5. Property and Equipment

Property and equipment consisted of the following at June 30, 2017 and December 31, 2016 (in thousands):

	June 30,			December 31,
	2017			2016
Equipment	$	7,832,117		$	6,809,129
Oil and natural gas properties		208,299			201,568
Buildings		155,992			97,029
Land		22,475			22,270
Total property and equipment		8,218,883			7,129,996
Less accumulated depreciation, depletion and impairment		(3,986,689	)		(3,721,033	)
Property and equipment, net	$	4,232,194		$	3,408,963

On a periodic basis, the Company evaluates its fleet of drilling rigs for marketability based on the condition of inactive rigs, expenditures that would be necessary to bring them to working condition and the expected demand for drilling services by rig type (such as drilling conventional, vertical wells versus drilling longer, horizontal wells using higher specification rigs). The components comprising rigs that will no longer be marketed are evaluated, and those components with continuing utility to the Company’s other marketed rigs are transferred to other rigs or to the Company’s yards to be used as spare equipment. The remaining components of these rigs are retired. During the three months ended June 30, 2017, the Company recorded an impairment charge of $29.0 million for the write-down of drilling equipment that will have no continuing utility as a result of the upgrade of certain rigs to super-spec capability.

In addition, the Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable (a “triggering event”). Based on recent commodity prices, the Company’s results of operations for the three and six month periods ended June 30, 2017 and management’s expectations of operating results in future periods, the Company concluded that no triggering event occurred during the six months ended June 30, 2017 with respect to its contract drilling or pressure pumping segments. Management’s expectations of future operating results were based on the assumption that activity levels in both segments will continue to improve throughout 2017 in response to relatively stable oil prices.

The Company reviews its proved oil and natural gas properties for impairment whenever a triggering event occurs, such as downward revisions in reserve estimates or decreases in expected future oil and natural gas prices. Proved properties are grouped by field, and undiscounted cash flow estimates are prepared based on the Company’s expectation of future pricing over the lives of the respective fields. These cash flow estimates are reviewed by an independent petroleum engineer. If the net book value of a field exceeds its undiscounted cash flow estimate, impairment expense is measured and recognized as the difference between net book value and fair value. The fair value estimates used in measuring impairment are based on internally developed unobservable inputs including reserve volumes and future production, pricing and operating costs (Level 3 inputs in the fair value hierarchy of fair value accounting). The expected future net cash flows are discounted using an annual rate of 10% to determine fair value. The Company reviews unproved oil and natural gas properties quarterly to assess potential impairment. The Company’s impairment assessment is made on a lease-by-lease basis and considers factors such as the Company’s intent to drill, lease terms and abandonment of an area. If an unproved property is determined to be impaired, the related property costs are expensed. Impairment expense related to proved and unproved oil and natural gas properties totaled $1.7 million in the second quarter of 2017 and $2.2 million for the six months ended June 30, 2017 and is included in depreciation, depletion, amortization and impairment in the condensed consolidated statements of operations.