XML 25 R10.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Impairments and Other Charges | 12 Months Ended
--- | ---
Dec. 31, 2016
Impairments and Other Charges |
Impairments and Other Charges | Note 3 Impairments and Other Charges The components of impairments and other charges are provided below:
|  | Year Ended December 31, |
|  | 2016 |  | 2015 |  | 2014 |
|  | (In thousands) |
Tangible Assets & Equipment: |  |  |  |  |  |  |  |  |  |
Provision for retirement of assets |  | $ | 69,072 |  | $ | 65,633 |  | $ | 393,962 |
Impairment of long-lived assets |  |  | 216,355 |  |  | 74,464 |  |  | 217,627 |
Subtotal |  |  | 285,427 |  |  | 140,097 |  |  | 611,589 |
Goodwill & Intangible Assets: |  |  |  |  |  |  |  |  |  |
Goodwill impairments |  |  | — |  |  | — |  |  | 356,605 |
Intangible asset impairment |  |  | — |  |  | — |  |  | 29,942 |
Subtotal |  |  | — |  |  | — |  |  | 386,547 |
Other Charges: |  |  |  |  |  |  |  |  |  |
Other-than-temporary impairment |  |  | 219,737 |  |  | 180,591 |  |  | 6,974 |
Provision for International operations |  |  | — |  |  | 48,279 |  |  | — |
Total |  | $ | 505,164 |  | $ | 368,967 |  | $ | 1,005,110 |
For the year ended December 31, 2016 Throughout the first half of 2016, we continued to experience decreased demand for our services as well as increased pricing pressure. Although there was a slight uptick in activity over the latter half of 2016, management evaluated our existing rig fleet and identified asset classes that may not fully participate in the next drilling cycle given the current requirements of many drilling programs and other factors. This resulted in both the provision for retirement of assets and tangible asset impairments. The majority of the remaining charges are attributable to our previous investment in CJES, which experienced severe financial and operational difficulties in their business, and ultimately commenced voluntarily cases under chapter 11 of the U.S. Bankruptcy code in July 2016. These charges are outlined below. Tangible Assets and Equipment The following table summarizes the 2016 retirement and impairment charges for tangible assets and equipment by reportable operating segment:
|  | Provision for |  | Tangible Asset |  |  |
|  | Retirements |  | Impairments |  | Total
Drilling & Rig Services: |  |  |  |  |  |  |  |  |
U.S. |  | $ | 25,365 |  | $ | 163,182 |  | $ | 188,547
Canada |  |  | 19,573 |  |  | 1,125 |  |  | 20,698
International |  |  | 23,275 |  |  | 12,721 |  |  | 35,996
Rig Services |  |  | 859 |  |  | 15,343 |  |  | 16,202
Other |  |  | — |  |  | 23,984 |  |  | 23,984
Total |  | $ | 69,072 |  | $ | 216,355 |  | $ | 285,427
During 2016, we retired certain classes of rigs and rig components in our U.S., Canada and International drilling operating segments and reduced their carrying value to their estimated salvage value. As a result of the sustained decline in oil and gas prices and the extended period of reduced demand for some of our legacy asset classes, we retired 24 of our remaining SCR rigs within the U.S. drilling operating segment. We utilized some of the parts on these retired rigs to enhance and upgrade other existing rigs in our fleet. Additionally, we retired 7 older rigs in our Canada Drilling operating segment. Within our International drilling operating segment, we also retired various older, smaller and in some cases functionally obsolete rigs and yard assets. In 2016, we also recorded impairments totaling $216.4 million primarily comprised of $163.2 million for underutilized rigs in our U.S. Drilling operating segment as well as $12.7 million in our International drilling operating segment. These impairments were deemed necessary due to the lack of future contractual opportunities because of the nature of the rigs being lower horsepower and size than our newer rigs, which limits the rigs functional capabilities of drilling many of the more complex wells in the current environment. Included in the other amount was an impairment of $22.4 million that we recognized related to our retained interest in the oil and gas properties located on the North Slope of Alaska to reduce the carrying value to fair value, as a result of the sustained decline in oil prices. The balance of the impairment charge primarily relates to obsolete inventory and various rig-related equipment within our Rig Services operating segment. Other-than-temporary impairment During 2016, we recognized impairment charges associated with our CJES holdings in the amount of $216.2 million resulting from declines in the fair value of our investment including other than temporary impairment charges of $192.4 million. Additionally, we recorded a charge related to a reserve of certain other amounts associated with our CJES holdings, including affiliate receivables of $23.8 million. The balance of the charge was related to an impairment of an equity security during the third quarter of 2016. As the trading price of the security remained below our cost basis for an extended period, we determined the investment was other than temporarily impaired and it was appropriate to write down the investment’s carrying value to its current estimated fair value. See Note 9—Investments in Unconsolidated Affiliates. For the year ended December 31, 2015 Throughout 2015, our industry continued to experience depressed oil prices, which led to considerable reductions in capital spending by some of our customers and has diminished demand for our drilling services. The impact of the industry downturn on our business activity and future outlook resulted in impairments and retirement provisions of approximately $140.1 million, an other-than-temporary impairment on our investment in CJES of $180.6 million, and the provision for International operations of $48.3 million during 2015 as discussed below. Tangible Assets and Equipment The following table summarizes the 2015 retirement and impairment charges for tangible assets and equipment by reportable operating segment:
|  | Provision for |  | Tangible Asset |  |  |  |
|  | Retirements |  | Impairments |  | Total |
Drilling & Rig Services: |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 47,247 |  | $ | — |  | $ | 47,247 |
Canada |  |  | 7,547 |  |  | — |  |  | 7,547 |
International |  |  | 10,839 |  |  | 52,479 |  |  | 63,318 |
Rig Services |  |  | — |  |  | 3,879 |  |  | 3,879 |
Other |  |  | — |  |  | 18,106 |  |  | 18,106 |
Total |  | $ | 65,633 |  | $ | 74,464 |  | $ | 140,097 |
During 2015, we retired some rigs and rig components in our U.S., Canada and International drilling operating segments and reduced their carrying value to their estimated salvage value. Due to market conditions and resulting competitive drilling market, we experienced a decline in utilization of our remaining legacy rigs. Accordingly, we retired roughly half of our fleet of SCR rigs within the U.S. Drilling operating segment, continuing to market the remaining 47 of our most competitive assets within this group. Additionally, we retired various yard assets within our International operating segment as well as rig-related equipment in our Canada operating segment. In 2015, we also recorded impairments totaling $74.5 million primarily comprised of $52.5 million for an inactive jackup rig in our International operating segment. We recognized an impairment of $15.1 million to our retained interest in the oil and gas properties located on the North Slope of Alaska to reduce the carrying value to fair value, as a result of the sustained decline in oil prices. The balance of the impairment charge primarily relates to obsolete inventory within our Rig Services operating segment. Other-than-temporary impairment During the third quarter of 2015, we determined the carrying value of our investment in CJES was other than temporarily impaired which resulted in an impairment charge of $180.6 million. The charge directly resulted from reduced activity levels driven by lower customer demand stemming from lower oil prices coupled with the further pricing concessions required by the highly competitive environment. See Note 9—Investments in Unconsolidated Affiliates. Provision for International operations During 2015, we recognized $25.4 million related to assets and receivables impacted by the degradation of the overall country economy and financial situation in Venezuela, which has been adversely affected by the downturn in oil prices, primarily comprised of a loss of $10.0 million related to the remeasurement of our net monetary assets denominated in local currency from the official exchange rate of 6.3 Bolivares per US dollar to the SIMADI exchange rate which was 199 Bolivares per US dollar as of September 30, 2015 and $15.4 million related to the write-off of a receivable balance. The balance of this provision represents an obligation associated with the decision to exit a non-core business line in another country within the region of $22.9 million. For the year ended December 31, 2014 During the latter part of 2014, oil prices fell sharply and remained depressed into 2015. As a result of the reduced price of oil, we experienced a decline in the demand for drilling and completion services as customers reduced or curtailed their capital spending and drilling activities. The reduction in demand for drilling services, coupled with the increased supply of newly built high specification rigs in the drilling market, has led to a highly competitive market for all rigs, including high specification rigs. This has accelerated the under-utilization of our legacy rig fleet (non AC rigs). We have also experienced downward pricing pressure for our services. Due to the aforementioned factors, we recorded impairments and retirement provisions of approximately $1 billion during 2014, as detailed in the table above. The impairments and retirement provision were comprised of approximately $611.6 million in charges related to drilling rigs and rig equipment and $386.5 million in impairments to our goodwill and intangible assets. Tangible Assets and Equipment The following table summarizes the 2014 retirement and impairment charges for tangible assets and equipment by operating segment:
|  | Provision for |  | Tangible Asset |  |  |  |
|  | Retirements |  | Impairments |  | Total |
Drilling & Rig Services: |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 271,141 |  | $ | 137,000 |  | $ | 408,141 |
Canada |  |  | 24,211 |  |  | 10,176 |  |  | 34,387 |
International |  |  | 56,472 |  |  | 70,451 |  |  | 126,923 |
Rig Services |  |  | 42,138 |  |  | — |  |  | 42,138 |
Total |  | $ | 393,962 |  | $ | 217,627 |  | $ | 611,589 |
The majority of the 2014 charges from drilling rigs and rig equipment is due to the U.S. lower 48 legacy rig fleet. Given the sharp decline in crude oil prices and the resulting impact on our customers’ spending programs that we have experienced, and the disproportionate impact of the reduced activity that we believe our legacy rig fleet will absorb, we have retired approximately 25 mechanical rigs and impaired our fleet of SCR rigs, including retirements of rig related equipment associated with a reduced overall size of our working rig fleet. Also included in the 2014 charges for our U.S. drilling rigs and rig equipment is a retirement provision of approximately $54.4 million for our Gulf of Mexico jackup fleet. This market has been challenged for the past several years and we believe the drop in oil prices will exacerbate the lack of demand for these rigs. The majority of these rigs would require substantial amounts of capital in order for them to be operable again. The balance of the drilling rigs and rig equipment charges relate to our coil tubing drilling rig fleet in Canada and various under-utilized rigs or asset classes throughout our International and Canada drilling fleets. We also recognized an impairment charge related to obsolete inventory within our Rig Services operating segment. Goodwill and Intangible Assets During 2014, we recognized an impairment of goodwill totaling $356.6 million, the majority of which was for the remaining goodwill balance of $335.0 million in our Completion Services operating segment related to the acquisition of Superior Well Services, Inc. in 2010. The value attributable to the Merger with CJES declined sharply beginning in the fourth quarter of 2014, with a drop in the market price of CJES's stock and the agreed upon reduction to the amount of cash we expect to receive from this transaction. The combination of these events and a sharp decline in the market price of our stock, led us to believe that a triggering event had occurred in the fourth quarter of 2014, and we performed an impairment test on our remaining goodwill balances. We determined that our Completion Services goodwill balances should be fully impaired. The balance of the impairment relates to $21.6 million in goodwill related to Ryan Directional Services, Inc., our directional drilling operations included in our Rig Services operating segment. The decline in oil prices and the impact it has had on our businesses, along with the lack of certainty surrounding an eventual recovery, led us to impair these goodwill balances. Additionally, during 2014, we recognized an impairment of $29.9 million primarily related to various customer relationships within our Completion & Production Services and Rig Services operating segments. Other‑than‑temporary impairment During 2014, we recorded an other‑than‑temporary impairment of $7.0 million related to an equity security. Because the trading price of this security remained below our cost basis for an extended period, we determined the investment was other than temporarily impaired and it was appropriate to write down the investment’s carrying value to its current estimated fair value.

X
- References No definition available. + Details
Name: | nbr_ImpairmentsAndOtherChargesAbstract
Namespace Prefix: | nbr_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Entire disclosure of impairments and other charges of the reporting entity. + References No definition available. + Details
Name: | nbr_ImpairmentsAndOtherChargesTextBlock
Namespace Prefix: | nbr_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration