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Segment Information

9 Months Ended

Sep. 30, 2019

Segment Reporting Information, Revenue for Reportable Segment [Abstract]

Segment Information

Segment Information

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, 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 nine-month periods ended September 30, 2019 and 2018 is presented below (in millions):

Three Months Ended September 30, 2019

			Floaters						Jackups						ARO						Other						Reconciling Items						Consolidated Total
Revenues			$	269.8					$	217.8					$	138.4					$	63.7					$	(138.4)					$	551.3
Operating expenses
Contract drilling (exclusive of depreciation)			250.3						213.5						92.7						32.7						(92.7)						496.5
Loss on impairment			88.2						—						—						—						—						88.2
Depreciation			98.1						59.0						14.6						—						(8.7)						163.0
General and administrative			—						—						8.8						—						27.3						36.1
Equity in earnings of ARO			—						—						—						—						(3.7)						(3.7)
Operating income (loss)			$	(166.8)					$	(54.7)					$	22.3					$	31.0					$	(68.0)					$	(236.2)
Property and equipment, net			$	10,187.5					$	5,022.0					$	652.5					$	—					$	(611.3)					$	15,250.7

Three Months Ended September 30, 2018

			Floaters						Jackups						ARO						Other						Reconciling Items						Consolidated Total
Revenues			$	241.8					$	173.3					$	—					$	15.8					$	—					$	430.9
Operating expenses
Contract drilling (exclusive of depreciation)			175.6						136.4						—						15.1						—						327.1
Depreciation			77.8						39.3						—						—						3.5						120.6
General and administrative			—						—						—						—						25.1						25.1
Operating income (loss)			$	(11.6)					$	(2.4)					$	—					$	0.7					$	(28.6)					$	(41.9)
Property and equipment, net			$	9,501.7					$	3,190.2					$	—					$	—					$	39.7					$	12,731.6

Nine Months Ended September 30, 2019

			Floaters						Jackups						ARO						Other						Reconciling Items						Consolidated Total
Revenues			$	798.1					$	604.0					$	262.2					$	139.0					$	(262.2)					$	1,541.1
Operating expenses
Contract drilling (exclusive of depreciation)			681.3						561.1						171.7						87.0						(171.7)						1,329.4
Loss on impairment			88.2												—						—						2.5						90.7
Depreciation			281.3						151.4						26.9						—						(13.7)						445.9
General and administrative			—						—						13.9						—						133.0						146.9
Equity in earnings of ARO			—						—						—						—						(3.1)						(3.1)
Operating income (loss)			$	(252.7)					$	(108.5)					$	49.7					$	52.0					$	(215.4)					$	(474.9)
Property and equipment, net			$	10,187.5					$	5,022.0					$	652.5					$	—					$	(611.3)					$	15,250.7

Nine Months Ended September 30, 2018

			Floaters						Jackups						ARO						Other						Reconciling Items						Consolidated Total
Revenues			$	785.7					$	475.4					$	—					$	45.3					$	—					$	1,306.4
Operating expenses
Contract drilling (exclusive of depreciation)			564.4						390.1						—						42.1						—						996.6
Depreciation			233.9						112.3						—						—						10.3						356.5
General and administrative			—						—						—						—						79.1						79.1
Operating income (loss)			$	(12.6)					$	(27.0)					$	—					$	3.2					$	(89.4)					(125.8)
Property and equipment, net			$	9,501.7					$	3,190.2					$	—					$	—					$	39.7					12,731.6

Information about Geographic Areas 

As of September 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			11						8						—						19						—
Europe & Mediterranean			6						15						—						21						—
Middle East & Africa			5						13						9						27						7
Asia & Pacific Rim			3						7						—						10						—
Asia & Pacific Rim (under construction)			2						—						—						2						—
Held for Sale			1						1						—						2						—
Total			28						44						9						81						7

⁽¹⁾The rigs included in the "Other" segment represent the nine rigs leased to ARO. See Note 4 for additional information.

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- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

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- References

No definition available.

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