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Goodwill and Intangible Assets
6 Months Ended
Jun. 30, 2019
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets

7. Goodwill and Intangible Assets

Goodwill — Goodwill by operating segment as of June 30, 2019 and changes for the six months then ended are as follows (in thousands):

 

Contract

 

 

Other

 

 

 

 

 

 

Drilling

 

 

Operations

 

 

Total

 

Balance at beginning of period

$

395,060

 

 

 

15,696

 

 

$

410,756

 

Changes to goodwill

 

 

 

 

2,104

 

 

 

2,104

 

Balance at end of period

$

395,060

 

 

$

17,800

 

 

$

412,860

 

 

The goodwill reflected above in Other Operations has increased primarily as a result of a measurement period adjustment related to accrued liabilities, which resulted in a $2.1 million increase from the original purchase price allocation assessed with the Current Power acquisition. There were no accumulated impairment losses related to goodwill in the contract drilling segment or other operations as of June 30, 2019 or December 31, 2018.

 

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.

Intangible Assets — The following table presents the gross carrying amount and accumulated amortization of the intangible assets as of June 30, 2019 and December 31, 2018 (in thousands):

 

June 30, 2019

 

 

December 31, 2018

 

 

Gross

 

 

 

 

 

 

Net

 

 

Gross

 

 

 

 

 

 

Net

 

 

Carrying

 

 

Accumulated

 

 

Carrying

 

 

Carrying

 

 

Accumulated

 

 

Carrying

 

 

Amount

 

 

Amortization

 

 

Amount

 

 

Amount

 

 

Amortization

 

 

Amount

 

Customer relationships

$

28,000

 

 

$

(15,214

)

 

 

12,786

 

 

$

28,000

 

 

$

(10,719

)

 

$

17,281

 

Developed technology

 

55,772

 

 

 

(9,321

)

 

 

46,451

 

 

 

55,772

 

 

 

(6,533

)

 

 

49,239

 

Favorable drilling contracts

 

 

 

 

 

 

 

 

 

 

22,500

 

 

 

(22,500

)

 

 

 

Internal use software

 

482

 

 

 

(166

)

 

 

316

 

 

 

482

 

 

 

(118

)

 

 

364

 

 

$

84,254

 

 

$

(24,701

)

 

$

59,553

 

 

$

106,754

 

 

$

(39,870

)

 

$

66,884

 

 

Amortization expense on intangible assets of approximately $3.7 million and $4.9 million was recorded in the three months ended June 30, 2019 and 2018, respectively. Amortization expense on intangible assets of approximately $7.3 million and $10.3 million was recorded in the six months ended June 30, 2019 and 2018, respectively.