Note 7—Goodwill

Goodwill is tested for impairment annually in the fourth quarter, or more frequently if circumstances are indicative of potential impairment. The Company has identified four reporting units, of which only two, Chemicals and Logistics and Teledrift, have an unamortized goodwill balance at December 31, 2011.

During annual goodwill impairment testing in 2011, the Company first assessed qualitative factors to determine whether it was necessary to perform the two-step goodwill impairment test that the Company has historically used. The Company concluded that it was not more-likely-than-not that goodwill was impaired as of the fourth quarter of 2011, and therefore, further testing was not required. The Company's 2010 annual goodwill impairment testing did not identify impairment of goodwill in any reporting unit. During 2009, the periodic assessment of goodwill was performed due to continuing deterioration in global economies and in oil and gas industry conditions, and the declining financial performance of all reporting units. An impairment charge of $18.5 million was recognized for the Teledrift reporting unit in June 2009. No additional impairment of goodwill was identified during subsequent interim and annual testing during 2009.

In estimating the fair value of the Company's reporting units, management makes estimates and judgments regarding future cash flows and market valuations using a combination of income and market approaches. The income approach, specifically a discounted cash flow analysis, includes assumptions for discount rates, cash flow projections, growth rates and terminal value rates. Each assumption is reevaluated and updated at each testing date to take into consideration Company-specific risk factors from the perspective of a market participant.

The changes in the carrying value of goodwill for each reporting unit were as follows (in thousands):


	Chemicals and Logistics		Downhole Tool			Teledrift			Artificial Lift			Total
Balance at December 31, 2009:
Goodwill	$	11,610	$	43,009		$	46,396		$	5,861		$	106,876
Accumulated impairment losses		-		(43,009	)		(31,063	)		(5,861	)		(79,933	)

Goodwill balance, net		11,610		-			15,333			-			26,943
Activity during the year 2010:
Goodwill impairment		-		-			-			-			-
recognized		-		-			-			-			-
Balance at December 31, 2010:
Goodwill		11,610		43,009			46,396			5,861			106,876
Accumulated impairment losses		-		(43,009	)		(31,063	)		(5,861	)		(79,933	)

Goodwill balance, net		11,610		-			15,333			-			26,943
Activity during the year 2011:
Goodwill impairment
recognized		-		-			-			-			-
Balance at December 31, 2011:
Goodwill		11,610		43,009			46,396			5,861			106,876
Accumulated impairment losses		-		(43,009	)		(31,063	)		(5,861	)		(79,933	)

Goodwill balance, net	$	11,610	$	-		$	15,333		$	-		$	26,943