Equity Method Investment In ARO (Tables)

3 Months Ended

Mar. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

Summarized financial information for ARO is as follows (in millions):


	Three Months Ended
	March 31, 2021		March 31, 2020
Revenues	$	122.7	$	140.3
Operating expenses
Contract drilling (exclusive of depreciation)	86.3		108.3
Depreciation	16.1		13.0
General and administrative	3.0		8.3
Operating income	17.3		10.7
Other expense, net	4.5		6.6
Provision for income taxes	4.5		.9
Net income	$	8.3	$	3.2


	March 31, 2021		December 31, 2020
Current assets	$	364.6	$	358.6
Non-current assets	789.0		804.0
Total assets	$	1,153.6	$	1,162.6

Current liabilities	$	52.3	$	70.8
Non-current liabilities	952.1		950.8
Total liabilities	$	1,004.4	$	1,021.6

A reconciliation of those components is presented below (in millions):


	Three Months Ended March 31,
	2021		2020
50% interest in ARO net income	$	4.1	$	1.6
Amortization of basis differences	(2.2)		(7.9)
Equity in earnings (losses) of ARO	$	1.9	$	(6.3)

The following summarizes the total assets and liabilities as reflected in our Condensed Consolidated Balance Sheets as well as our maximum exposure to loss related to ARO (in millions). Our maximum exposure to loss is limited to (1) our equity investment in ARO; (2) the outstanding balance on our shareholder notes receivable; and (3) other receivables and contract assets related to services provided to ARO, partially offset by contract liabilities as well as payables for services received. Contract liabilities related to our Lease Agreements are subject to adjustment during the lease term. The per day bareboat charter amount in the Lease Agreements is subject to adjustment based on actual performance of the respective rig.


	March 31, 2021		December 31, 2020
Total assets	$	582.0	$	585.2
Less: total liabilities	34.9		30.9
Maximum exposure to loss	$	547.1	$	554.3

Schedule of Related Party Transactions

Revenues recognized by us related to the Lease Agreements, Transition Services Agreement and Secondment Agreement are as follows (in millions):


	Three Months Ended March 31,
	2021		2020
Lease revenue	$	16.6	$	21.5
Secondment revenue	.8		18.3
Transition Services revenue	—		3.5
Total revenue from ARO (1)	$	17.4	$	43.3

(1) All of the revenues presented above are included in our Other segment in our segment disclosures. See "Note 14 - Segment Information" for additional information.