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Derivative Instruments | 12 Months Ended
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Dec. 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 previously used derivatives to reduce our exposure to various market risks, primarily foreign currency exchange rate risk. The commencement of the Chapter 11 Cases constituted a termination event with respect to the Company’s derivative instruments, which permits the counterparties of our derivative instruments to terminate their outstanding contracts. The exercise of these termination rights are not stayed under the Bankruptcy Code. During September 2020, the counterparties to the Company’s derivative instruments elected to terminate their outstanding derivatives with us for an aggregate settlement of $3.6 million which was recorded as a gain in contract drilling expense in our Consolidated Statement of Operations for the year ended December 31, 2020 related to this termination. All derivatives were recorded on our consolidated balance sheets at fair value. Derivatives subject to legally enforceable master netting agreements were not offset on our consolidated balance sheets. Accounting for the gains and losses resulting from changes in the fair value of derivatives depended on the use of the derivative and whether it qualified for hedge accounting. See "Note 1 - Description of the Business and Summary of Significant Accounting Policies" for additional information on our accounting policy for derivatives. As of December 31, 2019, our consolidated balance sheets included net foreign currency derivative assets of $5.4 million. See "Note 6 - Fair Value Measurements" for additional information on the fair value measurement of our derivatives. Derivatives recorded at fair value on our consolidated balance sheet as of December 31, 2019, consisted of the following (in millions):
|  | Derivative Assets |  | Derivative Liabilities
|  | 2019 |  | 2019
Derivatives Designated as Hedging Instruments |  |  |  |
Foreign currency forward contracts - current(1) |  | $ | 4.2 |  |  | $ | .7 |
Foreign currency forward contracts - non-current(2) |  | .8 |  |  | — |
|  | 5.0 |  |  | .7 |
Derivatives not Designated as Hedging Instruments |  |  |  |
Foreign currency forward contracts - current(1) |  | 1.3 |  |  | .2 |
Total |  | $ | 6.3 |  |  | $ | .9 |
(1)Derivative assets and liabilities that have maturity dates equal to or less than 12 months from the respective balance sheet date were included in other current assets and accrued liabilities and other, respectively, on our consolidated balance sheet. (2)Derivative assets and liabilities that have maturity dates greater than 12 months from the respective balance sheet date were included in other assets and other liabilities, respectively, on our consolidated balance sheet. We have historically utilized 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. Gains and losses, net of tax, on derivatives designated as cash flow hedges included in our consolidated statements of operations and comprehensive loss for each of the years in the three-year period ended December 31, 2020 were as follows (in millions):
| Gain (Loss) Recognized in Other Comprehensive Income ("OCI") on Derivatives (Effective Portion) |  | (Gain) Loss Reclassified from AOCI into Income (Effective Portion)(1) |  | Gain (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)(2)
| 2020 |  | 2019 |  | 2018 |  | 2020 |  | 2019 |  | 2018 |  | 2020 |  | 2019 |  | 2018
Interest rate lock contracts(3) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1.9 |  |  | $ | .2 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign currency forward contracts(4) | (5.4) |  |  | 1.6 |  |  | (9.7) |  |  | (11.6) |  |  | 6.4 |  |  | (1.2) |  |  | — |  |  | — |  |  | (1.9) |
Total | $ | (5.4) |  |  | $ | 1.6 |  |  | $ | (9.7) |  |  | $ | (11.6) |  |  | $ | 8.3 |  |  | $ | (1.0) |  |  | $ | — |  |  | $ | — |  |  | $ | (1.9) |
(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)Gains and losses recognized in income for amounts excluded from effectiveness testing were included in other, net, in our consolidated statements of operations. As a result of our adoption of Update 2017-12 on January 1, 2019, ineffectiveness is no longer separately measured and recognized. (3)Losses on interest rate lock derivatives reclassified from AOCI into income were included in interest expense, net, in our consolidated statements of operations. (4)During the year ended December 31, 2020, $2.0 million of losses were reclassified from AOCI into contract drilling expense and $13.6 million of gains were reclassified from AOCI into depreciation expense in our consolidated statement of operations. During the year ended December 31, 2019, $7.3 million of losses were reclassified from AOCI into contract drilling expense and $0.9 million of gains were reclassified from AOCI into depreciation expense in our consolidated statement of operations. During the year ended December 31, 2018, $400,000 of gains were reclassified from AOCI into contract drilling expense and $800,000 of gains were reclassified from AOCI into depreciation expense in our 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. Historically, we have occasionally entered into derivatives that hedged the fair value of recognized foreign currency denominated assets or liabilities but did not designate such derivatives as hedging instruments. In these situations, a natural hedging relationship generally existed whereby changes in the fair value of the derivatives offset changes in the fair value of the underlying hedged items. As of December 31, 2020, we did not have open derivative contracts to hedge against this risk. Net losses of $0.2 million, $6.4 million and $11.8 million associated with our derivatives not designated as hedging instruments were included in other, net, in our consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018, respectively.

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- 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
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