Goodwill, Long-lived Assets and Intangibles

Goodwill and long-lived assets

As of December 31, 2018, our goodwill balance was $2.2 billion. During 2018, we recognized $10.8 million in goodwill as a result of our Red Giant Oil acquisition. Also during 2018, HEP recognized $3.6 million in goodwill as a result of the acquisition of HEP's remaining interests in SLC Pipeline and Frontier Pipeline. See Note 20 for additional information on our segments. The carrying amount of our goodwill may fluctuate from period to period due to the effects of foreign currency translation adjustments on goodwill assigned to our Lubricants and Specialty Products segment.

The following is a summary of our goodwill by segment:



	Refining			Lubricants and Specialty Products			HEP		Total
	(In thousands)
Balance at December 31, 2017
Goodwill	$	2,042,790		$	200,662		$	310,610	$	2,554,062
Accumulated impairment losses	(309,318		)	—			—		(309,318		)
	1,733,472			200,662			310,610		2,244,744

Additional goodwill acquired	—			10,791			3,619		14,410
Foreign currency translation adjustment	—			(12,719		)	—		(12,719		)

Balance at December 31, 2018
Goodwill	2,042,790			198,734			314,229		2,555,753
Accumulated impairment losses	(309,318		)	—			—		(309,318		)
	$	1,733,472		$	198,734		$	314,229	$	2,246,435

We performed our annual goodwill impairment testing as of July 1. There was no impairment of goodwill during the years ended December 31, 2018 and 2017. See below for discussion of our goodwill impairment recognized during the year ended December 31, 2016.

In 2017, we incurred long-lived asset impairment charges totaling $23.2 million, including $19.2 million of construction-in-progress that primarily related to engineering work for a planned expansion to add lubricants production capabilities at our Woods Cross Refinery as we concluded to no longer pursue for various reasons including our recent acquisition of PCLI. The remaining $4.0 million in charges relate to property, plant and equipment that we expensed in the form of accelerated depreciation in the income statement.

During the second quarter of 2016, we performed interim impairment testing of our El Dorado and Cheyenne Refinery asset groups (also representing distinct reporting units for goodwill impairment testing) after identifying a combination of events and circumstances that are indicators of potential long-lived asset and goodwill impairment. The indicators included lower than typical gross margins, a decrease in the gross margin outlook and decrease in our market capitalization due to a decline in our common share price. As a result, we determined that the carrying value of the Cheyenne Refinery asset group had been impaired and recorded long-lived asset impairment charges of $344.8 million that principally related to properties, plant and equipment and a goodwill impairment charge of $309.3 million.

Testing initially entailed an assessment of the carrying values of our refining asset groups for recoverability through a comparison of our asset group carrying values relative to its estimated future undiscounted cash flows. This assessment indicated impairment of the Cheyenne Refinery asset group had occurred. The impairment loss was measured as the excess of the carrying amount of the asset group over its respective fair value, which was derived using a combination of both income and market approaches. The income approach reflects expected future cash flows based on estimates of future crack spreads, forecasted production levels, operating costs and capital expenditures. Our market approaches include both the guideline public company and guideline transaction methods. Both methods utilize pricing multiples derived from historical market transactions of other like-kind assets. These fair value measurements involve significant unobservable inputs (Level 3 inputs).Our long-lived asset impairment testing did not identify any impairment related to our El Dorado Refinery asset group.

There was no impairment of long-lived assets during the year ended December 31, 2018.

Intangibles

The carrying amounts of our intangible assets presented in “Intangibles and other” in our consolidated balance sheet are as follows:



		December 31
	Useful Life	2018			2017
		(In thousands)

Customer relationships	10 - 20 years	$	91,941		$	84,399
Transportation agreements	30 years	59,933			59,933
Trademarks, patents and other	10 - 20 years	83,326			90,858
		235,200			235,190
Accumulated amortization		(52,834		)	(36,201		)
Total intangibles		$	182,366		$	198,989

Amortization expense was $16.6 million, $9.1 million and $3.1 million for the years ended December 31, 2018, 2017 and 2016, respectively and expected to approximate $16.7 million for each of the next five years.