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Discontinued Operations
 12 Months Ended
Dec. 31, 2016
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations
DISCONTINUED OPERATIONS

Our business strategy has been to focus on ultra-deepwater floater and premium jackup operations. We continually assess our rig portfolio and actively work with our rig broker to market certain rigs that no longer meet our standards for economic returns or are not part of our long-term strategic plan.

Prior to 2015, individual rig disposals were classified as discontinued operations once the rigs met the criteria to be classified as held-for-sale. The operating results of the rigs through the date the rig was sold as well as the gain or loss on sale were included in loss from discontinued operations, net, in our consolidated statement of operations. Net proceeds from the sales of the rigs were included in investing activities of discontinued operations in our consolidated statement of cash flows in the period in which the proceeds were received.

During 2015, we adopted the Financial Accounting Standards Board’s Accounting Standards Update 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("Update 2014-08"). Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. As a result, individual assets that are classified as held-for-sale beginning in 2015 are not reported as discontinued operations and their operating results and gain or loss on sale of these rigs are included in contract drilling expense in our consolidated statements of operations. Rigs that were classified as held-for-sale prior to 2015 continue to be reported as discontinued operations.

During 2014, we committed to a plan to sell six floaters and two jackups. ENSCO 5000, ENSCO 5001, ENSCO 5002, ENSCO 6000, ENSCO 7500, ENSCO DS-2, ENSCO 58 and ENSCO 90 were removed from our portfolio of rigs marketed for contract drilling services and were classified as held-for-sale. The operating results for these rigs and any related gain or loss on sale were included in income (loss) from discontinued operations, net, in our consolidated statements of operations. ENSCO 7500 and ENSCO 90 continue to be actively marketed for sale and were classified as held-for-sale on our December 31, 2016 consolidated balance sheet.

The following rig sales were included in discontinued operations during the three-year period ended December 31, 2016 (in millions):
Rig
 
Date of Sale
 
Segment(1)
 
Net Proceeds
 
Net Book Value(2)
 
Pre-tax(Loss)/Gain
ENSCO DS-2
 
May 2016
 
Floaters
 
$
5.0

 
$
4.0

 
$
1.0

ENSCO 58
 
April 2016
 
Jackups
 
.7

 
.3

 
.4

ENSCO 6000
 
April 2016
 
Floaters
 
.6

700,000

.8

 
(.2
)
ENSCO 5001
 
December 2015
 
Floaters
 
2.4

 
2.5

 
(.1
)
ENSCO 5002
 
June 2015
 
Floaters
 
1.6

 
—

 
1.6

ENSCO 5000
 
December 2014
 
Floaters
 
1.3

 
.5

 
.8

ENSCO 93(3)
 
September 2014
 
Jackups
 
51.7

 
52.9

 
(1.2
)
ENSCO 85
 
April 2014
 
Jackups
 
64.4

 
54.1

 
10.3

ENSCO 69 & Pride Wisconsin (4)
 
January 2014
 
Jackups
 
32.2

 
8.6

 
23.6

 
 
 
 
 
 
$
159.9

 
$
123.7

 
$
36.2


(1) The rigs' operating results were reclassified to discontinued operations in our consolidated statements of operations for each of the years in the three-year period ended December 31, 2016 and were previously included within the specified operating segment.

(2) Includes the rig's net book value as well as inventory and other assets on the date of the sale.

(3) In September 2014, we sold ENSCO 93, a jackup contracted to Pemex. In connection with this sale, we executed a charter agreement with the purchaser to continue operating the rig for the remainder of the Pemex contract, which ended in July 2015, less than one year from the date of sale. Our management services following the sale did not constitute significant ongoing involvement and therefore, the $1.2 million loss on sale was included in loss from discontinued operations, net, in our consolidated statement of operations for the year ended December 31, 2014.

(4) The net proceeds from the sale of ENSCO 69 and Pride Wisconsin were received in December 2013.

The following table summarizes income (loss) from discontinued operations for each of the years in the three-year period ended December 31, 2016 (in millions):
 
 
2016
 
2015
 
2014
Revenues
 
$
—

 
$
19.5

 
$
325.0

Operating expenses
 
3.1

 
39.5

 
372.0

Operating loss
 
(3.1
)
 
(20.0
)
 
(47.0
)
Income tax (benefit) expense
 
(10.1
)
 
(7.7
)
 
30.7

Loss on impairment, net
 
—

 
(120.6
)
 
(1,158.8
)
Gain on disposal of discontinued operations, net
 
1.1

 
4.3

 
37.3

Income (loss) from discontinued operations
 
$
8.1

 
$
(128.6
)
 
$
(1,199.2
)


On a quarterly basis, we reassess the fair values of our held-for-sale rigs to determine whether any adjustments to the carrying values are necessary.  We recorded a non-cash loss on impairment totaling $120.6 million (net of tax benefits of $28.0 million) and $1.2 billion (net of tax benefits of $83.5 million), for the years ended December 31, 2015 and 2014, respectively, as a result of declines in the estimated fair values of our held-for-sale rigs. The loss on impairment was included in loss from discontinued operations, net, in our consolidated statement of operations for the years ended December 31, 2015 and 2014, respectively. We measured the fair value of held-for-sale rigs by applying a market approach, which was based on an unobservable third-party estimated price that would be received in exchange for the assets in an orderly transaction between market participants.

Income tax benefit from discontinued operations for the year ended December 31, 2016 and 2015 included $10.2 million and $12.6 million of discrete tax benefits, respectively.

Debt and interest expense are not allocated to our discontinued operations.