Impairments and Other Charges

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

The following table provides a reconciliation of our impairments and other charges:


	Year Ended December 31,
(in thousands)	2020		2019
Long lived asset impairments	$	88,697	$	—
Goodwill impairments	19,089		—
Inventory write-downs	5,281		5,266
Transaction costs	4,734		2,153
Field restructuring	351		—






Executive departure	—		843
Total impairments and other charges	$	118,152	$	8,262

Long-lived asset impairments - The reduction in demand for our services beginning in March 2020 for each of our businesses was an indicator that our long-lived assets could be impaired. Our impairment testing indicated that our Well Servicing segment long-lived assets were not recoverable. The estimated fair value of the Well Servicing segment assets was determined to be below its carrying value and as a result we recorded impairments of property and equipment totaling $86.0 million and write-downs of component parts inventory totaling $4.8 million as of March 31, 2020. As of December 31, 2020, we recorded an additional $2.5 million impairment of long-lived assets primarily related to certain real property yard and facility locations that we no longer use and are planning to dispose. For assets being disposed, fair value is determined based on expected sales proceeds, less cost to dispose. For long-lived assets being impaired, other than goodwill, fair value is determined using an income approach calculated by using forecasted revenues and probability weighted operating cash flows, estimating terminal values and associated growth rates, and discounting them using an estimate of the discount rate.

Goodwill impairments - The Company recorded goodwill of $19.1 million in connection with the acquisition of CJWS, which was allocated to our Well Servicing and Water Logistics reporting units. On March 31, 2020, due to the reduction in demand for our services, we determined that the fair value of the Well Servicing reporting unit was less than its carrying value, which resulted in a goodwill impairment of $10.6 million for this reporting unit. As part of our annual goodwill impairment test, we determined that the remaining fair value of the Water Logistics reporting unit was less than its carrying value, which resulted in a goodwill impairment of $8.5 million for this reporting unit. For goodwill, fair value is determined by using a combination of the income approach and the market approach. The income approach estimates the fair value by using forecasted revenues and operating cash flows, estimating terminal values and associated growth rates, and discounting them using an estimate of the discount rate, or expected return, that a market participant would have required as of the valuation date. The market approach involves the selection of the appropriate peer group companies and valuation multiples.

Inventory write-downs - In connection with the downturn in our business, we recorded a $4.8 million write-down of certain parts inventory in our Well Servicing segment in the first quarter of 2020. We also recorded a $5.3 million write-down of certain parts inventory in our Well Servicing segment during 2019 due to obsolescence.

Transaction costs - In response to the downturn in our business, and in connection with our plans to adjust our capital structure accordingly, we incurred $4.7 million of legal and professional consulting costs, including costs associated with the Exchange Offer. For further discussion of the Exchange Offer, see Note 4. "Indebtedness and Borrowing Facility."

Field restructuring costs - In 2020, we incurred $0.4 million of costs associated with yard closures in connection with our field restructuring initiative.

Executive departure - In 2019, we incurred $0.8 million in costs related to the departure of our Chief Executive Officer.