XML 29 R15.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Goodwill and Intangible Assets | 12 Months Ended
--- | ---
Dec. 31, 2018
Goodwill And Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets Goodwill — Goodwill by operating segment as of December 31, 2018 and 2017 and changes for the years then ended are as follows (in thousands):
|  | Contract |  |  | Pressure |  |  | Directional |  |  | Other |  |  |  |  |
|  | Drilling |  |  | Pumping |  |  | Drilling |  |  | Operations |  |  | Total |
Balance December 31, 2016 |  | $ | 86,234 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 86,234 |
Goodwill acquired |  |  | 308,826 |  |  |  | 121,444 |  |  |  | 88,685 |  |  |  | 6,284 |  |  |  | 525,239 |
Balance December 31, 2017 |  |  | 395,060 |  |  |  | 121,444 |  |  |  | 88,685 |  |  |  | 6,284 |  |  |  | 611,473 |
Goodwill acquired |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,412 |  |  |  | 9,412 |
Measurement period adjustment |  |  | — |  |  |  | — |  |  |  | 1,000 |  |  |  | — |  |  |  | 1,000 |
Impairment |  |  | — |  |  |  | (121,444 | ) |  |  | (89,685 | ) |  |  | — |  |  |  | (211,129 | )
Balance December 31, 2018 |  | $ | 395,060 |  |  | $ | — |  |  | $ | — |  |  | $ | 15,696 |  |  | $ | 410,756 |
There were no accumulated impairment losses related to goodwill in the contract drilling segment or other operations as of December 31, 2018 or 2017. Goodwill is evaluated at least annually as of December 31, or when circumstances require, to determine if the fair value of recorded goodwill has decreased below its carrying value. For impairment testing purposes, goodwill is evaluated at the reporting unit level. The Company’s reporting units for impairment testing are its operating segments. The Company determines whether it is more likely than not that the fair value of a reporting unit is less than its carrying value after considering qualitative, market and other factors, and if this is the case, any necessary goodwill impairment is determined using a quantitative impairment test. From time to time, the Company may perform quantitative testing for goodwill impairment in lieu of performing the qualitative assessment. If the resulting fair value of goodwill is less than the carrying value of goodwill, an impairment loss would be recognized for the amount of the shortfall. Due to the decline in the market price of the Company’s common stock and the deterioration of crude oil prices in the fourth quarter of 2018, the Company lowered its expectations with respect to future activity levels in certain of its operating segments. The Company performed a quantitative impairment assessment of its goodwill as of December 31, 2018. In completing the assessment, the fair value of each reporting unit was estimated using the income valuation method. The estimate of fair value for each reporting unit required the use of significant unobservable inputs, representative of a Level 3 fair value measurement. The inputs included assumptions related to the future performance of the Company’s contract drilling, pressure pumping, directional drilling and oilfield rentals reporting units, such as future oil and natural gas prices and projected demand for the Company’s services, and assumptions related to discount rates and long-term growth rates. Based on the results of the goodwill impairment test as of December 31, 2018, the fair value of the contract drilling and oilfield rentals reporting units exceeded their carrying values by approximately 16% and 14%, respectively, and management concluded that no impairment was indicated in its contract drilling and oilfield rentals reporting units; however, impairment was indicated in its pressure pumping and directional drilling reporting units. The Company recognized an impairment charge of $211 million associated with the impairment of all of the goodwill in its pressure pumping and directional drilling reporting units. While management believes the assumptions used with respect to future oil pricing are reasonable, actual future prices may vary significantly from the ones that were assumed. The timeframe over which oil prices will recover is highly uncertain. If the lower oil price environment experienced at the end of 2018 were to last into 2020 and beyond, the Company’s actual cash flows would likely be less than the expected cash flows used in these assessments and could result in additional impairment charges in the future and such impairment could be material. In connection with its annual goodwill impairment assessment as of December 31, 2017 and 2016, the Company determined based on an assessment of qualitative factors that it was more likely than not that the fair values of its reporting units were greater than the respective carrying amount. In making this determination, the Company considered the current and expected levels of commodity prices for oil and natural gas, which influence the overall level of business activity in its reporting units, as well as the Company’s operating results for 2017 and 2016 and forecasted operating results for the respective succeeding year. Management also considered the Company’s overall market capitalization at December 31, 2017 and 2016. Intangible Assets — In 2018, intangible assets were recorded in the Company’s directional drilling operating segment with the acquisition of Superior QC and in other operations with the acquisition of Current Power. In 2017, intangible assets were recorded in the Company’s directional drilling operating segment with the acquisition of MS Directional and in the contract drilling operating segment with the SSE merger (See Note 2). The Company’s intangible assets were recorded at fair value on the date of acquisition and are amortized on a straight line basis. The following table identifies the segment and weighted average useful life of each of the Company’s intangible assets:
|  |  |  | Weighted Average
|  | Segment |  | Useful Life
|  |  |  | (in years)
Customer relationships |  | Directional drilling |  | 3.00
Customer relationships |  | Other operations |  | 7.00
Developed technology |  | Directional drilling |  | 10.00
Favorable drilling contracts |  | Contract drilling |  | 0.83
Internal use software |  | Directional drilling |  | 5.00
Due to the decline in the market price of the Company’s common stock and the deterioration of crude oil prices in the fourth quarter of 2018, the Company lowered its expectations with respect to activity levels in certain of its operating segments. The Company deemed it necessary to assess the recoverability of its contract drilling, pressure pumping, directional drilling and oilfield rentals asset groups. The assessments of recoverability of the asset groups included the respective intangible assets, and no impairment was indicated. See Note 5 for additional information. The Company concluded that no triggering events necessitating an impairment assessment of the intangible assets had occurred in 2017 or 2016. The gross carrying amount and accumulated amortization of intangible assets as of December 31, 2018 and 2017 are as follows (in thousands):
|  | 2018 |  |  | 2017 |
|  | Gross Carrying |  |  | Accumulated |  |  | Net Carrying |  |  | Gross Carrying |  |  | Accumulated |  |  | Net Carrying |
|  | Amount |  |  | Amortization |  |  | Amount |  |  | Amount |  |  | Amortization |  |  | Amount |
Customer relationships |  | $ | 28,000 |  |  | $ | (10,719 | ) |  | $ | 17,281 |  |  | $ | 26,200 |  |  | $ | (1,943 | ) |  | $ | 24,257 |
Developed technology |  |  | 55,772 |  |  |  | (6,533 | ) |  |  | 49,239 |  |  |  | 48,000 |  |  |  | (1,137 | ) |  |  | 46,863 |
Favorable drilling contracts |  |  | 22,500 |  |  |  | (22,500 | ) |  |  | — |  |  |  | 22,500 |  |  |  | (18,482 | ) |  |  | 4,018 |
Internal use software |  |  | 482 |  |  |  | (118 | ) |  |  | 364 |  |  |  | 482 |  |  |  | (21 | ) |  |  | 461 |
|  | $ | 106,754 |  |  | $ | (39,870 | ) |  | $ | 66,884 |  |  | $ | 97,182 |  |  | $ | (21,583 | ) |  | $ | 75,599 |
Amortization expense on intangible assets of approximately $18.3 million, $24.3 million and $3.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. The remaining amortization expense associated with finite-lived intangible assets is expected to be as follows (in thousands):
Year ending December 31, |  |  |  |
2019 |  | $ | 14,664 |
2020 |  |  | 12,721 |
2021 |  |  | 5,931 |
2022 |  |  | 5,909 |
2023 |  |  | 5,834 |
Thereafter |  |  | 21,825 |
Total |  | $ | 66,884 |

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

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration