Note 4 Assets Held for Sale and Discontinued Operations

Assets Held for Sale

Assets held for sale included the following:

	December 31,
Assets Held for Sale	2012		2011
	(In thousands)
Oil and Gas	$	377,625	$	385,414
Other Rig Services	6,232		16,086
	$	383,857	$	401,500

Oil and Gas Properties

During 2010, we began marketing our oil and gas assets in Canada and Colombia, including our then 49.7% and 50.0% ownership interests in Remora and SMVP, respectively, and we reclassified the assets to assets held for sale. In 2011, we reclassified the carrying value of our wholly owned U.S. oil and gas assets to assets held for sale. The carrying value of our assets held for sale as of December 31, 2012 and 2011 represents the lower of carring value or fair value less costs to sell. We continue to market these properties at prices that are reasonable compared to current fair value. Also, as of December 31, 2012, we have deferred tax assets of approximately $106 million, which are included in long-term deferred income taxes in our consolidated balance sheet, associated with our oil and gas operations in Canada.

We have contracts with pipeline companies to pay specified fees based on committed volumes for gas transport and processing. At December 31, 2012, our undiscounted contractual commitments for such contracts approximate $339.6 million. At December 31, 2012, we have liabilities of $206 million, $69 million of which are classified as current and are included in accrued liabilities. These amounts represent our best estimate of the fair value of the excess capacity of the pipeline commitments calculated using a discounted cash flow model (a Level 3 measurement), when considering our disposal plan, current production levels, natural gas prices and expected utilization of the pipeline over the remaining contractual term. Decreases in actual production or natural gas prices could result in future charges related to excess capacity of the pipeline.

During 2011, we evaluated production levels, natural gas prices and market conditions, and determined our production flowing to pipelines and processing plants did not meet the volumes required under the contracts. Accordingly at December 31, 2011, we recorded liabilities of $125 million, $71 million was classified as current and included in accrued liabilities.

In 2011, we sold some of our wholly owned oil and gas assets in Colombia to an unrelated third party. We received proceeds of $89.2 million from this sale and recognized a gain of approximately $39.6 million. Additionally during 2011, Remora completed sales of its oil and gas assets and made cash distributions to us in the amount of $143.0 million. At December 31, 2012 and 2011, our oil and gas assets held for sale included a receivable of approximately $4.1 million and $13.7 million, respectively, representing a final distribution to us upon dissolution of the joint venture.

In 2011, we sold our 25% working interest in the Cat Canyon and West Cat Canyon fields in Santa Barbara County, California to an unrelated party and received proceeds of approximately $71.6 million. Also, the equity owners of SMVP dissolved the partnership and a proportionate share of the assets and liabilities were conveyed to us in exchange for our ownership interest.

In 2012, we sold our remaining wholly owned oil and gas business in Colombia and sold some of our U.S. wholly owned oil and gas assets in the Fayetteville Shale, Floyd Shale, and Barnett Shale areas as well as properties primarily in Texas, Louisiana and Utah. We received cumulative cash receipts of $104.5 million from these third parties during 2012.

At December 31, 2012, our assets held for sale included suspended wells that have capitalized costs for more than one year. Specifically, on the north slope of Alaska, seven wells, including two drilled in 2007, one drilled in 2008, two drilled in 2010 and two drilled in 2012, were suspended with total capitalized costs of $70.2 million. Further drilling is needed over the area to determine if the discovery holds sufficient quantities of reserves to justify future investment of infrastructure.

Other Rig Services

During 2011, we determined that one of our Canadian subsidiaries that provides logistic services for onshore drilling using helicopter and fixed-wing aircraft met the accounting criteria of assets held for sale. Based on quoted market prices, the carrying value of these assets at December 31, 2012 and 2011 represent fair value less costs to sell.

Discontinued Operations

The operating results from the assets discussed above for all periods presented are retroactively presented and accounted for as discontinued operations in the accompanying audited consolidated statements of income (loss) and the respective accompanying notes to the consolidated financial statements. Our condensed statements of income (loss) from discontinued operations for each operating segment were as follows:

	Year Ended December 31,
	2012			2011			2010
	(In thousands)
Operating revenues and Earnings (losses) from unconsolidated affiliates
Oil and Gas	$	27,363		$	125,654	(1)	$	37,615
Other Rig Services	$	25,813		$	29,713		$	29,739

Income (loss) from Oil and Gas discontinued operations:
Income (loss) from discontinued operations	$	(3,954	)	$	18,660		$	(26,139	)
Impairment charges or other gains and losses on sale of wholly owned assets	(106,100		)(2)	(255,046		)(3)	(192,179		)(4)
Less: income tax expense (benefit)	(44,021		)	(98,181		)	(62,028		)
Income (loss) from Oil and Gas discontinued operations, net of tax	$	(66,033	)	$	(91,394	)	$	(156,290	)

Income (loss) from Other Rig Services discontinued operations:
Income (loss) from discontinued operations	$	(2,080	)	$	(210	)	$	1,059
Impairment and gains and losses on long-lived assets	(9,082		)(5)	(7,853		)(5)	(7,460		)
Less: income tax expense (benefit)	(2,795		)	(2,017		)	(1,601		)
Income (loss) from Other Rig Services discontinued operations, net of tax	$	(8,367	)	$	(6,046	)	$	(4,800	)

Oil and Gas

(1) Includes approximately $83 million of equity in earnings during 2011 for our proportionate share of Remora’s net income, inclusive of the gains recognized for asset sales during 2011.

(2) Includes adjustments during 2012 to increase our pipeline contractual commitments by $128.1 million and other gains and losses related to the sale of our wholly owned oil and gas-centered assets.

(3) Includes impairments during 2011 of $255.0 million to write down the carrying value of our wholly owned oil and gas-centered assets, including $27.2 million related to an oil and gas financing receivable that was deemed uncollectible.

(4) Includes impairments during 2010 of $192.2 million related to our wholly owned oil and gas assets. Of this total, $137.8 million represented writedowns to the carrying value of some acreage in the United States, which we did not have future plans to develop due to sustained low natural gas prices, and certain exploratory wells in Colombia, which we determined were uneconomical to develop in the foreseeable future. The remaining $54.3 million related to impairment of an oil and gas financing receivable and was determined using discounted cash flow models, a Level 3 measurement, and involved assumptions based on estimated cash flows for proved and probable reserves, undeveloped acreage value, and current and expected natural gas prices.

Other Rig Services

(5) Includes $7.8 million and $7.9 million, respectively, of impairment (a Level 3 measurement) in 2012 and 2011 to our aircraft and logistics assets as a result of the continued downturn in the oil and gas industry in Canada.

Additional discussion of our policy pertaining to the calculations of our annual impairment tests, including any impairment to goodwill, is set forth in Note 2 — Summary of Significant Accounting Policies. A further protraction of lower commodity prices or an inability to sell these assets in a timely manner could result in recognition of future impairment charges.