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Impairment (Notes) | 9 Months Ended
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Sep. 30, 2015
Asset Impairment Charges [Abstract] |
Impairment | Impairment Impairment of Long-Lived Assets Fiscal Year 2015 - We continually assess our rig portfolio and actively work with our rig broker to market certain rigs that no longer meet our standards for economic returns or are not part of our long-term strategic plan. On a quarterly basis, we assess whether any rig meets the criteria established by Financial Accounting Standards Board ASC 360-10-45 for “held for sale” classification on our balance sheet. We measure the fair value of our assets held for sale by applying a market approach based on third-party estimated prices that would be received in exchange for the assets in an orderly transaction between market participants. We reassess the fair value of our held for sale assets on a quarterly basis and adjust the carrying value, as necessary. During 2015, we adopted the Financial Accounting Standards Board’s Accounting Standards Update 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("Update 2014-08"). Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. As a result, individual assets that we classify as held for sale during 2015 are not reported as discontinued operations. Rigs that were classified as held for sale prior to 2015 continue to be reported as discontinued operations. During the third quarter of 2015, management received approval from our Board of Directors to market for sale ENSCO 91, an older, less capable jackup rig that we cold stacked during the second quarter. We concluded that the rig met the held for sale criteria as of September 30, 2015, and its carrying value was written-down to fair value based on its estimated sales price. We recorded a pre-tax, non-cash loss on impairment totaling $2.4 million, which was included in income from continuing operations in our condensed consolidated statement of operations for the three-month and nine-month periods ended September 30, 2015. In performing our quarterly assessment of the remaining held for sale rigs (ENSCO 5001, ENSCO 6000, ENSCO 7500, ENSCO DS-2, ENSCO 58 and ENSCO 90), we concluded that impairments were required as a result of declines in fair values observed during the third quarter. We recognized a pre-tax, non-cash loss on impairment of $25.6 million, which was included in (loss) income from discontinued operations, net in our condensed consolidated statement of operations for the three-month and nine-month periods ended September 30, 2015. See “Note 9 - Discontinued Operations” for additional information on rigs classified as held for sale and presented in discontinued operations. Our condensed consolidated balance sheet as of September 30, 2015 included seven held for sale rigs with an aggregate carrying value of $127.5 million. We believe the asset carrying values are supported by current market prices. If there is continued deterioration in the general business environment for offshore drilling rigs and/or further declines in the estimated sales price for drilling rigs, the estimated fair values of these assets will likely decline below their current carrying values, resulting in additional impairments. On a quarterly basis, we evaluate the carrying value of our property and equipment to identify events or changes in circumstances ("triggering events") that indicate the carrying value may not be recoverable. If the global economy, our overall business outlook, or our expectations regarding the marketability of one or more of our drilling rigs deteriorates further, we may conclude that a triggering event has occurred and perform a recoverability test that could lead to a material impairment charge in future periods. During 2015, customers exercised their termination rights for certain drilling contracts, and we agreed to amended contract terms in some cases. In each instance, we concluded that a triggering event had occurred and performed an asset impairment analysis. Based on the analysis performed, we concluded there were no impairments as the carrying values of these rigs were recoverable. We continue to have ongoing discussions with certain customers requesting contract concessions. The outcome of these negotiations remains uncertain; however, deterioration of existing contract terms and/or change in our long-term operating assumptions could lead to a material impairment charge in future periods. Fiscal Year 2014 - During the second quarter of 2014, demand for floaters deteriorated as a result of continued reduction in capital spending by customers in addition to delays in customers’ drilling programs. The reduction in demand, combined with the increasing supply from newbuild floater deliveries, led to a very competitive market. In general, contracting activity for floaters declined significantly, and new day rate fixtures were substantially lower than rates previously realized. In response to the adverse change in the floaters business climate, management evaluated our older, less capable floaters and committed to a plan to sell five rigs. ENSCO 5000, ENSCO 5001, ENSCO 5002, ENSCO 6000 and ENSCO 7500 were removed from our portfolio of rigs marketed for contract drilling services and actively marketed for sale. These rigs were written down to fair value, less costs to sell, as of May 31, 2014 and classified as "held for sale." We completed the sale of ENSCO 5000 during the fourth quarter of 2014 and ENSCO 5002 during the second quarter of 2015. The remaining three floaters were classified as "held for sale" on our September 30, 2015 condensed consolidated balance sheet. We measured the fair value of the "held for sale" rigs by applying a market approach, which was based on unobservable third-party estimated prices that would be received in exchange for the assets in an orderly transaction between market participants. We recorded a pre-tax, non-cash loss on impairment totaling $546.4 million during the nine-month period ended September 30, 2014. The impairment charge was included in loss from discontinued operations, net in our condensed consolidated statement of operations for the nine-month period ended September 30, 2014. See "Note 9 - Discontinued Operations" for additional information on our "held for sale" rigs. As a result of the adverse change in the floater business climate observed during the second quarter of 2014, management's commitment to a plan to sell five floaters during the second quarter of 2014 and the impairment charge incurred on the "held for sale" floaters, management concluded that a triggering event had occurred during the second quarter of 2014 and performed an asset impairment analysis on our remaining older, less capable floaters. Based on the analysis performed as of May 31, 2014, we recorded an additional non-cash loss on impairment with respect to four other floaters totaling $991.5 million, of which $288.0 million related to ENSCO DS-2 which was removed from our portfolio of rigs marketed for contract drilling services during the fourth quarter. As a result, the ENSCO DS-2 impairment charge was reclassified to loss from discontinued operations, net in our condensed consolidated statement of operations for the nine-month period ended September 30, 2014. The remaining $703.5 million impairment charge was included in loss on impairment in our condensed consolidated statement of operations for the nine-month period ended September 30, 2014. We measured the fair value of these rigs by applying an income approach, using projected discounted cash flows. These valuations were based on unobservable inputs that require significant judgments for which there is limited information, including assumptions regarding future day rates, utilization, operating costs and capital requirements.

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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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