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Property and Equipment | 9 Months Ended
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Sep. 30, 2015
Property Plant And Equipment [Abstract] |
Property and Equipment | 3. Property and Equipment Property and equipment consisted of the following at September 30, 2015 and December 31, 2014 (in thousands):
| September 30, |  |  | December 31, |
| 2015 |  |  | 2014 |
Equipment | $ | 6,960,256 |  |  | $ | 6,679,894 |
Oil and natural gas properties |  | 200,822 |  |  |  | 196,234 |
Buildings |  | 90,710 |  |  |  | 83,465 |
Land |  | 22,528 |  |  |  | 12,038 |
|  | 7,274,316 |  |  |  | 6,971,631 |
Less accumulated depreciation, depletion and impairment |  | (3,251,117 | ) |  |  | (2,840,560 | )
Property and equipment, net | $ | 4,023,199 |  |  | $ | 4,131,071 |
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 higher specification rigs). The components comprising rigs that will no longer be marketed are evaluated, and those components with continuing utility to the Company’s other marketed rigs are transferred to other rigs or to the Company’s yards to be used as spare equipment. The remaining components of these rigs will be retired. In the quarter ended September 30, 2015, the Company identified 24 mechanical rigs and 9 non-APEX® electric rigs that will no longer be marketed. Also, the Company has 15 additional mechanical rigs that are not currently operating. Although these 15 rigs remain marketable, the Company has lower expectations with respect to utilization of these rigs due to the industry shift to higher specification drilling rigs. The Company recorded a charge of $131 million related to the retirement of the 33 rigs, the 15 mechanical rigs that remain marketable but are not operating, and the write-down of excess spare rig components to their realizable values. The Company also periodically evaluates its pressure pumping assets and in the quarter ended September 30, 2015, recorded a charge of $22.0 million for the write-down of pressure pumping equipment and certain closed facilities. 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”). During the first quarter of 2015, oil prices averaged $48.54 per barrel and reached a low of $43.39 per barrel on March 17, 2015. Oil prices improved during the second quarter of 2015 and averaged $57.85 per barrel. Although the price improvement was earlier than the Company projected, this improvement was generally consistent with the Company’s assumption at December 31, 2014, that oil prices would improve late in 2015 and continue to improve in 2016, resulting in improved activity levels for both the contract drilling and pressure pumping businesses. During the second quarter of 2015 as oil prices increased, the Company received requests from customers to reactivate drilling rigs to resume operations in the third quarter of 2015. The Company believed this was an indication that future activity levels would be improving for both the contract drilling and pressure pumping businesses. During the third quarter of 2015, however, oil prices declined and averaged $46.42 per barrel and reached a new low for 2015 of $38.22 per barrel on August 24, 2015. With lower oil prices in August, the Company lowered its expectations with respect to future activity levels in both the contract drilling and pressure pumping businesses. In light of the Company’s revised expectations of the duration of the lower oil and natural gas commodity price environment and the related deterioration of the markets for contract drilling and pressure pumping services during the third quarter of 2015, management deemed it necessary to assess the recoverability of long-lived asset groups for both contract drilling and pressure pumping. The Company performed a Step 1 analysis as required by ASC 360-10-35 to assess the recoverability of long-lived assets within its contract drilling and pressure pumping segments. With respect to these assets, future cash flows were estimated over the expected remaining life of the assets, and the Company determined that, on an undiscounted basis, expected cash flows exceeded the carrying value of the long-lived assets, and no impairment was indicated. The expected cash flows for the contract drilling segment include the backlog of commitments for contract drilling revenues under term contracts, which was approximately $801 million at September 30, 2015. Rigs not under term contracts will be subject to pricing in the spot market. Utilization and rates for rigs in the spot market and for the pressure pumping segment were estimated based upon the Company’s historical experience in prior downturns. Also, the expected cash flows for the contract drilling and pressure pumping segments are based on the assumption that activity levels in both segments would begin to recover in the first quarter of 2017 in response to improved oil prices. While management believes these assumptions with respect to future pricing for oil and natural gas are reasonable, actual future prices may vary significantly from the ones that were assumed. The timeframe over which oil and natural gas prices will recover is highly uncertain. Potential events that could affect the Company’s assumptions regarding future prices and the timeframe for a recovery are affected by factors such as:
| · | market supply and demand,
| · | domestic and international military, political, economic and weather conditions,
| · | the desire and ability of the Organization of Petroleum Exporting Countries, commonly known as OPEC, to set and maintain production and price targets,
| · | legal and other limitations or restrictions on exportation and/or importation of oil and natural gas,
| · | technical advances affecting energy consumption and production,
| · | the price and availability of alternative fuels,
| · | the cost of exploring for, developing, producing and delivering oil and natural gas, and
| · | regulations regarding the exploration, development, production and delivery of oil and natural gas
All of these factors are beyond the Company’s control. If the current lower oil and natural gas commodity price environment were to last into 2017 and beyond, the Company’s actual cash flows would likely be less than the expected cash flows used in this assessment and could result in impairment charges in the future and such impairment could be material. 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 each quarter due to revisions in its oil and natural gas reserve estimates and expectations about future commodity prices. The Company’s analysis indicated that the carrying amounts of certain oil and natural gas properties were not recoverable at various testing dates in 2015. 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 $9.3 million in 2015, including $1.9 million in the quarter ended September 30, 2015, related to its oil and natural gas properties.

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- 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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.13-14) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51717284&loc=d3e1361-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=51719941&loc=d3e2921-110230 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6391035&loc=d3e2868-110229 + Details
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