Impairments and Other Charges

9 Months Ended

Sep. 30, 2012

Impairments and Other Charges

Impairments and Other Charges

Note 3 Impairments and Other Charges

Impairments and other charges included the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2012		2011		2012		2011
Goodwill impairment	$	—	$	—	$	26,279	$	—
Intangible asset impairment (1)	—		—		74,960		—
Provision for retirement of assets (2)	—		98,072		46,264		98,072
Total impairments and other charges	$	—	$	98,072	$	147,503	$	98,072

(1)Represents $75.0 million related to the impairment of the Superior trade name. The Superior trade name was initially classified as a ten-year intangible asset at the date of acquisition in September 2010. The impairment is a result of the decision to cease using the Superior trade name to reduce confusion in the marketplace and enhance the Nabors brand.

(2)During the second quarter of 2012, we recorded a provision for retirement of long-lived assets in multiple operating segments, including $26.5 million in Pressure Pumping, $15.1 million in Canada and $4.6 million in U.S. Land Well-servicing. The retirements in our Canada operations included functionally inoperable rigs and other drilling equipment. Our U.S. Land Well-servicing retirements included rigs and vehicles that would require significant repair to return to work. As we began the process of streamlining our operations and consolidating our Pressure Pumping and U.S. Land Well-servicing segments into one business line, Nabors Completion & Production Services, we decided to retire certain non-core assets. As we continue to streamline our lines of business, there could be future retirement or impairment charges, which could have a potential impact on our future operating results.

During the third quarter of 2011, we recorded a provision for retirement of long-lived assets in multiple operating segments including $63.2 million in U.S. Lower 48 Land Drilling, $26.1 million in International and $8.9 million in U.S. Land Well-servicing. The retirements related to the decommissioning and retirement of a jackup rig, 116 land rigs, and a number of trucks and rigs for well-servicing. These assets were deemed economically noncompetitive for the market and were dismantled for parts and scrap.

A prolonged period of lower natural gas and oil prices and its potential impact on our utilization and dayrates could result in the recognition of future impairment charges to additional assets if future cash flow estimates, based upon information then available to management, indicate that the carrying value of those assets may not be recoverable.