
 
699,000 
 
 
 
Federal statutory income tax rate
 
35.00% 
35.00% 
35.00% 
 
 
 
Federal minimum alternative minimum tax rate
 
 
 
20.00% 
 
 
 
Federal capital gains income tax rate
 
 
 
20.00% 
15.00% 
 
 
Trading Securities, Realized Gain (Loss)
(6,432,269)
 
 
(251,213)
 
24,664 
2,061,358 
Gain on Escrow
 
 
 
307,000 
 
 
 
Reclassification in Net Distributions and Dividend Income [Member] |
Restatement Adjustment [Member]
 
 
 
 
 
 
 
Other Interest and Dividend Income
 
 
 
567,000 
 
 
 
Increase in Distribution and Dividend Income Reclassification
 
 
 
$ 0.06 
 
 
 
Reclassification of Realized and Unrealized Gains [Member] |
Restatement Adjustment [Member]
 
 
 
 
 
 
 
Increase in Distribution and Dividend Income Reclassification
 
 
 
$ 0.06 
 
 
 
Trading Securities, Realized Gain (Loss)
 
 
 
$ (567,000)
 
 
 
Leased Properties (Details) (USD $)
Share data in Millions, unless otherwise specified
1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Dec. 31, 2012
Pinedale Liquids Gathering System [Member]
Dec. 31, 2013
Pinedale Liquids Gathering System [Member]
mi
Point
Nov. 30, 2012
Pinedale Liquids Gathering System [Member]
Nov. 30, 2011
Pinedale Liquids Gathering System [Member]
Dec. 20, 2012
Secured Debt [Member]
Key Bank [Member]
Pinedale Liquids Gathering System [Member]
Sale Leaseback Transaction [Line Items]
 
 
 
 
 
 
 
 
 
Cash paid for acquisition
 
 
 
 
$ 205,000,000 
 
 
 
 
Fair value of investements acquired
 
 
 
 
23,000,000 
 
 
 
 
Shares issued with acquisition
 
 
 
 
13 
 
 
 
 
Shares issued with acquisition, value
 
 
 
 
73,600,000 
 
 
 
 
Length of transmission lines physical assets
 
 
 
 
 
150 
 
 
 
Number of receipt points
 
 
 
 
 
107 
 
 
 
Estimated useful lives of assets
 
 
 
 
 
26 years 
 
 
 
Proceeds from non-controlling interest
30,000,000 
30,000,000 
 
 
 
 
Proceeds from contributions from parent
 
 
 
 
108,300,000 
 
 
 
 
Available-for-sale Securities
 
 
 
 
 
20,000,000 
 
 
 
Settlement date
 
 
 
 
Dec. 20, 2012 
 
 
 
 
Long-term debt
70,000,000 
70,000,000 
 
 
 
 
 
70,000,000 
Line of Credit Facility, Expiration Date
 
Oct. 29, 2013 
 
 
 
 
 
 
 
Ownership percentage by noncontrolling owners
 
 
 
 
18.95% 
 
 
 
 
Non controlling economic interest pinedale GP
 
 
 
 
81.05% 
 
 
 
 
Depreciation expense
$ 499,357 
$ 11,429,980 
$ 1,118,269 
$ 364,254 
$ 286,000 
$ 8,900,000 
$ 0 
$ 0 
 
Leased Properties (Details 1) (Eastern Interconnect Project [Member], USD $)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Oct. 31, 2012
Dec. 31, 2013
mi
kV
Nov. 30, 2012
Nov. 30, 2011
Eastern Interconnect Project [Member]
 
 
 
 
 
Sale Leaseback Transaction [Line Items]
 
 
 
 
 
Length of transmission lines physical assets
 
 
216 
 
 
Power of transmission lines physical assets
 
 
345 
 
 
Incremental depreciation per quarter
 
 
 
$ 131,000 
 
Outstanding debt assumption on purchase price of Eastern Interconnect Project
 
3,400,000 
 
 
 
Estimated useful lives of assets
 
 
20 years 
 
 
Amount of depreciation of leased property
$ 190,000 
 
$ 2,300,000 
$ 837,000 
$ 294,000 
Note maturity date
 
Oct. 01, 2012 
 
 
 
Accrued interest rate
 
10.25% 
 
 
 
Leases Leases (Details)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Pinedale Liquids Gathering System [Member]
 
 
Operating Leased Assets [Line Items]
 
 
Percentage of total leased properties
 
94.23% 
Percentage of leased property revenue
75.20% 
88.68% 
Public Service Copmany of New Mexico [Member]
 
 
Operating Leased Assets [Line Items]
 
 
Percentage of total leased properties
 
5.77% 
Percentage of leased property revenue
24.80% 
0.00% 
Leases (Details 1) (USD $)
1 Months Ended 3 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Nov. 30, 2012
Aug. 31, 2012
May 31, 2012
Feb. 29, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Nov. 30, 2010
Dec. 31, 2012
Ultra Petroleum Corporation [Member]
Dec. 31, 2013
Ultra Petroleum Corporation [Member]
Dec. 31, 2012
Pinedale Liquids Gathering System [Member]
Dec. 31, 2013
Pinedale Liquids Gathering System [Member]
Nov. 30, 2012
Pinedale Liquids Gathering System [Member]
Dec. 31, 2013
Real Property [Member]
Pinedale Liquids Gathering System [Member]
Dec. 31, 2013
Land Rights [Member]
Pinedale Liquids Gathering System [Member]
Dec. 20, 2012
Minimum [Member]
Pinedale Liquids Gathering System [Member]
Dec. 20, 2012
Maximum [Member]
Pinedale Liquids Gathering System [Member]
Balance Sheet Related Disclosures [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets
$ 19,202,432 
$ 5,307,970 
 
 
 
 
 
 
 
 
 
 
 
 
$ 125,848 
$ 128,631 
 
 
 
 
 
 
 
Non-current assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,881,497 
2,656,688 
 
 
 
 
 
 
 
Income tax receivable
293,661,985 
95,931,078 
283,875,659 
 
 
 
111,431,833 
 
 
 
283,875,659 
111,431,833 
 
 
2,007,345 
2,785,319 
 
 
 
 
 
 
 
Current liabilities
8,290,065 
1,552,281 
 
 
 
 
 
 
 
 
 
 
 
 
514,092 
407,476 
 
 
 
 
 
 
 
Non-current liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,071,120 
2,709,333 
 
 
 
 
 
 
 
Total Liabilities
82,819,793 
4,446,481 
78,334,289 
 
 
 
12,576,048 
 
 
 
78,334,289 
12,576,048 
 
 
2,585,212 
3,116,809 
 
 
 
 
 
 
 
Shareholder's equity
210,842,192 
91,484,597 
205,541,370 
 
 
 
98,855,785 
 
 
 
205,541,370 
98,855,785 
90,426,313 
95,479,173 
(577,867)
(331,490)
 
 
 
 
 
 
 
Total Liabilities and Shareholder's Equity
293,661,985 
95,931,078 
283,875,659 
 
 
 
111,431,833 
 
 
 
283,875,659 
111,431,833 
 
 
2,007,345 
2,785,319 
 
 
 
 
 
 
 
Income Statement [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
1,726,901 
1,079,612 
7,990,075 
7,574,112 
7,568,016 
8,153,817 
2,854,371 
2,565,870 
2,078,202 
3,075,554 
31,286,020 
10,573,997 
3,225,463 
 
809,974 
933,404 
 
 
 
 
 
 
 
Expenses
1,826,422 
993,919 
6,423,549 
6,285,711 
5,967,747 
6,353,378 
3,024,822 
2,762,123 
2,178,838 
2,851,918 
25,030,385 
10,817,701 
4,659,376 
 
3,655,252 
561,138 
 
 
 
 
 
 
 
Operating Income (Loss)
(99,521)
85,693 
1,566,526 
1,288,401 
1,600,269 
1,800,439 
(170,451)
(196,253)
(100,636)
223,636 
6,255,635 
(243,704)
(1,433,913)
 
(2,845,278)
372,266 
 
 
 
 
 
 
 
Other Income (Expense), net
(2,342,365)
1,601,084 
958,529 
622,218 
(935,550)
2,017,792 
(409,064)
7,973,546 
3,267,558 
8,989,319 
2,662,989 
19,821,359 
5,238,913 
 
(31,833)
(138,044)
 
 
 
 
 
 
 
Income (Loss) before income tax provision (benefit)
(2,441,886)
 
2,525,055 
1,910,619 
664,719 
3,818,231 
(579,515)
7,777,293 
3,166,922 
9,212,955 
8,918,624 
19,577,655 
3,805,000 
 
(2,877,111)
234,222 
 
 
 
 
 
 
 
Income tax provision (benefit)
(920,143)
(628,493)
581,695 
1,105,125 
241,754 
1,020,944 
(215,927)
2,788,785 
1,190,162 
3,465,914 
2,949,518 
7,228,934 
882,857 
 
(700,213)
(3,616)
 
 
 
 
 
 
 
Net Income (Loss)
(1,521,743)
1,058,284 
1,943,360 
805,494 
422,965 
2,797,287 
(363,588)
4,988,508 
1,976,760 
5,747,041 
5,969,106 
12,348,721 
2,922,143 
 
(2,176,898)
237,838 
 
 
 
 
 
 
 
Settlement date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dec. 20, 2012 
 
 
 
 
 
 
Annual rent payment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,000,000 
27,500,000 
Annual rent escalator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.00% 
 
 
 
 
 
 
Deferred lease costs, net of accumulated amortization of $5,490, $0, and $172 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
912,875 
 
857,190 
 
 
 
 
 
 
857,190 
 
 
 
 
913,000 
857,000 
 
 
 
 
Deferred costs amortization period
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15 years 
 
 
 
 
 
Acquisition costs
 
 
 
 
 
 
 
 
 
 
2,557,910 
 
 
 
 
 
 
2,600,000 
 
 
 
 
 
Estimated useful lives of assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
26 years 
 
 
 
 
 
Fair value of assets acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
122,300,000 
105,700,000 
 
 
Amortiztion expense in year one
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,100,000 
 
 
Amortiztion expense in year two
 
 
291,939 
 
 
 
 
 
 
 
291,939 
 
 
 
 
 
 
 
 
 
8,800,000 
 
 
Amortiztion expense in year three
 
 
72,985 
 
 
 
 
 
 
 
72,985 
 
 
 
 
 
 
 
 
 
8,800,000 
 
 
Amortiztion expense in year four
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,800,000 
 
 
Amortiztion expense in year five
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 8,800,000 
 
 
Leases (Details 2) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Dec. 31, 2011
Nov. 30, 2011
Nov. 30, 2010
Dec. 31, 2013
Public Service Copmany of New Mexico [Member]
customer
Nov. 30, 2012
Public Service Copmany of New Mexico [Member]
Oct. 31, 2012
Public Service Copmany of New Mexico [Member]
Dec. 31, 2013
Future Expectations [Member]
Public Service Copmany of New Mexico [Member]
Dec. 31, 2013
Ultra Petroleum Corporation [Member]
Dec. 31, 2012
Ultra Petroleum Corporation [Member]
Operating Leased Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Assets, Current
 
$ 19,202,432 
 
$ 5,307,970 
 
 
 
 
 
 
$ 128,631 
$ 125,848 
Assets, Noncurrent
 
 
 
 
 
 
 
 
 
 
2,656,688 
1,881,497 
Lease termination date
 
 
 
 
 
 
Apr. 01, 2015 
 
 
 
 
 
Number of customers served
 
 
 
 
 
 
500,000 
 
 
 
 
 
Sales lease back intangible asset amortized
 
 
 
 
 
 
1,100,000 
 
 
 
 
 
Semi annual rent payment
 
 
 
 
 
 
1,400,000 
 
 
 
 
 
Future minimum rent payment
2,133,685 
2,370,762 
 
 
 
 
2,400,000 
 
 
 
 
Percentage of ownership in Eastern Interconnect Project
 
 
 
 
 
 
 
 
40.00% 
 
 
 
Fair value of lease option under agreement anticipated to be received
 
 
 
 
 
 
 
 
 
7,680,000 
 
 
Incremental depreciation per quarter
 
 
 
 
 
 
1,600,000 
 
 
 
 
 
Assets
283,875,659 
293,661,985 
111,431,833 
95,931,078 
 
 
 
 
 
 
2,785,319 
2,007,345 
Current liabilities
 
8,290,065 
 
1,552,281 
 
 
 
 
 
 
407,476 
514,092 
Liabilities, Noncurrent
 
 
 
 
 
 
 
 
 
 
2,709,333 
2,071,120 
Total Liabilities
78,334,289 
82,819,793 
12,576,048 
4,446,481 
 
 
 
 
 
 
3,116,809 
2,585,212 
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest
205,541,370 
210,842,192 
98,855,785 
91,484,597 
90,426,313 
95,479,173 
 
 
 
 
(331,490)
(577,867)
Liabilities and Equity
$ 283,875,659 
$ 293,661,985 
$ 111,431,833 
$ 95,931,078 
 
 
 
 
 
 
$ 2,785,319 
$ 2,007,345 
Leases (Details 3) (USD $)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Leases [Abstract]
 
 
 
 
deferred amortization cost on lease
$ 2,000 
$ 61,000 
$ 0 
$ 0 
Percentage of leased properties
 
 
0.00% 
 
Advance Receipt for Future Minimum Rental
2,133,685 
2,370,762 
 
2013
 
24,573,005 
 
 
2014
 
20,000,000 
 
 
2015
 
20,000,000 
 
 
2016
 
20,000,000 
 
 
2017
 
20,000,000 
 
 
Thereafter
 
180,000,000 
 
 
Total
 
$ 284,573,005 
 
 
Income Taxes (Details) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Deferred Tax Assets:
 
 
 
Organization costs
$ 0 
$ (27,188)
$ (17,668)
Net operating loss carryforwards
(65,248)
(6,411,230)
Net unrealized loss on investment securities
(143,822)
Cost recovery of leased and fixed assets
(966,914)
(36,443)
Asset acquisition costs
(158,535)
(134,415)
AMT and State of Kansas credit
(196,197)
Sub-total
(1,032,162)
(329,545)
(6,795,953)
Deferred Tax Liabilities:
 
 
 
Basis reduction of investment in partnerships
6,335,805 
2,675,142 
11,655,817 
Net unrealized gain on investment securities
28,444 
2,312,269 
Cost recovery of leased assets
50,446 
Sub-total
6,364,249 
2,725,588 
13,968,086 
Total net deferred tax liability
$ 5,332,087 
$ 2,396,043 
$ 7,172,133 
Income Taxes (Details 1) (USD $)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Nov. 30, 2012
Aug. 31, 2012
May 31, 2012
Feb. 29, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Total income tax expense (benefit) differs from the amount computed by applying the federal statutory income tax rates net investment income and net realized and unrealized gains on investments
 
 
 
 
 
 
 
 
 
 
 
 
 
Application of statutory income tax rate
$ (848,239)
 
 
 
 
 
 
 
 
 
$ 2,608,151 
$ 6,852,179 
$ 1,331,750 
State income taxes, net of federal tax benefit
(64,771)
 
 
 
 
 
 
 
 
 
273,174 
442,455 
133,158 
Dividends received deduction
(7,133)
 
 
 
 
 
 
 
 
 
(1,221)
(86)
Income of Real Estate Investment Trust not subject to tax
 
 
 
 
 
 
 
 
 
(927,254)
Income Tax Reconciliation, Effect on Tax Rate Change
 
 
 
 
 
 
 
 
 
995,447 
Other
 
 
 
 
 
 
 
 
 
(64,479)
(581,965)
Income tax expense (benefit), net
$ (920,143)
$ (628,493)
$ 581,695 
$ 1,105,125 
$ 241,754 
$ 1,020,944 
$ (215,927)
$ 2,788,785 
$ 1,190,162 
$ 3,465,914 
$ 2,949,518 
$ 7,228,934 
$ 882,857 
Income Taxes (Details 2) (USD $)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Nov. 30, 2012
Aug. 31, 2012
May 31, 2012
Feb. 29, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Current tax expense (benefit)
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal
$ 3,610,165 
 
 
 
 
 
 
 
 
 
$ (7,139)
$ 0 
$ 0 
State (net of federal tax benefit)
245,782 
 
 
 
 
 
 
 
 
 
20,613 
38,107 
53,650 
AMT benefit
 
 
 
 
 
 
 
 
 
(8,842)
200,000 
Total current tax expense (benefit)
3,855,947 
 
 
 
 
 
 
 
 
 
13,474 
29,265 
253,650 
Deferred tax expense (benefit)
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal
(4,465,104)
 
 
 
 
 
 
 
 
 
2,683,483 
6,762,974 
585,386 
State (net of federal tax benefit)
(310,986)
 
 
 
 
 
 
 
 
 
252,561 
436,695 
43,821 
Total deferred tax expense (benefit)
(4,776,090)
 
 
 
 
 
 
 
 
 
2,936,044 
7,199,669 
629,207 
Income tax expense (benefit), net
$ (920,143)
$ (628,493)
$ 581,695 
$ 1,105,125 
$ 241,754 
$ 1,020,944 
$ (215,927)
$ 2,788,785 
$ 1,190,162 
$ 3,465,914 
$ 2,949,518 
$ 7,228,934 
$ 882,857 
Income Taxes (Details 3) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Aggregate cost of securities for federal income tax purposes and securities with unrealized appreciation and depreciation
 
 
 
Aggregate cost for federal income tax purposes
$ 6,604,636 
$ 22,007,069 
$ 41,995,195 
Gross unrealized appreciation
16,699,686 
2,018,455 
33,892,176 
Gross unrealized depreciation
(801,340)
Net unrealized appreciation
$ 16,699,686 
$ 2,018,455 
$ 33,090,836 
Income Taxes Income Taxes (Details 4)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
$ 0.000 
$ 0.375 
$ 0.440 
$ 0.410 
Capital Gain Distribution [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.0000 
$ 0.0000 
$ 0.0000 
Capital Gain Distribution [Member] |
Installment One [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.0000 
$ 0.0000 
$ 0.0000 
Capital Gain Distribution [Member] |
Installment Two [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.0000 
$ 0.0000 
$ 0.0000 
Capital Gain Distribution [Member] |
Installment Three [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.0000 
$ 0.0000 
$ 0.0000 
Capital Gain Distribution [Member] |
Installment Four [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
 
$ 0.0000 
$ 0.0000 
Nondividend Distribution [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.2133 
$ 0.4400 
$ 0.0000 
Nondividend Distribution [Member] |
Installment One [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.0000 
$ 0.1100 
$ 0.0000 
Nondividend Distribution [Member] |
Installment Two [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.0883 
$ 0.1100 
$ 0.0000 
Nondividend Distribution [Member] |
Installment Three [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.1250 
$ 0.1100 
$ 0.0000 
Nondividend Distribution [Member] |
Installment Four [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
 
$ 0.1100 
$ 0.0000 
Qualified Dividends [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.1617 
$ 0.0000 
$ 0.4100 
Qualified Dividends [Member] |
Installment One [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.1250 
$ 0.0000 
$ 0.1000 
Qualified Dividends [Member] |
Installment Two [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.0367 
$ 0.0000 
$ 0.1000 
Qualified Dividends [Member] |
Installment Three [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.0000 
$ 0.0000 
$ 0.1000 
Qualified Dividends [Member] |
Installment Four [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
 
$ 0.0000 
$ 0.1100 
Dividend Declared [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.3750 
$ 0.4400 
$ 0.4100 
Dividend Declared [Member] |
Installment One [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.1250 
$ 0.1100 
$ 0.1000 
Dividend Declared [Member] |
Installment Two [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.1250 
$ 0.1100 
$ 0.1000 
Dividend Declared [Member] |
Installment Three [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.1250 
$ 0.1100 
$ 0.1000 
Dividend Declared [Member] |
Installment Four [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
 
$ 0.1100 
$ 0.1100 
Ordinary Dividends [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.1617 
$ 0.0000 
$ 0.4100 
Ordinary Dividends [Member] |
Installment One [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.1250 
$ 0.0000 
$ 0.1000 
Ordinary Dividends [Member] |
Installment Two [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.0367 
$ 0.0000 
$ 0.1000 
Ordinary Dividends [Member] |
Installment Three [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
$ 0.0000 
$ 0.0000 
$ 0.1000 
Ordinary Dividends [Member] |
Installment Four [Member]
 
 
 
 
Dividends Payable [Line Items]
 
 
 
 
Common Stock, Dividends, Per Share, Declared
 
 
$ 0.0000 
$ 0.1100 
Income Taxes (Details Textual) (USD $)
3 Months Ended 9 Months Ended 12 Months Ended
Aug. 31, 2012
Aug. 31, 2012
Dec. 31, 2013
Nov. 30, 2012
Income Taxes (Textual) [Abstract]
 
 
 
 
Uncertain tax positions
 
 
$ 0 
 
Penalties and interest
 
 
 
Blended state tax rate
 
 
3.11% 
2.26% 
Federal statutory income tax rate
35.00% 
35.00% 
35.00% 
 
Net operating loss for federal income tax purposes
 
 
 
17,200,000 
Net operating loss carry forward period
 
 
 
20 years 
Net operating loss expiring on November 30, 2028 if not utilized
 
 
 
8,000 
Net operating loss expiring on November 30, 2029 if not utilized
 
 
 
4,000,000 
Net operating loss expiring on November 30, 2030 if not utilized
 
 
 
3,400,000 
Net operating loss expiring on November 30, 2031 if not utilized
 
 
 
24,000 
Net operating loss expiring on November 30, 2032 if not utilized
 
 
 
9,800,000 
Net operating loss of taxable reit subsidiary
 
 
160,000 
 
AMT credit carryforward
 
 
 
$ 194,000 
Percentage of dividends treated as qualified dividends
 
 
43.00% 
 
Percentage of cash distributions, treated as return of capital
 
 
57.00% 
 
Property and Equipment (Details) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Component of property and equipment
 
 
 
Gross property and equipment
$ 5,356,168 
$ 5,340,646 
$ 5,340,224 
Less accumulated depreciation
(2,037,685)
(1,774,616)
(1,751,202)
Net property and equipment
3,318,483 
3,566,030 
3,589,022 
Natural gas pipeline [Member]
 
 
 
Component of property and equipment
 
 
 
Gross property and equipment
5,215,424 
5,215,424 
5,215,424 
Vehicles and trailers [Member]
 
 
 
Component of property and equipment
 
 
 
Gross property and equipment
125,117 
110,782 
110,782 
Computers [Member]
 
 
 
Component of property and equipment
 
 
 
Gross property and equipment
$ 15,627 
$ 14,440 
$ 14,018 
Property and Equipment (Details Textual) (USD $)
In Thousands, unless otherwise specified
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2012
Nov. 30, 2011
Dec. 31, 2013
Nov. 30, 2012
Property, Plant and Equipment [Abstract]
 
 
 
 
Amount of depreciation of property and equipment recognized
$ 23 
$ 70 
$ 283 
$ 281 
Concentrations (Details)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2012
Nov. 30, 2011
Dec. 31, 2013
Nov. 30, 2012
Risks and Uncertainties [Abstract]
 
 
 
 
Percentage of investments in securities of energy infrastructure companies in relation to aggregate assets
 
 
8.21% 
 
Term of contract
 
 
10 years 
 
Natural gas contract with Mowood, expiration year
 
 
2015 
 
Revenue related to the DOD contract
84.00% 
88.00% 
80.00% 
71.00% 
Percentage of amounts due from the department of defense in relation to consolidated accounts receivable
79.00% 
 
91.00% 
84.00% 
Percentage of payment to supplier of natural gas in relation to cost of sales
58.00% 
 
41.00% 
29.00% 
Management's Agreements (Details) (USD $)
12 Months Ended
Nov. 30, 2012
Nov. 30, 2012
Minimum [Member]
Nov. 30, 2011
Corridor Infra Trust Management [Member]
Agreements (Textual) [Abstract]
 
 
 
Quarterly management fee percentage on the value of company's average monthly managed assets
 
 
0.25% 
Annual management fee percentage on the value of company's average monthly managed assets
 
 
1.00% 
Quarterly incentive fee on increase in distributions paid
 
 
10.00% 
Threshold distribution per quarter
 
 
$ 0.125 
Annually rate of fee percentage on the value of company's average daily managed assets
0.04% 
 
 
Administrator minimum annual fee
 
$ 30,000 
 
Monthly fee payable to accounting services provider
24,000 
 
 
Company net asset, year one
50,000,000 
 
 
Annual rate of monthly fee payable to accounting services provider on company assets, year one
0.0125% 
 
 
Company net asset, year two
200,000,000 
 
 
Annual rate of monthly fee payable to accounting services provider on company assets, year two
0.0075% 
 
 
Company net asset, year three
$ 250,000,000 
 
 
Annual rate of monthly fee payable to accounting services provider on company assets, year three
0.0025% 
 
 
Fair Value (Details) (Fair Value, Measurements, Recurring [Member], USD $)
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Assets:
 
 
 
Trading securities
$ 0 
$ 4,318,398 
$ 55,219,411 
Other equity securities
23,304,321 
19,707,126 
19,866,621 
Total Assets
23,304,321 
24,025,524 
75,086,032 
Level 1 [Member]
 
 
 
Assets:
 
 
 
Trading securities
4,318,398 
27,480,191 
Other equity securities
Total Assets
4,318,398 
27,480,191 
Level 2 [Member]
 
 
 
Assets:
 
 
 
Trading securities
27,739,220 
Other equity securities
Total Assets
27,739,220 
Level 3 [Member]
 
 
 
Assets:
 
 
 
Trading securities
Other equity securities
23,304,321 
19,707,126 
19,866,621 
Total Assets
$ 23,304,321 
$ 19,707,126 
$ 19,866,621 
Fair Value (Details 1) (USD $)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Nov. 30, 2012
Feb. 29, 2012
Fair Value Disclosures [Abstract]
 
 
 
 
changes in Unrealized Gain Loss on Assets Held and Realized and Unrealized Gain Loss on Other Equity Securities Included In Income
 
$ 5,292,890 
$ 5,018,152 
 
The changes for all Level 3 assets measured at fair value on a recurring basis using significant unobservable inputs
 
 
 
 
Fair value beginning balance
19,866,621 
19,707,126 
41,856,730 
19,866,621 
Total realized and unrealized gains (losses) included in net income
(159,495)
5,292,890 
16,190,428 
 
Sales
(35,919,672)
 
Return of capital adjustments impacting cost basis of securities
(1,695,695)
(2,260,865)
 
Fair value ending balance
19,707,126 
23,304,321 
19,866,621 
19,866,621 
Changes in unrealized gains (losses), included in net income, relating to securities still held
$ (159,495)
 
 
 
Fair Value (Details 2) (USD $)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Public company historical EBITDA analysis [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Other equity securities, at fair value
$ 23,304,321 
$ 19,707,126 
$ 19,866,621 
Valuation Technique
Public company historical EBITDA analysis 
Public company historical EBITDA analysis 
Public company historical EBITDA analysis 
Public company historical EBITDA analysis [Member] |
Minimum [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Historical EBITDA Valuation Multiples
9.6 
9.5 
9.4 
Public company historical EBITDA analysis [Member] |
Maximum [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Historical EBITDA Valuation Multiples
10.6 
11.6 
10.4 
Public company historical EBITDA analysis [Member] |
Weighted Average [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Historical EBITDA Valuation Multiples
10.1 
10.6 
9.95 
Public company projected EBITDA analysis [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Valuation Technique
Public company projected EBITDA analysis 
Public company projected EBITDA analysis 
Public company projected EBITDA analysis 
Public company projected EBITDA analysis [Member] |
Minimum [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Projected EBITDA Valuation Multiples
8.3 
8.8 
8.1 
Public company projected EBITDA analysis [Member] |
Maximum [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Projected EBITDA Valuation Multiples
9.3 
10.1 
9.8 
Public company projected EBITDA analysis [Member] |
Weighted Average [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Projected EBITDA Valuation Multiples
8.8 
9.5 
8.95 
Public Company Yield Analysis [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Valuation Technique
 
 
Public company yield analysis 
Public Company Yield Analysis [Member] |
Minimum [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Projected EBITDA Valuation Multiples
 
 
0.0811 
Public Company Yield Analysis [Member] |
Maximum [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Projected EBITDA Valuation Multiples
 
 
0.0911 
Public Company Yield Analysis [Member] |
Weighted Average [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Projected EBITDA Valuation Multiples
 
 
0.0861 
M&A company analysis [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Valuation Technique
M&A company analysis 
M&A company analysis 
M&A company analysis 
M&A company analysis [Member] |
Minimum [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
EV/LTM 2012 EBITDA
8.3 
8.9 
9.3 
M&A company analysis [Member] |
Maximum [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
EV/LTM 2012 EBITDA
9.3 
10.3 
9.9 
M&A company analysis [Member] |
Weighted Average [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
EV/LTM 2012 EBITDA
8.8 
9.6 
9.6 
Discounted cash flow [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Valuation Technique
Discounted cash flow 
Discounted cash flow 
Discounted cash flow 
Discounted cash flow [Member] |
Minimum [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Weighted Average Cost of Capital
9.50% 
9.50% 
9.50% 
Discounted cash flow [Member] |
Maximum [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Weighted Average Cost of Capital
14.00% 
13.00% 
13.00% 
Discounted cash flow [Member] |
Weighted Average [Member]
 
 
 
Quantitative table for Valuation Techniques
 
 
 
Weighted Average Cost of Capital
11.80% 
11.30% 
11.25% 
Fair Value (Details 3) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Carrying Amount [Member] |
Level 1 [Member]
 
 
 
Financial instruments financial assets and financial liabilities at fair value
 
 
 
Cash and cash equivalents
$ 17,963,266 
$ 17,680,783 
$ 14,333,456 
Line of credit
81,935 
120,000 
Carrying Amount [Member] |
Level 2 [Member]
 
 
 
Financial instruments financial assets and financial liabilities at fair value
 
 
 
Escrow receivable
698,729 
698,729 
Long-term debt
70,000,000 
70,000,000 
Fair Value [Member] |
Level 1 [Member]
 
 
 
Financial instruments financial assets and financial liabilities at fair value
 
 
 
Cash and cash equivalents
17,963,266 
17,680,783 
14,333,456 
Line of credit
81,935 
120,000 
Fair Value [Member] |
Level 2 [Member]
 
 
 
Financial instruments financial assets and financial liabilities at fair value
 
 
 
Escrow receivable
698,729 
698,729 
Long-term debt
$ 70,000,000 
$ 70,000,000 
$ 0 
Fair Value Fair Value (Details 4) (Unconsolidated Affiliates [Member], USD $)
12 Months Ended
Dec. 31, 2013
Unconsolidated Affiliates [Member]
 
Financial Information of Unconsolidated Affiliates [Abstract]
 
Revenues
$ 127,356,000 
Operating expenses
66,167,000 
Net income
33,360,000 
Current assets
36,726,000 
Noncurrent assets
417,998,000 
Current liabilities
28,285,000 
Noncurrent liabilities
191,405,000 
Partner's equity
$ 235,034,000 
Fair Value (Details Textual) (USD $)
Share data in Millions, unless otherwise specified
1 Months Ended 3 Months Ended 12 Months Ended 1 Months Ended 3 Months Ended
Dec. 31, 2012
Nov. 30, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Nov. 30, 2011
High Sierra Energy [Member]
Aug. 31, 2012
High Sierra Energy [Member]
Dec. 31, 2012
Lightfoot Capital Partners LP [Member]
Dec. 31, 2012
Vantacore Partners LP [Member]
Schedule of Equity Method Investments [Line Items]
 
 
 
 
 
 
 
 
 
Proceeds from Sale of Available-for-sale Securities
$ 49,000,000 
 
 
 
 
$ 9,400,000 
 
 
 
Equity Method Investment, Ownership Percentage
 
 
 
 
 
 
 
6.70% 
11.10% 
Fair Value of Financial Instruments (Textual) [Abstract]
 
 
 
 
 
 
 
 
 
Consideration paid in newly issued units
 
 
 
 
 
1.2 
 
 
 
Trading Securities, Realized Gain (Loss)
(6,432,269)
 
(251,213)
24,664 
2,061,358 
 
15,800,000 
 
 
Fair Value of Financial Instruments (Additional Textual) [Abstract]
 
 
 
 
 
 
 
 
 
Transfers between levels
 
 
 
 
 
 
 
Minimum period for releasing of escrow receivable
 
 
14 months 
 
 
 
 
 
 
Remaining amount of escrow receivable
 
 
$ 699,000 
 
 
 
 
 
 
Intangibles (Details) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Amortization of the intangible lease asset
 
 
 
Intangible lease asset
$ 1,094,771 
$ 1,094,771 
$ 1,094,771 
Accumulated amortization
(729,847)
(437,908)
(413,580)
Net intangible lease asset
$ 364,924 
$ 656,863 
$ 681,191 
Intangibles (Details 1) (USD $)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Nov. 30, 2012
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
Amortization of Acquired Intangible Assets
$ 24,000 
$ 292,000 
$ 122,000 
Remaining estimated amortization on the lease
 
 
 
2014
 
291,939 
 
2015
 
72,985 
 
Net intangible lease asset
$ 656,863 
$ 364,924 
$ 681,191 
Credit Facilities (Details) (USD $)
1 Months Ended 12 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Nov. 30, 2011
Oct. 15, 2013
Mowood LLC [Member]
Revolving note payable [Member]
Oct. 29, 2010
Mowood LLC [Member]
Revolving note payable [Member]
Nov. 30, 2011
Line of Credit [Member]
Oct. 29, 2011
Line of Credit [Member]
Mowood LLC [Member]
Revolving note payable [Member]
Dec. 31, 2012
Non-Controlling Interest [Member]
Dec. 31, 2013
Key Bank [Member]
Secured Debt [Member]
Dec. 31, 2012
Key Bank [Member]
Secured Debt [Member]
Nov. 30, 2012
Key Bank [Member]
Secured Debt [Member]
Dec. 20, 2012
Key Bank [Member]
Secured Debt [Member]
Dec. 31, 2012
Key Bank [Member]
Line of Credit [Member]
Dec. 31, 2013
Key Bank [Member]
Line of Credit [Member]
Dec. 31, 2012
Key Bank [Member]
Line of Credit [Member]
Nov. 30, 2012
Key Bank [Member]
Line of Credit [Member]
Nov. 30, 2011
Key Bank [Member]
Line of Credit [Member]
May 8, 2013
Key Bank [Member]
Line of Credit [Member]
Oct. 15, 2013
Subsequent Event [Member]
Line of Credit [Member]
Mowood LLC [Member]
Revolving note payable [Member]
Line of Credit Facility [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of Credit Facility, Amount Outstanding
$ 0 
$ 81,935 
$ 0 
$ 120,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of Credit Facility, Covenant Terms
 
three years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contributions from noncontrolling interests
30,000,000 
 
 
 
 
 
 
 
 
30,000,000 
 
 
 
 
 
 
 
 
 
 
 
Description of variable rate basis
 
 
 
 
 
 
 
LIBOR 
 
 
LIBOR 
 
 
 
 
LIBOR 
 
 
 
 
 
Accrued interest on outstanding balance
 
 
 
 
 
 
 
0.75% 
4.00% 
 
 
 
 
3.25% 
 
4.00% 
 
 
 
 
0.50% 
Debt Instrument, Interest Rate at Period End
 
 
 
 
 
 
 
 
 
 
3.42% 
 
 
 
 
 
 
 
 
 
3.75% 
Line of Credit Facility, Periodic Payment, Principal
 
294,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Required principle payment as percentage of outstanding amount, beginning in year two
 
 
 
 
 
 
 
 
 
 
0.42% 
 
 
 
 
 
 
 
 
 
 
Restricted Cash and Cash Equivalents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of Restricted Net Assets for Consolidated and Unconsolidated Subsidiaries
 
93,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retained Earnings, Unappropriated
 
22,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt issuance cost
 
 
1,500,000 
 
 
 
 
 
 
 
1,000,000 
1,500,000 
 
 
208,000 
 
 
 
Maximum borrowing base of revolving note payable
 
 
 
 
10,000,000 
1,500,000 
1,300,000 
 
 
 
 
 
 
70,000,000 
 
 
 
 
 
20,000,000 
 
Outstanding principal and accrued interest payable, termination date
 
Oct. 29, 2013 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan facility secured by assets
 
 
 
 
10,000,000 
1,500,000 
1,300,000 
 
 
 
 
 
 
70,000,000 
 
 
 
 
 
20,000,000 
 
Expiration period
 
 
 
 
180 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitment fee percentage
 
 
 
 
0.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization of Financing Costs and Discounts
17,000 
515,000 
 
 
 
 
 
 
 
 
 
 
41,700 
 
 
 
debt instrument, description of prime rate basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prime Rate 
 
 
 
 
 
debt instrument, basis spread on prime rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.75% 
 
 
 
 
 
Remaining borrowing capacity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 20,000,000 
 
 
 
 
 
Interest Rate Hedge Swaps (Details) (Fair Value, Measurements, Recurring [Member], USD $)
Dec. 31, 2013
Dec. 31, 2012
Level 1 [Member]
 
 
Assets, Prepaid expenses and other assets
$ 0 
$ 0 
Liabilities, Accounts payable and other accrued liabilities
Level 2 [Member]
 
 
Assets, Prepaid expenses and other assets
680,968 
Liabilities, Accounts payable and other accrued liabilities
316,756 
Level 3 [Member]
 
 
Assets, Prepaid expenses and other assets
Liabilities, Accounts payable and other accrued liabilities
$ 0 
$ 0 
Interest Rate Hedge Swaps (Details 2) (Not Designated as Hedging Instrument [Member], Interest Rate Swap [Member], USD $)
Dec. 31, 2013
Instrument
Not Designated as Hedging Instrument [Member] |
Interest Rate Swap [Member]
 
Derivative Instruments, Gain (Loss) [Line Items]
 
Number of Instruments
Notional Amount Outstanding
$ 52,500,000 
Fixed Rate Paid
0.865% 
Interest Rate Hedge Swaps (Details 3) (USD $)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Derivative Instruments, Gain (Loss) [Line Items]
 
 
Interest Expense
 
$ 6,000,000 
Not Designated as Hedging Instrument [Member] |
Interest Rate Swap [Member]
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
Derivative, Number of Instruments Held
 
Derivative, Notional Amount
 
52,500,000 
Derivative, Forward Interest Rate
 
0.865% 
Not Designated as Hedging Instrument [Member] |
Interest rate contract [Member]
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
Interest Expense
316,756 
75,000 
Interest Expense [Member] |
Interest Rate Swap [Member]
 
 
Derivative Instruments, Gain (Loss) [Line Items]
 
 
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net
 
741,344 
Interest Expense
 
(217,821)
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net
 
5,969 
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net
$ (316,756)
$ (75,200)
Interest Rate Hedge Swaps (Details Textual) (USD $)
12 Months Ended 1 Months Ended 12 Months Ended
Jun. 30, 2014
Dec. 31, 2013
Dec. 31, 2012
Not Designated as Hedging Instrument [Member]
Interest rate contract [Member]
Dec. 31, 2013
Not Designated as Hedging Instrument [Member]
Interest rate contract [Member]
Derivative Instruments, Gain (Loss) [Line Items]
 
 
 
 
Amounts reported in OCI related to derivative hedgest to be reclassed into interest expense
$ 264,000 
 
 
 
Gain recognized in earnings
 
$ 6,000,000 
$ 316,756 
$ 75,000 
Warrants (Details)
12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Warrants and Rights Note Disclosure [Abstract]
 
 
 
Warrants, outstanding
945,594 
945,594 
945,594 
Exercise price of warrants
11.41 
 
 
Warrants expiration date
Feb. 06, 2014 
 
 
Earnings Per Share (Details) (USD $)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Nov. 30, 2012
Aug. 31, 2012
May 31, 2012
Feb. 29, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Earnings Per Share [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to CORR Stockholders
$ (1,503,396)
$ 1,058,284 
$ 1,580,062 
$ 439,452 
$ 70,072 
$ 2,412,753 
 
 
 
 
$ 4,502,339 
$ 12,348,721 
$ 2,922,143 
Basic and diluted weighted average shares
15,564,861 1
 
 
 
 
 
 
 
 
 
24,149,396 1
9,182,425 1
9,159,809 1
Basic and diluted earnings per share attributable to CORR Stockholders
$ (0.10)
 
$ 0.06 
$ 0.02 
$ 0.00 
$ 0.10 
$ (0.04)
$ 0.54 
$ 0.21 
$ 0.63 
$ 0.19 
$ 1.34 
$ 0.32 
Shares issued during period
14,950,000 
 
 
 
 
 
 
 
 
 
 
 
 
Quarterly Financial Data (Unaudited) (Details) (USD $)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Nov. 30, 2012
Aug. 31, 2012
May 31, 2012
Feb. 29, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Quarterly Financial Data [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
$ 857,909 
 
$ 5,638,244 
$ 5,638,244 
$ 5,638,244 
$ 5,638,244 
$ 638,243 
$ 638,244 
$ 638,244 
$ 638,244 
$ 22,552,976 
$ 2,552,975 
$ 1,063,740 
Sales revenue
868,992 
 
2,351,831 
1,935,868 
1,929,772 
2,515,573 
2,216,128 
1,927,626 
1,439,958 
2,437,310 
8,733,044 
8,021,022 
2,161,723 
Total Revenue
1,726,901 
1,079,612 
7,990,075 
7,574,112 
7,568,016 
8,153,817 
2,854,371 
2,565,870 
2,078,202 
3,075,554 
31,286,020 
10,573,997 
3,225,463 
Cost of sales (excluding depreciation expense)
686,976 
 
1,843,360 
1,411,318 
1,476,348 
2,003,639 
1,661,155 
1,381,161 
1,031,114 
2,004,672 
6,734,665 
6,078,102 
1,689,374 
Cost of sales
686,976 
 
1,843,360 
1,411,318 
1,476,348 
2,003,639 
1,661,155 
1,381,161 
1,031,114 
2,004,672 
6,734,665 
6,078,102 
1,689,374 
Management fees, net of expense reimbursements
155,242 
 
699,677 
647,380 
646,394 
643,814 
246,399 
298,051 
254,965 
247,381 
2,637,265 
1,046,796 
968,163 
Management fees, net of expense reimbursements
155,242 
 
699,677 
647,380 
646,394 
643,814 
246,399 
298,051 
254,965 
247,381 
2,637,265 
1,046,796 
968,163 
Other expenses
27,500 
 
3,880,512 
4,227,013 
3,845,005 
3,705,925 
1,117,268 
1,082,911 
892,759 
599,865 
580,183 
231,086 
183,674 
All other expenses
27,500 
 
3,880,512 
4,227,013 
3,845,005 
3,705,925 
1,117,268 
1,082,911 
892,759 
599,865 
580,183 
231,086 
183,674 
Total Expenses
1,826,422 
993,919 
6,423,549 
6,285,711 
5,967,747 
6,353,378 
3,024,822 
2,762,123 
2,178,838 
2,851,918 
25,030,385 
10,817,701 
4,659,376 
Operating Income (Loss)
(99,521)
85,693 
1,566,526 
1,288,401 
1,600,269 
1,800,439 
(170,451)
(196,253)
(100,636)
223,636 
6,255,635 
(243,704)
(1,433,913)
Net realized and unrealized gain (loss) on other equity securities
(159,495)
 
1,783,460 
872,020 
(30,976)
2,742,049 
(479,416)
8,492,502 
3,237,325 
8,931,466 
5,617,766 
16,171,944 
2,283,773 
Realized and unrealized gain (loss) on securities transactions, before income taxes
(159,495)
 
1,783,460 
872,020 
(30,976)
2,742,049 
(479,416)
8,492,502 
3,237,325 
8,931,466 
5,617,766 
16,171,944 
2,283,773 
Distributions and Income from Investments Net
 
 
657 
568,332 
2,701 
13,124 
82,057 
(502,176)
55,462 
85,262 
 
 
 
Interest expense
(416,137)
 
(825,588)
(818,134)
(907,275)
(737,381)
(11,705)
(16,780)
(25,229)
(27,409)
(3,288,378)
(81,123)
(36,508)
Total Other Income (Expense)
(2,342,365)
1,601,084 
958,529 
622,218 
(935,550)
2,017,792 
(409,064)
7,973,546 
3,267,558 
8,989,319 
2,662,989 
19,821,359 
5,238,913 
Income (loss) before income taxes
(2,441,886)
 
2,525,055 
1,910,619 
664,719 
3,818,231 
(579,515)
7,777,293 
3,166,922 
9,212,955 
8,918,624 
19,577,655 
3,805,000 
Current and deferred tax expense, net
920,143 
628,493 
(581,695)
(1,105,125)
(241,754)
(1,020,944)
215,927 
(2,788,785)
(1,190,162)
(3,465,914)
(2,949,518)
(7,228,934)
(882,857)
Net Income
(1,521,743)
1,058,284 
1,943,360 
805,494 
422,965 
2,797,287 
(363,588)
4,988,508 
1,976,760 
5,747,041 
5,969,106 
12,348,721 
2,922,143 
Net income attributable to non-controlling interest
(18,347)
363,298 
366,042 
352,893 
384,534 
 
 
 
 
1,466,767 
Net income attributable to CORR stockholders
(1,503,396)
1,058,284 
1,580,062 
439,452 
70,072 
2,412,753 
 
 
 
 
4,502,339 
12,348,721 
2,922,143 
Less: Net Income (Loss) attributable to non-controlling interest
$ (18,347)
$ 0 
$ 363,298 
$ 366,042 
$ 352,893 
$ 384,534 
 
 
 
 
$ 1,466,767 
$ 0 
$ 0 
Basic and diluted earnings per share attributable to CORR Stockholders
$ (0.10)
 
$ 0.06 
$ 0.02 
$ 0.00 
$ 0.10 
$ (0.04)
$ 0.54 
$ 0.21 
$ 0.63 
$ 0.19 
$ 1.34 
$ 0.32 
CorEnergy Historical Summary Financial (Details) (USD $)
1 Months Ended 3 Months Ended 12 Months Ended 13 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Nov. 30, 2012
Aug. 31, 2012
May 31, 2012
Feb. 29, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Dec. 31, 2013
Nov. 30, 2010
Assets [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets
$ 19,202,432 
$ 5,307,970 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-current assets
274,459,553 
90,623,108 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets
293,661,985 
95,931,078 
283,875,659 
 
 
 
111,431,833 
 
 
 
283,875,659 
111,431,833 
 
283,875,659 
 
Liabilities [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
8,290,065 
1,552,281 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-current liabilities
74,529,728 
2,894,200 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Liabilities
82,819,793 
4,446,481 
78,334,289 
 
 
 
12,576,048 
 
 
 
78,334,289 
12,576,048 
 
78,334,289 
 
Shareholder's equity
210,842,192 
91,484,597 
205,541,370 
 
 
 
98,855,785 
 
 
 
205,541,370 
98,855,785 
90,426,313 
205,541,370 
95,479,173 
Total Liabilities and Shareholder's Equity
293,661,985 
95,931,078 
283,875,659 
 
 
 
111,431,833 
 
 
 
283,875,659 
111,431,833 
 
283,875,659 
 
Income Statement [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
1,726,901 
1,079,612 
7,990,075 
7,574,112 
7,568,016 
8,153,817 
2,854,371 
2,565,870 
2,078,202 
3,075,554 
31,286,020 
10,573,997 
3,225,463 
 
 
Expenses
1,826,422 
993,919 
6,423,549 
6,285,711 
5,967,747 
6,353,378 
3,024,822 
2,762,123 
2,178,838 
2,851,918 
25,030,385 
10,817,701 
4,659,376 
 
 
Operating Income (Loss)
(99,521)
85,693 
1,566,526 
1,288,401 
1,600,269 
1,800,439 
(170,451)
(196,253)
(100,636)
223,636 
6,255,635 
(243,704)
(1,433,913)
 
 
Other Income (Expense), net
(2,342,365)
1,601,084 
958,529 
622,218 
(935,550)
2,017,792 
(409,064)
7,973,546 
3,267,558 
8,989,319 
2,662,989 
19,821,359 
5,238,913 
 
 
Income (Loss) before income tax benefit (provision)
(2,441,886)
1,686,777 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit (provision)
920,143 
628,493 
(581,695)
(1,105,125)
(241,754)
(1,020,944)
215,927 
(2,788,785)
(1,190,162)
(3,465,914)
(2,949,518)
(7,228,934)
(882,857)
 
 
Net Income (Loss)
(1,521,743)
1,058,284 
1,943,360 
805,494 
422,965 
2,797,287 
(363,588)
4,988,508 
1,976,760 
5,747,041 
5,969,106 
12,348,721 
2,922,143 
 
 
Less: Net Income (Loss) attributable to non-controlling interest
(18,347)
363,298 
366,042 
352,893 
384,534 
 
 
 
 
1,466,767 
 
 
Net Income attributable to CORR Stockholders
(1,503,396)
1,058,284 
1,580,062 
439,452 
70,072 
2,412,753 
 
 
 
 
4,502,339 
12,348,721 
2,922,143 
 
 
Business Acquisition, Purchase Price Allocation, Property, Plant and Equipment
230,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Significant Noncash Transaction, Value of Consideration Received
 
 
 
 
 
 
 
 
 
 
 
 
 
23,000,000 
 
Proceeds from Sale of Available-for-sale Securities
$ 49,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsequent Events (Details) (USD $)
1 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Jan. 3, 2014
Subsequent Event [Member]
Nov. 30, 2011
Line of Credit [Member]
Jan. 21, 2014
Common Stock [Member]
Subsequent Event [Member]
Jan. 21, 2014
LCP Oregon [Member]
Subsequent Event [Member]
Mar. 13, 2014
Black Bison Water Services LLC [Member]
Line of Credit [Member]
Subsequent Event [Member]
Mar. 13, 2014
Warrant [Member]
Subsequent Event [Member]
Subsequent Event [Line Items]
 
 
 
 
 
 
 
 
 
 
Common Stock, Dividends, Per Share, Declared
$ 0.000 
$ 0.375 
$ 0.440 
$ 0.410 
$ 0.125 
 
 
 
 
 
Maximum borrowing base of revolving note payable
 
 
 
$ 10,000,000 
 
 
 
 
$ 11,500,000 
 
Accrued interest on outstanding balance
 
 
 
 
 
0.75% 
 
 
2.00% 
 
Shares issued during period
14,950,000 
 
 
 
 
 
7,475,000 
 
 
 
Net offering proceeds
84,516,780 
(523,094)
 
 
49,000,000 
 
 
 
Proceeds from Divestiture of Businesses
 
 
 
 
 
 
 
40,000,000 
 
 
Rental Agreement Consumer Price Index Increase Percent
 
 
 
 
 
 
 
2.00% 
 
 
Monthly Rental Payment
 
 
 
 
 
 
 
417,522 
 
 
Construction and Development Costs
 
 
 
 
 
 
 
10,000,000 
 
 
Variable Rent Cap, Percentage
 
 
 
 
 
 
 
30.00% 
19.00% 
 
Class of Warrant or Right, Right To Purchase Percentage Of Equity
 
 
 
 
 
 
 
 
 
15.00% 
Proceeds for Purchase of Shares
 
 
 
 
 
 
 
 
 
34,000 
Share Price
 
 
 
 
 
 
$ 6.50 
 
 
 
Payments of Stock Issuance Costs
 
 
 
 
 
 
46,000,000 
 
 
 
Stock Issued During Period, Shares, New Issues to Over Allotment Option
 
 
 
 
 
 
6,500,000 
 
 
 
Proceeds from Lines of Credit
530,000 
221,332 
5,285,000 
 
 
 
 
4,265,000 
 
Debt Instrument, Interest Rate, Stated Percentage
 
 
 
 
 
 
 
 
12.00% 
 
Class of Warrant or Right, Exercise Price of Warrants or Rights
 
11.41 
 
 
 
 
 
 
 
3.16 
Class of Warrant or Right, Value of Percent of Capital Contributed
 
 
 
 
 
 
 
 
 
$ 0.15 
Class of Warrant or Right, Value of Percent of Capital Contributed Increase Per Annum
 
 
 
 
 
 
 
 
 
12.00% 
CONDENSED FINANCIAL INFORMATION OF REGISTRANT Balance Sheet (Details) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Dec. 31, 2011
Nov. 30, 2011
Nov. 30, 2010
Assets [Abstract]
 
 
 
 
 
 
Leased property, net of accumulated depreciation of $3,790,570, $1,131,680, and $1,327,517 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
$ 232,220,618 
$ 243,078,709 
$ 12,995,169 
 
 
 
Investments
23,304,321 
19,707,126 
19,866,621 
 
 
 
Cash and cash equivalents
17,963,266 
17,680,783 
14,333,456 
 
2,793,326 
1,466,193 
Trading securities, at fair value
4,318,398 
55,219,411 
 
 
 
Escrow receivable
698,729 
698,729 
 
 
 
Lease receivable
711,229 
 
 
 
Intangible lease asset, net of accumulated amortization of $729,847, $413,580, and $437,908 at December 31, 2013, November 30, 2012, and December 31, 2012 respectively
364,924 
656,863 
681,191 
 
 
 
Deferred debt issuance costs, net of accumulated amortization of $56,019, $0 and $448 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
1,225,524 
1,520,823 
 
 
 
Deferred lease costs, net of accumulated amortization of $5,490, $0, and $172 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
857,190 
912,875 
 
 
 
Prepaid expenses and other assets
326,561 
598,755 
2,477,977 
 
 
 
Total Assets
283,875,659 
293,661,985 
111,431,833 
95,931,078 
 
 
Liabilities and Equity [Abstract]
 
 
 
 
 
 
Long-term debt
70,000,000 
70,000,000 
 
 
 
Accounts payable and other accrued liabilities
2,920,267 
4,413,420 
2,885,631 
 
 
 
Lease obligation
20,698 
27,522 
 
 
 
Income tax liability
3,855,947 
 
 
 
Deferred tax liability
5,332,087 
2,396,043 
7,172,133 
 
 
 
Line of credit
81,935 
120,000 
 
 
 
Unearned revenue
2,133,685 
2,370,762 
 
 
 
Total Liabilities
78,334,289 
82,819,793 
12,576,048 
4,446,481 
 
 
Equity [Abstract]
 
 
 
 
 
 
Warrants
1,370,700 
1,370,700 
1,370,700 
 
 
 
Capital stock
24,156 
24,141 
9,191 
 
 
 
Additional paid-in capital
173,441,019 
175,256,675 
91,763,475 
 
 
 
Accumulated retained earnings
1,580,062 
4,209,023 
5,712,419 
 
 
 
Accumulated other comprehensive income
777,403 
 
 
 
Total Equity
205,541,370 
210,842,192 
98,855,785 
91,484,597 
90,426,313 
95,479,173 
Total Liabilities and Equity
283,875,659 
293,661,985 
111,431,833 
95,931,078 
 
 
Parent Company [Member]
 
 
 
 
 
 
Assets [Abstract]
 
 
 
 
 
 
Leased property, net of accumulated depreciation of $3,790,570, $1,131,680, and $1,327,517 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
15,374,167 
17,592,988 
12,995,169 
 
 
 
Investments
135,574,270 
151,857,174 
20,697,003 
 
 
 
Cash and cash equivalents
16,649,618 
16,504,354 
14,289,425 
 
2,738,080 
1,466,193 
Trading securities, at fair value
55,219,411 
 
 
 
Due from subsidiary
3,972,006 
 
 
 
Note receivable from subsidiary
5,300,000 
5,300,000 
3,800,000 
 
 
 
Escrow receivable
698,729 
 
 
 
Lease receivable
711,229 
 
 
 
Intangible lease asset, net of accumulated amortization of $729,847, $413,580, and $437,908 at December 31, 2013, November 30, 2012, and December 31, 2012 respectively
364,924 
656,863 
681,191 
 
 
 
Deferred debt issuance costs, net of accumulated amortization of $56,019, $0 and $448 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
235,693 
41,262 
 
 
 
Deferred lease costs, net of accumulated amortization of $5,490, $0, and $172 at December 31, 2013, November 30, 2012, and December 31, 2012, respectively
74,286 
79,604 
 
 
 
Income tax receivable
512,060 
 
 
 
Prepaid expenses and other assets
156,153 
75,665 
2,078,724 
 
 
 
Total Assets
178,924,406 
192,107,910 
110,459,652 
 
 
 
Liabilities and Equity [Abstract]
 
 
 
 
 
 
Long-term debt
 
 
 
Accounts payable and other accrued liabilities
1,731,066 
2,861,696 
2,060,972 
 
 
 
Distributions payable to non-controlling interest
 
 
 
Lease obligation
 
 
 
Income tax liability
3,855,947 
 
 
 
Deferred tax liability
2,396,043 
7,172,133 
 
 
 
Line of credit
 
 
 
Unearned revenue
2,133,685 
2,370,762 
 
 
 
Total Liabilities
1,731,066 
11,247,371 
11,603,867 
 
 
 
Equity [Abstract]
 
 
 
 
 
 
Warrants
1,370,700 
1,370,700 
1,370,700 
 
 
 
Capital stock
24,156 
24,141 
9,191 
 
 
 
Additional paid-in capital
173,441,019 
175,256,675 
91,763,475 
 
 
 
Accumulated retained earnings
1,580,062 
4,209,023 
5,712,419 
 
 
 
Accumulated other comprehensive income
777,403 
 
 
 
Total Equity
177,193,340 
180,860,539 
98,855,785 
 
 
 
Total Liabilities and Equity
$ 178,924,406 
$ 192,107,910 
$ 110,459,652 
 
 
 
CONDENSED FINANCIAL INFORMATION OF REGISTRANT Balance Sheet (Parenthetical) (Details) (USD $)
Dec. 31, 2013
Dec. 31, 2012
Nov. 30, 2012
Accumulated depreciation, leased property
$ 12,754,588 
$ 1,607,624 
$ 1,131,680 
Accumulated amortization, intangible lease asset
729,847 
437,908 
413,580 
Accumulated amortization, deferred debt
572,830 
16,350 
Accumulated amortization, deferred lease
63,272 
1,967 
Warrants, par value
$ 0 
$ 0 
$ 0 
Warrants, issued
945,594 
945,594 
945,594 
Warrants, outstanding
945,594 
945,594 
945,594 
Warrants, authorized
5,000,000 
5,000,000 
5,000,000 
Capital stock non-convertible, par value
$ 0.001 
$ 0.001 
$ 0.001 
Capital stock non-convertible, shares issued
24,156,163 
24,140,667 
9,190,667 
Capital stock non-convertible, shares outstanding
24,156,163 
24,140,667 
9,190,667 
Capital stock non-convertible, shares authorized
100,000,000 
100,000,000 
100,000,000 
Parent Company [Member]
 
 
 
Accumulated depreciation, leased property
3,790,570 
1,327,517 
1,131,680 
Accumulated amortization, intangible lease asset
729,847 
437,908 
413,580 
Accumulated amortization, deferred debt
56,019 
448 
Accumulated amortization, deferred lease
$ 5,490 
$ 172 
$ 0 
Warrants, par value
$ 0 
$ 0 
$ 0 
Warrants, issued
945,594 
945,594 
945,594 
Warrants, outstanding
945,594 
945,594 
945,594 
Warrants, authorized
5,000,000 
5,000,000 
5,000,000 
Capital stock non-convertible, par value
$ 0.0001 
$ 0.0001 
$ 0.0001 
Capital stock non-convertible, shares issued
24,156,163 
24,140,667 
9,190,667 
Capital stock non-convertible, shares outstanding
24,156,163 
24,140,667 
9,190,667 
Capital stock non-convertible, shares authorized
100,000,000 
100,000,000 
100,000,000 
CONDENSED FINANCIAL INFORMATION OF REGISTRANT Statements of Income (Details) (USD $)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Nov. 30, 2012
Aug. 31, 2012
May 31, 2012
Feb. 29, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Revenues [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
$ 857,909 
 
$ 5,638,244 
$ 5,638,244 
$ 5,638,244 
$ 5,638,244 
$ 638,243 
$ 638,244 
$ 638,244 
$ 638,244 
$ 22,552,976 
$ 2,552,975 
$ 1,063,740 
Sales revenue
868,992 
 
2,351,831 
1,935,868 
1,929,772 
2,515,573 
2,216,128 
1,927,626 
1,439,958 
2,437,310 
8,733,044 
8,021,022 
2,161,723 
Total Revenue
1,726,901 
1,079,612 
7,990,075 
7,574,112 
7,568,016 
8,153,817 
2,854,371 
2,565,870 
2,078,202 
3,075,554 
31,286,020 
10,573,997 
3,225,463 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Management fees, net of expense reimbursements
155,242 
 
699,677 
647,380 
646,394 
643,814 
246,399 
298,051 
254,965 
247,381 
2,637,265 
1,046,796 
968,163 
Asset acquisition expenses
64,733 
 
 
 
 
 
 
 
 
 
806,083 
377,834 
638,185 
Professional fees
333,686 
 
 
 
 
 
 
 
 
 
1,678,137 
1,141,045 
548,759 
Depreciation expense
499,357 
 
 
 
 
 
 
 
 
 
11,429,980 
1,118,269 
364,254 
Amortization expense
1,967 
 
 
 
 
 
 
 
 
 
61,305 
Directors’ fees
8,500 
 
 
 
 
 
 
 
 
 
178,196 
85,050 
70,192 
Other expenses
27,500 
 
3,880,512 
4,227,013 
3,845,005 
3,705,925 
1,117,268 
1,082,911 
892,759 
599,865 
580,183 
231,086 
183,674 
Total Expenses
1,826,422 
993,919 
6,423,549 
6,285,711 
5,967,747 
6,353,378 
3,024,822 
2,762,123 
2,178,838 
2,851,918 
25,030,385 
10,817,701 
4,659,376 
Operating Income (Loss)
(99,521)
85,693 
1,566,526 
1,288,401 
1,600,269 
1,800,439 
(170,451)
(196,253)
(100,636)
223,636 
6,255,635 
(243,704)
(1,433,913)
Other Income (Expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net distributions and dividend income
2,325 
 
 
 
 
 
 
 
 
 
584,814 
(279,395)
651,673 
Net realized and unrealized gain (loss) on trading securities
(1,769,058)
 
 
 
 
 
 
 
 
 
(251,213)
4,009,933 
2,299,975 
Net realized and unrealized gain (loss) on other equity securities
(159,495)
 
1,783,460 
872,020 
(30,976)
2,742,049 
(479,416)
8,492,502 
3,237,325 
8,931,466 
5,617,766 
16,171,944 
2,283,773 
Other Income
 
 
 
 
 
 
 
 
 
40,000 
Interest expense
416,137 
 
825,588 
818,134 
907,275 
737,381 
11,705 
16,780 
25,229 
27,409 
3,288,378 
81,123 
36,508 
Total Other Income (Expense)
(2,342,365)
1,601,084 
958,529 
622,218 
(935,550)
2,017,792 
(409,064)
7,973,546 
3,267,558 
8,989,319 
2,662,989 
19,821,359 
5,238,913 
Income (Loss) before income taxes
(2,441,886)
 
2,525,055 
1,910,619 
664,719 
3,818,231 
(579,515)
7,777,293 
3,166,922 
9,212,955 
8,918,624 
19,577,655 
3,805,000 
Taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
Current tax expense
3,855,947 
 
 
 
 
 
 
 
 
 
13,474 
29,265 
253,650 
Deferred tax expense (benefit)
(4,776,090)
 
 
 
 
 
 
 
 
 
2,936,044 
7,199,669 
629,207 
Income tax expense (benefit), net
(920,143)
(628,493)
581,695 
1,105,125 
241,754 
1,020,944 
(215,927)
2,788,785 
1,190,162 
3,465,914 
2,949,518 
7,228,934 
882,857 
Net Income (Loss)
(1,521,743)
1,058,284 
1,943,360 
805,494 
422,965 
2,797,287 
(363,588)
4,988,508 
1,976,760 
5,747,041 
5,969,106 
12,348,721 
2,922,143 
Basic and Diluted (in dollars per share)
$ (0.10)
 
$ 0.06 
$ 0.02 
$ 0.00 
$ 0.10 
$ (0.04)
$ 0.54 
$ 0.21 
$ 0.63 
$ 0.19 
$ 1.34 
$ 0.32 
Basic and Diluted (in dollars per share)
15,564,861 1
 
 
 
 
 
 
 
 
 
24,149,396 1
9,182,425 1
9,159,809 1
Dividends declared per share (in dollars per share)
$ 0.000 
 
 
 
 
 
 
 
 
 
$ 0.375 
$ 0.440 
$ 0.410 
Parent Company [Member]
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
212,748 
 
 
 
 
 
 
 
 
 
2,552,976 
2,552,975 
1,063,740 
Earnings (loss) from subsidiary
(22,313)
 
 
 
 
 
 
 
 
 
5,720,413 
356,336 
86,967 
Total Revenue
190,435 
 
 
 
 
 
 
 
 
 
8,273,389 
2,909,311 
1,150,707 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
Management fees, net of expense reimbursements
155,242 
 
 
 
 
 
 
 
 
 
366,863 
1,046,796 
968,163 
Asset acquisition expenses
64,734 
 
 
 
 
 
 
 
 
 
806,083 
377,834 
638,185 
Professional fees
282,303 
 
 
 
 
 
 
 
 
 
198,562 
1,141,045 
548,759 
Depreciation expense
195,838 
 
 
 
 
 
 
 
 
 
2,463,052 
837,371 
294,309 
Amortization expense
172 
 
 
 
 
 
 
 
 
 
5,320 
Directors’ fees
6,000 
 
 
 
 
 
 
 
 
 
24,788 
85,050 
70,192 
Other expenses
27,500 
 
 
 
 
 
 
 
 
 
113,001 
232,248 
205,795 
Total Expenses
731,789 
 
 
 
 
 
 
 
 
 
3,977,669 
3,720,344 
2,725,403 
Operating Income (Loss)
(541,354)
 
 
 
 
 
 
 
 
 
4,295,720 
(811,033)
(1,574,696)
Other Income (Expense)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net distributions and dividend income
48,136 
 
 
 
 
 
 
 
 
 
6,681 
261,472 
786,151 
Net realized and unrealized gain (loss) on trading securities
(1,769,058)
 
 
 
 
 
 
 
 
 
4,009,933 
2,299,975 
Net realized and unrealized gain (loss) on other equity securities
(159,495)
 
 
 
 
 
 
 
 
 
16,171,944 
2,283,773 
Other Income
 
 
 
 
 
 
 
 
 
40,000 
Interest expense
1,768 
 
 
 
 
 
 
 
 
 
(703,091)
54,661 
30,203 
Total Other Income (Expense)
(1,882,185)
 
 
 
 
 
 
 
 
 
709,772 
20,388,688 
5,379,696 
Income (Loss) before income taxes
(2,423,539)
 
 
 
 
 
 
 
 
 
5,005,492 
19,577,655 
3,805,000 
Taxes
 
 
 
 
 
 
 
 
 
 
 
 
 
Current tax expense
3,855,947 
 
 
 
 
 
 
 
 
 
(540,111)
29,265 
253,650 
Deferred tax expense (benefit)
(4,776,090)
 
 
 
 
 
 
 
 
 
1,043,264 
7,199,669 
629,207 
Income tax expense (benefit), net
(920,143)
 
 
 
 
 
 
 
 
 
503,153 
7,228,934 
882,857 
Net Income (Loss)
$ (1,503,396)
 
 
 
 
 
 
 
 
 
$ 4,502,339 
$ 12,348,721 
$ 2,922,143 
Basic and Diluted (in dollars per share)
$ 0 
 
 
 
 
 
 
 
 
 
$ 777,403 
$ 0 
$ 0 
Basic and Diluted (in dollars per share)
 
 
 
 
 
 
 
 
 
5,279,742 
CONDENSED FINANCIAL INFORMATION OF REGISTRANT Cash Flows (Details) (USD $)
1 Months Ended 3 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Nov. 30, 2012
Aug. 31, 2012
May 31, 2012
Feb. 29, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Interest Paid
$ 2,765 
 
 
 
 
 
 
 
 
 
$ 2,651,355 
$ 203,611 
$ 176,595 
Net Income (Loss)
(1,521,743)
1,058,284 
1,943,360 
805,494 
422,965 
2,797,287 
(363,588)
4,988,508 
1,976,760 
5,747,041 
5,969,106 
12,348,721 
2,922,143 
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributions Received from Investment Securities
 
 
 
 
 
 
 
 
 
567,276 
(4,985,370)
(2,845,434)
Deferred Income Taxes and Tax Credits
(4,776,090)
 
 
 
 
 
 
 
 
 
2,936,044 
7,199,669 
629,207 
Depreciation expense
499,357 
 
 
 
 
 
 
 
 
 
11,429,980 
1,118,269 
364,254 
Amortization
42,645 
 
 
 
 
 
 
 
 
 
909,724 
200,056 
27,030 
Realized and unrealized (gain) loss on trading securities
(1,769,058)
 
 
 
 
 
 
 
 
 
(251,213)
4,009,933 
2,299,975 
Realized and unrealized (gain) loss on other equity securities
(159,495)
 
 
 
 
 
 
 
 
 
5,617,766 
16,171,944 
2,283,773 
Changes in assets and liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease) in Accounts Receivable
(647,363)
 
 
 
 
 
 
 
 
 
1,145,299 
167,302 
49,695 
Increase (Decrease) in Leasing Receivables
 
 
 
 
 
 
 
 
 
711,229 
(474,152)
(237,077)
Increase (Decrease) in Prepaid Expense and Other Assets
177,521 
 
 
 
 
 
 
 
 
 
(272,194)
233,272 
(70,109)
Increase in accounts payable and other accrued liabilities
122,445 
 
 
 
 
 
 
 
 
 
816,430 
1,533,944 
300,635 
Increase (decrease) in unearned revenue
(237,077)
 
 
 
 
 
 
 
 
 
(2,133,685)
2,370,762 
Net cash provided by operating activities
767,370 
 
 
 
 
 
 
 
 
 
7,708,012 
9,648,492 
2,762,446 
Investing Activities
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchases of long-term investments of trading and other equity securities
 
 
 
 
 
 
 
 
 
(38,060,281)
Proceeds from sale of long-term investment of trading and other equity securities
26,085,740 
 
 
 
 
 
 
 
 
 
5,580,985 
9,983,169 
53,950,583 
Deferred lease costs
(796,649)
 
 
 
 
 
 
 
 
 
(74,037)
Acquisition expenditures
(205,706,823)
 
 
 
 
 
 
 
 
 
(1,834,036)
(942,707)
Cash paid in business combination
 
 
 
 
 
 
 
 
 
(12,250,000)
Return of capital on distributions received
 
 
 
 
 
 
 
 
 
1,772,776 
Net cash provided by (used in) investing activities
(180,418,153)
 
 
 
 
 
 
 
 
 
5,410,219 
9,013,217 
3,639,257 
Financing Activities
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt financing costs
(1,391,846)
 
 
 
 
 
 
 
 
 
(144,798)
(1,054,302)
Net offering proceeds
84,516,780 
 
 
 
 
 
 
 
 
 
(523,094)
Dividends
 
 
 
 
 
 
 
 
 
(8,946,941)
(3,919,249)
(3,503,365)
Payments on long-term debt
 
 
 
 
 
 
 
 
 
(2,188,000)
(1,221,000)
Net cash used in financing activities
182,998,110 
 
 
 
 
 
 
 
 
 
(12,835,748)
(7,121,579)
(5,169,181)
Net Change in Cash and Cash Equivalents
3,347,327 
 
 
 
 
 
 
 
 
 
282,483 
11,540,130 
1,232,522 
Cash and Cash Equivalents at beginning of period
14,333,456 
2,793,326 
 
 
 
17,680,783 
 
 
 
2,793,326 
17,680,783 
2,793,326 
1,466,193 
Cash and Cash Equivalents at end of period
17,680,783 
 
17,963,266 
 
 
 
14,333,456 
 
 
 
17,963,266 
14,333,456 
2,793,326 
Income Taxes Paid
 
 
 
 
 
 
 
 
 
4,637,068 
96,000 
253,650 
Long Term Investments Sold
23,046,215 
 
 
 
 
 
 
 
 
 
26,565,400 
Reclassification of prepaid expenses and other assets to deferred lease costs
753,940 
 
 
 
 
 
 
 
 
 
Reclassification of prepaid expenses and other assets to acquisition expenditures
181,766 
 
 
 
 
 
 
 
 
 
Change in accounts payable and accrued expenses related to deferred lease costs
(653,747)
 
 
 
 
 
 
 
 
 
(68,417)
Change in accounts payable and accrued expenses related to acquisition expenditures
1,624,680 
 
 
 
 
 
 
 
 
 
(1,545,163)
Reclassification of prepaid expenses and other assets to issuance of equity
617,308 
 
 
 
 
 
 
 
 
 
Reclassification of prepaid expenses and other assets to debt financing costs
436,994 
 
 
 
 
 
 
 
 
 
Change in accounts payable and accrued expenses related to the issuance of equity
391,322 
 
 
 
 
 
 
 
 
 
(523,094)
Change in accounts payable and accrued expenses related to debt financing costs
(291,667)
 
 
 
 
 
 
 
 
 
116,383 
Reinvestment of distributions by common stockholders in additional common shares
 
 
 
 
 
 
 
 
 
108,119 
121,024 
252,242 
Parent Company [Member]
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Paid
2,765 
 
 
 
 
 
 
 
 
 
176,595 
176,595 
Net Income (Loss)
(1,503,396)
 
 
 
 
 
 
 
 
 
4,502,339 
12,348,721 
2,922,143 
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation expense
195,838 
 
 
 
 
 
 
 
 
 
2,463,052 
837,371 
294,309 
Realized and unrealized (gain) loss on trading securities
(1,769,058)
 
 
 
 
 
 
 
 
 
4,009,933 
2,299,975 
Changes in assets and liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities
223,494 
 
 
 
 
 
 
 
 
 
(8,040,654)
9,391,301 
2,284,927 
Investing Activities
 
 
 
 
 
 
 
 
 
 
 
 
 
Purchases of long-term investments of trading and other equity securities
 
 
 
 
 
 
 
 
 
(38,060,281)
Proceeds from sale of long-term investment of trading and other equity securities
26,085,740 
 
 
 
 
 
 
 
 
 
9,983,169 
53,950,583 
Deferred lease costs
(796,649)
 
 
 
 
 
 
 
 
 
Investment in consolidated subsidiaries
(108,300,100)
 
 
 
 
 
 
 
 
 
Cash distributions from consolidated subsidiaries
483,346 
 
 
 
 
 
 
 
 
 
19,337,911 
281,133 
71,023 
Acquisition expenditures
2,318 
 
 
 
 
 
 
 
 
 
(1,651,956)
(942,707)
Cash paid in business combination
 
 
 
 
 
 
 
 
 
(12,250,000)
Net cash provided by (used in) investing activities
(82,525,345)
 
 
 
 
 
 
 
 
 
17,685,955 
9,321,595 
3,711,325 
Financing Activities
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt financing costs
 
 
 
 
 
 
 
 
 
(30,002)
(1,054,302)
Net offering proceeds
84,516,780 
 
 
 
 
 
 
 
 
 
(523,094)
Dividends
 
 
 
 
 
 
 
 
 
(8,946,941)
(3,919,249)
(3,503,365)
Payments on long-term debt
 
 
 
 
 
 
 
 
 
(2,188,000)
(1,221,000)
Net cash used in financing activities
84,516,780 
 
 
 
 
 
 
 
 
 
(9,500,037)
(7,161,551)
(4,724,365)
Net Change in Cash and Cash Equivalents
2,214,929 
 
 
 
 
 
 
 
 
 
145,264 
11,551,345 
1,271,887 
Cash and Cash Equivalents at beginning of period
14,289,425 
2,738,080 
 
 
 
16,504,354 
 
 
 
2,738,080 
16,504,354 
2,738,080 
1,466,193 
Cash and Cash Equivalents at end of period
16,504,354 
 
16,649,618 
 
 
 
14,289,425 
 
 
 
16,649,618 
14,289,425 
2,738,080 
Income Taxes Paid
 
 
 
 
 
 
 
 
 
3,761,161 
96,000 
253,650 
Long Term Investments Sold
23,046,215 
 
 
 
 
 
 
 
 
 
26,565,400 
Reclassification of prepaid expenses and other assets to deferred lease costs
753,940 
 
 
 
 
 
 
 
 
 
Reclassification of prepaid expenses and other assets to acquisition expenditures
188,766 
 
 
 
 
 
 
 
 
 
Change in accounts payable and accrued expenses related to deferred lease costs
(704,164)
 
 
 
 
 
 
 
 
 
Change in accounts payable and accrued expenses related to acquisition expenditures
1,560,993 
 
 
 
 
 
 
 
 
 
(1,407,724)
Reclassification of prepaid expenses and other assets to issuance of equity
617,308 
 
 
 
 
 
 
 
 
 
Reclassification of prepaid expenses and other assets to debt financing costs
436,994 
 
 
 
 
 
 
 
 
 
Change in accounts payable and accrued expenses related to the issuance of equity
391,322 
 
 
 
 
 
 
 
 
 
(523,094)
Change in accounts payable and accrued expenses related to debt financing costs
(395,284)
 
 
 
 
 
 
 
 
 
220,000 
Reinvestment of distributions by common stockholders in additional common shares
$ 0 
 
 
 
 
 
 
 
 
 
$ 108,119 
$ 121,024 
$ 252,242 
CONDENSED FINANCIAL INFORMATION OF REGISTRANT Textual (Details) (USD $)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Textual Details [Abstract]
 
 
 
 
Cash Dividends Paid to Parent Company
$ 483,346 
$ 19,337,911 
$ 281,133 
$ 71,023 
REAL ESTATE AND ACCUMULATED DEPRECIATION (Details) (USD $)
12 Months Ended
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Nov. 30, 2010
Real Estate and Accumulated Depreciation [Line Items]
 
 
 
 
Acquisition costs
$ 2,557,910 
 
 
 
Initial Cost to Company
 
 
 
 
Land
105,485,063 
 
 
 
Building and Fixtures
139,490,143 
 
 
 
Costs Capitalized Subsequent to Acquisition, Improvements
 
 
 
Investment in Real Estate, Net
232,220,618 
 
 
 
Accumulated Depreciation
12,754,588 
 
 
 
Encumbrances
70,000,000 
 
 
 
Gross Amount Carried at Close
 
 
 
 
Balance, beginning of year
244,686,333 
14,126,849 
14,126,849 
Land
105,485,063 
 
 
 
Buildings and Fixtures
139,490,143 
 
 
 
Balance, end of year
244,975,206 
14,126,849 
14,126,849 
Preacquisition Costs [Member]
 
 
 
 
Initial Cost to Company
 
 
 
 
Land
 
 
 
Building and Fixtures
244,232 
 
 
 
Costs Capitalized Subsequent to Acquisition, Improvements
 
 
 
Investment in Real Estate, Net
244,232 
 
 
 
Accumulated Depreciation
 
 
 
Encumbrances
 
 
 
Gross Amount Carried at Close
 
 
 
 
Land
 
 
 
Buildings and Fixtures
244,232 
 
 
 
Balance, end of year
244,232 
 
 
 
Pinedale Liquids Gathering System [Member]
 
 
 
 
Initial Cost to Company
 
 
 
 
Land
105,485,063 1
 
 
 
Building and Fixtures
125,119,062 1
 
 
 
Costs Capitalized Subsequent to Acquisition, Improvements
1
 
 
 
Investment in Real Estate, Net
221,449,788 1
 
 
 
Accumulated Depreciation
9,154,337 1
 
 
 
Encumbrances
70,000,000 1
 
 
 
Gross Amount Carried at Close
 
 
 
 
Land
105,485,063 1
 
 
 
Buildings and Fixtures
125,119,062 1
 
 
 
Balance, end of year
230,604,125 1
 
 
 
Eastern Interconnect Project [Member]
 
 
 
 
Initial Cost to Company
 
 
 
 
Land
 
 
 
Building and Fixtures
14,126,849 
 
 
 
Costs Capitalized Subsequent to Acquisition, Improvements
 
 
 
Investment in Real Estate, Net
10,526,598 
 
 
 
Accumulated Depreciation
3,600,251 
 
 
 
Encumbrances
 
 
 
Gross Amount Carried at Close
 
 
 
 
Land
 
 
 
Buildings and Fixtures
14,126,849 
 
 
 
Balance, end of year
14,126,849 
 
 
 
Before Preacquisition Costs [Member]
 
 
 
 
Initial Cost to Company
 
 
 
 
Land
105,485,063 
 
 
 
Building and Fixtures
139,245,911 
 
 
 
Costs Capitalized Subsequent to Acquisition, Improvements
 
 
 
Investment in Real Estate, Net
231,976,386 
 
 
 
Accumulated Depreciation
12,754,588 
 
 
 
Encumbrances
70,000,000 
 
 
 
Gross Amount Carried at Close
 
 
 
 
Land
105,485,063 
 
 
 
Buildings and Fixtures
139,245,911 
 
 
 
Balance, end of year
$ 244,730,974 
 
 
 
REAL ESTATE AND ACCUMULATED DEPRECIATION (Details 2) (USD $)
1 Months Ended 12 Months Ended
Dec. 31, 2012
Dec. 31, 2013
Nov. 30, 2012
Nov. 30, 2011
Nov. 30, 2010
Real Estate and Accumulated Depreciation Disclosure [Abstract]
 
 
 
 
 
Real Estate, Federal Income Tax Basis
 
$ (11,378,747)
 
 
 
Investment in real estate:
 
 
 
 
 
Balance, beginning of year
244,686,333 
244,975,206 
14,126,849 
14,126,849 
Addition: Acquisitions and developments
230,559,484 
288,873 
14,126,849 
 
Deduction: Dispositions and other
 
Balance, end of year
244,686,333 
244,975,206 
14,126,849 
14,126,849 
Accumulated depreciation:
 
 
 
 
 
Balance, beginning of year
1,607,624 
12,754,588 
1,131,680 
294,309 
Addition: Depreciation
475,944 
11,146,964 
837,371 
294,309 
 
Deduction: Dispositions and other
 
Balance, end of year
$ 1,607,624 
$ 12,754,588 
$ 1,131,680 
$ 294,309 
$ 0