Impairment and Other Charges (Notes)

12 Months Ended

Dec. 31, 2021

Impairments and Other Charges [Abstract]

The following table presents various pre-tax charges we recorded during the years ended December 31, 2021, 2020, and 2019 which are reflected within "Impairments and other charges" on our consolidated statements of operations.


	Year Ended December 31
Millions of dollars	2021		2020		2019
Catch-up depreciation	$	36	$	—	$	—
Severance costs	15		384		172
Long-lived asset impairments	—		2,629		1,603
Inventory costs and write-downs	—		505		458
Joint venture costs	—		—		154
Gain on real estate transaction	(74)		—		—
Other	35		281		119
Total impairments and other charges	$	12	$	3,799	$	2,506

Of the $12 million net charges recorded during the year ended December 31, 2021, a $42 million charge was attributable to our Completion and Production segment, a $9 million charge was attributable to our Drilling and Evaluation segment, and a $39 million net gain was attributable to Corporate and other. During the year ended December 31, 2021, we decided to discontinue the proposed sale of our Pipeline and Process Services business and as a result recorded a $36 million charge for accumulated unrecognized depreciation and amortization expense during the period the associated assets were classified as held for sale. We reclassified this business to assets held and used in the consolidated balance sheet as of September 30, 2021. Beginning October 1, 2021, all depreciation and amortization expense associated with this business was included in operating costs and expenses on our consolidated statements of operations. Additionally, we finalized a structured transaction relating to most of our owned United States real estate. As a result of the transaction, we derecognized $358 million of assets previously held for sale included in Other current assets and recognized an investment in an unconsolidated subsidiary of $349 million included in Other Assets, which resulted in a gain of $74 million, due to specific assets with a carrying amount less than the fair value. We elected to account for our investment under the fair value option using an income approach. We believe the election of the fair value option aligns the accounting treatment with our interest in the real estate held by the unconsolidated subsidiary. As part of the transaction, we completed the sale-leaseback of the same United States real estate, which resulted in an increase of our operating right-of-use assets and operating lease liabilities of $276 million and we received gross cash proceeds of $87 million. Pursuant to a master lease agreement, the properties are subject to initial lease terms of either twelve or fifteen years, we have the option to extend the term on each property for two additional terms of five years each thereafter and the rent payments are subject to an annual rent escalator of 1.35%.

For the year ended December 31, 2020, the $2.6 billion of long-lived asset impairments consisted of the following: $1.0 billion attributable to hydraulic fracturing equipment, the majority of which was located in North America; $297 million related to drilling-related services equipment; $191 million related to right-of-use assets, primarily operating leases; $131 million related to intangible assets; and $394 million associated with other fixed asset impairments. Also included in "Long-lived asset impairments" was $616 million for a fair value adjustment on real estate properties held for sale, primarily related to a contemplated structured transaction for its North America real estate assets due to specific assets with a fair value less than the carrying amount.

For the year ended December 31, 2019, the $1.6 billion of long-lived asset impairments consisted of the following: $759 million attributable to hydraulic fracturing equipment, the majority of which was located in North America; $243 million related to legacy drilling equipment; $215 million related to real estate owned and classified as held for sale; $139 million related to right-of-use assets associated with operating leases; $98 million related to intangible assets; and $148 million of other fixed asset impairments. We also rationalized our portfolio of existing joint ventures and recorded resulting charges within "Joint venture costs" in the table above.

Inventory costs and write-downs in the table above primarily represent disposal of excess inventory, including drilling fluids and other chemicals, and write-downs in which some of our inventory cost exceeded its market value.