Quarterly report pursuant to Section 13 or 15(d)

Property, Plant and Equipment

v3.20.2
Property, Plant and Equipment
 9 Months Ended
Sep. 30, 2020
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment Property, Plant and Equipment     
Property, plant and equipment include the following (in thousands):
September 30, December 31,
Useful Life 2020 2019
Pressure pumping equipment
3-5 years
 $ 217,980  $ 216,627 
Drilling rigs and related equipment
3-15 years
 114,132  117,783 
Machinery and equipment
7-20 years
 172,567  190,221 
Buildings(a)
15-39 years
 47,307  47,859 
Vehicles, trucks and trailers
5-10 years
 113,057  135,724 
Coil tubing equipment
4-10 years
 8,541  29,438 
Land N/A 13,417  13,687 
Land improvements
15 years or life of lease
 10,135  10,135 
Rail improvements
10-20 years
 13,802  13,802 
Other property and equipment(b)
3-12 years
 18,674  18,880 
729,612  794,156 
Deposits on equipment and equipment in process of assembly(c)
3,252  6,627 
732,864  800,783 
Less: accumulated depreciation(d)
462,240  448,011 
Total property, plant and equipment, net $ 270,624  $ 352,772 
a.    Included in Buildings at September 30, 2020 and December 31, 2019 are costs of $7.6 million and $6.7 million, respectively, related to assets under operating leases.
b.    Included in Other property and equipment at each of September 30, 2020 and December 31, 2019 are costs of $6.0 million and $6.5 million, respectively, related to assets under operating leases.
c.    Deposits on equipment and equipment in process of assembly represents deposits placed with vendors for equipment that is in the process of assembly and purchased equipment that is being outfitted for its intended use. The equipment is not yet placed in service.
d.    Includes accumulated depreciation of $4.8 million and $3.5 million at September 30, 2020 and December 31, 2019, respectively, related to assets under operating leases.

Impairment
Oil prices declined significantly in March 2020 as a result of geopolitical events that increased the supply of oil in the market as well as effects of the COVID-19 pandemic. As a result, the Company determined that it was more likely than not that the fair value of certain of its oilfield services assets were less than their carrying value. Therefore, the Company performed an interim impairment test. As a result of the test, the Company recorded the following impairments to its fixed assets during the first quarter of 2020 (in thousands):


Water transfer equipment $ 4,203 
Crude oil hauling equipment 3,275 
Coil tubing equipment 2,160 
Flowback equipment 1,514 
Rental equipment 1,308 
Other equipment 437 
Total impairment of other long-lived assets $ 12,897 

The Company measured the fair values of these assets using significant unobservable inputs (Level 3) based on an income approach. The Company did not record any impairment of other long-lived assets during the three months ended September 30, 2020.

Due to market conditions, the Company temporarily shutdown its flowback operations beginning in the third quarter of 2019. As a result, the Company recognized $3.3 million of impairment charges, which is included in impairment of long-lived assets on the unaudited condensed consolidated statements of comprehensive income (loss), for its flowback property and equipment during the three months ended September 30, 2019. Estimated fair value for these assets was determined using significant unobservable inputs (Level 3) based on an income approach.

Disposals
Proceeds from customers for horizontal and directional drilling services equipment damaged or lost down-hole are reflected in revenue with the carrying value of the related equipment charged to cost of service revenues and are reported as cash inflows from investing activities in the unaudited condensed consolidated statement of cash flows. For the nine months ended September 30, 2020 and 2019, proceeds from the sale of equipment damaged or lost down-hole were $0.7 million and a nominal amount, respectively, and gains on sales of equipment damaged or lost down-hole were $0.7 million and a nominal amount, respectively.

Proceeds from assets sold or disposed of as well as the carrying value of the related equipment are reflected in “other, net” on the unaudited condensed consolidated statement of comprehensive income (loss). For the nine months ended September 30, 2020 and 2019, proceeds from the sale of equipment were $4.9 million and $2.5 million, respectively, and gains (losses) from the sale or disposal of equipment were $0.2 million and ($0.2) million, respectively.

Depreciation, depletion, amortization and accretion
A summary of depreciation, depletion, amortization and accretion expense is below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Depreciation expense $ 22,305  $ 28,123  $ 71,645  $ 84,288 
Depletion expense 545  1,339  638  3,285 
Amortization expense 253  277  761  844 
Accretion expense 29  52  86  95 
Depreciation, depletion, amortization and accretion $ 23,132  $ 29,791  $ 73,130  $ 88,512