XML 50 R14.htm IDEA: XBRL DOCUMENT
v3.20.1

Derivative Instruments | 3 Months Ended
--- | ---
Mar. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments Our functional currency is the U.S. dollar. As is customary in the oil and gas industry, a majority of our revenues are denominated in U.S. dollars; however, a portion of the revenues earned and expenses incurred by certain of our subsidiaries are denominated in currencies other than the U.S. dollar. These transactions are remeasured in U.S. dollars based on a combination of both current and historical exchange rates. We use derivatives to reduce our exposure to various market risks, primarily foreign currency exchange rate risk. All derivatives were recorded on our condensed consolidated balance sheets at fair value. Derivatives subject to legally enforceable master netting agreements were not offset on our condensed consolidated balance sheets. Accounting for the gains and losses resulting from changes in the fair value of derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. As of March 31, 2020 and December 31, 2019, our condensed consolidated balance sheets included net foreign currency derivative liabilities of $12.6 million and assets of $5.4 million, respectively. All of our derivative instruments mature during the next 18 months. See "Note 5- Fair Value Measurements" for additional information on the fair value measurement of our derivatives. Derivatives recorded at fair value on our condensed consolidated balance sheets consisted of the following (in millions):
| Derivative Assets |  | Derivative Liabilities
| March 31, 2020 |  | December 31, 2019 |  | March 31, 2020 |  | December 31, 2019
Derivatives Designated as Hedging Instruments |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts - current(1) | $ | 1.0 |  |  | $ | 4.2 |  |  | $ | 10.8 |  |  | $ | .7 |
Foreign currency forward contracts - non-current(2) | .1 |  |  | .8 |  |  | 1.3 |  |  | — |
| $ | 1.1 |  |  | $ | 5.0 |  |  | $ | 12.1 |  |  | $ | .7 |
Derivatives not Designated as Hedging Instruments |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts - current(1) | $ | 1.7 |  |  | $ | 1.3 |  |  | $ | 3.3 |  |  | $ | .2 |
Total | $ | 2.8 |  |  | $ | 6.3 |  |  | $ | 15.4 |  |  | $ | .9 |
(1) | Derivative assets and liabilities that have maturity dates equal to or less than 12 months from the respective balance sheet dates were included in other current assets and accrued liabilities and other, respectively, on our condensed consolidated balance sheets.
(2) | Derivative assets and liabilities that have maturity dates greater than 12 months from the respective balance sheet dates were included in other assets and other liabilities, respectively, on our condensed consolidated balance sheets.
We utilize cash flow hedges to hedge forecasted foreign currency denominated transactions, primarily to reduce our exposure to foreign currency exchange rate risk associated with contract drilling expenses and capital expenditures denominated in various currencies. As of March 31, 2020, we had cash flow hedges outstanding to exchange an aggregate $206.4 million for various foreign currencies, including $119.8 million for British pounds, $55.7 million for Australian dollars, $13.5 million for euros, $8.4 million for Norwegian krone, $5.6 million for Singapore dollars, and $3.4 million for Brazilian reals. Gains and losses, net of tax, on derivatives designated as cash flow hedges included in our condensed consolidated statements of operations and comprehensive loss for the three-month periods ended March 31, 2020 and 2019 were as follows (in millions):
| Loss Recognized in Other Comprehensive Loss ("OCI") on Derivatives (Effective Portion) |  | (Gain) Loss Reclassified from ("AOCI") into Income (Effective Portion)(1)
| 2020 |  | 2019 |  | 2020 |  | 2019
Interest rate lock contracts(2) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | .1 |
Foreign currency forward contracts(3) | (12.9 | ) |  | — |  |  | (.1 | ) |  | 1.5 |
Total | $ | (12.9 | ) |  | $ | — |  |  | $ | (.1 | ) |  | $ | 1.6 |
(1) | Changes in the fair value of cash flow hedges are recorded in AOCI. Amounts recorded in AOCI associated with cash flow hedges are subsequently reclassified into contract drilling, depreciation or interest expense as earnings are affected by the underlying hedged forecasted transaction.
(2) | Losses on interest rate lock derivatives reclassified from AOCI into income were included in interest expense, net, in our condensed consolidated statements of operations.
(3) | During the three months ended March 31, 2020, $0.9 million of losses were reclassified from AOCI into contract drilling expense and $1.0 million of gains were reclassified from AOCI into depreciation expense in our condensed consolidated statement of operations. During the three months ended March 31, 2019, $1.7 million of losses were reclassified from AOCI into contract drilling expense and $0.2 million of gains were reclassified from AOCI into depreciation expense in our condensed consolidated statement of operations.
We have net assets and liabilities denominated in numerous foreign currencies and use various methods to manage our exposure to foreign currency exchange rate risk. We predominantly structure our drilling contracts in U.S. dollars, which significantly reduces the portion of our cash flows and assets denominated in foreign currencies. We occasionally enter into derivatives that hedge the fair value of recognized foreign currency denominated assets or liabilities but do not designate such derivatives as hedging instruments. In these situations, a natural hedging relationship generally exists whereby changes in the fair value of the derivatives offset changes in the fair value of the underlying hedged items. As of March 31, 2020, we held derivatives not designated as hedging instruments to exchange an aggregate $65.0 million for various foreign currencies, including $21.8 million for Euros, $20.7 million for British pounds, $8.3 million for Norwegian krone, $5.5 million for Nigerian Naira, 5.4 million for Egyptian dollars and $3.3 million for other currencies. Net losses of $0.1 million and $3.1 million associated with our derivatives not designated as hedging instruments were included in other, net, in our condensed consolidated statements of operations for the three-month periods ended March 31, 2020 and 2019, respectively. As of March 31, 2020, the estimated amount of net losses associated with derivatives, net of tax, that will be reclassified to earnings during the next 12 months totaled $7.9 million.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration