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Long-lived Asset Impairment
12 Months Ended
Dec. 31, 2012
Long-lived Asset Impairment  
Long-lived Asset Impairment

10.  Long-lived Asset Impairment

 

During 2012, we evaluated the future deployment of our idle fleet and determined to retire and either sell or re-utilize the key components of approximately 260 idle compressor units, representing approximately 71,000 horsepower, that we previously used to provide services. As a result of this decision, we performed an impairment review and, based on that review, recorded a $22.2 million asset impairment to reduce the book value of each unit to its estimated fair value. The fair value of each unit was estimated based on the expected net sale proceeds compared to other fleet units we recently sold, as well as our review of other units recently offered for sale by third parties, or the estimated component value of the equipment we plan to use.

 

In connection with our review of our fleet in 2012, we evaluated for impairment idle units that had been culled from our fleet in prior periods and were available for sale. Based upon that review, we reduced the expected proceeds from disposition for most of the remaining units and increased the weighted average disposal period for the units from the assumptions used in prior periods. This resulted in an additional impairment of $7.4 million to reduce the book value of each unit to its estimated fair value.

 

During 2011, we reviewed our idle compression fleet for units that were not of the type, configuration, make or model that are cost effective to maintain and operate. Our estimate of the impaired long-lived assets’ fair value was based on the expected net sale proceeds compared to other fleet units we had recently sold, as well as our review of other units recently offered for sale by third parties, or the estimated component value of the equipment we planned to use. The net book value of these assets exceeded the fair value by $1.1 million and was recorded as a long-lived asset impairment in 2011.

 

During December 2010, we completed an evaluation of our longer-term strategies and determined to retire and sell approximately 370 idle compressor units, representing approximately 117,000 horsepower, that we previously used to provide services in our business. As a result of this decision to sell these compressor units, we performed an impairment review and based on that review, recorded a $24.6 million asset impairment to reduce the book value of each unit to its estimated fair value. The fair value of each unit was estimated based on the expected net sale proceeds compared to other fleet units we recently sold, as well as our review of other units recently for sale by third parties.

 

As a result of a decline in market conditions during 2010, we reviewed our idle compression fleet for units that were not of the type, configuration, make or model that are cost effective to maintain and operate. We performed a cash flow analysis of the expected proceeds from the salvage value of these units to determine the fair value of the assets. The net book value of these assets exceeded the fair value by $0.4 million for the year ended December 31, 2010 and was recorded as a long-lived asset impairment.