ASSET DISPOSITIONS, ASSETS HELD FOR SALE AND ASSET IMPAIRMENTS	3 Months Ended
Mar. 31, 2020
Asset Impairment Charges [Abstract]
ASSET DISPOSITIONS, ASSETS HELD FOR SALE AND ASSET IMPAIRMENTS	(15)ASSET DISPOSITIONS, ASSETS HELD FOR SALE AND ASSET IMPAIRMENTS In the fourth quarter of 2019, we evaluated our fleet for vessels to be considered for disposal. We determined that 42 of our 61 stacked vessels should be scrapped or sold. In addition, we identified four vessels in our active fleet that should be designated for sale. At December 31, 2019 we reclassified the vessels from property and equipment to assets held for sale. In the three months ended March 31, 2020, we sold 8 of these vessels plus one additional vessel from our active fleet, recognizing net gains totaling $5.3 million. In the first quarter of 2019, we sold 16 vessels, primarily from our stacked fleet, and recognized gains of $1.3 million. In conjunction with the reclassification of vessels from property and equipment at December 31, 2019, we adjusted the carrying value of these assets to the lower of current net book value or the expected net realizable sale value. This resulted in a $26.7 million charge to impairment expense and the reclassification of the remaining $39.3 million of carrying value to assets held for sale. At March 31, 2020, we determined that certain of the vessels remaining in our assets held for sale account should be further impaired due to deterioration in the markets. As a result, as of March 31, 2020 we further impaired our asset held for sale by $10.2 million. We considered this valuation approach to be a Level 3 fair value measurement due to the level of estimation involved in valuing assets to be scrapped or sold. At December 31, 2019, we determined the fair value of the vessels held for sale using three methodologies depending on the vessel and on our planned method of disposition. We designated 20 of the 46 vessels as vessels to be scrapped and valued those vessels using scrap yard pricing schedules based on dollars per ton. Four of the 46 vessels were valued based on sales agreements which closed in the first quarter of 2020. The remaining vessels were valued using comparative sales in the marketplace and reduced by 10% to factor in the effects of completing a quick sale within the next twelve months. At March 31, 2020, we adjusted the expected value of the vessels using the same methodology. We do not separate our asset impairment expense by segment because of the significant movement of our assets between segments. In early 2020, it became evident that a novel coronavirus originating in Asia (COVID-19) could become a pandemic with worldwide reach. By mid-March, when the World Health Organization declared the outbreak to be a pandemic (the “COVID-19 pandemic”), much of the industrialized world had initiated severe measures to lessen its impact. The ongoing COVID-19 pandemic has created significant volatility, uncertainty, and economic disruption during the first quarter of 2020. With respect to our particular sector, the COVID-19 pandemic has resulted in a much lower demand for oil as national, regional, and local governments impose travel restrictions, border closings, restrictions on public gatherings, stay at home orders, and limitations on business operations in order to contain its spread. During this same time period, oil-producing countries have struggled to reach consensus on worldwide production levels, resulting in both a market oversupply of oil and a precipitous fall in oil prices. Combined, these conditions have adversely affected our operations and business during the latter part of the first quarter of 2020 and expect our operations and business in 2020 to be negatively impacted. The reduction in demand for hydrocarbons together with an unprecedented decline in the price of oil has resulted in our primary customers, the oil and gas companies, making material reductions to their planned spending on offshore projects, compounding the effect of the virus on offshore operations. Further, these conditions, separately or together, may continue to impact the demand for our services, the utilization and/or rates we can achieve for our assets and services, and the outlook for our industry in general. Although, as of the date of this filing, oil-producing countries have reached a tentative agreement regarding future output, oil prices will remain depressed as long as the market is oversupplied. We consider these events to be indicators that the value of our offshore vessel fleet may be impaired. As a result, we performed a Step 1 evaluation of our offshore fleet under FASB Accounting Standards Codification 360, which governs the methodology for identifying and recording impairment of long-lived assets to determine if any of our asset groups have net book value in excess of undiscounted future net cash flows. Our evaluation did not indicate impairment of any of our asset groups We will continue to monitor the expected future cash flows and the fair market value of our asset groups for impairment.

ASSET DISPOSITIONS, ASSETS HELD FOR SALE AND ASSET IMPAIRMENTS

3 Months Ended

Mar. 31, 2020

ASSET DISPOSITIONS, ASSETS HELD FOR SALE AND ASSET IMPAIRMENTS

(15)ASSET DISPOSITIONS, ASSETS HELD FOR SALE AND ASSET IMPAIRMENTS

In the fourth quarter of 2019, we evaluated our fleet for vessels to be considered for disposal. We determined that 42 of our 61 stacked vessels should be scrapped or sold. In addition, we identified four vessels in our active fleet that should be designated for sale. At December 31, 2019 we reclassified the vessels from property and equipment to assets held for sale. In the three months ended March 31, 2020, we sold 8 of these vessels plus one additional vessel from our active fleet, recognizing net gains totaling $5.3 million. In the first quarter of 2019, we sold 16 vessels, primarily from our stacked fleet, and recognized gains of $1.3 million.

In conjunction with the reclassification of vessels from property and equipment at December 31, 2019, we adjusted the carrying value of these assets to the lower of current net book value or the expected net realizable sale value. This resulted in a $26.7 million charge to impairment expense and the reclassification of the remaining $39.3 million of carrying value to assets held for sale. At March 31, 2020, we determined that certain of the vessels remaining in our assets held for sale account should be further impaired due to deterioration in the markets. As a result, as of March 31, 2020 we further impaired our asset held for sale by $10.2 million. We considered this valuation approach to be a Level 3 fair value measurement due to the level of estimation involved in valuing assets to be scrapped or sold. At December 31, 2019, we determined the fair value of the vessels held for sale using three methodologies depending on the vessel and on our planned method of disposition. We designated 20 of the 46 vessels as vessels to be scrapped and valued those vessels using scrap yard pricing schedules based on dollars per ton. Four of the 46 vessels were valued based on sales agreements which closed in the first quarter of 2020. The remaining vessels were valued using comparative sales in the marketplace and reduced by 10% to factor in the effects of completing a quick sale within the next twelve months. At March 31, 2020, we adjusted the expected value of the vessels using the same methodology. We do not separate our asset impairment expense by segment because of the significant movement of our assets between segments.

In early 2020, it became evident that a novel coronavirus originating in Asia (COVID-19) could become a pandemic with worldwide reach. By mid-March, when the World Health Organization declared the outbreak to be a pandemic (the “COVID-19 pandemic”), much of the industrialized world had initiated severe measures to lessen its impact. The ongoing COVID-19 pandemic has created significant volatility, uncertainty, and economic disruption during the first quarter of 2020. With respect to our particular sector, the COVID-19 pandemic has resulted in a much lower demand for oil as national, regional, and local governments impose travel restrictions, border closings, restrictions on public gatherings, stay at home orders, and limitations on business operations in order to contain its spread. During this same time period, oil-producing countries have struggled to reach consensus on worldwide production levels, resulting in both a market oversupply of oil and a precipitous fall in oil prices. Combined, these conditions have adversely affected our operations and business during the latter part of the first quarter of 2020 and expect our operations and business in 2020 to be negatively impacted. The reduction in demand for hydrocarbons together with an unprecedented decline in the price of oil has resulted in our primary customers, the oil and gas companies, making material reductions to their planned spending on offshore projects, compounding the effect of the virus on offshore operations. Further, these conditions, separately or together, may continue to impact the demand for our services, the utilization and/or rates we can achieve for our assets and services, and the outlook for our industry in

general. Although, as of the date of this filing, oil-producing countries have reached a tentative agreement regarding future output, oil prices will remain depressed as long as the market is oversupplied.

We consider these events to be indicators that the value of our offshore vessel fleet may be impaired. As a result, we performed a Step 1 evaluation of our offshore fleet under FASB Accounting Standards Codification 360, which governs the methodology for identifying and recording impairment of long-lived assets to determine if any of our asset groups have net book value in excess of undiscounted future net cash flows. Our evaluation did not indicate impairment of any of our asset groups We will continue to monitor the expected future cash flows and the fair market value of our asset groups for impairment.