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Commitments And Contingencies | 12 Months Ended
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Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract] |
Commitments And Contingencies | COMMITMENTS AND CONTINGENCIES Leases We are obligated under leases for certain of our offices and equipment. Rental expense relating to operating leases was $50.9 million, $54.4 million and $49.1 million during the years ended December 31, 2015, 2014 and 2013, respectively. Future minimum rental payments under our noncancellable operating lease obligations are as follows: $45.3 million during 2016; $18.3 million during 2017; $12.0 million during 2018; $10.6 million during 2019; $10.1 million during 2020 and $53.4 million thereafter. Capital Commitments The following table summarizes the cumulative amount of contractual payments made as of December 31, 2015 for our rigs under construction and estimated timing of our remaining contractual payments (in millions):
|  | Cumulative Paid(1) |  | 2016 |  | 2017 |  | 2018 |  | Total(2)
ENSCO DS-10 |  | $ | 236.2 |  |  | $ | 9.3 |  |  | $ | 310.5 |  |  | $ | — |  |  | $ | 556.0 |
ENSCO 123 |  | 53.5 |  |  | 3.2 |  |  | 9.5 |  |  | 215.4 |  |  | 281.6 |
ENSCO 140 |  | 156.8 |  |  | 39.9 |  |  | — |  |  | — |  |  | 196.7 |
ENSCO 141 |  | 78.4 |  |  | 117.2 |  |  | — |  |  | — |  |  | 195.6 |
|  | $ | 524.9 |  |  | $ | 169.6 |  |  | $ | 320.0 |  |  | $ | 215.4 |  |  | $ | 1,229.9 |
(1) | Cumulative paid represents the aggregate amount of contractual payments made from commencement of the construction agreement through December 31, 2015.
(2) | Total commitments are based on fixed-price shipyard construction contracts, exclusive of costs associated with commissioning, systems integration testing, project management and capitalized interest.
The actual timing of these expenditures may vary based on the completion of various construction milestones, which are, to a large extent, beyond our control. Brazil Internal Investigation Pride International, Inc. (“Pride”), a company we acquired in 2011, commenced drilling operations in Brazil in 2001. In 2008, Pride entered into a drilling services agreement with Petrobras (the "DSA") for ENSCO DS-5, a drillship ordered from Samsung Heavy Industries, a shipyard in South Korea ("SHI"). Beginning in 2006, Pride conducted periodic compliance reviews of its business with Petrobras, and, after the acquisition of Pride, Ensco conducted similar compliance reviews, the most recent of which commenced in early 2015 after media reports were released regarding ongoing investigations of various kickback and bribery schemes in Brazil involving Petrobras. While conducting our compliance review, we became aware of an internal audit report by Petrobras alleging irregularities in relation to the DSA. Upon learning of the Petrobras internal audit report, our Audit Committee appointed independent counsel to lead an investigation into the alleged irregularities. Further, in June and July 2015, we voluntarily contacted the SEC and the DOJ, respectively, to advise them of this matter and our Audit Committee’s investigation. Independent counsel, under the direction of our Audit Committee, has substantially completed its investigation by reviewing and analyzing available documents and correspondence and interviewing current and former employees involved in the DSA negotiations and the negotiation of the ENSCO DS-5 construction contract with SHI (the "DS-5 Construction Contract"). To date, our Audit Committee has found no evidence that Pride or Ensco or any of their current or former employees were aware of or involved in any wrongdoing, and our Audit Committee has found no evidence linking Ensco or Pride to any illegal acts committed by our former marketing consultant. Independent counsel has continued to provide the SEC and DOJ with updates throughout the investigation, including detailed briefings regarding its investigation and findings. On December 21, 2015, we entered into a one-year tolling agreement with the DOJ, at the agency's request. Subsequent to initiating our Audit Committee investigation, the Petrobras internal audit report and the alleged irregularities were referenced in Brazilian court documents connected to the prosecution of former Petrobras directors and employees as well as certain other third parties, including our former marketing consultant who provided services to Pride and Ensco in connection with the DSA. Our former marketing consultant has entered into a plea agreement with the Brazilian authorities. On January 10, 2016, Brazilian authorities filed an indictment against a former Petrobras director. This indictment states that the former Petrobras director received bribes paid out of proceeds from a brokerage agreement entered into for purposes of intermediating a drillship construction contract between SHI and Pride, which we believe to be the DS-5 Construction Contract. The parties to the brokerage agreement were a company affiliated with a person acting on behalf of the former Petrobras director, a company affiliated with our former marketing consultant, and SHI. The indictment alleges that amounts paid by SHI under the brokerage agreement ultimately were used to pay bribes to the former Petrobras director. The indictment does not state that Pride or Ensco or any of their current or former employees were involved in the bribery scheme or had any knowledge of the bribery scheme. On January 4, 2016, we received a notice from Petrobras declaring the DSA void effective immediately. Petrobras’ notice alleges that SHI made improper payments to our former marketing consultant who then shared the improper payments with employees of Petrobras and, without specifying any supporting facts or conduct, that Pride had knowledge of this activity and assisted in the procurement of and/or facilitated these improper payments. We disagree with Petrobras’ assertion that the DSA is void and plan to pursue our legal rights in connection with this dispute, as described further below under "—DSA Dispute." Outside of Petrobras’ allegations, we have not been contacted by any Brazil governmental authority regarding alleged wrongdoing by Pride or Ensco or any of their current or former employees related to this matter. We cannot predict whether any U.S., Brazilian or other governmental authority will seek to investigate this matter, or if a proceeding were opened, the scope or ultimate outcome of any such investigation. If the SEC or DOJ determines that violations of the FCPA have occurred, or if any governmental authority determines that we have violated applicable anti-bribery laws, they could seek civil and criminal sanctions, including monetary penalties, against us, as well as changes to our business practices and compliance programs, any of which could have a material adverse effect on our business and financial condition. Although our internal investigation is substantially complete, we cannot predict whether any additional allegations will be made or whether any additional facts relevant to the investigation will be uncovered during the course of the investigation and what impact those allegations and additional facts will have on the timing or conclusions of the investigation. Our Audit Committee will examine any such additional allegations and additional facts and the circumstances surrounding them. DSA Dispute As described above, on January 4, 2016, Petrobras sent a notice to us declaring the DSA void effective immediately, reserving its rights and stating its intention to seek any restitution to which it may be entitled. We disagree with Petrobras’ assertion that the DSA is void and plan to pursue our legal rights in connection with this dispute. However, at this time, we cannot reasonably determine the validity of Petrobras’ claim or the range of potential exposure, if any. As a result, there can be no assurance as to how this dispute will ultimately be resolved. Due to this dispute with Petrobras, we did not recognize revenue for services provided under the DSA during the fourth quarter totaling $44.7 million as we concluded collectability of these amounts was not reasonably assured. Additionally, we recorded a $17.1 million provision for doubtful accounts during the fourth quarter of 2015 for receivables related to services provided under the DSA through September 30, 2015. Our receivables from Petrobras related to the ENSCO DS-5 DSA are fully reserved on our consolidated balance sheet as of December 31, 2015. Asbestos Litigation We and certain subsidiaries have been named as defendants, along with numerous third-party companies as co-defendants, in multi-party lawsuits filed in Mississippi and Louisiana by approximately 50 plaintiffs. The lawsuits seek an unspecified amount of monetary damages on behalf of individuals alleging personal injury or death, primarily under the Jones Act, purportedly resulting from exposure to asbestos on drilling rigs and associated facilities during the 1960s through the 1980s. During 2013, we reached an agreement in principle with 58 plaintiffs to settle lawsuits filed in Mississippi for a nominal amount. A special master reviewed all 58 cases and made an allocation of settlement funds among the parties. The District Court Judge reviewed the allocations and accepted the special master’s recommendations and approved the settlements. The settlement documents for most of the individual plaintiffs have been processed, and the cases have been dismissed. The settlement documents for approximately 13 individual plaintiffs are continuing to be processed. We intend to vigorously defend against the remaining claims and have filed responsive pleadings preserving all defenses and challenges to jurisdiction and venue. However, discovery is still ongoing and, therefore, available information regarding the nature of all pending claims is limited. At present, we cannot reasonably determine how many of the claimants may have valid claims under the Jones Act or estimate a range of potential liability exposure, if any. In addition to the pending cases in Mississippi and Louisiana, we have other asbestos or lung injury claims pending against us in litigation from time to time in other jurisdictions. Although we do not expect final disposition of these asbestos or lung injury lawsuits to have a material adverse effect upon our financial position, operating results or cash flows, there can be no assurances as to the ultimate outcome of the lawsuits. Other Matters In addition to the foregoing, we are named defendants or parties in certain other lawsuits, claims or proceedings incidental to our business and are involved from time to time as parties to governmental investigations or proceedings, including matters related to taxation, arising in the ordinary course of business. Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, we do not expect these matters to have a material adverse effect on our financial position, operating results or cash flows. In the ordinary course of business with customers and others, we have entered into letters of credit to guarantee our performance as it relates to our drilling contracts, contract bidding, customs duties, tax appeals and other obligations in various jurisdictions. Letters of credit outstanding as of December 31, 2015 totaled $70.0 million and are issued under facilities provided by various banks and other financial institutions. Obligations under these letters of credit and surety bonds are not normally called, as we typically comply with the underlying performance requirement. As of December 31, 2015, we had not been required to make collateral deposits with respect to these agreements.

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