XML 36 R24.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Equity Method Investment In ARO (Tables)
 6 Months Ended
Jun. 30, 2024
Equity Method Investments and Joint Ventures [Abstract]  
Equity Method Investments
Summarized financial information for ARO is as follows (in millions):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Revenues$124.2 $117.8 $262.5 $241.4 
Operating expenses
Contract drilling (exclusive of depreciation)94.1 95.0 192.4 185.9 
Depreciation19.7 15.6 38.7 30.6 
General and administrative5.5 5.7 11.3 10.3 
Operating income4.9 1.5 20.1 14.6 
Other expense, net13.4 8.8 26.5 19.2 
Provision (benefit) for income taxes(1.8)— 1.9 1.9 
Net Loss$(6.7)$(7.3)$(8.3)$(6.5)
June 30, 2024December 31, 2023
Cash and cash equivalents$131.7 $92.9 
Other current assets157.8 184.0 
Non-current assets1,214.4 1,081.0 
Total assets$1,503.9 $1,357.9 
Current liabilities$173.2 $136.0 
Non-current liabilities1,172.2 1,056.8 
Total liabilities$1,345.4 $1,192.8 
A reconciliation of those components is presented below (in millions):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
50% interest in ARO net loss$(3.4)$(3.7)$(4.2)$(3.3)
Amortization of basis differences3.1 3.0 6.3 5.9 
Equity in earnings (losses) of ARO$(0.3)$(0.7)$2.1 $2.6 
Schedule of Related Party Transactions
Our balances related to the ARO lease agreements were as follows (in millions):

June 30, 2024December 31, 2023
Amounts receivable (1)
$27.9 $10.2 
Contract liabilities(2)
$22.2 $15.9 
Accounts payable(2)
$13.9 $57.7 

(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 therefore, the corresponding contract liabilities 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. As a result of the Net Settlement Agreement, as defined below, a portion of our accounts payable to ARO was reduced by $50.7 million in June of 2024.
The principal amount and discount of the Notes Receivable from ARO were as follows (in millions):

June 30, 2024December 31, 2023
Principal amount$352.0 $402.7 
Discount(92.8)(120.4)
Carrying value$259.2 $282.3 
Interest receivable(1)(2)
$12.2 $— 

(1)Our interest receivable from ARO is included in Accounts receivable, net in our Condensed Consolidated Balance Sheets.
(2)We collected our 2023 interest on the Notes Receivable from ARO in cash prior to December 31, 2023, and as such, there was no interest receivable from ARO as of December 31, 2023.
Interest income earned on the Notes Receivable from ARO was as follows (in millions):

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Interest income$5.2 $7.6 $12.2 $15.1 
Non-cash amortization (1)(2)
20.6 7.0 27.6 14.0 
Total interest income on the Notes Receivable from ARO$25.8 $14.6 $39.8 $29.1 

(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)The three and six months ended June 30, 2024, includes non-cash interest income of $13.9 million related to the discount attributable to the Net Settlement Agreement.