Property And Equipment

3 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

A summary of property and equipment by classification is as follows:

(In thousands)	December 31, 2014			September 30, 2014
Drilling vessels and equipment	$	4,021,901		$	4,181,774
Construction work in progress	437,939			319,548
Drill pipe	40,141			31,265
Office equipment and other	35,842			35,566
Total cost	4,535,823			4,568,153
Less: Accumulated depreciation	(522,650		)	(601,125		)
Property and equipment, net	$	4,013,173		$	3,967,028

Asset Impairment

The Atwood Hunter was under contract until early in December 2014, and since the date that contract ended, we have been unable to obtain new work for this rig. Based on the current lack of contracting opportunities and the further deterioration of commodity prices, we determined that it was not likely to obtain additional work in the foreseeable future. Therefore in January 2015, we made the decision to scrap the rig. The Atwood Hunter was written down to its salvage value. We recorded a non-cash impairment charge of approximately $60.8 million ($56.1 million, net of tax, or $0.86 per diluted share), which is included in Asset Impairment on the Consolidated Statement of Operations for the three months ended December 31, 2014. This impairment charge includes write-downs of property and equipment of $48.0 million and $8.4 million for our inventory of material and supplies that was specific to the Atwood Hunter.

Sale of Assets

During December 2014, we completed the sale of our rig, the Atwood Southern Cross, for recycling. We received $2.1 million in proceeds and incurred related costs of $2.0 million. We recorded a loss of approximately $8.0 million ($7.1 million, net of tax, or $0.11 per diluted share), which is included in (Gain) Loss on Sale of Equipment on the Consolidated Statement of Operations for the three months ended December 31, 2014.

Construction Projects

As of December 31, 2014, we had expended approximately $418 million towards our two ultra-deepwater drillships under construction at the Daewoo Shipbuilding and Marine Engineering Co., Ltd. ("DSME") yard in South Korea. Total remaining firm commitments for these two drillships under construction were approximately $704 million at December 31, 2014.