During the third quarter of 2020, U.S. oilfield activity improved from the historic lows recorded in the second quarter. Earlier in 2020, the Company experienced drastic declines in oilfield drilling and completions, with revenues reflecting low levels not recorded by RPC or the industry for many years.

This unprecedented disruption was caused by the substantial decline in global demand for oil caused by the COVID-19 pandemic and subsequent mitigation efforts as well as macroeconomic events such as the geopolitical tensions between the Organization of Petroleum Exporting Countries and Russia, regarding limits on oil production. These factors resulted in a significant drop in oil prices and a substantial deterioration of the Company’s market capitalization. In response, the Company reduced headcount, furloughed employees and implemented compensation reductions for remaining active employees with the goal of adjusting its cost structure caused by low revenue levels. The Company determined these events constituted a triggering event that required a review of the recoverability of its long-lived assets and performed an interim goodwill impairment assessment as of March 31, 2020.

The Company used both income based and market based approaches to determine the fair value of its long-lived asset groups and its reporting units for goodwill impairment assessment. Under the income approach, the fair value for each of its asset groups and reporting units was determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company used internal forecasts, updated for recent events, to estimate future cash flows and terminal value calculation, which incorporates historical and forecasted trends, including an estimate of long-term future growth rates, based on its most recent views of the long-term outlook for each asset group and reporting units. For the market based valuation, the Company used comparable public company multiples. The selection of comparable businesses was based on the markets in which the asset groups and reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. Based on the concluded fair value of the asset groups, the Company measured and recorded an impairment loss that represents the amount by which the asset groups' carrying amounts exceeded their fair value. For purposes of the goodwill impairment assessment, the fair value of each reporting unit exceeded its net book value and therefore, goodwill was deemed to be not impaired.

The Company recorded the following pre-tax charges during the three and nine months ended September 30, 2020 and 2019, which are reflected in “Impairment and other charges” in the consolidated statements of operations:

^(1).Relates solely to the Technical Services segment and primarily includes pressure pumping and coiled tubing assets.

^(2).Includes interest costs related to leased assets that were impaired in the third and fourth quarters of 2019 and additional costs related to abandoned assets.

See Note 7 for details of impairment and other charges by segment.

The Company's operating losses narrowed in the third quarter of 2020 due to revenue increases and increased operational efficiency accruing from expense reduction measures, resulting from moderate industry activity improvement. We believe that oilfield activity will remain at current levels during the near term or until the industry gains some clarity regarding global oil supply and demand. This view informs our near-term strategy of minimal capital investment and continued expense scrutiny and if market conditions continue to deteriorate, including crude oil prices further declining and remaining at low levels for a sustained period of time, the Company may record further asset impairments, or an impairment of the carrying value of goodwill.