Business Segment and Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment and Geographic Information | Business Segment and Geographic Information We operate under two divisions, which form the basis for the two operating segments we report: the Completion and Production segment and the Drilling and Evaluation segment. Intersegment revenue was immaterial. Our equity in earnings and losses of unconsolidated affiliates that are accounted for using the equity method of accounting are included within cost of services on our statements of operations, which is part of operating income of the applicable segment. The following table presents information on our business segments.
(a) Corporate and other includes certain expenses not attributable to a particular business segment such as costs related to support functions and corporate executives. Other items include amortization expense associated with intangible assets recorded as a result of our acquisitions in the third quarter of 2017 and merger-related costs and termination fee incurred during the nine months ended September 30, 2016. Receivables As of September 30, 2017, 43% of our gross trade receivables were from customers in the United States and 9% were from customers in Venezuela. As of December 31, 2016, 28% of our gross trade receivables were from customers in the United States and 15% were from customers in Venezuela. Other than the United States and Venezuela, no other country or single customer accounted for more than 10% of our gross trade receivables at these dates. We routinely monitor the financial stability of our customers, and employ an extensive process to evaluate the collectability of outstanding receivables. This process, which involves a high degree of judgment utilizing significant assumptions, includes analysis of our customers’ historical time to pay, financial condition and various financial metrics, debt structure, credit agency ratings, and production profile, as well as political and economic factors in countries of operations and other customer-specific factors. Venezuela. Although we have continued to experience delays in collecting payments on our receivables from our primary customer in Venezuela, our outstanding receivables are not disputed, and we continue to believe that they are collectable, with appropriate classification between short-term and long-term on our condensed consolidated balance sheets. In assessing the collectability of these receivables, we considered our historical collection experience with this customer, including both payments received prior to the industry downturn and continued collections at reduced levels during the downturn, and the fact that we have not historically had material write-offs relating to this customer. We also took into account the continued importance to the Venezuelan economy of oil production, our strategic relationship with this customer, our current activity levels and our current intention to continue to provide services to this customer, and an evaluation of this customer’s financial solvency. We also incorporated assumptions regarding potential future events based on market pricing data points. We are actively managing our relationship with this customer, with ongoing dialogue between key executives of both companies, including discussions regarding this customer's intention to pay long-aged trade receivables. In the second quarter of 2016, we exchanged $200 million of accounts receivables with our primary customer in Venezuela for an interest-bearing promissory note with a par value of the same amount. We recognized a pre-tax loss on the exchange of $148 million, representing the difference between the par value and fair market value of the note. We are accreting the carrying amount of the note to its par value and the carrying amount of this note is $116 million as of September 30, 2017. Although this customer has made all scheduled interest payments on the note, they did not make the first scheduled principal payment in the third quarter of 2017, which they informed us was due to banking complications. We continue to have discussions with this customer regarding the delay, and they have confirmed their intention to make the payment. While we believe that our customer will make all required payments on this note, further delays in payment on this promissory note or defaults on the customer's indebtedness to other parties may lead to a default on this promissory note. This would result in an impairment charge on the existing carrying amount of this note and potentially further charges on other receivables with this customer, which could have a material adverse effect on our consolidated financial statements. In the second quarter of 2017, we made a decision to exchange an additional $375 million of outstanding accounts receivable with this customer for an interest-bearing promissory note with a par value of the same amount. We recognized a pre-tax loss of $262 million for a fair market value adjustment related to this exchange within "Impairments and other charges" on our condensed consolidated statements of operations. While this exchange has not been finalized, we continue to pursue this transaction in accordance with applicable law. Although we recognized fair value adjustments, we intend to hold both notes to maturity and collect the entire principal amounts. We do not intend to accept further notes as payment if offered, and we will continue to monitor political and economic conditions in Venezuela. We have collected over $600 million on receivables in Venezuela since this industry downturn began in late 2014. We believe our collectability assumptions to be reasonable according to the current facts and circumstances. However, differences in actual experience or changes in facts and circumstances may materially affect our financial position or results of operations. Our assumptions and related judgments are sensitive to the political and economic conditions in Venezuela. If conditions in Venezuela worsen or if low commodity prices persist for an extended period of time, we may be required to record adjustments to our receivables balance. Our financial results can be affected by adjustments to these receivables, including any allowance for bad debts, actual write-offs of uncollectable amounts that differ from estimated amounts, fair value adjustments on existing receivables, and potential defaults on the promissory notes we hold. Subsequent to the fair market value adjustment associated with the additional promissory note exchange, our total outstanding net trade receivables in Venezuela were $429 million as of September 30, 2017, compared to $610 million as of December 31, 2016. The majority of our Venezuela receivables are United States dollar-denominated receivables. Of the $429 million of receivables in Venezuela as of September 30, 2017, $267 million have been classified as long-term and included within “Other assets” on our condensed consolidated balance sheets. See Note 7 for additional information about the promissory notes and Part II, Item 1(a), “Risk Factors” for additional information on risks associated with our operations in Venezuela, including recent sanctions imposed in Venezuela which could delay our ability to execute the promissory note exchange. |