Chesapeake Energy 2015 Annual Report Download - page 140

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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Oilfield Services Equipment. In 2014, we sold substantially all of our crude oil hauling assets for approximately
$44 million. We recorded a $23 million gain associated with the transaction. Also, in 2014, we sold 14 rigs for
approximately $14 million and recorded a $14 million loss.
Assets Held for Sale
We are continuing to pursue the sale of buildings and land located primarily in Oklahoma, West Virginia and the
Fort Worth, Texas area. Buildings and land are recorded within our other segment. These assets are being actively
marketed, and we believe it is probable they will be sold over the next 12 months. As a result, these assets are reflected
as held for sale as of December 31, 2015. Oil and natural gas properties that we intend to sell are not presented as
held for sale pursuant to the rules governing full cost accounting for oil and gas properties. As of December 31, 2015
and 2014, we had $95 million and $93 million, respectively, of buildings and land, net of accumulated depreciation,
classified as assets held for sale on our consolidated balance sheets.
17. Impairments
Impairments of Oil and Natural Gas Properties
On a quarterly basis, we analyze our unproved leasehold and transfer to proved properties leasehold that can
be associated with proved reserves, leasehold that expired in the quarter and leasehold that is no longer part of our
development strategy and will be abandoned. As commodity prices have decreased significantly over the past 12
months, we transferred, in 2015, noncore unproved leasehold in all of our operating areas having a cost of approximately
$1.9 billion that would not be a part of our development strategy going forward.
Our proved oil and natural gas properties are subject to quarterly full cost ceiling tests. Under the ceiling test,
capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal
to the sum of the present value of estimated future net revenues (adjusted for cash flow hedges) less estimated future
expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects.
Estimated future net revenues for the quarterly ceiling limit are calculated using the average of commodity prices on
the first day of the month over the trailing 12-month period. During 2015, capitalized costs of oil and natural gas
properties exceeded the ceiling, resulting in an impairment in the carrying value of our oil and natural gas properties
of $18.238 billion. During 2015, cash flow hedges which related to future periods, increased the ceiling test impairment
by $176 million. Based on the first-day-of-the-month prices we have received over the 11 months ended February 1,
2016, we expect to record another material write-down in the carrying value of our oil and natural gas properties in the
first quarter of 2016. Further material write-downs in subsequent quarters will occur if the trailing 12-month commodity
prices continue to fall as compared to the commodity prices used in prior quarters.
Impairments of Fixed Assets and Other
We review our long-lived assets, other than oil and natural gas properties, for recoverability whenever events or
changes in circumstances indicate that carrying amounts may not be recoverable. We recognize an impairment loss
if the carrying amount of a long-lived asset is not recoverable and exceeds its fair value. A summary of our impairments
of fixed assets by asset class and other charges for the years ended December 31, 2015, 2014 and 2013 is as follows:
Years Ended December 31,
2015 2014 2013
($ in millions)
Natural gas compressors ......................................................................... $ 21 $ 11 $ —
Buildings and land .................................................................................... — 18 366
Gathering systems and treating plants ..................................................... — 13 22
Oilfield services equipment ...................................................................... — 23 71
Other ........................................................................................................ 173 23 87
Total impairments of fixed assets and other .................................. $ 194 $ 88 $ 546