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Goodwill and Intangible Assets | 9 Months Ended
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Sep. 30, 2019
Goodwill And Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | 7. Goodwill and Intangible Assets Goodwill — Goodwill by operating segment as of September 30, 2019 and changes for the nine 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 |
Impairment |  | — |  |  |  | (17,800 | ) |  |  | (17,800 | )
Balance at end of period | $ | 395,060 |  |  | $ | - |  |  | $ | 395,060 |
The changes to goodwill in Other Operations was primarily 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 operating segment as of September 30, 2019 or December 31, 2018. There were $17.8 million in accumulated impairment losses related to goodwill in the other operations segment as of September 30, 2019 and no accumulated impairment losses for the period ended 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. Due to the decline in the market price of the Company’s common stock and recent commodity prices, the Company’s results of operations for the three months ended September 30, 2019 and management’s expectations of operating results in future periods, 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 September 30, 2019. 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, oilfield rentals and electrical controls and automation 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 September 30, 2019, the fair value of the contract drilling reporting unit exceeded its carrying value by approximately 13% and management concluded that no impairment was indicated in its contract drilling reporting unit; however, impairment was indicated in its oilfield rentals and electrical controls and automation reporting units included in the other operations segment. The Company recognized an impairment charge of $17.8 million in the quarter ended September 30, 2019 associated with the impairment of all the goodwill in its oilfield rentals and electrical controls and automation 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 may recover is highly uncertain. If the lower oil price environment experienced in 2019 were to last into late 2021 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. Intangible Assets — The following table presents the gross carrying amount and accumulated amortization of the intangible assets as of September 30, 2019 and December 31, 2018 (in thousands):
| September 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 |  |  |  | (17,463 | ) |  |  | 10,537 |  |  | $ | 28,000 |  |  | $ | (10,719 | ) |  | $ | 17,281 |
Developed technology |  | 55,772 |  |  |  | (12,355 | ) |  |  | 43,417 |  |  |  | 55,772 |  |  |  | (6,533 | ) |  |  | 49,239 |
Favorable drilling contracts |  | — |  |  |  | — |  |  |  | — |  |  |  | 22,500 |  |  |  | (22,500 | ) |  |  | — |
Internal use software |  | 482 |  |  |  | (188 | ) |  |  | 294 |  |  |  | 482 |  |  |  | (118 | ) |  |  | 364 |
|  | 84,254 |  |  |  | (30,006 | ) |  |  | 54,248 |  |  | $ | 106,754 |  |  | $ | (39,870 | ) |  | $ | 66,884 |
Amortization expense on intangible assets of approximately $5.3 million and $4.2 million was recorded in the three months ended September 30, 2019 and 2018, respectively. Amortization expense on intangible assets of approximately $12.6 million and $14.5 million was recorded in the nine months ended September 30, 2019 and 2018, respectively.

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- 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
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