GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill relates to the following segments (in thousands):



	December 31,
	2017		2016
Crude Transportation	$	—	$	26,628
HFOTCO	257,302		—
Corporate and Other	—		7,602
Total goodwill	$	257,302	$	34,230

Changes in goodwill balances during the period from December 31, 2014 to December 31, 2017 are shown below (in thousands):



Balance, December 31, 2014	$	58,326
Crude oil trucking impairment loss	(9,488		)
Currency translation adjustments	(806		)
Balance, December 31, 2015	48,032
SemGas impairment loss	(13,052		)
Currency translation adjustments	(750		)
Balance, December 31, 2016	34,230
Crude oil trucking impairment loss	(26,628		)
Reclassification of SemMexico goodwill as held for sale (Note 4)	(7,808		)
HFOTCO acquisition (Note 5)	257,302
Currency translation adjustments	206
Balance, December 31, 2017	$	257,302

For U.S. federal income tax purposes, goodwill is amortized on a straight-line basis over 15 years.

We assess our goodwill for impairment at least annually as of October 1. No impairments were indicated as of October 1, 2017.

Crude oil trucking goodwill impairment - 2017

Based on market conditions, in the third-quarter of 2017, management lowered the long range forecast for our crude oil trucking business unit, which provides truck transportation services as part of our Crude Transportation segment. The decrease in the long range forecast for crude oil trucking is primarily due to the on-going challenging business environment. We viewed the decrease in the forecast as a triggering event that indicated a potential impairment and performed an interim impairment analysis on the business unit’s assets including goodwill and intangible assets.

We performed a recoverability test of our definite lived assets under ASC 360 whereby we compared the undiscounted cash flows of the asset group, which was determined to be the entire crude oil trucking reporting unit and included goodwill, to the carrying value of the assets at September 30, 2017. This test indicated that the assets were not fully recoverable. Therefore, we estimated the fair value of the definite lived assets using an income approach, supplemented by a market approach to measure impairment. We also performed an interim impairment test of our goodwill associated with the crude oil trucking reporting unit and determined the estimated fair value was less than the adjusted carrying value of the reporting unit resulting in impairment of goodwill. The cash flow models used to determine recoverability of our assets and to measure impairment expense involved using significant judgments and assumptions, which included the discount rate, anticipated revenue and volume growth rates, estimated operating expenses and capital expenditures, which were based on our operating and capital budgets as well as our strategic plans. We considered the market approach by comparing the revenue and earnings multiples implied by our income approach to those of comparable companies for reasonableness and for estimating the fair value of certain assets of our reporting unit.

We recorded a $26.6 million impairment of goodwill and a $12.1 million impairment of intangible assets, which are reflected in “loss on disposal or impairment, net” in our consolidated statements of operations and comprehensive income (loss).

SemGas goodwill impairment - 2016

In March 2016, our SemGas segment revised the volume forecast for its northern Oklahoma system based on revised volume forecasts provided by certain producers who have chosen to adjust plans for production following release of the Oklahoma Corporation Commission’s Regional Earthquake Response Plan that curtails the amount of volume that can be injected into disposal wells.

Based on the reduction to our forecast, we tested our SemGas segment's long-lived assets, finite-lived intangible assets and goodwill for impairment at March 31, 2016. No impairment was indicated for SemGas' long-lived assets and finite-lived intangible assets based on an undiscounted cash flow analysis. However, we did record an impairment of SemGas' goodwill for the entire balance of $13.1 million.

To test the goodwill for impairment, we used an income approach, supplemented by a market approach to calculate the fair value of the reporting unit. Under the income approach, we utilized a discounted cash flow model to determine the fair value of our SemGas operations. Significant judgments and assumptions included the discount rate, anticipated revenue and volume growth rates, estimated operating expenses and capital expenditures, which were based on our operating and capital budgets as well as our strategic plans. A significant underlying assumption is that commodity prices will eventually improve, water disposal issues will be resolved and production volumes will begin to increase. If production does not increase in the future or the production takes longer than anticipated to return, this would negatively affect our key assumptions and potentially lead to finite-lived intangible and long-lived asset impairments in the future. We considered the market approach by comparing the revenue and earnings multiples implied by our income approach to those of comparable companies for reasonableness. See Note 4 for 2017 impairment of long-lived assets.

Crude oil trucking goodwill impairment - 2015

As a result of the continued decline in oil prices and lower forecast volumes from declining drilling activity, along with lower than expected results during the fourth quarter of 2015, we performed an interim goodwill impairment analysis as of December 31, 2015, which resulted in an impairment charge of $9.5 million related to our crude oil trucking operation which was identified as the reporting unit for purposes of the impairment test.

We used an income approach, supplemented by a market approach to calculate the fair value of the reporting unit. Under the income approach, we utilized a discounted cash flow model to determine the fair value of our crude oil trucking operations. Significant judgments and assumptions included the discount rate, anticipated revenue and volume growth rates, estimated operating expenses and capital expenditures, which were based on our operating and capital budgets as well as our strategic plans. A significant underlying assumption is that crude oil prices will eventually improve and production volumes will begin to increase. We considered the market approach by comparing the revenue and earnings multiples implied by our income approach to those of comparable companies for reasonableness.

Other intangible assets

The gross carrying amount and accumulated amortization of intangible assets are shown below (in thousands):



	December 31, 2017							December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	424,000	$	(49,717	)	$	374,283	$	187,114	$	(36,601	)	$	150,513
Non - compete agreement	30,000		(6,250		)	23,750		—		—			—
Trade names	52		(42		)	10		421		(366		)	55
Customer contract	1,000		(400		)	600		—		—			—
Unpatented technology	—		—			—		2,461		(2,051		)	410
Total other intangible assets	$	455,052	$	(56,409	)	$	398,643	$	189,996	$	(39,018	)	$	150,978

Changes in other intangible asset balances during the period from December 31, 2014 to December 31, 2017 are shown below (in thousands):



Balance, December 31, 2014	$	173,065
Amortization	(10,334		)
Currency translation adjustments	(508		)
Balance, December 31, 2015	162,223
Amortization	(10,928		)
Currency translation adjustments	(317		)
Balance, December 31, 2016	150,978
HFOTCO acquisition (Note 5)	291,000
Crude oil trucking impairment	(12,087		)
Reclassification of Mexican asphalt assets as held for sale (Note 4)	(715		)
Amortization	(30,628		)
Currency translation adjustments	95
Balance, December 31, 2017	$	398,643

Our other intangible assets consist primarily of customer relationships at our HFOTCO and SemGas segments and a non-compete agreement at our HFOTCO segment. These assets may be subject to impairments in the future if we are unable to maintain the relationships with the customers to which the assets relate.

We estimate that future amortization of other intangible assets will be as follows (in thousands):



For the year ending:
December 31, 2018	$	33,605
December 31, 2019	39,455
December 31, 2020	30,000
December 31, 2021	30,200
December 31, 2022	28,600
Thereafter	236,783
Total estimated amortization expense	$	398,643