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Asset Impairment

9 Months Ended

Sep. 30, 2020

8. Asset Impairment

The following table summarizes the amounts reflected on the line “Asset impairment” in the Condensed Consolidated Statements of Operations:


	September 30,
Description	2020
	(In thousands)
Coal lands and mineral rights	$	33,197
Plant and equipment		43,197
Deferred development		50,527
Equity Investment		36,167
	$	163,088

The Company’s thermal coal segments have experienced reduced demand as a result of sustained low natural gas pricing, reduced utilization and retirement of coal-fired power plants, the increased use of renewable energy sources, and the impact of COVID-19. The reduced demand has led to lower production levels, higher unit costs, and lower realized prices, which have contributed to operating losses at certain of the mine complexes. Further, on September 29, 2020 the U.S. District Court upheld the FTC’s decision to block the Company’s proposed joint venture. These conditions have resulted in changes to the Company’s expectations for projected future volume levels and the overall longevity of the mines. During the third quarter of 2020, the Company determined that these conditions represented indicators of impairment with respect to certain of its long-lived assets or asset groups. As a result, the Company recorded impairment charges during the three and nine months ended September 30, 2020 of $51.8 million related to the Coal Creek Mine within the Powder River Basin Mining segment, $33.5 million related to the Viper Mine within the Other Thermal Segment, $41.6 million related to the West Elk Mine within the Other Thermal segment and $36.2 million related to the Company’s equity method investment in Knight Hawk Holdings, LLC. The impairment charges were based upon

estimated discounted cash flows that were based on estimates of future sales volumes, coal prices for unpriced volumes, production costs and a risk-adjusted cost of capital. These estimates generally constitute unobservable Level 3 inputs under the fair value hierarchy.