Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

11. Goodwill and Intangible Assets

Successor Goodwill Recognition and Impairment

As a result of Fresh Start Accounting, we recognized $239 million of goodwill in our Middle East and North Africa (“MENA”) and Russia, Turkmenistan and Kazakhstan (“Russia”) reporting units. During the first half of 2020 we identified the impairment indicators as discussed in “Note 10 – Long-Lived Asset Impairments” that triggered interim quantitative goodwill assessments as of March 31, 2020 and June 30, 2020. The fair values of our reporting units were determined using a combination of the income approach and the market approach for comparable companies in our industry, a Level 3 fair value analysis. Determining the fair value of the reporting units requires management to develop significant judgments, including estimating discounted future cash flows by reporting unit, specifically forecasted revenue, forecasted operating margins and discount rates. We determined that the fair value of our reporting units were less than their carrying values and as a result of our impairment tests, we fully impaired our goodwill in the MENA and Russia reporting units as presented in “Impairments and Other Charges” on the accompanying Consolidated Statements of Operations.

The changes in the carrying amount of goodwill by reporting segment for the years ended December 31, 2020 and 2019, are presented in the following table.


(Dollars in millions)	Western Hemisphere		Eastern Hemisphere		Total






Balance at December 31, 2018 (Predecessor)	$	494	$	219	$	713
Impairment	(508)		(222)		(730)
Reclassification from assets held for sale	4		—		4
Foreign currency translation	10		3		13
Balance at December 13, 2019 (Predecessor)	—		—		—
Fresh Start Accounting Valuation	—		239		239
Balance at December 31, 2019 (Successor)	$	—	$	239	$	239
Impairment	$	—	$	(239)	$	(239)
Balance at December 31, 2020 (Successor)	$	—	$	—	$	—

Predecessor Period Goodwill Impairments and Assessment Factors

The Predecessor impairment indicators during 2019 and 2018 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 quickly and significantly reduce our cost structure under our restructuring plans savings.

In the 2019 Predecessor Period, 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. In 2018, our annual and interim goodwill impairment tests indicated that our goodwill was impaired and as a result we incurred a goodwill impairment charge of $1.9 billion, of which $1.4 billion was related to our Western Hemisphere segment and $537 million was related to our Eastern Hemisphere segment.

The cumulative impairment loss for goodwill was $239 million for the Successor and $3.4 billion for Predecessor periods.

Intangible Assets

The components of intangible assets were as follows:


	December 31, 2020
	Gross				Net
	Carrying		Accumulated		Intangible
(Dollars in millions)	Amount		Amortization		Assets
Developed and Acquired Technology	$	588	$	(132)	$	456
Trade Names	395		(41)		354
Totals	$	983	$	(173)	$	810

	December 31, 2019
	Gross				Net
	Carrying		Accumulated		Intangible
(Dollars in millions)	Amount		Amortization		Assets
Developed and Acquired Technology	$	728	$	(7)	$	721
Trade Names	395		(2)		393


Totals	$	1,123	$	(9)	$	1,114

We recognized an impairment of $155 million of our developed and acquired technology in “Impairments and Other Charges” on the accompanying Consolidated Statements of Operations during the Successor year ended December 31, 2020.

Amortization expense was $163 million in the Successor year ended December 31, 2020, $9 million in the 2019 Successor Period, $61 million in the 2019 Predecessor Period and $63 million in the Predecessor year ended December 31, 2018. Based on the carrying value of intangible assets at December 31, 2020, amortization expense for the subsequent five years is estimated as follows (dollars in millions):


Period	Amount
2021	$	157
2022	157
2023	157
2024	144
2025	40