XML 18 R14.htm IDEA: XBRL DOCUMENT
v3.20.1

PROPERTY, PLANT AND EQUIPMENT | 6 Months Ended
--- | ---
Mar. 31, 2020
Property, Plant and Equipment [Abstract] |
PROPERTY, PLANT AND EQUIPMENT | NOTE 5 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment as of March 31, 2020 and September 30, 2019 consisted of the following:
(in thousands) | Estimated Useful Lives |  | March 31, 2020 |  | September 30, 2019
Contract drilling services equipment | 4 - 15 years |  | $ | 7,330,789 |  |  | $ | 7,881,323 |
Tubulars | 4 years |  | 615,238 |  |  | 618,310 |
Real estate properties | 10 - 45 years |  | 72,517 |  |  | 72,507 |
Other | 2 - 23 years |  | 474,148 |  |  | 471,803 |
Construction in progress (1) |  |  | 71,252 |  |  | 117,761 |
|  |  | 8,563,944 |  |  | 9,161,704 |
Accumulated depreciation |  |  | (4,723,731 | ) |  | (4,659,620 | )
Property, plant and equipment, net |  |  | $ | 3,840,213 |  |  | $ | 4,502,084 |
(1) | Included in construction in progress are costs for projects in progress to upgrade or refurbish certain rigs in our existing fleet. Additionally, we include other capital maintenance purchase-orders that are open/in process. As these various projects are completed, the costs are then classified to their appropriate useful life category.
Depreciation Depreciation expense in the Unaudited Condensed Consolidated Statements of Operations was $130.2 million and $141.7 million for the three months ended March 31, 2020 and 2019, respectively, and $258.5 million and $281.7 million for the six months ended March 31, 2020 and 2019, respectively. Included in depreciation expenses is abandonments of $0.9 million and $4.4 million for the three months ended March 31, 2020 and 2019, respectively, and $1.7 million and $5.4 million for the six months ended March 31, 2020 and 2019, respectively. Gain on Sale of Assets We had gains on sales of assets of $10.3 million and $11.5 million for the three months ended March 31, 2020 and 2019, respectively, and $14.6 million and $17.1 million for the six months ended March 31, 2020 and 2019, respectively. These gains were primarily related to reimbursement for drill pipe damaged or lost in drilling operations. Impairments Consistent with our policy, we evaluate our drilling rigs and related equipment for impairment whenever events or changes in circumstances indicate the carrying value of these assets may exceed the estimated undiscounted future net cash flows. Our evaluation, among other things, includes a review of external market factors and an assessment on the future marketability of a specific rigs’ asset group. During the three months ended March 31, 2020, several significant economic events took place that severely impacted the current demand on drilling services, including the significant drop in crude oil prices caused by OPEC+'s price war coupled with a decrease in the demand due to the COVID-19 pandemic. To maintain a competitive edge in a challenging market, the Company’s management introduced a new strategy focused on operating various types of highly capable upgraded rigs and phasing out the older, less capable fleet. This resulted in grouping the super-spec rigs of our legacy Domestic FlexRig3 asset group with our FlexRig5 asset group creating a new "Domestic super-spec FlexRig" asset group, while combining the legacy Domestic conventional asset group, FlexRig4 asset group and FlexRig3 non-super-spec rigs into one asset group (Domestic non-super-spec asset group) (See Note 18—Subsequent Events). Given the current and projected low utilization for our Domestic non-super-spec asset group and all International asset groups, we considered these economic factors to be indicators that these asset groups may be impaired. At March 31, 2020, we performed impairment testing on our Domestic non-super-spec and International conventional, FlexRig3, and FlexRig4 asset groups which had an aggregate net book value of $605.8 million. We concluded that the net book value of each asset group is not recoverable through estimated undiscounted cash flows and recorded a non-cash impairment charge of $441.4 million in the Unaudited Condensed Consolidated Statement of Operations during the three and six months ended March 31, 2020. Of the $441.4 million total impairment charge recorded, $292.4 million and $149.0 million was recorded in the U.S. Land and International Land segment, respectively. Impairment was measured as the amount by which the net book value of each asset group exceeds its fair value. The most significant assumptions used in our undiscounted cash flow model include timing on awards of future drilling contracts, drilling rig utilization, estimated remaining useful life, and net proceeds received upon future sale/disposition. These assumptions are classified as Level 3 inputs by ASC Topic 820 Fair Value measurement and Disclosures as they are based upon unobservable inputs and primarily rely on management assumptions and forecasts. In determining the fair value of each asset group, we utilized a combination of income and market approaches. The significant assumptions in the valuation are based on those of a market participant and are classified as Level 2 and Level 3 inputs by ASC Topic 820 Fair Value Measurement and Disclosures. The Company also recorded an additional non-cash impairment charge related to in-progress drilling equipment and rotational inventory of $44.9 million and $38.6 million, respectively, which had aggregate book values of $68.4 million and $38.6 million, respectively, in the Unaudited Condensed Consolidated Statement of Operations during the three and six months ended March 31, 2020. Of the $83.5 million total impairment charge recorded for in-progress drilling equipment and rotational inventory, $75.8 million and $7.7 million was recorded in the U.S. Land and International Land segment, respectively.

X
- References No definition available. + Details
Name: | us-gaap_PropertyPlantAndEquipmentAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 + Details
Name: | us-gaap_PropertyPlantAndEquipmentDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration