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Equity Method Investment In ARO (Tables) | 9 Months Ended
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Sep. 30, 2023
Equity Method Investments and Joint Ventures [Abstract] |
Equity Method Investments | Summarized financial information for ARO is as follows (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Revenues | $ | 121.5 |  |  | $ | 111.4 |  |  | $ | 362.9 |  |  | $ | 339.1 |
Operating expenses |  |  |  |  |  |  |
Contract drilling (exclusive of depreciation) | 92.0 |  |  | 90.0 |  |  | 277.9 |  |  | 256.3 |
Depreciation | 15.8 |  |  | 15.4 |  |  | 46.4 |  |  | 47.3 |
General and administrative | 5.6 |  |  | 4.7 |  |  | 15.9 |  |  | 13.1 |
Operating income | 8.1 |  |  | 1.3 |  |  | 22.7 |  |  | 22.4 |
Other expense, net | 9.0 |  |  | 2.7 |  |  | 28.2 |  |  | 9.3 |
Provision (benefit) for income taxes | 0.4 |  |  | (0.1) |  |  | 2.3 |  |  | 3.1 |
Net income (loss) | $ | (1.3) |  |  | $ | (1.3) |  |  | $ | (7.8) |  |  | $ | 10.0 |
| September 30, 2023 |  | December 31, 2022 |  |
Cash and cash equivalents | $ | 110.3 |  |  | $ | 176.2 |  |  |
Other current assets | 191.2 |  |  | 140.6 |  |  |
Non-current assets | 915.3 |  |  | 818.1 |  |  |
Total assets | $ | 1,216.8 |  |  | $ | 1,134.9 |  |  |
Current liabilities | $ | 173.6 |  |  | $ | 86.3 |  |  |
Non-current liabilities | 886.2 |  |  | 884.6 |  |  |
Total liabilities | $ | 1,059.8 |  |  | $ | 970.9 |  |  |
A reconciliation of those components is presented below (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
50% interest in ARO net income (loss) | $ | (0.6) |  |  | $ | (0.7) |  |  | $ | (3.9) |  |  | $ | 5.0 |
Amortization of basis differences | 3.0 |  |  | 3.6 |  |  | 8.9 |  |  | 10.9 |
Equity in earnings of ARO | $ | 2.4 |  |  | $ | 2.9 |  |  | $ | 5.0 |  |  | $ | 15.9 |
Schedule of Related Party Transactions | Our balances related to the ARO lease agreements were as follows (in millions):
| September 30, 2023 |  | December 31, 2022 |  |  |
Amounts receivable (1) | $ | 17.6 |  |  | $ | 12.0 |  |  |  |
Contract liabilities(2) | $ | 13.1 |  |  | $ | 16.7 |  |  |  |
Accounts payable(2) | $ | 54.9 |  |  | $ | 43.2 |  |  |  |
(1)Amounts receivable from ARO is included in Accounts receivable, net in our Condensed Consolidated Balance Sheets. (2)The per day bareboat charter amount in the Lease Agreements is subject to adjustment based on actual performance of the respective rig and as such contract liabilities related to the Lease Agreements are subject to adjustment during the lease term. Upon completion of the lease term, such amount becomes a payable to or a receivable from ARO. The principal amount and discount of the Notes Receivable from ARO were as follows (in millions):
| September 30, 2023 |  | December 31, 2022 |  |  |
Principal amount | $ | 402.7 |  |  | $ | 402.7 |  |  |  |
Discount | (127.5) |  |  | (148.7) |  |  |  |
Carrying value | $ | 275.2 |  |  | $ | 254.0 |  |  |  |
Interest receivable(1)(2) | $ | 22.8 |  |  | $ | — |  |  |  |
(1)Our interest receivable from ARO is included in Accounts receivable, net in our Condensed Consolidated Balance Sheets. (2)We collected our 2022 interest on the Notes Receivable from ARO in cash prior to December 31, 2022, and as such, there was no interest receivable from ARO as of December 31, 2022. Interest income earned on the Notes Receivable from ARO was as follows (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30, |  |  |
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |  |
Interest income | $ | 7.7 |  |  | $ | 2.8 |  |  | $ | 22.8 |  |  | $ | 8.6 |  |  |  |
Non-cash amortization (1)(2) | 7.2 |  |  | 22.4 |  |  | 21.2 |  |  | 37.8 |  |  |  |
Total interest income on the Notes Receivable from ARO | $ | 14.9 |  |  | $ | 25.2 |  |  | $ | 44.0 |  |  | $ | 46.4 |  |  |  |
(1)Represents the amortization of the discount on the Notes Receivable from ARO using the effective interest method to interest income over the term of the notes. (2)We recognized non-cash interest income of $14.8 million in the third quarter of 2022 attributable to a $40.0 million early principal repayment of the Notes Receivable from ARO received in September 2022.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Publisher FASB -URI https://asc.fasb.org//1943274/2147481687/323-10-50-3 + 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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