Segment Information

6 Months Ended

Jun. 30, 2019

Segment Reporting Information, Revenue for Reportable Segment [Abstract]

Prior to the Rowan Transaction, our business consisted of three operating segments: (1) Floaters, which included our drillships and semisubmersible rigs, (2) Jackups and (3) Other, which consisted only of our management services provided on rigs owned by third-parties. Our Floaters and Jackups segments were also reportable segments.

As a result of the Rowan Transaction, we concluded that we would maintain the aforementioned segment structure while adding ARO as a reportable segment for the new combined company. We also concluded that the activities associated with our arrangements with ARO, consisting of our Transition Services Agreement, Rig Lease Agreements and Secondment Agreement, do not constitute reportable segments and are therefore included within Other in the following segment disclosures. Substantially all of the expenses incurred associated with our Transition Services Agreement are included in general and administrative under "Reconciling Items" in the table set forth below.

General and administrative expense and depreciation expense incurred by our corporate office are not allocated to our operating segments for purposes of measuring segment operating income and are included in "Reconciling Items." The full operating results included below for ARO (representing only results of operations of ARO from the Transaction Date) are not included within our consolidated results and thus deducted under "Reconciling Items" and replaced with our equity in earnings of ARO. See Note 4 for additional information on ARO and related arrangements.

Segment information for the three-month and six-month periods ended June 30, 2019 and 2018 is presented below (in millions):

Three Months Ended June 30, 2019



	Floaters			Jackups			ARO		Other		Reconciling Items			Consolidated Total
Revenues	$	295.6		$	229.2		$	123.8	$	59.1	$	(123.8	)	$	583.9
Operating expenses
Contract drilling (exclusive of depreciation)	249.2			212.2			78.9		38.9		(78.9		)	500.3
Loss on impairment	—			—			—		—		2.5			2.5
Depreciation	98.4			55.5			12.4		—		(8.4		)	157.9
General and administrative	—			—			5.3		—		75.9			81.2
Equity in earnings of ARO	—			—			—		—		0.6			0.6
Operating income (loss)	$	(52.0	)	$	(38.5	)	$	27.2	$	20.2	$	(114.3	)	$	(157.4	)
Property and equipment, net	$	10,364.7		$	5,055.6		$	656.5	$	—	$	(621.1	)	$	15,455.7

Three Months Ended June 30, 2018



	Floaters		Jackups			ARO		Other		Reconciling Items			Consolidated Total
Revenues	$	284.9	$	158.7		$	—	$	14.9	$	—		$	458.5
Operating expenses													—
Contract drilling (exclusive of depreciation)	203.7		126.8			—		13.8		—			344.3
Depreciation	80.8		36.5			—		—		3.4			120.7
General and administrative	—		—			—		—		26.1			26.1
Operating income (loss)	$	0.4	$	(4.6	)	$	—	$	1.1	$	(29.5	)	$	(32.6	)
Property and equipment, net	$	9,574.9	$	3,167.0		$	—	$	—	$	42.0		$	12,783.9

Six Months Ended June 30, 2019



	Floaters			Jackups			ARO		Other		Reconciling Items			Consolidated Total
Revenues	$	528.3		$	386.2		$	123.8	$	75.3	$	(123.8	)	$	989.8
Operating expenses														—
Contract drilling (exclusive of depreciation)	431.0			347.6			78.9		54.3		(78.9		)	832.9
Loss on impairment	—			—			—		—		2.5			2.5
Depreciation	183.2			92.4			12.4		—		(5.1		)	282.9
General and administrative	—			—			5.3		—		105.5			110.8
Equity in earnings of ARO	—			—			—		—		0.6			0.6
Operating income (loss)	$	(85.9	)	$	(53.8	)	$	27.2	$	21.0	$	(147.2	)	$	(238.7	)
Property and equipment, net	$	10,364.7		$	5,055.6		$	656.5	$	—	$	(621.1	)	$	15,455.7

Six Months Ended June 30, 2018



	Floaters			Jackups			ARO		Other		Reconciling Items			Consolidated Total
Revenues	$	543.9		$	302.1		$	—	$	29.5	$	—		$	875.5
Operating expenses														—
Contract drilling (exclusive of depreciation)	388.8			253.7			—		27.0		—			669.5
Depreciation	156.1			73.0			—		—		6.8			235.9
General and administrative	—			—			—		—		54.0			54.0
Operating income (loss)	$	(1.0	)	$	(24.6	)	$	—	$	2.5	$	(60.8	)	(83.9		)
Property and equipment, net	$	9,574.9		$	3,167.0		$	—	$	—	$	42.0		12,783.9

Information about Geographic Areas

As of June 30, 2019, the geographic distribution of our and ARO's drilling rigs was as follows:



	Floaters	Jackups	Other ⁽¹⁾	Total Valaris	ARO
North & South America	12	9	—	21	—
Europe & Mediterranean	5	17	—	22	—
Middle East & Africa⁽²⁾	5	11	9	25	7
Asia & Pacific Rim	4	7	—	11	—
Asia & Pacific Rim (under construction)	2	—	—	2	—
Total	28	44	9	81	7


⁽¹⁾	The rigs included in the "Other" segment represent the nine rigs leased to ARO (two of which are expected to commence drilling operations during the third quarter of 2019). See Note 4 for additional information.

⁽²⁾

The number of Middle East & Africa Jackup drilling rigs excludes one older Rowan jackup rig marked for retirement.