Property, Plant and Equipment

12 Months Ended

Dec. 31, 2019

Disclosure Of Property Plant And Equipment [Abstract]

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

	2019			2018
Cost	$	6,670,979		$	6,937,062
Accumulated depreciation		(3,921,516	)		(3,898,450	)
	$	2,749,463		$	3,038,612
Rig equipment		2,510,505			2,745,172
Rental equipment		34,437			43,992
Other equipment		38,604			52,195
Vehicles		7,796			12,702
Buildings		56,834			65,561
Assets under construction		67,740			84,561
Land		33,547			34,429
	$	2,749,463		$	3,038,612

Cost

	Rig Equipment			Rental Equipment			Other Equipment			Vehicles			Buildings			Assets Under Construction			Land			Total
Balance, December 31, 2017	$	6,034,166		$	148,011		$	244,950		$	43,201		$	127,385		$	102,035		$	33,886		$	6,733,634
Additions		7,013			—			347			—			569			106,647			—			114,576
Disposals		(32,153	)		(18,227	)		(59,865	)		(228	)		(3,663	)		—			(893	)		(115,029	)
Reclassifications		127,668			—			507			—			—			(128,175	)		—			—
Reclassification to assets held for sale		(135,398	)		—			—			—			—			—			—			(135,398	)
Effect of foreign currency exchange differences		321,240			679			5,351			2,483			4,036			4,054			1,436			339,279
Balance, December 31, 2018		6,322,536			130,463			191,290			45,456			128,327			84,561			34,429			6,937,062
Additions		18,436			—			976			224			415			139,835			—			159,886
Disposals		(69,945	)		(19,982	)		(4,708	)		(6,014	)		(58	)		—			—			(100,707	)
Reclassifications		150,674			—			1,197			—			—			(151,871	)		—			—
Asset decommissioning		(4,364	)		—			—			—			—			—			—			(4,364	)
Effect of foreign currency exchange differences		(307,954	)		(174	)		(3,436	)		(1,160	)		(2,507	)		(4,785	)		(882	)		(320,898	)
Balance, December 31, 2019	$	6,109,383		$	110,307		$	185,319		$	38,506		$	126,177		$	67,740		$	33,547		$	6,670,979

Accumulated Depreciation

	Rig Equipment			Rental Equipment			Other Equipment			Vehicles			Buildings			Assets Under Construction		Land		Total
Balance, December 31, 2017	$	3,210,384		$	87,832		$	178,390		$	26,921		$	56,283		$	—	$	—	$	3,559,810
Depreciation expense		335,215			9,418			15,993			4,820			8,126			—		—		373,572
Disposals		(28,399	)		(11,249	)		(59,857	)		(220	)		(3,161	)		—		—		(102,886	)
Reclassification to assets held for sale		(115,740	)		—			—			—			—			—		—		(115,740	)
Effect of foreign currency exchange differences		175,904			470			4,569			1,233			1,518			—		—		183,694
Balance, December 31, 2018		3,577,364			86,471			139,095			32,754			62,766			—		—		3,898,450
Depreciation expense		289,056			7,473			13,023			3,521			7,663			—		—		320,736
Disposals		(33,929	)		(17,933	)		(3,274	)		(4,768	)		(58	)		—		—		(59,962	)
Asset decommissioning		(3,518	)		—			—			—			—			—		—		(3,518	)
Reversal of impairment of property, plant and equipment		(5,810	)		—			—			—			—			—		—		(5,810	)
Effect of foreign currency exchange differences		(224,285	)		(141	)		(2,129	)		(797	)		(1,028	)		—		—		(228,380	)
Balance, December 31, 2019	$	3,598,878		$	75,870		$	146,715		$	30,710		$	69,343		$	—	$	—	$	3,921,516

(a)

Asset Disposals

In addition to those items below, through the completion of normal course business operations, the Corporation sold used assets incurring gains or losses on disposal.

Mexico

In the second quarter of 2019, Precision concluded the sale of its Mexico-based drilling rigs and ancillary equipment, contained within its Contract Drilling Services segment, for total proceeds of US$48 million. Precision recognized a gain on asset disposal of US$24 million and reversed US$4 million of previous impairment charges.

Snubbing

In the second quarter of 2019, Precision disposed of certain snubbing units and related equipment, contained within the Completion and Production Services segment, for proceeds of $8 million resulting in a gain on asset disposal of $3 million.

(b)

Impairment Test

Precision reviews the carrying value of its long-lived assets at each reporting period for indications of impairment. The Corporation did not identify an indication of impairment within the Corporation’s CGUs as at December 31, 2019. Accordingly, no impairment tests were performed.

For the year ended December 31, 2018, impairment charges of $208 million were recorded against goodwill. Refer to Note 9 for discussion of impairment tests performed.

(c)

Decommissioned Drilling Rigs

In 2019, the Corporation incurred a $20 million (2018 – nil) loss on the decommissioning of certain drilling and ancillary equipment, contained within the Contract Drilling Services segment, that no longer met the Corporation’s High Performance technology standards. The decommissioning charge included those drilling rigs that were previously held for sale.

(d)

Change in Rig Components

In the fourth quarter of 2019, Precision performed its annual review of estimated useful lives, residual values and methods and components of depreciation of property, plant and equipment. Due to changes in the timing, nature and complexity of certain rig recertifications, the Corporation determined the associated costs represent a separate component of property, plant and equipment. This change has been recognized prospectively and is expected to increase the Corporation’s 2020 depreciation expense by approximately $3 million.