Mammoth Energy Services, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Impairments

Impairments

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

A summary of our impairments is as follows (in thousands):



	December 31,
	2018		2017		2016
Drilling rigs ^(a)	$	3,966	$	3,822	$	347
Flowback equipment ^(a)	—		—		1,385
Other property, plant and equipment ^(a)	307		324		139
Impairment of goodwill ^(b)	3,203		—		—
Impairment of intangible assets ^(b)	1,379		—		—
	$	8,855	$	4,146	$	1,871


a.	For the years ended December 31, 2018, 2017 and 2016, the Company recognized impairments of $4.3 million, $4.1 million and $1.9 million, respectively, to reduce the carrying value of certain assets which were deemed impaired based on future expected cash flows of the equipment. The Company measured impairment using significant unobservable inputs (Level 3) based on an income approach.

During the year ended December 31, 2018, the Company moved Cementing's equipment from the Utica shale to the Permian basin. As a result, the Company recognized impairment on Cementing's intangible assets, including goodwill, non-contractual customer relationships and trade name of $3.2 million, $1.0 million and $0.2 million, respectively. Additionally, the Company recognized impairment of trade name totaling $0.2 million related to the name change of Stingray Logistics to Silverback Energy. The Company measured Cementing's goodwill using an income approach, which provides an estimated fair value based on anticipated cash flows that are discounted using a weighted average cost of capital rate.

The assumptions used in the impairment evaluation for long-lived assets are inherently uncertain and require management’s judgment. A continued period of low oil and natural gas prices or continued reductions in capital expenditures by our customers would likely have an adverse impact on our utilization and the prices that we receive for our services. This could result in the recognition of future material impairment charges on the same, or additional, property and equipment if future cash flow estimates, based upon information then available to management, indicate that their carrying values are not recoverable.