| Impairments |
Impairments
A summary of our impairments is as follows:
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December 31, |
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2016 |
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2015 |
Flowback equipment (a)
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$ |
1,384,751 |
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$ |
— |
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Drilling rigs (a)
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347,547 |
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8,917,240 |
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Fluid storage equipment (a)
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— |
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957,218 |
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Other property, plant and equipment (a)
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138,587 |
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— |
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Impairment of long term contractual agreement (b)
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— |
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1,904,982 |
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Impairment of goodwill (c)
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— |
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88,247 |
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Impairment of intangible (d)
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— |
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256,666 |
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$ |
1,870,885 |
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$ |
12,124,353 |
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a. |
For the years ended December 31, 2016 and 2015, the Company recognized impairments of $1,870,885 and $9,874,458, respectively, to reduce the carrying value of certain assets which were classified as held for use, to their estimated fair values, based on expected sales prices. No impairments occurred during the year ended December 31, 2014. The Company impaired based on future expected cash flows using significant unobservable inputs (Level 3) based on an income approach.
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b. |
The Company impaired $1,904,982 of assets in 2015 related to prepaid assets pursuant to a purchase contract from a vendor. The impairment impacted the prepaid expenses and other non-current assets lines of the Consolidated Balance Sheet for $1,080,000 and $824,982, respectively.
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c. |
The Company determined that there was an indication of impairment present based on the results of the first step of the goodwill impairment test for the goodwill held at Energy Services and fully impaired the $88,247 balance.
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d. |
The Company terminated one customer relationship related to its amortizable intangible assets and impaired the remaining unamortized value of the intangible of that relationship.
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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.
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