Impairment

12 Months Ended

Dec. 31, 2017

As deemed necessary based on events in 2017, 2016 and 2015, the Company analyzed various property, plant and equipment for impairment by comparing the carrying values of these assets to their estimated fair values. Estimated fair values of drilling, midstream, electrical transmission and other assets were determined in accordance with the policies discussed in Note 3.

Impairment consists of the following (in thousands):



	Successor				Predecessor
	Year Ended December 31, 2017		Period from October 2, 2016 through December 31, 2016		Period from January 1, 2016 through October 1, 2016		Year Ended December 31, 2015
Full cost pool ceiling limitation(1)(2)	$	—	$	319,087	$	657,392	$	4,473,787
Drilling assets(3)(4)	4,019		—		3,511		37,646
Electrical infrastructure assets(5)	—		—		55,600		—
Midstream assets(6)	—		—		1,691		7,148
Other(7)	—		—		—		16,108
	$	4,019	$	319,087	$	718,194	$	4,534,689

____________________

(1)

Impairment recorded in the Successor 2016 Period resulted from the application of fresh start accounting. Upon the application of fresh start accounting, the value of the Successor Company full cost pool was determined based upon forward strip oil and natural gas prices as of the Emergence Date. Because these prices were higher than the 12-month weighted average prices used in the full cost ceiling limitation calculation at December 31, 2016, the Successor Company incurred a ceiling test impairment.

(2)

Impairment recorded for the Predecessor Company in 2016 was due to full cost ceiling limitations recognized in each of the first three quarters of 2016. The impairments recorded in 2015 and the first two quarters of 2016 resulted primarily from the significant decrease in oil prices, and to a lesser extent, natural gas prices, that began in the latter half of 2014 and continued throughout 2015 and the first half of 2016. The impairment recorded in the third quarter of 2016 resulted primarily from downward revisions to forecasted reserves due to a decrease in projected Mid-Continent production volumes.


(3)	Impairment recorded in the year ended 2017 reflects the write-down of remaining drilling and oilfield services assets classified as held for sale to net realizable value.


(4)	Impairment recorded in the Predecessor 2016 Period and the year ended December 31, 2015, resulted from discontinued drilling operations in its Permian region which resulted in an impairment on certain drilling assets after determining their future use was limited.


(5)	Impairment in the Predecessor 2016 Period resulted from a decrease in projected Mid-Continent production volumes supporting the system’s usage.


(6)	Impairment in the Predecessor 2016 Period and the year ended December 31, 2015 resulted from the evaluation of certain midstream pipe inventory, natural gas compressors, gas treating plants and a carbon dioxide (“CO₂”) compressor station after determining that their future use was limited.

(7)

Impairment recorded on other assets in 2015, includes a $15.4 million impairment on property located in downtown Oklahoma City, Oklahoma to adjust the carrying value of the property to the agreed upon sales price for which it was later sold in 2016.