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Equity Method Investment in ARO (Tables)

12 Months Ended

Dec. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

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


	Year Ended December 31, 2022		Year Ended December 31, 2021		Year Ended December 31, 2020
Revenues	$	459.5	$	470.6	$	549.4
Operating expenses
Contract drilling (exclusive of depreciation)	341.8		362.3		388.2
Depreciation	63.4		65.2		54.8
General and administrative	18.7		17.8		24.2
Operating income	35.6		25.3		82.2
Other expense, net	11.1		13.4		26.7
Provision for income taxes	3.8		7.9		14.2
Net income	$	20.7	$	4.0	$	41.3


	December 31, 2022		December 31, 2021
Cash and cash equivalents	$	176.2	$	270.8
Other current assets	140.6		135.0
Non-current assets	818.1		775.8
Total assets	$	1,134.9	$	1,181.6

Current liabilities	$	86.3	$	79.9
Non-current liabilities	884.6		956.7
Total liabilities	$	970.9	$	1,036.6

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


	Successor				Predecessor
	Year Ended December 31, 2022		Eight Months Ended December 31, 2021		Four Months Ended April 30, 2021		Year Ended December 31, 2020
50% interest in ARO net income (loss)	$	10.4	$	(4.0)	$	6.0	$	20.7
Amortization of basis differences	14.1		10.1		(2.9)		(28.5)
Equity in earnings (losses) of ARO	$	24.5	$	6.1	$	3.1	$	(7.8)

The following table summarizes the total assets and liabilities as reflected in our 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 Notes Receivable from ARO; and (3) other receivables and contract assets from ARO, partially offset by contract liabilities as well as payables to ARO.


	December 31, 2022		December 31, 2021
Total assets	$	377.8	$	348.1
Less: total liabilities	59.9		49.1
Maximum exposure to loss	$	317.9	$	299.0

Schedule of Related Party Transactions

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


	Successor				Predecessor
	Year Ended December 31, 2022		Eight Months Ended December 31, 2021		Four Months Ended April 30, 2021		Year Ended December 31, 2020
Lease revenue	$	56.7	$	35.4	$	21.7	$	52.2
Secondment revenue	2.0		1.5		1.1		21.6

Total revenue from ARO (1)	$	58.7	$	36.9	$	22.8	$	73.8

(1) All of the revenues presented above are included in our Other segment in our segment disclosures. See "Note 16- Segment Information" for additional information.

The principal amount and discount of the Notes Receivable from ARO were as follows (in millions):


	December 31, 2022		December 31, 2021
Principal amount	$	402.7	$	442.7
Discount	(148.7)		(193.6)
Carrying value	$	254.0	$	249.1

We collected our 2022 and 2021 interest on the Notes Receivable from ARO from ARO in cash prior to December 31, 2022 and 2021, respectively, and as such, there was no interest receivable for the Notes Receivable from ARO as of December 31, 2022 and 2021.

Interest income earned on the Notes Receivable from ARO was as follows (in millions):


	Successor				Predecessor
	Year Ended December 31, 2022		Eight Months Ended December 31, 2021		Four Months Ended April 30, 2021		Year Ended December 31, 2020
Interest income	$	11.3	$	7.0	$	3.5	$	18.3
Non-cash amortization	44.9		20.8		—		—
Total interest income on the Notes Receivable from ARO	$	56.2	$	27.8	$	3.5	$	18.3