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Equity Method Investment In ARO (Tables) | 9 Months Ended
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Sep. 30, 2025
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, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
50% interest in ARO net income (loss)(1) | $ | 1.2 |  |  | $ | (27.0) |  |  | $ | (3.6) |  |  | $ | (31.2) |
Amortization of basis differences | 3.2 |  |  | 3.2 |  |  | 9.5 |  |  | 9.5 |
Equity in earnings (losses) of ARO | $ | 4.4 |  |  | $ | (23.8) |  |  | $ | 5.9 |  |  | $ | (21.7) |
(1) ARO's net loss (prior to determining our 50% interest) for the three and nine months ended September 30, 2024 includes a non-cash loss on impairment of $28.4 million related to costs which were capitalized pursuant to certain contractual maintenance and upgrade requirements for VALARIS 143, VALARIS 147 and VALARIS 148. The contracts associated with these rigs were terminated in 2024 in connection with Saudi Arabia’s announcement during the prior year period to limit oil production capacity.
Schedule of Related Party Transactions | Revenues recognized by us related to the Lease Agreements are included within Operating revenues in our Condensed Consolidated Statements of Operations and were as follows (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Revenues from Lease Agreements | $ | 22.5 |  |  | $ | 11.3 |  |  | $ | 52.9 |  |  | $ | 42.9 |
Our balances related to the ARO lease agreements were as follows (in millions):
| September 30, 2025 |  | December 31, 2024 |  |  |
Amounts receivable (1) | $ | 18.7 |  |  | $ | 16.5 |  |  |  |
Contract liabilities (2) | $ | 12.2 |  |  | $ | 14.1 |  |  |  |
Accounts payable (2) | $ | 59.7 |  |  | $ | 43.1 |  |  |  |
(1)Amounts receivable from ARO are 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 amounts become a payable to or a receivable from ARO. In addition, the accounts payable balance includes amounts owed to ARO for certain reimbursable costs. The principal amount and discount of the Notes Receivable from ARO were as follows (in millions):
| September 30, 2025 |  | December 31, 2024 |  |  |
Principal amount | $ | 376.6 |  |  | $ | 376.6 |  |  |  |
Discount | (61.9) |  |  | (80.4) |  |  |  |
Carrying value | $ | 314.7 |  |  | $ | 296.2 |  |  |  |
Interest receivable (1)(2) | $ | 18.0 |  |  | $ | — |  |  |  |
(1)Our interest receivable from ARO is included in Accounts receivable, net in our Condensed Consolidated Balance Sheets. (2)The 2024 interest on the Notes Receivable from ARO of approximately $24.6 million was paid in kind in December 2024 by increasing the principal balance of the Notes Receivable from ARO. Interest income earned on the Notes Receivable from ARO was as follows (in millions):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
Interest income | $ | 10.0 |  |  | $ | 6.2 |  |  | $ | 18.0 |  |  | $ | 18.4 |
Non-cash amortization (1)(2) | 6.2 |  |  | 6.2 |  |  | 18.5 |  |  | 33.8 |
Total interest income on the Notes Receivable from ARO | $ | 16.2 |  |  | $ | 12.4 |  |  | $ | 36.5 |  |  | $ | 52.2 |
(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)During the nine months ended September 30, 2024, we recognized $13.9 million of non-cash interest income attributable to a settlement agreement executed in June 2024 whereby $50.7 million of accounts payable due to ARO was net settled against a portion of the Notes Receivable from ARO.

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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 Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 850 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147483326/850-10-50-1 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 850 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org/1943274/2147483326/850-10-50-1 + Details
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