Asset Impairments and Write-Downs Asset Impairments and Write-Downs

9 Months Ended

Sep. 30, 2018

Property, Plant and Equipment [Abstract]

Asset Impairments and Write-Downs

Asset Impairments and Write-Downs

For the three months ended September 30, 2018, we recognized $19 million of long-lived asset impairments and $50 million of asset write-downs for deferred mobilization costs and other rigs related assets, all of which were in the Eastern Hemisphere segment. The long-lived asset impairments were to write-down our assets to the lower of carrying amount or fair value less cost to sell for our land drilling rigs. See Note 4 – Business Combinations and Divestitures for more details. For the nine months ended September 30, 2018, we recognized $111 million in long-lived asset impairments and $50 million of asset write-downs for deferred mobilization costs and other rigs related assets, of which, $101 million was to write-down our assets to the lower of carrying amount or fair value less cost to sell for our land drilling rigs. Of the long-lived asset impairment charges $34 million was in our Western Hemisphere segment and $67 million in our Eastern Hemisphere segment. The remaining $10 million of charges were for long-lived asset impairment charges other than those held for sale, of which $3 million was in our Western Hemisphere and $7 million is in our Eastern Hemisphere segment. The impairments were due to the sustained downturn in the oil and gas industry that resulted in us having to reassess our disposal groups for our land drilling rigs. The change in our expectations of the market’s recovery, in addition to successive negative operating cash flows in certain disposal asset groups represented an indicator that those assets will no longer be recoverable over their remaining useful lives. The Level 3 fair values of the long-lived assets were determined using a combination of the market and income approach. The market approach considered market sales values for similar assets. The unobservable inputs to the income approach included the assets’ estimated future cash flows and estimates of discount rates commensurate with the assets’ risks.