Sidewinder Merger

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Sidewinder Merger

Sidewinder Merger

We completed the merger with Sidewinder Drilling LLC (“Sidewinder”) on October 1, 2018 (the “Sidewinder Merger”).

During the three and nine months ended September 30, 2019 we recorded $0.3 million and $2.7 million, respectively, of merger-related expenses comprised primarily of severance, professional fees and various other integration related expenses. There were no merger expenses recorded during the three and nine months ended September 30, 2020.

Certain intangible liabilities were recorded in connection with the Sidewinder Merger for drilling contracts in place at the closing date of the transaction that had unfavorable contract terms as compared to then current market terms for comparable drilling rigs. The intangible liabilities were amortized to operating revenues over the remaining underlying contract terms. As of June 30, 2019, $1.1 million of intangible revenue was recognized as a result of this amortization and the intangible liabilities were fully amortized.    

In addition, at the time of consummation of the Sidewinder Merger, Sidewinder owned various mechanical rig assets and related equipment (the "Mechanical Rigs") located principally in the Utica and Marcellus plays. As these assets are not consistent with ICD’s core strategy or geographic focus, ICD agreed that these assets can be disposed of, with the Sidewinder unitholders receiving the net proceeds. As a result of this arrangement, on the merger date, we recorded the fair value of the Mechanical Rigs less costs to sell, as assets held for sale, with an offsetting liability in contingent consideration. Subsequently, a majority of these assets were sold at auction for substantially less than the appraised fair values on the merger date. As a result, the contingent consideration liability was reduced by the appraised fair values on the merger date and the proceeds were recorded as merger consideration payable to an affiliate on our consolidated balance sheets.