Quarterly report pursuant to Section 13 or 15(d)

Property, Plant and Equipment

Property, Plant and Equipment
9 Months Ended
Sep. 30, 2020
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment
    Property, plant and equipment is comprised of fixed assets, proved oil and natural gas properties and finance leases, as shown below (in thousands):
September 30, 2020 December 31, 2019
Land $ 13,808  $ 13,808 
Proved properties 61,384  142,494 
Wells in progress —  57 
Corporate and other 3,477  5,285 
Total property, plant and equipment at cost 78,669  161,644 
Accumulated DD&A (35,856) (22,041)
Right of use asset — finance leases (Note 15) 20,119  13,437 
Total property, plant and equipment, net $ 62,932  $ 153,040 
    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. 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 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.