Property and Equipment

The following table presents the estimated useful lives and costs of our assets by class:



		As of December 31,
		2018		2017
	Lives	Cost (amounts in thousands)
Drilling rigs and equipment	3 - 25	$	590,148	$	594,743
Well servicing rigs and equipment	3 - 20	252,589		244,747
Wireline units and equipment	1 - 10	144,171		142,224
Coiled tubing units and equipment	1 - 7	25,689		18,141
Vehicles	3 - 10	50,317		47,932
Office equipment	3 - 10	11,606		12,717
Buildings and improvements	3 - 40	23,610		24,013
Property and equipment not yet placed in service	—	17,718		6,751
Land	—	2,367		2,367
		$	1,118,215	$	1,093,635

Capital Expenditures — Our capital expenditures were $72.9 million, $61.4 million and $32.6 million during the years ended December 31, 2018, 2017, and 2016, respectively, which includes $0.4 million, $0.4 million and $0.2 million, respectively, of capitalized interest costs incurred in connection with the construction of a new domestic drilling rig which we expect to deploy in early 2019, and the expansion of our coiled tubing and well servicing fleets in 2018 and 2017, respectively.

Capital expenditures during 2018 primarily related to various routine expenditures to maintain our fleets and purchase new support equipment, expansion of our coiled tubing and wireline fleets, capital projects to upgrade and refurbish certain components of our international and domestic drilling rigs and begin construction of one new-build drilling rig, and vehicle fleet upgrades in all domestic business segments. Capital expenditures during 2017 primarily related to the acquisition of 20 well servicing rigs and expansion of our wireline fleet, upgrades to certain domestic drilling rigs, routine capital expenditures necessary to deploy assets that were previously idle, and other new drilling equipment and trucks. Capital expenditures during 2016 consisted primarily of routine expenditures to maintain our drilling and production services fleets, and expenditures for equipment ordered in 2014 before the market slowdown.

Capital expenditures incurred for property and equipment not yet placed in service as of December 31, 2018 primarily related to approximately $8.0 million of costs for the construction of a new-build drilling rig, which is partially being constructed from spare components already in our fleet, various refurbishments and upgrades of drilling and production services equipment, and the purchase of other new ancillary equipment. At December 31, 2017, property and equipment not yet placed in service primarily related to routine refurbishments on one international drilling rig in preparation for its deployment in 2018, installments on the purchase of three wireline units and one coiled tubing unit, and scheduled refurbishments on drilling and production services equipment.

Gain/Loss on Disposition of Property — We recognized a net gain during the year ended December 31, 2018 of $3.1 million on the disposition of various property and equipment, primarily from the sale of drill pipe and collars, various coiled tubing equipment and fleet disposals, including the sale of five coiled tubing units, twelve wireline units, and two drilling rigs which were designated as held for sale. During 2017, we recognized a net gain of $3.6 million on the disposition of property and equipment, including sales of certain coiled tubing equipment and vehicles, as well as the loss of drill pipe in operation, for which we were reimbursed by the client, and the disposal of three cranes that were damaged. During 2016, we recognized a net gain of $1.9 million on the disposition of property and equipment, including the sale of three SCR drilling rigs and other drilling equipment, the disposal of excess drill pipe and the disposition of damaged components from one of our AC drilling rigs.

Assets Held for Sale — As of December 31, 2018, our consolidated balance sheet reflects assets held for sale of $3.6 million, which primarily represents the fair value of two domestic SCR drilling rigs, spare drilling equipment that would support these rigs and three coiled tubing units. As of December 31, 2017, our consolidated balance sheet reflects assets held for sale of $6.6 million, which primarily represents the fair value of three domestic SCR drilling rigs, one domestic mechanical drilling rig, spare drilling equipment that would support these rigs, two wireline units, one coiled tubing unit and other spare equipment.

During the years ended December 31, 2018, 2017 and 2016, we recognized impairment charges of $4.4 million, $1.9 million, and $12.8 million, respectively, to reduce the carrying values of assets which were classified as held for sale, to their estimated fair values, based on expected sales prices which are classified as Level 3 inputs as defined by ASC Topic 820, Fair Value Measurements and Disclosures.

Impairments — In accordance with ASC Topic 360, Property, Plant and Equipment, we monitor all indicators of potential impairments, and we evaluate for potential impairment of long-lived assets when indicators of impairment are present, which may include, among other things, significant adverse changes in industry trends (including revenue rates, utilization rates, oil and natural gas market prices, and industry rig counts). In performing an impairment evaluation, we estimate the future undiscounted net cash flows from the use and eventual disposition of the assets grouped at the lowest level that independent cash flows can be identified. We perform an impairment evaluation and estimate future undiscounted cash flows for each of our reporting units separately, which are our domestic drilling services, international drilling services, well servicing, wireline services and coiled tubing services segments. If the sum of the estimated future undiscounted net cash flows is less than the carrying amount of the asset group, then we determine the fair value of the asset group, and the amount of an impairment charge would be measured as the difference between the carrying amount and the fair value of the assets.

Due to lower than anticipated operating results in 2016 and 2017 and a decline in our projected cash flows for the coiled tubing reporting unit, we performed an impairment analysis of our coiled tubing long-lived assets at September 30, 2016 and again at June 30, 2017, which indicated that our projected net undiscounted cash flows associated with the coiled tubing reporting unit were in excess of the net carrying value of the assets at both dates and thus no impairment was present.

Due to adverse factors affecting our well servicing operations, including increased competition and labor shortages in certain well servicing markets, and lower than anticipated utilization, all of which contributed to a decline in our projected cash flows for the well servicing reporting unit, we performed an impairment analysis of this reporting unit at September 30, 2018. As a result of this analysis, we concluded that this reporting unit was not at risk of impairment because the sum of the estimated future undiscounted net cash flows for our well servicing reporting unit was significantly in excess of the carrying amount.

We used an income approach to estimate the fair value of our reporting units. The most significant inputs used in our impairment analysis include the projected utilization and pricing of our services, as well as the estimated proceeds upon any future sale or disposal of the assets, all of which are classified as Level 3 inputs as defined by ASC Topic 820, Fair Value Measurements and Disclosures.

The assumptions we use in the evaluation for impairment are inherently uncertain and require management judgment. Although we believe the assumptions and estimates used in our impairment analysis are reasonable, different assumptions and estimates could materially impact the analysis and resulting conclusions. If commodity prices remain at current levels for an extended period of time, or if the demand for any of our services decreases below what we are currently projecting, our estimated cash flows may decrease, and if any of the foregoing were to occur, we could incur impairment charges on the related assets.