Goodwill

6 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

For the second quarter ended June 30, 2019, our interim goodwill impairment tests indicated that goodwill for our Asia and Middle East/North Africa (“MENA”) reporting units were impaired and as a result we incurred a goodwill impairment charge of $102 million. In the first quarter ended March 31, 2019 our interim goodwill impairment tests indicated that goodwill for our North America reporting unit was impaired and as a result we incurred a goodwill impairment charge of $229 million. The impairment indicators during the first and second quarters of 2019 were a result of lower activity levels and lower exploration and production capital spending that resulted in a decline in drilling activity and forecasted growth in North America, Asia and MENA reporting units. Our cumulative impairment loss for goodwill was $3.0 billion at June 30, 2019. The changes in the carrying amount of goodwill by reporting segment at June 30, 2019, are presented in the following table.



(Dollars in millions)	Western Hemisphere			Eastern Hemisphere			Total
Balance at December 31, 2018	$	494		$	219		$	713
Impairment	(229		)	(102		)	(331		)
Reclassification from held for sale	4			—			4
Foreign currency translation adjustments	12			5			17
Balance at June 30, 2019	$	281		$	122		$	403

Goodwill Impairment Assessment Factors

We perform an impairment test for goodwill annually as of October 1 or more frequently if indicators of potential impairment exist that would more likely than not reduce the fair value of the reporting unit below its carrying value. In assessing the possibility that a reporting unit’s fair value has been reduced below its carrying amount due to the occurrence of events or circumstances

between annual impairment testing dates, we consider all available evidence, including, but not limited to, (i) the results of our impairment testing at the prior annual impairment testing date, in particular the magnitude of the excess of fair value over carrying value, (ii) changes in market conditions, (iii) downward revisions to internal forecasts, and the magnitude thereof, if any, (iv) decline in our market capitalization below our book value, and the magnitude and duration of those declines, if any.

Our share price has historically experienced volatility as a result of industry-wide and macroeconomic factors, including global oil prices and rig counts. In addition, our financial results and our inability to meet our Transformation Plan (as defined in “Note 9 – Transformation, Facility Restructuring and Severance Charges”) initiatives in the magnitude and desired time-frame, contributed to the NYSE suspension of the trading in our ordinary shares and commencement of procedures to delist our shares, which the Company has appealed. These circumstances, along with the filing of the Cases, prompted us to evaluate whether circumstances had changed that would more likely than not reduce the fair value of one or more of our reporting units below their carrying amount as of June 30, 2019. While conducting this evaluation, we considered macroeconomic and industry conditions, including the outlook for exploration and production spending by our customers, the magnitude and declines in our market capitalization and overall financial performance of each of our reporting units. We also considered whether there were any changes in our long-term forecasts, which are impacted by assumptions about the future commodity pricing and supply and demand for our goods and services, all of which require considerable judgment in estimation.

For the second quarter ended June 30, 2019, our interim goodwill impairment tests indicated that goodwill for our Asia and MENA reporting units were impaired and as a result we incurred a goodwill impairment charge of $102 million. We impaired our entire balance of our MENA reporting unit by recognizing a $43 million impairment charge.

While we believe that we will continue to operate in the ordinary course during our bankruptcy process and upon emergence from Chapter 11 bankruptcy proceedings, our estimates of fair values are sensitive to inputs to the valuation approaches, including our forecasts of revenues and earnings growth. There can be no assurances that changes to our inputs would not result in a material impairment of goodwill.