3.	Property and Equipment

Property and equipment consisted of the following at December 31, 2013 and 2012 (in thousands):


	2013			2012
Equipment	$	5,749,975		$	5,387,490
Oil and natural gas properties		183,571			156,834
Buildings		80,050			66,490
Land		12,054			10,413

		6,025,650			5,621,227
Less accumulated depreciation and depletion		(2,390,109	)		(2,005,844	)

Property and equipment, net	$	3,635,541		$	3,615,383

Depreciation, depletion, amortization and impairment — The following table summarizes depreciation, depletion, amortization and impairment expense related to property and equipment and intangible assets for 2013, 2012 and 2011 (in thousands):


	2013		2012		2011
Depreciation and impairment expense	$	573,106	$	502,953	$	419,183
Amortization expense		3,993		4,110		4,110
Depletion expense		20,370		19,551		13,986

Total	$	597,469	$	526,614	$	437,279

The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable (a “triggering event”). In light of levels of activity and revenue per operating day experienced by the Company and its peers in 2011, 2012 and 2013, management concluded that no triggering event had occurred in 2011, 2012 or 2013 with respect to its contract drilling segment as a whole. The Company also concluded that no triggering event occurred with respect to its pressure pumping segment in 2011, 2012 or 2013. With respect to the long-lived assets in the Company’s oil and natural gas exploration and production segment, the Company assesses the recoverability of long-lived assets at the end of each quarter due to revisions in its oil and natural gas reserve estimates and expectations about future commodity prices.

Long-lived assets are evaluated for impairment at the lowest level for which identifiable cash flows can be separated from other long-lived assets. The Company performs the first step of its impairment assessments by comparing the undiscounted cash flows for each long-lived asset or asset group to its respective carrying value. The Company’s analysis indicated that the carrying amounts of certain oil and natural gas properties were not recoverable at various testing dates in 2013, 2012 and 2011. The Company’s estimates of expected future net cash flows from impaired properties are used in measuring the fair value of such properties. The Company recorded impairment charges of $4.0 million, $1.9 million and $3.0 million in 2013, 2012 and 2011, respectively, related to its oil and natural gas properties. The Company determined the fair value of the impaired assets using internally developed unobservable inputs including future pricing and reserves (level 3 inputs in the fair value hierarchy of fair value accounting).

On a periodic basis, the Company evaluates its fleet of drilling rigs for marketability based on the condition of inactive rigs, expenditures that would be necessary to bring them to working condition and the expected demand for drilling services by rig type (such as drilling conventional vertical wells versus drilling longer horizontal wells using high capacity rigs). In connection with the Company’s ongoing planning process, it evaluated its then-current fleet of marketable drilling rigs in 2013, 2012 and 2011 and identified 48, 36 and 53 rigs, during each of those years respectively, that it determined would no longer be marketed as rigs based on its assessment of estimated expenditures to bring these rigs into condition to operate in the current environment, as well as its assessment of future demand and the suitability of the identified rigs in light of this expected demand. The components comprising these rigs were evaluated, and those components with continuing utility to the Company’s other marketed rigs were transferred to other rigs or to its yards to be used as spare equipment. The remaining components of these rigs were retired. The net book values of these assets of $7.9 million in 2013, $5.2 million in 2012 and $15.7 million in 2011 were expensed in the Company’s consolidated statements of operations.

In 2013, due to a recent shift in customer demand away from mechanically powered drilling rigs to electric powered drilling rigs, the Company recorded in its consolidated statement of operations a charge of $29.9 million related to 55 mechanical rigs that were not under contract. Although these 55 rigs remain marketable, the Company has lower expectations with respect to utilization of these rigs due to the industry shift to electric powered drilling rigs. There were no similar charges in 2012 or 2011.

The Company also evaluates its fleet of marketable pressure pumping equipment and in 2012 identified approximately 37,000 horsepower of pressure pumping equipment that would be retired. The net book value of these assets of $7.3 million was expensed in the Company’s consolidated statements of operations. There were no similar charges in 2013 or 2011.

During 2012, the Company sold its flowback operations in a cash transaction. The sale price was $42.5 million and the Company recognized a gain on disposal of $22.6 million. Also during 2012, the Company sold at auction certain excess drilling assets. The total sale price was $10.6 million, and the Company recognized a gain on disposal of $4.5 million.