Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Dec. 31, 2020
Property, Plant and Equipment [Abstract]  
Property, plant and equipment is comprised of fixed assets and natural gas properties, as shown below (in thousands):
December 31,
2020 2019
Land $ 13,808  $ 13,808 
Proved properties 62,227  142,494 
Wells in progress 492  57 
Corporate and other 3,476  5,285 
Total property, plant and equipment, at cost 80,003  161,644 
Accumulated depreciation and depletion (38,764) (22,041)
Right of use asset — finance leases 20,018  13,437 
Total property, plant and equipment, net $ 61,257  $ 153,040 
Depreciation and depletion expenses for the years ended December 31, 2020, 2019 and 2018 were approximately $17.2 million, $20.4 million and $1.5 million, respectively.
We own land in Louisiana for the purpose of constructing the Driftwood Project.
Proved Properties Impairment
The carrying values of our proved natural gas properties are reviewed for impairment when events or circumstances indicate that the remaining carrying value may not be recoverable. During the second quarter of 2020, there were indicators that the carrying values of certain of our properties may be impaired as a result of depressed natural gas prices and a decline in demand for natural gas. We determined that these adverse market conditions represented a triggering event to perform an impairment assessment of our proved natural gas properties.
To determine whether impairment had occurred, we compared the estimated expected undiscounted future cash flows from our natural gas properties to the carrying values of those properties. The estimated future cash flows used in the recoverability test are based on proved and, if determined reasonable by management, risk-adjusted probable and possible reserves and assumptions generally consistent with those used by us for internal planning and budgeting purposes. These include, among other things, the intended use of the asset, anticipated production from reserves, future market prices of natural gas adjusted for basis differentials, and future operating costs. Proved properties that have carrying amounts in excess of estimated future undiscounted cash flows are written down to fair value.
During the second quarter of 2020, we recognized an impairment charge of approximately $81.1 million primarily associated with our assets located in northern Louisiana. The impairment charge was recorded as a reduction to the assets’ carrying values to their estimated fair values of approximately $28.7 million. The estimated fair value of the impaired assets, as determined as of June 30, 2020, was based on significant inputs that are not observable in the market and, as such, are considered a Level 3 fair value measurement. Key assumptions included in the calculation of the fair value included values for the following: (i) reserves, (ii) future commodity prices and (iii) future operating and development costs.
Unproved Properties
On September 10, 2019 (the “Sale Closing Date”), we sold our wholly owned subsidiary, Magellan Petroleum (UK) Investments Holdings Limited (“Magellan Petroleum UK”), to a third party for approximately $14.8 million. The assets and liabilities of Magellan Petroleum UK consisted predominantly of non-operated interests in the Weald Basin, United Kingdom. The sale of Magellan Petroleum UK generated an overall gain of approximately $4.2 million, all of which was recognized in 2019 as Other income, net in our Consolidated Statements of Operations.