Property, Plant and Equipment

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment

Property, Plant and Equipment

Note 4: Property, Plant and Equipment

Property, plant and equipment are presented at cost net of accumulated depreciation and consist of the following:

December 31,	2016			2015
(in thousands)
Land	$	19,070		$	19,056
Buildings and leasehold improvements		142,741			142,715
Operating equipment		1,432,007			1,440,508
Computer software		22,050			19,650
Furniture and fixtures		8,056			8,043
Vehicles		469,570			480,899
Construction in progress		—			6
Gross property, plant and equipment		2,093,494			2,110,877
Less: accumulated depreciation		(1,595,508	)		(1,422,542	)
Net property, plant and equipment	$	497,986		$	688,335

Depreciation expense was $220.6 million in 2016, $274.4 million in 2015, and $233.4 million in 2014, and includes amounts recorded as costs of revenues and inventory. There were no capital leases outstanding as of December 31, 2016 and December 31, 2015. The Company had accounts payable for purchases of property and equipment of $3.4 million as of December 31, 2016, $2.4 million as of December 31, 2015, and $38.5 million as of December 31, 2014.

Effective January 1, 2015, the Company reassessed the useful life of a specific component of its pressure pumping equipment. Prior to January 1, 2015, this component was recorded as property, plant and equipment and depreciated over an expected useful life of 18 months. As a result of this reassessment, the Company concluded that this component is no longer a long-lived asset, but instead a consumable supply inventory item. Accordingly, effective January 1, 2015, the cost of this component was expensed as repairs and maintenance as part of cost of revenues at the time of installation. Management deemed the change preferable because it more closely reflects the pattern of consumption of this component as a result of continual increases in wear and tear resulting from harsher geological environments.

This change was accounted for as a change in accounting estimate effected by a change in accounting principle. The net impact of this change in accounting estimate effected by a change in accounting principle on operating income and net income is not material. The change has resulted in an increase in the cost of revenues of $41,919,000 during 2015, while loss on dispositions and depreciation expense relating to this component decreased by a comparable amount during the period. Additionally, due to the change in accounting estimate effected by a change in accounting principle, purchases and deployment of this component will no longer be reflected as a capital expenditure under the investing activities section in the consolidated statement of cash flows, but instead will be reflected within cash flows from operating activities. The remaining net book value of these components at December 31, 2014 was $16,406,000 and was depreciated over an estimated weighted average remaining useful life of approximately 12 months. Loss on disposition related to this component totaled $21,408,000 in 2014.