Annual report pursuant to Section 13 and 15(d)

Property, Plant and Equipment

v3.19.3.a.u2
Property, Plant and Equipment
 12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment
Note 4 - Property, Plant, and Equipment
The components of our property, plant, and equipment balance are as follows:
 
Successor
 
 
Predecessor
Dollars in Thousands
December 31,
2019
 
 
December 31,
2018
Property, plant, and equipment, at cost:
 
 
 
 
Drilling equipment
$
139,722

 
 
$
720,037

Rental tools
164,592

 
 
581,107

Building, land and improvements
25,636

 
 
58,193

Other
15,902

 
 
115,977

Construction in progress
10,078

 
 
10,855

Total property, plant, and equipment, at cost
355,930

 
 
1,486,169

Accumulated depreciation
(56,162
)
 
 
(951,798
)
Property, plant, and equipment, net
$
299,768

 
 
$
534,371


Depreciation expense related to property, plant, and equipment is presented below:
 
Successor
 
 
Predecessor
 
Nine Months Ended December 31,
 
 
Three Months Ended March 31,
 
Year Ended December 31,
Dollars in thousands
2019
 
 
2019
 
2018
Depreciation expense
$
57,174

 
 
$
24,525

 
$
105,239


Loss on impairment
There was no loss on impairment for the nine months ended December 31, 2019, or the three months ended March 31, 2019. Loss on impairment was $50.7 million for the year ended December 31, 2018. During the third quarter of 2018, we noted that historically, our barge rig utilization has trended closely with oil prices in periods of both decline and recovery. Management determined the divergence between oil prices and utilization for our Gulf of Mexico inland barge and international barge asset groups necessitated performance of a recoverability analysis for these two asset groups. Average quarterly oil prices have increased sequentially beginning in the third quarter of 2017, reaching an average quarterly 3-year high in the third quarter of 2018, while our utilization remained flat for the nine months ending September 30, 2018, as compared to the year ended December 31, 2018.
Based upon our recoverability analysis, where the carrying values exceeded both estimated future undiscounted cash flows and a subsequent aggregate fair value determination based upon a cost approach method, we determined the Gulf of Mexico inland barge and international barge asset groups were impaired. The significant unobservable inputs to the cost approach method included replacement costs and remaining economic life. See also Note 9 - Fair Value Measurements.
We estimated the fair values to be $19.7 million and $3.4 million for the Gulf of Mexico inland barge asset group and the international barge asset group, respectively for the year ended December 31, 2018. We recognized a pretax impairment loss of approximately $44.0 million in total, or $34.2 million and $9.8 million for the Gulf of Mexico inland barge asset group and the international barge asset group, respectively, for the year ended December 31, 2018. The Gulf of Mexico inland barge asset group is reported as part of the U.S. (lower 48) drilling segment and the international barge asset group is reported as part of the International & Alaska drilling segment.
Gain (loss) on disposition of assets, net
During the normal course of operations, we periodically sell equipment deemed excess, obsolete, or not currently required for operations. Net gains recorded on asset disposition were $0.2 million and $0.4 million for the nine months ended December 31, 2019, and the three months ended March 31, 2019, respectively, and a net loss of $1.7 million for the year ended December 31,
2018. The net gains for 2019 were primarily related to disposal of equipment deemed to be excess, obsolete, or not currently required for operations. The net loss for 2018 was primarily related to equipment that was deemed obsolete in the International & Alaska drilling segment and U.S. rental tools segment.