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Note 15 - Asset Dispositions, Assets Held for Sale and Asset Impairments | 9 Months Ended
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Sep. 30, 2022
Notes to Financial Statements |
Asset Impairment Charges [Text Block] |
(15) | ASSET DISPOSITIONS, ASSETS HELD FOR SALE AND ASSET IMPAIRMENTS
During the nine months ending September 30, 2022, we added one vessel from the SPO fleet to assets held for sale, sold or recycled ten of our vessels held for sale, and re-activated one vessel from assets held for sale back into the active fleet, leaving eight vessels valued at $6.8 million remaining in the held for sale account as of September 30, 2022. In addition, we sold no vessels from our active fleet in the nine-month period ending September 30, 2022. The total vessel and other sales for the nine-month period ending September 30, 2022 contributed approximately $8.5 million in proceeds and we recognized a net $0.8 million loss on the dispositions. In the nine-month period ending September 30, 2021, we added two vessels to assets held for sale, sold nine of our vessels held for sale, and re-activated two vessels from assets held for sale back into the active fleet. In addition, we sold 10 vessels from our active fleet in the nine-month period of 2021. The vessel and other sales for the nine-month period ending September 30, 2021 contributed $34.0 million in proceeds and we recognized a $3.0 million net loss on the dispositions. One of the active vessel sales in 2021, was to a third-party operator, whose Chief Operating Officer, Matthew Rigdon, is the son of Larry Rigdon, the 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. We consider the valuation approach for our assets held for sale to be a Level 3 fair value measurement due to the level of estimation involved in valuing assets to be recycled or sold. We estimate the net realizable value of our assets held for sale using various methodologies including third party appraisals, sales comparisons, sales agreements and recycle yard tonnage prices. Estimates generally fall in ranges rather than exact numbers due to the nature of sales of offshore vessels and industry conditions. Our value ranges depend on our expectation of the ultimate disposition of the vessel. We will in all circumstances attempt to achieve maximum value for our vessels, but also recognize that certain vessels are more likely to be recycled, especially given the time and effort required to achieve a sale and the costs incurred to maintain a vessel while searching for a buyer. We establish ranges that in many cases have recycle value as the low end of the range and an expected open market sale value at the top of the range. When there is no expectation within the range that is considered more likely than any other, we apply equal probability weighting to the low and high ends of the valuation range. In addition, in conjunction with the reactivation of a vessel from assets held for sale to the active fleet in the first quarter of 2022 and the concurrent valuation of such vessel at its fair value, we recaptured $0.5 million of impairment charged to expense. During the nine months ended September 30, 2021, we recorded $1.9 million in impairment related to assets held for sale and recaptured $1.7 million of impairment previously charged to expense related to a vessel reactivated to the active fleet. We do not separate our asset impairment expense by segment because of the significant movement of our assets between segments. The following table presents the activity in our asset held for sale account for the periods indicated:
(In Thousands, except number of vessels) |  | Three Months Ended |
|  | Number of Vessels |  |  | September 30, 2022 |  |  | Number of Vessels |  |  | September 30, 2021 |
Beginning balance |  |  | 9 |  |  | $ | 6,862 |  |  |  | 14 |  |  | $ | 17,214 |
Additions |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | 4,089 |
Sales |  |  | (1 | ) |  |  | (47 | ) |  |  | (1 | ) |  |  | (1,250 | )
Transfers |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | (250 | )
Impairment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,912 | )
Ending balance |  |  | 8 |  |  | $ | 6,815 |  |  |  | 14 |  |  | $ | 17,891 |
(In Thousands, except number of vessels) |  | Nine Months Ended |
|  | Number of Vessels |  |  | September 30, 2022 |  |  | Number of Vessels |  |  | September 30, 2021 |
Beginning balance |  |  | 18 |  |  | $ | 14,421 |  |  |  | 23 |  |  | $ | 34,396 |
Additions |  |  | 1 |  |  |  | 2,500 |  |  |  | 2 |  |  |  | 4,089 |
Sales |  |  | (10 | ) |  |  | (8,606 | ) |  |  | (9 | ) |  |  | (15,432 | )
Transfers |  |  | (1 | ) |  |  | (1,500 | ) |  |  | (2 | ) |  |  | (3,250 | )
Impairment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1,912 | )
Ending balance |  |  | 8 |  |  | $ | 6,815 |  |  |  | 14 |  |  | $ | 17,891 |
We perform inventory counts and evaluate our inventory for obsolescence each year. We charged $1.2 million to impairment expense for obsolete marine service and vessel supplies and parts inventory for the three and nine months ended September 30, 2022 compared to $1.9 million for the three and nine months ended September 30, 2021. We consider our valuation approach to be a Level 3 fair value measurement due to the level of estimation involved in valuing obsolete inventory.

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- Definition The entire disclosure for the details of the charge against earnings resulting from the aggregate write down of all assets from their carrying value to their fair value. Disclosure may also include a description of the impaired asset and facts and circumstances leading to the impairment, amount of the impairment loss and where the loss is located in the income statement, method(s) for determining fair value, and the segment in which the impaired asset is reported. + References No definition available. + Details
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