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Equity Method Investment In ARO (Tables) | 3 Months Ended | 9 Months Ended
--- | --- | ---
Sep. 30, 2022 | Sep. 30, 2022
Equity Method Investments and Joint Ventures [Abstract] |  |
Equity Method Investments | A reconciliation of those components is presented below (in millions):
| Three Months Ended September 30, |  |  |
| 2022 |  | 2021 |  |  |
50% interest in ARO net income | $ | (0.7) |  |  | $ | (1.3) |  |  |  |
Amortization of basis differences | 3.6 |  |  | 3.9 |  |  |  |
Equity in earnings of ARO | $ | 2.9 |  |  | $ | 2.6 |  |  |  |
| Successor |  |  | Predecessor
| Nine Months Ended September 30, 2022 |  | Five Months Ended September 30, 2021 |  |  | Four Months Ended April 30, 2021
50% interest in ARO net income | $ | 5.0 |  |  | $ | 1.0 |  |  |  | $ | 6.0 |
Amortization of basis differences | 10.9 |  |  | 6.4 |  |  |  | (2.9) |
Equity in earnings of ARO | $ | 15.9 |  |  | $ | 7.4 |  |  |  | $ | 3.1 |
| Summarized financial information for ARO is as follows (in millions):
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, 2022 |  | September 30, 2021 |  | September 30, 2022 |  | September 30, 2021
Revenues |  | $ | 111.4 |  |  | $ | 117.7 |  |  | $ | 339.1 |  |  | $ | 365.2 |
Operating expenses |  |  |  |  |  |  |  |
Contract drilling (exclusive of depreciation) |  | 90.0 |  |  | 94.4 |  |  | 256.3 |  |  | 273.4 |
Depreciation |  | 15.4 |  |  | 16.8 |  |  | 47.3 |  |  | 47.5 |
General and administrative |  | 4.7 |  |  | 5.4 |  |  | 13.1 |  |  | 12.7 |
Operating income |  | 1.3 |  |  | 1.1 |  |  | 22.4 |  |  | 31.6 |
Other expense, net |  | 2.7 |  |  | 3.4 |  |  | 9.3 |  |  | 11.0 |
Provision (benefit) for income taxes |  | (0.1) |  |  | 0.2 |  |  | 3.1 |  |  | 6.6 |
Net income (loss) |  | $ | (1.3) |  |  | $ | (2.5) |  |  | $ | 10.0 |  |  | $ | 14.0 |
|  | September 30, 2022 |  | December 31, 2021
Cash and cash equivalents |  | $ | 173.5 |  |  | $ | 270.8 |
Other current assets |  | 145.6 |  |  | 135.0 |
Non-current assets |  | 800.9 |  |  | 775.8 |
Total assets |  | $ | 1,120.0 |  |  | $ | 1,181.6 |
Current liabilities |  | $ | 87.3 |  |  | $ | 79.9 |
Non-current liabilities |  | 879.5 |  |  | 956.7 |
Total liabilities |  | $ | 966.8 |  |  | $ | 1,036.6 |
The following table 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 carrying amount of our shareholder notes receivable; and (3) other receivables and contract assets from ARO, partially offset by contract liabilities as well as payables to ARO.
| September 30, 2022 |  | December 31, 2021
Total assets | $ | 366.9 |  |  | $ | 348.1 |
Less: total liabilities | 55.4 |  |  | 49.1 |
Maximum exposure to loss | $ | 311.5 |  |  | $ | 299.0 |
Schedule of Related Party Transactions |  | Revenues recognized by us related to the Lease Agreements are as follows (in millions):
| Three Months Ended September 30, |  |  |  |  |  |  |
| 2022 |  | 2021 |  |  |  |  |  |  |
Lease revenue | $ | 13.8 |  |  | $ | 14.2 |  |  |  |  |  |  |  |
| Successor |  |  | Predecessor |  |  |  |
| Nine Months Ended September 30, 2022 |  | Five Months Ended September 30, 2021 |  |  | Four Months Ended April 30, 2021 |  |  |  |
Lease revenue | $ | 42.6 |  |  | $ | 24.5 |  |  |  | $ | 21.7 |  |  |  |  |
The principal amount, discount and interest receivable of the shareholder notes receivable from ARO were as follows (in millions):
| September 30, 2022 |  | December 31, 2021 |  |  |
Principal amount | $ | 402.7 |  |  | $ | 442.7 |  |  |  |
Discount | (155.8) |  |  | (193.6) |  |  |  |
Carrying value | $ | 246.9 |  |  | $ | 249.1 |  |  |  |
Interest receivable(1)(2) | $ | 8.6 |  |  | $ | — |  |  |  |
(1)Our interest receivable from ARO is included in Accounts receivable, net in our Condensed Consolidated Balance Sheet. (2)We collected our 2021 interest on our long-term notes receivable from ARO in cash prior to December 31, 2021, and as such, there was no interest receivable from ARO as of December 31, 2021. Interest income earned on the shareholder notes receivable were as follows (in millions):
| Three Months Ended September 30, |  |  |
| 2022 |  | 2021 |  |  |
Interest income | $ | 2.8 |  |  | $ | 2.7 |  |  |  |
Non-cash amortization | 22.4 |  |  | 6.9 |  |  |  |
Total interest income on the shareholder notes receivable | $ | 25.2 |  |  | $ | 9.6 |  |  |  |
| Successor |  |  | Predecessor
| Nine Months Ended September 30, 2022 |  | Five Months Ended September 30, 2021 |  |  | Four Months Ended April 30, 2021
Interest income | $ | 8.6 |  |  | $ | 4.4 |  |  |  | $ | 3.5 |
Non-cash amortization | 37.8 |  |  | 12.9 |  |  |  | — |
Total interest income on the shareholder notes receivable | $ | 46.4 |  |  | $ | 17.3 |  |  |  | $ | 3.5 |

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- Definition Tabular disclosure of equity method investments including, but not limited to, name of each investee or group of investments, percentage ownership, difference between recorded amount of an investment and the value of the underlying equity in the net assets, and summarized financial information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI https://asc.fasb.org/extlink&oid=114001798&loc=d3e33918-111571 + Details
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- Definition Tabular disclosure of related party transactions. Examples of related party transactions include, but are not limited to, transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners and (d) affiliates. + References No definition available. + Details
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