Goodwill

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

For the third quarter ended September 30, 2019, our goodwill impairment tests indicated that goodwill for our Latin America, Russia/China, and Asia reporting units were impaired and as a result we incurred a goodwill impairment charge of $399 million. For the nine months ended September 30, 2019, our goodwill impairment tests indicated that goodwill for all our reporting units in the Western Hemisphere and Eastern Hemisphere were impaired and as a result we incurred a goodwill impairment charge of $730 million. Our cumulative impairment loss for goodwill was $3.4 billion at September 30, 2019. The changes in the carrying amount of goodwill by reporting segment at September 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	(508		)	(222		)	(730		)
Reclassification from held for sale	4			—			4
Foreign currency translation adjustments	10			3			13
Balance at September 30, 2019	$	—		$	—		$	—

Goodwill Impairment Assessment Factors

The impairment indicators during the nine months ended September 30, 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 all our reporting units. Our lower than expected and forecasted financial results were due to the continued weakness within the energy market and consequently our inability to meet the original timeline of our Transformation Plan savings, defined in “Note 9 – Transformation, Facility Restructuring and Severance Charges”. These circumstances, 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 September 30, 2019.

When conducting this evaluation, we considered macroeconomic and industry conditions, including the outlook for exploration and production spending by our customers 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.