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Goodwill and Intangible Assets | 12 Months Ended
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Dec. 31, 2021
Goodwill And Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | 7. Goodwill and Intangible Assets Goodwill — As a result of a triggering event in the first quarter of 2020, we fully impaired our remaining goodwill balance, and as a result, we had no goodwill balance as of December 31, 2021. At times when we have a goodwill balance, we are required to evaluate goodwill 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. Our reporting units for impairment testing are our operating segments. We determine 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, we 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. 2020 Triggering Event Assessment Due to the decline in the market price of our common stock and commodity prices in the first quarter of 2020, we lowered our expectations with respect to future activity levels in our contract drilling reporting unit. We performed a quantitative impairment assessment of our goodwill as of March 31, 2020. In completing the assessment, the fair value of our contract drilling operating segment was estimated using the income approach. The estimate of fair value required the use of significant unobservable inputs, representative of a Level 3 fair value measurement. The assumptions included discount rates, revenue growth rates, operating expense growth rates, and terminal growth rates. Based on the results of the goodwill impairment test as of March 31, 2020, impairment was indicated in our contract drilling reporting unit. We recognized an impairment charge of $395 million in the quarter ended March 31, 2020 associated with the impairment of all of the goodwill in our contract drilling reporting unit. We had no remaining goodwill balance as of December 31, 2020. 2019 Triggering Event Assessment Due to the decline in the market price of our common stock and commodity prices leading up to September 30, 2021, our results of operations for the quarter ended September 30, 2019 and our expectations of operating results in future periods, we lowered our expectations with respect to future activity levels in certain of our operating segments. We performed a quantitative impairment assessment of our goodwill as of September 30, 2019. In completing the assessment, the fair value of each reporting unit was estimated using the income approach. 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 assumptions included discount rates, revenue growth rates, operating expense growth rates, and terminal 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 we concluded that no impairment was indicated in our contract drilling reporting unit; however, impairment was indicated in our oilfield rentals and electrical controls and automation reporting units included in the other operations segment. We recognized an impairment charge of $17.8 million in 2019 associated with the impairment of all of the goodwill in our oilfield rentals and electrical controls and automation reporting units. In connection with our annual goodwill impairment assessment as of December 31, 2019, we determined based on an assessment of qualitative factors that it was more likely than not that the fair values of our reporting units were greater than the respective carrying amount. In making this determination, we considered the current and expected levels of commodity prices for oil and natural gas, which influence the overall level of business activity in our reporting units, as well as our 2019 operating results and forecasted operating results for the succeeding year. We also considered our overall market capitalization at December 31, 2019. Intangible Assets — In 2021, an intangible asset was recorded in our contract drilling operating segment with the acquisition of Pioneer. See Note 2 for additional information. Our 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 our intangible assets:
|  |  |  | Weighted Average |
|  | Segment |  | Useful Life |
|  |  |  | (in years) |
Customer relationships |  | Other operations |  |  | 7.00 |
Developed technology |  | Directional drilling |  |  | 10.00 |
Internal use software |  | Directional drilling |  |  | 5.00 |
Trade name |  | Contract drilling |  |  | 5.00 |
During 2021, we achieved certain internal advancements in our directional drilling technology that have rendered obsolete certain technology acquired as part of the MS Directional acquisition. Accordingly, we recorded a charge of $11.4 million to abandon these developed technology intangibles and certain related internal use software. 2021 Triggering Event Assessment Based on current commodity prices, our results of operations for the year ended December 31, 2021 and management’s expectations of operating results in future periods, we concluded that no triggering events occurred during the year ended December 31, 2021. Our expectations of future operating results were based on the assumption that activity levels in all segments and our other operations will remain relatively stable or improve in response to relatively stable or increasing oil prices. 2020 Triggering Event Assessment Due to the decline in the market price of our common stock and commodity prices in the first quarter of 2020, we lowered our expectations with respect to future activity levels in certain of our operating segments. We deemed it necessary to assess the recoverability of our contract drilling, pressure pumping, directional drilling and oilfield rentals asset groups as of March 31, 2020. The assessments of recoverability of the asset groups included the respective intangible assets, and no impairment was indicated. See Note 6 for additional information. After the assessment we performed in the first quarter of 2020, we concluded that no triggering events necessitating an impairment assessment of the intangible assets occurred throughout the remainder of 2020. 2019 Triggering Event Assessment Due to the decline in the market price of our common stock and commodity prices in 2019, our results of operations for the quarter ended September 30, 2019 and our expectations of operating results in future periods, we lowered our expectations with respect to future activity levels in certain of our operating segments. We deemed it necessary to assess the recoverability of our contract drilling, pressure pumping, directional drilling and oilfield rentals asset groups as of September 30, 2019. The assessments of recoverability of the asset groups included the respective intangible assets, and no impairment was indicated. See Note 6 for additional information. We concluded that no triggering events necessitating an impairment assessment of the intangible assets had occurred during the quarter ended December 31, 2019. The gross carrying amount and accumulated amortization of intangible assets as of December 31, 2021 and 2020 are as follows (in thousands):
|  | 2021 |  |  | 2020 |
|  | Gross Carrying |  |  | Accumulated |  |  | Net Carrying |  |  | Gross Carrying |  |  | Accumulated |  |  | Net Carrying |
|  | Amount |  |  | Amortization |  |  | Amount |  |  | Amount |  |  | Amortization |  |  | Amount |
Customer relationships |  | $ | 1,800 |  |  | $ | (814 | ) |  | $ | 986 |  |  | $ | 28,000 |  |  | $ | (26,757 | ) |  | $ | 1,243 |
Developed technology |  |  | 55,772 |  |  |  | (50,996 | ) |  |  | 4,776 |  |  |  | 55,772 |  |  |  | (27,515 | ) |  |  | 28,257 |
Internal use software |  |  | 1,428 |  |  |  | (515 | ) |  |  | 913 |  |  |  | 906 |  |  |  | (319 | ) |  |  | 587 |
Trade name |  |  | 907 |  |  |  | (45 | ) |  |  | 862 |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 59,907 |  |  | $ | (52,370 | ) |  | $ | 7,537 |  |  | $ | 84,678 |  |  | $ | (54,591 | ) |  | $ | 30,087 |
Amortization and impairment expense on intangible assets of approximately $24.0 million, $19.3 million and $17.9 million was recorded for the years ended December 31, 2021, 2020 and 2019, respectively, which included an $11.4 million impairment in 2021. The remaining amortization expense associated with finite-lived intangible assets is expected to be as follows (in thousands):
Year ending December 31, |  |  |
2022 |  | $ | 1,405 |
2023 |  |  | 1,405 |
2024 |  |  | 1,405 |
2025 |  |  | 1,354 |
2026 |  |  | 1,078 |
Thereafter |  |  | 890 |
Total |  | $ | 7,537 |

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