ME » Topics » Goodwill

These excerpts taken from the ME 10-K filed Mar 6, 2009.
Goodwill
 
We account for goodwill in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”). SFAS 142 requires goodwill to be tested for impairment on an annual basis and between annual tests when events or circumstances indicate a potential impairment. In a purchase transaction, goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired net of the fair value of liabilities assumed. We follow the full cost method of accounting and all of our oil and gas properties are located in the United States. For the purpose of performing an impairment test, we have determined that we have one reporting unit. Our goodwill impairment reviews consist of a two-step process. The first step is to determine the fair value of our reporting unit and compare it to the carrying value of the related net assets. Fair value is determined based on our estimates of market values. If this fair value exceeds the carrying value no further analysis or goodwill write-down is required. The second step is required if the fair value of the reporting unit is less than the carrying value of the net assets. In this step the implied fair value of the reporting unit is allocated to all the underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their fair values. If necessary, goodwill is then written-down to its implied fair value.
 
We perform our goodwill test annually on November 30 and more often if circumstances require. Amounts recorded in goodwill relate to the excess purchase price paid in association with the Forest Merger. See “Note 2. Acquisitions and Dispositions — Forest Gulf of Mexico Operation” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
 
In connection with our annual impairment test on November 30, 2008, we performed a step one impairment analysis. As a result of weakened economic conditions and a decline in our stock price during the fourth quarter of 2008, the carrying value of our reporting unit exceeded the fair value and a step two analysis was required to determine the impairment. Our fair value estimates in step two were developed using a weighted average cost of capital (“WACC”) of 12.0% and a control premium of 25.0%. A 1.0% increase and decrease of the WACC would have changed the fair value by (3.7%) and 4.0% respectively. We allocated the estimated fair value determined using these assumptions to the identifiable tangible and intangible assets and liabilities of our reporting unit based on their respective values. This allocation indicated no residual value for goodwill and we recorded approximately $295.6 million of goodwill impairment in continuing operations as of December 31, 2008. We had previously determined that there was no impairment loss in continuing operations


56


Table of Contents

as of December 31, 2007 and 2006, respectively. In 2007, goodwill decreased as a result of changes in the book and tax basis related to the Forest Merger.
 
Goodwill
 
We account for goodwill in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”). SFAS 142 requires goodwill to be tested for impairment on an annual basis and between annual tests when events or circumstances indicate a potential impairment. In a purchase transaction, goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired net of the fair value of liabilities assumed. We follow the full cost method of accounting and all of our oil and gas properties are located in the United States. For the purpose of performing an impairment test, we have determined that we have one reporting unit. Our goodwill impairment reviews consist of a two-step process. The first step is to determine the fair value of our reporting unit and compare it to the carrying value of the related net assets. Fair value is determined based on our estimates of market values. If this fair value exceeds the carrying value no further analysis or goodwill write-down is required. The second step is required if the fair value of the reporting unit is less than the carrying value of the net assets. In this step the implied fair value of the reporting unit is allocated to all the underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their fair values. If necessary, goodwill is then written-down to its implied fair value.
 
We perform our goodwill test annually on November 30 and more often if circumstances require. Amounts recorded in goodwill relate to the excess purchase price paid in association with the Forest Merger. See “Note 2. Acquisitions and Dispositions — Forest Gulf of Mexico Operation” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
 
In connection with our annual impairment test on November 30, 2008, we performed a step one impairment analysis. As a result of weakened economic conditions and a decline in our stock price during the fourth quarter of 2008, the carrying value of our reporting unit exceeded the fair value and a step two analysis was required to determine the impairment. Our fair value estimates in step two were developed using a weighted average cost of capital (“WACC”) of 12.0% and a control premium of 25.0%. A 1.0% increase and decrease of the WACC would have changed the fair value by (3.7%) and 4.0% respectively. We allocated the estimated fair value determined using these assumptions to the identifiable tangible and intangible assets and liabilities of our reporting unit based on their respective values. This allocation indicated no residual value for goodwill and we recorded approximately $295.6 million of goodwill impairment in continuing operations as of December 31, 2008. We had previously determined that there was no impairment loss in continuing operations


56


Table of Contents

as of December 31, 2007 and 2006, respectively. In 2007, goodwill decreased as a result of changes in the book and tax basis related to the Forest Merger.
 
Goodwill
 
We account for goodwill in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”). SFAS 142 requires goodwill to be tested for impairment on an annual basis and between annual tests when events or circumstances indicate a potential impairment. In a purchase transaction, goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired net of the fair value of liabilities assumed. We follow the full cost method of accounting and all of our oil and gas properties are located in the United States. For the purpose of performing an impairment test, we have determined that we have one reporting unit. Our goodwill impairment reviews consist of a two-step process. The first step is to determine the fair value of our reporting unit and compare it to the carrying value of the related net assets. Fair value is determined based on our estimates of market values. If this fair value exceeds the carrying value no further analysis or goodwill write-down is required. The second step is required if the fair value of the reporting unit is less than the carrying value of the net assets. In this step the implied fair value of the reporting unit is allocated to all the underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their fair values. If necessary, goodwill is then written-down to its implied fair value.
 
We perform our goodwill test annually on November 30 and more often if circumstances require. Amounts recorded in goodwill relate to the excess purchase price paid in association with the Forest Merger. See “Note 2. Acquisitions and Dispositions — Forest Gulf of Mexico Operation” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
 
In connection with our annual impairment test on November 30, 2008, we performed a step one impairment analysis. As a result of weakened economic conditions and a decline in our stock price during the fourth quarter of 2008, the carrying value of our reporting unit exceeded the fair value and a step two analysis was required to determine the impairment. Our fair value estimates in step two were developed using a weighted average cost of capital (“WACC”) of 12.0% and a control premium of 25.0%. A 1.0% increase and decrease of the WACC would have changed the fair value by (3.7%) and 4.0% respectively. We allocated the estimated fair value determined using these assumptions to the identifiable tangible and intangible assets and liabilities of our reporting unit based on their respective values. This allocation indicated no residual value for goodwill and we recorded approximately $295.6 million of goodwill impairment in continuing operations as of December 31, 2008. We had previously determined that there was no impairment loss in continuing operations


56


Table of Contents

as of December 31, 2007 and 2006, respectively. In 2007, goodwill decreased as a result of changes in the book and tax basis related to the Forest Merger.
 
Goodwill
 
We account for goodwill in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”). SFAS 142 requires goodwill to be tested for impairment on an annual basis and between annual tests when events or circumstances indicate a potential impairment. In a purchase transaction, goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired net of the fair value of liabilities assumed. We follow the full cost method of accounting and all of our oil and gas properties are located in the United States. For the purpose of performing an impairment test, we have determined that we have one reporting unit. Our goodwill impairment reviews consist of a two-step process. The first step is to determine the fair value of our reporting unit and compare it to the carrying value of the related net assets. Fair value is determined based on our estimates of market values. If this fair value exceeds the carrying value no further analysis or goodwill write-down is required. The second step is required if the fair value of the reporting unit is less than the carrying value of the net assets. In this step the implied fair value of the reporting unit is allocated to all the underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their fair values. If necessary, goodwill is then written-down to its implied fair value.
 
We perform our goodwill test annually on November 30 and more often if circumstances require. Amounts recorded in goodwill relate to the excess purchase price paid in association with the Forest Merger. See “Note 2. Acquisitions and Dispositions — Forest Gulf of Mexico Operation” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
 
In connection with our annual impairment test on November 30, 2008, we performed a step one impairment analysis. As a result of weakened economic conditions and a decline in our stock price during the fourth quarter of 2008, the carrying value of our reporting unit exceeded the fair value and a step two analysis was required to determine the impairment. Our fair value estimates in step two were developed using a weighted average cost of capital (“WACC”) of 12.0% and a control premium of 25.0%. A 1.0% increase and decrease of the WACC would have changed the fair value by (3.7%) and 4.0% respectively. We allocated the estimated fair value determined using these assumptions to the identifiable tangible and intangible assets and liabilities of our reporting unit based on their respective values. This allocation indicated no residual value for goodwill and we recorded approximately $295.6 million of goodwill impairment in continuing operations as of December 31, 2008. We had previously determined that there was no impairment loss in continuing operations


56


Table of Contents

as of December 31, 2007 and 2006, respectively. In 2007, goodwill decreased as a result of changes in the book and tax basis related to the Forest Merger.
 
Goodwill


 



We account for goodwill in accordance with
SFAS No. 142 “Goodwill and Other Intangible
Assets” (“SFAS 142”). SFAS 142 requires
goodwill to be tested for impairment on an annual basis and
between annual tests when events or circumstances indicate a
potential impairment. In a purchase transaction, goodwill
represents the excess of the purchase price over the estimated
fair value of the assets acquired net of the fair value of
liabilities assumed. We follow the full cost method of
accounting and all of our oil and gas properties are located in
the United States. For the purpose of performing an impairment
test, we have determined that we have one reporting unit. Our
goodwill impairment reviews consist of a two-step process. The
first step is to determine the fair value of our reporting unit
and compare it to the carrying value of the related net assets.
Fair value is determined based on our estimates of market
values. If this fair value exceeds the carrying value no further
analysis or goodwill write-down is required. The second step is
required if the fair value of the reporting unit is less than
the carrying value of the net assets. In this step the implied
fair value of the reporting unit is allocated to all the
underlying assets and liabilities, including both recognized and
unrecognized tangible and intangible assets, based on their fair
values. If necessary, goodwill is then written-down to its
implied fair value.


 



We perform our goodwill test annually on November 30 and more
often if circumstances require. Amounts recorded in goodwill
relate to the excess purchase price paid in association with the
Forest Merger. See “Note 2. Acquisitions and
Dispositions — Forest Gulf of Mexico Operation”
in the Notes to the Consolidated Financial Statements in
Part II, Item 8 of this Annual Report on
Form 10-K.


 



In connection with our annual impairment test on
November 30, 2008, we performed a step one impairment
analysis. As a result of weakened economic conditions and a
decline in our stock price during the fourth quarter of 2008,
the carrying value of our reporting unit exceeded the fair value
and a step two analysis was required to determine the
impairment. Our fair value estimates in step two were developed
using a weighted average cost of capital (“WACC”) of
12.0% and a control premium of 25.0%. A 1.0% increase and
decrease of the WACC would have changed the fair value by (3.7%)
and 4.0% respectively. We allocated the estimated fair value
determined using these assumptions to the identifiable tangible
and intangible assets and liabilities of our reporting unit
based on their respective values. This allocation indicated no
residual value for goodwill and we recorded approximately
$295.6 million of goodwill impairment in continuing
operations as of December 31, 2008. We had previously
determined that there was no impairment loss in continuing
operations





56





Table of Contents






as of December 31, 2007 and 2006, respectively. In 2007,
goodwill decreased as a result of changes in the book and tax
basis related to the Forest Merger.


 




Goodwill


 



We account for goodwill in accordance with
SFAS No. 142 “Goodwill and Other Intangible
Assets” (“SFAS 142”). SFAS 142 requires
goodwill to be tested for impairment on an annual basis and
between annual tests when events or circumstances indicate a
potential impairment. In a purchase transaction, goodwill
represents the excess of the purchase price over the estimated
fair value of the assets acquired net of the fair value of
liabilities assumed. We follow the full cost method of
accounting and all of our oil and gas properties are located in
the United States. For the purpose of performing an impairment
test, we have determined that we have one reporting unit. Our
goodwill impairment reviews consist of a two-step process. The
first step is to determine the fair value of our reporting unit
and compare it to the carrying value of the related net assets.
Fair value is determined based on our estimates of market
values. If this fair value exceeds the carrying value no further
analysis or goodwill write-down is required. The second step is
required if the fair value of the reporting unit is less than
the carrying value of the net assets. In this step the implied
fair value of the reporting unit is allocated to all the
underlying assets and liabilities, including both recognized and
unrecognized tangible and intangible assets, based on their fair
values. If necessary, goodwill is then written-down to its
implied fair value.


 



We perform our goodwill test annually on November 30 and more
often if circumstances require. Amounts recorded in goodwill
relate to the excess purchase price paid in association with the
Forest Merger. See “Note 2. Acquisitions and
Dispositions — Forest Gulf of Mexico Operation”
in the Notes to the Consolidated Financial Statements in
Part II, Item 8 of this Annual Report on
Form 10-K.


 



In connection with our annual impairment test on
November 30, 2008, we performed a step one impairment
analysis. As a result of weakened economic conditions and a
decline in our stock price during the fourth quarter of 2008,
the carrying value of our reporting unit exceeded the fair value
and a step two analysis was required to determine the
impairment. Our fair value estimates in step two were developed
using a weighted average cost of capital (“WACC”) of
12.0% and a control premium of 25.0%. A 1.0% increase and
decrease of the WACC would have changed the fair value by (3.7%)
and 4.0% respectively. We allocated the estimated fair value
determined using these assumptions to the identifiable tangible
and intangible assets and liabilities of our reporting unit
based on their respective values. This allocation indicated no
residual value for goodwill and we recorded approximately
$295.6 million of goodwill impairment in continuing
operations as of December 31, 2008. We had previously
determined that there was no impairment loss in continuing
operations





56





Table of Contents






as of December 31, 2007 and 2006, respectively. In 2007,
goodwill decreased as a result of changes in the book and tax
basis related to the Forest Merger.


 




Goodwill


 



We account for goodwill in accordance with
SFAS No. 142 “Goodwill and Other Intangible
Assets” (“SFAS 142”). SFAS 142 requires
goodwill to be tested for impairment on an annual basis and
between annual tests when events or circumstances indicate a
potential impairment. In a purchase transaction, goodwill
represents the excess of the purchase price over the estimated
fair value of the assets acquired net of the fair value of
liabilities assumed. We follow the full cost method of
accounting and all of our oil and gas properties are located in
the United States. For the purpose of performing an impairment
test, we have determined that we have one reporting unit. Our
goodwill impairment reviews consist of a two-step process. The
first step is to determine the fair value of our reporting unit
and compare it to the carrying value of the related net assets.
Fair value is determined based on our estimates of market
values. If this fair value exceeds the carrying value no further
analysis or goodwill write-down is required. The second step is
required if the fair value of the reporting unit is less than
the carrying value of the net assets. In this step the implied
fair value of the reporting unit is allocated to all the
underlying assets and liabilities, including both recognized and
unrecognized tangible and intangible assets, based on their fair
values. If necessary, goodwill is then written-down to its
implied fair value.


 



We perform our goodwill test annually on November 30 and more
often if circumstances require. Amounts recorded in goodwill
relate to the excess purchase price paid in association with the
Forest Merger. See “Note 2. Acquisitions and
Dispositions — Forest Gulf of Mexico Operation”
in the Notes to the Consolidated Financial Statements in
Part II, Item 8 of this Annual Report on
Form 10-K.


 



In connection with our annual impairment test on
November 30, 2008, we performed a step one impairment
analysis. As a result of weakened economic conditions and a
decline in our stock price during the fourth quarter of 2008,
the carrying value of our reporting unit exceeded the fair value
and a step two analysis was required to determine the
impairment. Our fair value estimates in step two were developed
using a weighted average cost of capital (“WACC”) of
12.0% and a control premium of 25.0%. A 1.0% increase and
decrease of the WACC would have changed the fair value by (3.7%)
and 4.0% respectively. We allocated the estimated fair value
determined using these assumptions to the identifiable tangible
and intangible assets and liabilities of our reporting unit
based on their respective values. This allocation indicated no
residual value for goodwill and we recorded approximately
$295.6 million of goodwill impairment in continuing
operations as of December 31, 2008. We had previously
determined that there was no impairment loss in continuing
operations





56





Table of Contents






as of December 31, 2007 and 2006, respectively. In 2007,
goodwill decreased as a result of changes in the book and tax
basis related to the Forest Merger.


 




Goodwill


 



We account for goodwill in accordance with
SFAS No. 142 “Goodwill and Other Intangible
Assets” (“SFAS 142”). SFAS 142 requires
goodwill to be tested for impairment on an annual basis and
between annual tests when events or circumstances indicate a
potential impairment. In a purchase transaction, goodwill
represents the excess of the purchase price over the estimated
fair value of the assets acquired net of the fair value of
liabilities assumed. We follow the full cost method of
accounting and all of our oil and gas properties are located in
the United States. For the purpose of performing an impairment
test, we have determined that we have one reporting unit. Our
goodwill impairment reviews consist of a two-step process. The
first step is to determine the fair value of our reporting unit
and compare it to the carrying value of the related net assets.
Fair value is determined based on our estimates of market
values. If this fair value exceeds the carrying value no further
analysis or goodwill write-down is required. The second step is
required if the fair value of the reporting unit is less than
the carrying value of the net assets. In this step the implied
fair value of the reporting unit is allocated to all the
underlying assets and liabilities, including both recognized and
unrecognized tangible and intangible assets, based on their fair
values. If necessary, goodwill is then written-down to its
implied fair value.


 



We perform our goodwill test annually on November 30 and more
often if circumstances require. Amounts recorded in goodwill
relate to the excess purchase price paid in association with the
Forest Merger. See “Note 2. Acquisitions and
Dispositions — Forest Gulf of Mexico Operation”
in the Notes to the Consolidated Financial Statements in
Part II, Item 8 of this Annual Report on
Form 10-K.


 



In connection with our annual impairment test on
November 30, 2008, we performed a step one impairment
analysis. As a result of weakened economic conditions and a
decline in our stock price during the fourth quarter of 2008,
the carrying value of our reporting unit exceeded the fair value
and a step two analysis was required to determine the
impairment. Our fair value estimates in step two were developed
using a weighted average cost of capital (“WACC”) of
12.0% and a control premium of 25.0%. A 1.0% increase and
decrease of the WACC would have changed the fair value by (3.7%)
and 4.0% respectively. We allocated the estimated fair value
determined using these assumptions to the identifiable tangible
and intangible assets and liabilities of our reporting unit
based on their respective values. This allocation indicated no
residual value for goodwill and we recorded approximately
$295.6 million of goodwill impairment in continuing
operations as of December 31, 2008. We had previously
determined that there was no impairment loss in continuing
operations





56





Table of Contents






as of December 31, 2007 and 2006, respectively. In 2007,
goodwill decreased as a result of changes in the book and tax
basis related to the Forest Merger.


 




These excerpts taken from the ME 10-K filed Mar 2, 2009.
Goodwill
 
We account for goodwill in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”). SFAS 142 requires goodwill to be tested for impairment on an annual basis and between annual tests when events or circumstances indicate a potential impairment. In a purchase transaction, goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired net of the fair value of liabilities assumed. We follow the full cost method of accounting and all of our oil and gas properties are located in the United States. For the purpose of performing an impairment test, we have determined that we have one reporting unit. Our goodwill impairment reviews consist of a two-step process. The first step is to determine the fair value of our reporting unit and compare it to the carrying value of the related net assets. Fair value is determined based on our estimates of market values. If this fair value exceeds the carrying value no further analysis or goodwill write-down is required. The second step is required if the fair value of the reporting unit is less than the carrying value of the net assets. In this step the implied fair value of the reporting unit is allocated to all the underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their fair values. If necessary, goodwill is then written-down to its implied fair value.
 
We perform our goodwill test annually on November 30 and more often if circumstances require. Amounts recorded in goodwill relate to the excess purchase price paid in association with the Forest Merger. See “Note 2. Acquisitions and Dispositions — Forest Gulf of Mexico Operation” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.
 
In connection with our annual impairment test on November 30, 2008, we performed a step one impairment analysis. As a result of weakened economic conditions and a decline in our stock price during the fourth quarter of 2008, the carrying value of our reporting unit exceeded the fair value and a step two analysis was required to determine the impairment. Our fair value estimates in step two were developed using a weighted average cost of capital (“WACC”) of 12.0% and a control premium of 25.0%. A 1.0% increase and decrease of the WACC would have changed the fair value by (3.7%) and 4.0% respectively. We allocated the estimated fair value determined using these assumptions to the identifiable tangible and intangible assets and liabilities of our reporting unit based on their respective values. This allocation indicated no residual value for goodwill and we recorded approximately $295.6 million of goodwill impairment in continuing operations as of December 31, 2008. We had previously determined that there was no impairment loss in continuing operations


56


Table of Contents

as of December 31, 2007 and 2006, respectively. In 2007, goodwill decreased as a result of changes in the book and tax basis related to the Forest Merger.
 
Goodwill


 



We account for goodwill in accordance with
SFAS No. 142 “Goodwill and Other Intangible
Assets” (“SFAS 142”). SFAS 142 requires
goodwill to be tested for impairment on an annual basis and
between annual tests when events or circumstances indicate a
potential impairment. In a purchase transaction, goodwill
represents the excess of the purchase price over the estimated
fair value of the assets acquired net of the fair value of
liabilities assumed. We follow the full cost method of
accounting and all of our oil and gas properties are located in
the United States. For the purpose of performing an impairment
test, we have determined that we have one reporting unit. Our
goodwill impairment reviews consist of a two-step process. The
first step is to determine the fair value of our reporting unit
and compare it to the carrying value of the related net assets.
Fair value is determined based on our estimates of market
values. If this fair value exceeds the carrying value no further
analysis or goodwill write-down is required. The second step is
required if the fair value of the reporting unit is less than
the carrying value of the net assets. In this step the implied
fair value of the reporting unit is allocated to all the
underlying assets and liabilities, including both recognized and
unrecognized tangible and intangible assets, based on their fair
values. If necessary, goodwill is then written-down to its
implied fair value.


 



We perform our goodwill test annually on November 30 and more
often if circumstances require. Amounts recorded in goodwill
relate to the excess purchase price paid in association with the
Forest Merger. See “Note 2. Acquisitions and
Dispositions — Forest Gulf of Mexico Operation”
in the Notes to the Consolidated Financial Statements in
Part II, Item 8 of this Annual Report on
Form 10-K.


 



In connection with our annual impairment test on
November 30, 2008, we performed a step one impairment
analysis. As a result of weakened economic conditions and a
decline in our stock price during the fourth quarter of 2008,
the carrying value of our reporting unit exceeded the fair value
and a step two analysis was required to determine the
impairment. Our fair value estimates in step two were developed
using a weighted average cost of capital (“WACC”) of
12.0% and a control premium of 25.0%. A 1.0% increase and
decrease of the WACC would have changed the fair value by (3.7%)
and 4.0% respectively. We allocated the estimated fair value
determined using these assumptions to the identifiable tangible
and intangible assets and liabilities of our reporting unit
based on their respective values. This allocation indicated no
residual value for goodwill and we recorded approximately
$295.6 million of goodwill impairment in continuing
operations as of December 31, 2008. We had previously
determined that there was no impairment loss in continuing
operations





56





Table of Contents






as of December 31, 2007 and 2006, respectively. In 2007,
goodwill decreased as a result of changes in the book and tax
basis related to the Forest Merger.


 




Goodwill


 



We account for goodwill in accordance with
SFAS No. 142 “Goodwill and Other Intangible
Assets” (“SFAS 142”). SFAS 142 requires
goodwill to be tested for impairment on an annual basis and
between annual tests when events or circumstances indicate a
potential impairment. In a purchase transaction, goodwill
represents the excess of the purchase price over the estimated
fair value of the assets acquired net of the fair value of
liabilities assumed. We follow the full cost method of
accounting and all of our oil and gas properties are located in
the United States. For the purpose of performing an impairment
test, we have determined that we have one reporting unit. Our
goodwill impairment reviews consist of a two-step process. The
first step is to determine the fair value of our reporting unit
and compare it to the carrying value of the related net assets.
Fair value is determined based on our estimates of market
values. If this fair value exceeds the carrying value no further
analysis or goodwill write-down is required. The second step is
required if the fair value of the reporting unit is less than
the carrying value of the net assets. In this step the implied
fair value of the reporting unit is allocated to all the
underlying assets and liabilities, including both recognized and
unrecognized tangible and intangible assets, based on their fair
values. If necessary, goodwill is then written-down to its
implied fair value.


 



We perform our goodwill test annually on November 30 and more
often if circumstances require. Amounts recorded in goodwill
relate to the excess purchase price paid in association with the
Forest Merger. See “Note 2. Acquisitions and
Dispositions — Forest Gulf of Mexico Operation”
in the Notes to the Consolidated Financial Statements in
Part II, Item 8 of this Annual Report on
Form 10-K.


 



In connection with our annual impairment test on
November 30, 2008, we performed a step one impairment
analysis. As a result of weakened economic conditions and a
decline in our stock price during the fourth quarter of 2008,
the carrying value of our reporting unit exceeded the fair value
and a step two analysis was required to determine the
impairment. Our fair value estimates in step two were developed
using a weighted average cost of capital (“WACC”) of
12.0% and a control premium of 25.0%. A 1.0% increase and
decrease of the WACC would have changed the fair value by (3.7%)
and 4.0% respectively. We allocated the estimated fair value
determined using these assumptions to the identifiable tangible
and intangible assets and liabilities of our reporting unit
based on their respective values. This allocation indicated no
residual value for goodwill and we recorded approximately
$295.6 million of goodwill impairment in continuing
operations as of December 31, 2008. We had previously
determined that there was no impairment loss in continuing
operations





56





Table of Contents






as of December 31, 2007 and 2006, respectively. In 2007,
goodwill decreased as a result of changes in the book and tax
basis related to the Forest Merger.


 




Goodwill


 



We account for goodwill in accordance with
SFAS No. 142 “Goodwill and Other Intangible
Assets” (“SFAS 142”). SFAS 142 requires
goodwill to be tested for impairment on an annual basis and
between annual tests when events or circumstances indicate a
potential impairment. In a purchase transaction, goodwill
represents the excess of the purchase price over the estimated
fair value of the assets acquired net of the fair value of
liabilities assumed. We follow the full cost method of
accounting and all of our oil and gas properties are located in
the United States. For the purpose of performing an impairment
test, we have determined that we have one reporting unit. Our
goodwill impairment reviews consist of a two-step process. The
first step is to determine the fair value of our reporting unit
and compare it to the carrying value of the related net assets.
Fair value is determined based on our estimates of market
values. If this fair value exceeds the carrying value no further
analysis or goodwill write-down is required. The second step is
required if the fair value of the reporting unit is less than
the carrying value of the net assets. In this step the implied
fair value of the reporting unit is allocated to all the
underlying assets and liabilities, including both recognized and
unrecognized tangible and intangible assets, based on their fair
values. If necessary, goodwill is then written-down to its
implied fair value.


 



We perform our goodwill test annually on November 30 and more
often if circumstances require. Amounts recorded in goodwill
relate to the excess purchase price paid in association with the
Forest Merger. See “Note 2. Acquisitions and
Dispositions — Forest Gulf of Mexico Operation”
in the Notes to the Consolidated Financial Statements in
Part II, Item 8 of this Annual Report on
Form 10-K.


 



In connection with our annual impairment test on
November 30, 2008, we performed a step one impairment
analysis. As a result of weakened economic conditions and a
decline in our stock price during the fourth quarter of 2008,
the carrying value of our reporting unit exceeded the fair value
and a step two analysis was required to determine the
impairment. Our fair value estimates in step two were developed
using a weighted average cost of capital (“WACC”) of
12.0% and a control premium of 25.0%. A 1.0% increase and
decrease of the WACC would have changed the fair value by (3.7%)
and 4.0% respectively. We allocated the estimated fair value
determined using these assumptions to the identifiable tangible
and intangible assets and liabilities of our reporting unit
based on their respective values. This allocation indicated no
residual value for goodwill and we recorded approximately
$295.6 million of goodwill impairment in continuing
operations as of December 31, 2008. We had previously
determined that there was no impairment loss in continuing
operations





56





Table of Contents






as of December 31, 2007 and 2006, respectively. In 2007,
goodwill decreased as a result of changes in the book and tax
basis related to the Forest Merger.


 




Goodwill


 



We account for goodwill in accordance with
SFAS No. 142 “Goodwill and Other Intangible
Assets” (“SFAS 142”). SFAS 142 requires
goodwill to be tested for impairment on an annual basis and
between annual tests when events or circumstances indicate a
potential impairment. In a purchase transaction, goodwill
represents the excess of the purchase price over the estimated
fair value of the assets acquired net of the fair value of
liabilities assumed. We follow the full cost method of
accounting and all of our oil and gas properties are located in
the United States. For the purpose of performing an impairment
test, we have determined that we have one reporting unit. Our
goodwill impairment reviews consist of a two-step process. The
first step is to determine the fair value of our reporting unit
and compare it to the carrying value of the related net assets.
Fair value is determined based on our estimates of market
values. If this fair value exceeds the carrying value no further
analysis or goodwill write-down is required. The second step is
required if the fair value of the reporting unit is less than
the carrying value of the net assets. In this step the implied
fair value of the reporting unit is allocated to all the
underlying assets and liabilities, including both recognized and
unrecognized tangible and intangible assets, based on their fair
values. If necessary, goodwill is then written-down to its
implied fair value.


 



We perform our goodwill test annually on November 30 and more
often if circumstances require. Amounts recorded in goodwill
relate to the excess purchase price paid in association with the
Forest Merger. See “Note 2. Acquisitions and
Dispositions — Forest Gulf of Mexico Operation”
in the Notes to the Consolidated Financial Statements in
Part II, Item 8 of this Annual Report on
Form 10-K.


 



In connection with our annual impairment test on
November 30, 2008, we performed a step one impairment
analysis. As a result of weakened economic conditions and a
decline in our stock price during the fourth quarter of 2008,
the carrying value of our reporting unit exceeded the fair value
and a step two analysis was required to determine the
impairment. Our fair value estimates in step two were developed
using a weighted average cost of capital (“WACC”) of
12.0% and a control premium of 25.0%. A 1.0% increase and
decrease of the WACC would have changed the fair value by (3.7%)
and 4.0% respectively. We allocated the estimated fair value
determined using these assumptions to the identifiable tangible
and intangible assets and liabilities of our reporting unit
based on their respective values. This allocation indicated no
residual value for goodwill and we recorded approximately
$295.6 million of goodwill impairment in continuing
operations as of December 31, 2008. We had previously
determined that there was no impairment loss in continuing
operations





56





Table of Contents






as of December 31, 2007 and 2006, respectively. In 2007,
goodwill decreased as a result of changes in the book and tax
basis related to the Forest Merger.


 




These excerpts taken from the ME 10-K filed Feb 29, 2008.
Goodwill
 
Goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired net of the fair value of liabilities assumed in the acquisition. We account for goodwill in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). SFAS 142 requires an annual impairment assessment and a more frequent assessment if certain events occur that indicate impairment may have occurred. We performed the goodwill impairment assessment in the fourth quarter of 2007. The initial impairment assessment compares Mariner’s net book value to its estimated fair value. If impairment is indicated, then Mariner is required to make estimates of the fair value of goodwill. The estimated fair value of goodwill is based on many factors, including future net cash flows of estimated proved reserves as well as the success of future exploration and development of unproved reserves. If the carrying amount of goodwill exceeds the estimated fair value, then a measurement of the loss is performed with any excess charged to expense. To date, no impairment to goodwill has been recorded.
 
Goodwill


 



Goodwill represents the excess of the purchase price over the
estimated fair value of the assets acquired net of the fair
value of liabilities assumed in the acquisition. We account for
goodwill in accordance with SFAS No. 142,
“Goodwill and Other Intangible Assets”
(“SFAS 142”). SFAS 142 requires an annual
impairment assessment and a more frequent assessment if certain
events occur that indicate impairment may have occurred. We
performed the goodwill impairment assessment in the fourth
quarter of 2007. The initial impairment assessment compares
Mariner’s net book value to its estimated fair value. If
impairment is indicated, then Mariner is required to make
estimates of the fair value of goodwill. The estimated fair
value of goodwill is based on many factors, including future net
cash flows of estimated proved reserves as well as the success
of future exploration and development of unproved reserves. If
the carrying amount of goodwill exceeds the estimated fair
value, then a measurement of the loss is performed with any
excess charged to expense. To date, no impairment to goodwill
has been recorded.


 




This excerpt taken from the ME 10-K filed Apr 2, 2007.
Goodwill
 
Goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired net of the fair value of liabilities assumed in the acquisition. We account for goodwill in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142 requires an annual impairment assessment and a more frequent assessment if certain events occur that indicate impairment may have occurred. We performed the goodwill impairment assessment in the fourth quarter of 2006. The initial impairment assessment compares Mariner’s net book value to its estimated fair value. If impairment is indicated, then Mariner is required to make estimates of the fair value of goodwill. The estimated fair value of goodwill is based on many factors, including future net cash flows of estimated proved reserves as well as the success of future exploration and development of unproved reserves. If the carrying amount of goodwill exceeds the estimated fair value, then a measurement of the loss is performed with any excess charged to expense. To date, no impairment to goodwill has been recorded.
 
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki