Property, Plant and Equipment

12 Months Ended

Dec. 31, 2020

Disclosure Of Property Plant And Equipment [Abstract]

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

	2020			2019
Cost	$	6,563,206		$	6,670,979
Accumulated depreciation		(4,090,523	)		(3,921,516	)
	$	2,472,683		$	2,749,463
Rig equipment		2,269,794			2,510,505
Rental equipment		27,359			34,437
Other equipment		27,318			38,604
Vehicles		4,978			7,796
Buildings		49,451			56,834
Assets under construction		60,572			67,740
Land		33,211			33,547
	$	2,472,683		$	2,749,463

Cost

	Rig Equipment			Rental Equipment			Other Equipment			Vehicles			Buildings			Assets Under Construction			Land			Total
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
Additions		10,375			—			350			—			—			50,810			—			61,535
Disposals		(78,028	)		(4,664	)		(3,990	)		(2,789	)		(3,053	)		—			—			(92,524	)
Reclassifications		55,322			—			521			—			—			(55,843	)		—			—
Effect of foreign currency exchange differences		(71,285	)		(619	)		(1,196	)		(367	)		(846	)		(2,135	)		(336	)		(76,784	)
Balance, December 31, 2020	$	6,025,767		$	105,024		$	181,004		$	35,350		$	122,278		$	60,572		$	33,211		$	6,563,206

Accumulated Depreciation

	Rig Equipment			Rental Equipment			Other Equipment			Vehicles			Buildings			Assets Under Construction		Land		Total
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
Depreciation expense		277,799			7,044			12,013			2,790			5,288			—		—		304,934
Disposals		(73,354	)		(4,631	)		(3,990	)		(2,782	)		(1,319	)		—		—		(86,076	)
Effect of foreign currency exchange differences		(47,350	)		(618	)		(1,052	)		(346	)		(485	)		—		—		(49,851	)
Balance, December 31, 2020	$	3,755,973		$	77,665		$	153,686		$	30,372		$	72,827		$	—	$	—	$	4,090,523

(a) Impairment Test

Precision reviews the carrying value of its long-lived assets for indications of impairment at the end of each reporting period. Due to the global economic slowdown and significant commodity price reductions in the first quarter of 2020, the Corporation identified indications of impairment in each of its CGU at March 31, 2020. Accordingly, the Corporation tested all CGUs for impairment as at March 31, 2020.

In performing its impairment tests, the Corporation used a discounted cash flow model. Projected cash flows covered a five-year period and were based on future expected outcomes taking into account existing term contracts, past experience and management’s expectation of future market conditions. The primary source of cash flow information was the Corporation’s budget and strategic plan, developed based on benchmark commodity prices and industry supply-demand fundamentals. At March 31, 2020, the Corporation completed impairment tests for each CGU and no impairment charges were identified.

At December 31, 2020, Precision reviewed each of its cash-generating units and did not identify indications of impairment and therefore, did not test its CGUs for impairment.

(b) Asset Disposals

Through the completion of normal course business operations, the Corporation sold used assets incurring gains or losses on disposal resulting in a gain on asset disposal of $12 million. For the period ended December 31, 2019, Precision recognized a $51 million gain on asset disposal which was mainly comprised by the following transactions.

Mexico

In 2019, Precision sold 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 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.

In 2019, Precision incurred a $20 million 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.

(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 was made prospectively.