Long-Lived Asset Impairments

6 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Long-Lived Asset Impairments

Long-Lived Asset Impairments

We recognized long-lived asset impairments of $13 million and $20 million, respectively, for the three and six months ended June 30, 2019, and $92 million for the three and six months ended June 30, 2018, to write-down our assets to the lower of carrying amount or fair value less cost to sell for our land drilling rigs. The impairments were primarily related to our Western Hemisphere segment in the second quarter of 2019 and Eastern Hemisphere in the first quarter of 2019. The impairments recognized for the three and six months ended June 30, 2018, were comprised of $37 million from our Western Hemisphere segment and $55 million from our Eastern Hemisphere segment. During the second quarter of 2019, we reclassified our remaining land drilling rigs assets back into held for use.

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.