Note 8 - Assets Held for Sale, Asset Sales and Asset Impairments

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Asset Impairment Charges [Text Block]

(8) ASSETS HELD FOR SALE, ASSET SALES AND ASSET IMPAIRMENTS

In 2019, we implemented a plan, amended in 2020, (the 2019/2020 plan) to sell or recycle certain of our vessels under a strategic decision to remove assets that were not part of our long-term plans. We designated a total of 88 vessels for sale or recycling under this program and classified these vessels as assets held for sale. During 2021, we sold or recycled a total of nine vessels that were classified as held for sale, added seven vessels to our assets held for sale under the 2019/2020 plan, moved three vessels back into our active fleet and had 18 vessels remaining in the held for sale account as of December 31, 2021. In addition, we sold ten vessels from our active fleet in 2021. One of the vessel sales was to a third-party operator, Jackson Offshore, whose Chief Operating Officer, Matthew Rigdon, is the son of Larry Rigdon, the former chairman of our Board of Directors. This vessel was sold for proceeds of $11.4 million, all of which was collected in the second quarter of 2021, and we recognized a gain of $4.3 million on the sale. During 2022, we sold or recycled 12 vessels that were classified as held for sale, added three vessels to held for sale under 2019/2020 plan, moved one vessel back into our active fleet and have eight vessels remaining in the held for sale account as of December 31, 2022. During 2023, we sold or recycled a total of eight of the vessels that were classified as held for sale and had no vessels remaining in the held for sale account as of December 31, 2023. We also sold seven vessels from our active fleet in 2023. We realized proceeds from sales or recycling of vessels and other assets for the years ended  December 31, 2023, 2022 and 2021 of $15.5 million, $13.6 million and $34.0 million, respectively. We have completed the 2019/2020 plan.

See the following tables for additions and dispositions related to assets held for sale as well as net gains (losses) on sales of vessels and impairments recorded when the assets were valued at net realizable value upon classification as held for sale.

Following is the activity in assets held for sale during the years ended December 31:

(In Thousands, except number of vessels)	Number of Vessels			2023		Number of Vessels			2022		Number of Vessels			2021
Beginning balance	8		$	4,195		18		$	14,421		23		$	34,396
Additions	—			—		3			2,561		7			18,096
Sales	(8	)		(4,195	)	(12	)		(11,287	)	(9	)		(15,433	)
Reactivation	—			—		(1	)		(1,500	)	(3	)		(7,250	)
Impairment	—			—		—			—		—			(15,388	)
Ending balance	—		$	—		8		$	4,195		18		$	14,421

Following is the summary of vessel sales and the gains on sales of vessels for the years ended December 31:

(In Thousands, except number of vessels)	2023		2022		2021
Vessels sold from active fleet		7		2		10
Gain on sale of active vessels, net	$	5,613	$	553	$	3,499
Vessels sold/recycled from assets held for sale		8		12		9
Gain (loss) on vessels sold/recycled from assets held for sale, net	$	3,088	$	5	$	(6,209	)
Total vessels sold/recycled		15		14		19
Total gain (loss) on sales of vessels, net	$	8,701	$	558	$	(2,710	)

During the year ended  December 31, 2021, we recorded $13.7 million in impairment related to our assets held for sale. No long-lived asset impairment expense was recorded in 2023 or 2022. Also, in 2022 and 2021, we recaptured $0.5 million and $1.7 million, respectively, of impairment expense related to vessels held for sale that we reactivated.

In conjunction with our review of conditions that would indicate potential impairment in the value of our assets, we identified certain obsolete marine service parts and supplies inventory and charged $1.2 million and $1.9 million, respectively, of impairment expense for the years ended  December 31, 2022 and 2021. No impairment was recorded in 2023. We considered this valuation approach to be a Level 3 fair value measurement due to the level of estimation involved in valuing obsolete inventory.

Impairments incurred during 2021 were primarily the result of our customers' reduction in offshore exploration and production expenditures caused by the ongoing and sustained low levels of oil and gas prices as well as our efforts to reduce the oversupply of vessels through the sale and recycling of vessels.

During the years ended  December 31, 2023, 2022 and 2021, we have not identified conditions or circumstances that would indicate impairment of any of our long-lived asset groups. We continue to monitor the expected future cash flows and the fair market value of our asset groups for impairment.

Please refer to Note (1) for a discussion of our accounting policy for accounting for the impairment of long-lived assets.