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Impairments | 9 Months Ended
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Sep. 30, 2016
Impairments |
Impairments | Note 5—Impairments Assets held for sale—In the three months ended September 30, 2016, we recognized an aggregate loss of $11 million ($0.03 per diluted share) associated with the impairment of the midwater floaters Transocean Driller and Transocean Winner, along with related and other equipment. In the nine months ended September 30, 2016, we recognized an aggregate loss of $34 million ($31 million, or 0.08 per diluted share, net of tax), associated with the impairment of the deepwater floater Sedco 702 and the midwater floaters Transocean Driller, Transocean John Shaw and Transocean Winner, along with related and other equipment, which were classified as assets held for sale at the time of impairment. In the three months ended September 30, 2015, we recognized an aggregate loss of $13 million ($0.03 per diluted share), which had no tax effect, associated with the impairment of the midwater floater GSF Rig 135 along with related equipment, which were classified as held for sale at the time of impairment. In the nine months ended September 30, 2015, we recognized an aggregate loss of $664 million ($550 million, or $1.50 per diluted share, net of tax), associated with the impairment of the ultra‑deepwater floaters Deepwater Expedition and GSF Explorer, the deepwater floaters GSF Celtic Sea, Sedco 707 and Transocean Rather and the midwater floaters GSF Aleutian Key, GSF Arctic III, GSF Rig 135, Transocean Amirante and Transocean Legend, along with related equipment, which were classified as assets held for sale at the time of impairment. We measured the impairment of the drilling units and related equipment as the amount by which the carrying amount exceeded the estimated fair value less costs to sell. We estimated the fair value of the assets using significant other observable inputs, representative of Level 2 fair value measurements, including indicative market values for the drilling units and related equipment to be sold for scrap value. If we commit to plans to sell additional rigs for values below the respective carrying amounts, we may be required to recognize additional losses in future periods associated with the impairment of such assets. Assets held and used—During the nine months ended September 30, 2015, we identified indicators that the asset groups in our contract drilling services reporting unit may not be recoverable. Such indicators included a reduction in the number of new contract opportunities, customer suspensions of drilling programs, early contract terminations and cancellations and low dayrate fixtures. Our deepwater and midwater asset groups, in particular, experienced significant declines in projected dayrates and utilization caused by increased competition and marginalization of some of the less capable drilling units. As a result of our testing, we determined that the carrying amounts of the deepwater floater and midwater floater asset groups were impaired. In the nine months ended September 30, 2015, we recognized losses of $507 million ($481 million, or $1.32 per diluted share, net of tax) and $668 million ($654 million, or $1.79 per diluted share, net of tax), associated with the impairment of the deepwater floater asset group and the midwater floater asset group, respectively, including losses of $41 million and $11 million, respectively, associated with construction in progress for each asset group. We estimated the fair value of the asset groups by applying a combination of income and cost approaches, using projected discounted cash flows and estimates of the exchange price that would be received for the assets in the principal or most advantageous market for the assets in an orderly transaction between market participants as of the measurement date. Our estimates of fair value required us to use significant unobservable inputs, representative of a Level 3 fair value measurement, including assumptions related to the future performance of our contract drilling services reporting unit, such as future commodity prices, projected demand for our services, rig availability and dayrates. If we experience increasingly unfavorable changes to actual or anticipated dayrates or other impairment indicators, or if we are unable to secure new or extended contracts for our active units or the reactivation of any of our stacked units, we may be required to recognize additional losses in future periods as a result of impairments of the carrying amount of one or more of our asset groups.

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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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