Assets Held for Sale and Discontinued Operations

12 Months Ended

Dec. 31, 2015

Assets Held for Sale and Discontinued Operations

Assets Held for Sale and Discontinued Operations

Note 4 Assets Held for Sale and Discontinued Operations

Assets Held for Sale

Assets held for sale included the following:

	As of December 31,
	2015			2014
	(In thousands)
Oil and Gas	$	73,578	(1)	$	146,467
Other	2,100			—
	$	75,678		$	146,467

(1) The carrying value of these assets was reduced by $51.0 million to reflect current fair value, due to the deterioration of economic conditions in the dry gas market in western Canada. The impairment charge is reflected in income (loss) from discontinued operations, net of tax in our consolidated statement of income (loss) as outlined below.

Oil and Gas Properties

The carrying value of our assets held for sale represents the lower of carrying 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, we have deferred tax assets of approximately $6.3 million, which are included in long-term assets 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 associated with these properties held for sale. In December 2013, we entered into agreements to restructure these contracts, assigning a portion of the obligation to third parties and reducing our future payment commitments. At December 31, 2015, our undiscounted contractual commitments for these contracts approximated $23.3 million, and we had liabilities of $16.1 million, $5.2 million of which were classified as current and are included in accrued liabilities. At December 31, 2014, our undiscounted contractual commitments for these contracts approximated $84.6 million, and we had liabilities of $40.2 million, $19.6 million of which were classified as current and are included in accrued liabilities.

The amounts at each balance sheet date represented our best estimate of the fair value of the excess capacity of the pipeline commitments calculated using a discounted cash flow model, 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 pipeline commitments.

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,
	2015			2014			2013
	(In thousands, except percentages)
Operating revenues
Oil and Gas	$	3,212		$	13,143		$	25,327
Rig Services	$	—		$	—		$	127,154
Income (loss) from Oil & Gas discontinued operations:
Income (loss) from discontinued operations	$	(5,003	)	$	(1,840	)	$	(17,371	)
Less: Impairment charges or other (gains) and losses on sale of wholly owned assets	49,890		(1)	(1,313		)	24,087		(2)
Less: Income tax expense (benefit)	(14,455		)	(548		)	(14,062		)
Income (loss) from Oil and Gas discontinued operations, net of tax	$	(40,438	)	$	21		$	(27,396	)
Income (loss) from Rig Services discontinued operations:
Income (loss) from discontinued operations	$	—		$	—		$	17,680
Less: Impairment charges or other (gains) and losses on sale of wholly owned assets	3,146		(3)	—			(4,368		)(4)
Less: Income tax expense (benefit)	(787		)	—			5,831
Income (loss) from Rig Services discontinued operations, net of tax	$	(2,359	)	$	—		$	16,217
Income (loss) from discontinued operations, net of tax	$	(42,797	)	$	21		$	(11,179	)

Oil and Gas

(1) Includes a $51.0 million impairment charge due to the deterioration of economic conditions in the dry gas market in western Canada, partially offset by a gain related to our restructure of our future pipeline obligations.

(2) Includes a $61.5 million impairment charge to write down the carrying value of some of our wholly owned oil and gas-centered assets, partially offset by a gain related to our restructure of our future pipeline obligations.

In 2013, we sold some of our wholly owned oil and gas assets and received proceeds of $90.0 million.

Rig Services

(3) Reflects an impairment charge for a note receivable of $3.1 million remaining from the sale of one of our former Canada subsidiaries that provided logistics services.

(4) Represents the gains recognized from our sale of our logistics services and construction services. In April 2013, we sold the assets of one of our former Canadian subsidiaries that provided logistic services for proceeds of $9.3 million. In October 2013, we sold Peak, one of our businesses in Alaska, for which we received cash proceeds of $135.5 million.

During 2014, we sold a large portion of our interest in proved oil and gas properties located on the North Slope of Alaska. Under the terms of the agreement, we received $35.1 million at closing and expect to receive additional payments of $27.0 million upon certain future dates or the properties achieving certain production targets. In the event these production targets are not met and payments not received, our recourse would be to reclaim the properties. We retained both a working interest and an overriding royalty interest in the properties. The working interest is fully carried up to $600 million of total project costs. The $22.2 million gain from the transaction is included in other expense (income), net in our consolidated statement of income (loss) for the year ended December 31, 2014. The retained interest, which is currently valued at approximately $16.4 million as of December 31, 2015, is no longer classified as assets-held-for-sale and is included in other long-term assets. We have not recast prior period results as the balances are not material to our consolidated statements of income (loss) for any period.

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.