Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

We determined the unprecedented industry conditions described in “Note 1 – General” are triggering events in our qualitative goodwill assessment that required us to review the recoverability of our long-lived assets as discussed in “Note 6 - Long-Lived Asset Impairments and Other” and perform an interim quantitative goodwill assessment as of March 31, 2020. Our quantitative goodwill impairment assessment is based on discounted cash flow analysis and a multiples-based market approach for comparable companies in our industry, a Level 3 fair value analysis. The analysis includes significant judgments, including estimated future cash flows, estimates of discount rates, revenue growth rates, profitability margins and capital expenditures. Goodwill impairment occurs when the carrying amount of a reporting unit exceeds the fair value. For the three months ended March 31, 2020, based on our goodwill impairment assessment, we recognized goodwill impairment of $167 million, including $127 million in our Middle East & North Africa reporting unit and $40 million in our Russia reporting unit, which are both part of our Eastern Hemisphere segment.

The changes in the carrying amount of goodwill by reporting segment at March 31, 2020, are presented in the following table.



(Dollars in millions)	Western Hemisphere		Eastern Hemisphere			Total
Balance at December 31, 2019	$	—	$	239		$	239
Impairment	—		(167		)	(167		)
Balance at March 31, 2020	$	—	$	72		$	72

For the first quarter ended March 31, 2019, the Predecessor goodwill impairment tests indicated that goodwill for the North America reporting unit was impaired and as a result the Predecessor incurred a goodwill impairment charge of $229 million. The impairment indicators during the quarter was 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.

Intangible Assets

The components of definite-lived intangible assets, net of accumulated amortization, were as follows:



(Dollars in millions)	3/31/2020		12/31/2019
Developed and Acquired Technology	$	545	$	721
Trade Names	383		393
Totals	$	928	$	1,114

As of March 31, 2020, based on our impairment test, we recognized intangible asset impairments of $137 million of our developed and acquired technology. Amortization expense was $46 million for the three months ended March 31, 2020 and $16 million for the three months ended March 31, 2019 and is reported in Selling, General and Administrative on our Condensed Consolidated Statements of Operations. At March 31, 2020, accumulated amortization was $43 million for Developed and Acquired Technology and $12 million for Trade Names.

Given the dynamic nature of COVID-19 pandemic and related market conditions, we cannot estimate the period of time that these events will persist or the full extent of the impact on our business. If market conditions continue to deteriorate, we may record further impairments related to the carrying amount of our long-lived assets, definite-lived intangibles and goodwill.