Property, Plant and Equipment

12 Months Ended

Dec. 31, 2020

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Note 6.  Property, Plant and Equipment

December 31	2020		2019
(In millions)
Pipeline equipment (net of accumulated depreciation of $3,402 and $3,075)	$	8,368	$	8,229
Hotel properties (net of accumulated depreciation of $439 and $393)		1,083		839
Offshore drilling equipment (net of accumulated depreciation of $2,885) (a)				5,119
Other (net of accumulated depreciation of $688 and $721)		719		786
Construction in process		281		595
Property, plant and equipment	$	10,451	$	15,568

Depreciation expense and capital expenditures are as follows:

Year Ended December 31	2020				2019				2018
	Depre-		Capital		Depre-		Capital		Depre-		Capital
	ciation		Expend.		ciation		Expend.		ciation		Expend.
(In millions)
CNA Financial		56		25	$	64	$	26	$	76	$	99
Boardwalk Pipelines		361		415		348		418		346		487
Loews Hotels & Co		63		88		60		216		67		139
Corporate		74		90		70		53		59		48
Diamond Offshore (a)		119		52		356		345		332		222
Total	$	673	$	670	$	898	$	1,058	$	880		995

(a) Amounts presented for Diamond Offshore reflect the periods prior to deconsolidation. See Notes 2 and 20 for further discussion.

Capitalized interest related to the construction and upgrade of qualifying assets amounted to approximately $14 million, $18 million and $27 million for the years ended December 31, 2020, 2019 and 2018.

Asset Impairments

During the first quarter of 2020, five drilling rigs that had indicators of impairment were evaluated. Based on the assumptions and analysis at that time, it was determined that the carrying values of four of these rigs were impaired. The fair values of these rigs were estimated using multiple probability-weighted cash flow analyses, whereby the fair value of each rig was estimated based on a calculation of the rig’s future net cash flows. These calculations utilized significant unobservable inputs, including utilization and dayrate scenarios, as well as management’s assumptions related to future oil and gas prices. These fair value estimates were representative of Level 3 fair value measurements due to the significant level of estimation involved and the lack of transparency as to the inputs used. An aggregate asset impairment charge of $774 million ($408 million after tax and noncontrolling interests) was recorded for the year ended December 31, 2020 and is reported within Operating expenses and other on the Consolidated Statements of Operations.

During 2018, Diamond Offshore recorded an asset impairment charge of $27 million ($12 million after tax and noncontrolling interests) to recognize a reduction in fair value of the Ocean Scepter. Diamond Offshore estimated the fair value of the impaired rig using a market approach based on a signed agreement to sell the rig, less estimated costs to sell. This valuation approach is considered to be a Level 3 fair value measurement due to the level of estimation involved as the sale had not yet been completed at the time of the analysis.

Loews Hotels & Co evaluates properties with indications that their carrying amounts may not be recoverable. It was determined that the carrying values of one property and capitalized costs related to a potential development project in 2020, four properties in 2019 and two properties in 2018 were impaired. Loews Hotels & Co recorded aggregate impairment charges of $30 million ($22 million after tax), $99 million ($77 million after tax) and $22 million ($15 million after tax) for the years ended December 31, 2020, 2019 and 2018 and are reported within Operating expenses and other on the Consolidated Statements of Operations. These impairments reduced Property, plant and equipment by $30 million and $62 million in 2020 and 2019 and Other assets by $37 million in 2019.

Loews Hotels & Co utilizes an undiscounted probability-weighted cash flow analysis in testing the recoverability of its long-lived assets for potential impairment. Assumptions and estimates underlying this analysis include, among other things, (i) room revenue based on occupancy and average room rates, (ii) other revenue generated by the property, including food and beverage sales and ancillary services, as well as property specific revenue sources, (iii) operating expenses, including management and marketing fees and (iv) expenditures for repairs and refurbishments to maintain the asset’s value. When necessary, scenarios are developed using multiple assumptions of expected future events which Loews Hotels & Co assigns a probability of occurrence based on management’s expectations. This initial analysis results in a projected probability-weighted cash flow of the property, which is compared to the carrying value of the asset to assess recoverability. If the long-lived asset’s carrying value exceeds the undiscounted cash flows, Loews Hotels & Co compares the long-lived asset’s carrying value to fair value, estimating the fair value of the asset by discounting future cash flows using market participant assumptions or third-party indicators of fair value such as a recent independent appraisal. These calculations, at times, utilize significant unobservable inputs, including estimating the growth in the asset’s revenue and cost structure and are therefore considered Level 3 fair value measurements.