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Revenues

12 Months Ended

Dec. 31, 2019

Note 6—Revenues

Overview—We earn revenues primarily by performing the following activities: (i) providing our drilling rig, work crews, related equipment and services necessary to operate the rig (ii) delivering the drilling rig by mobilizing to and demobilizing from the drill location, and (iii) performing certain pre-operating activities, including rig preparation activities or equipment modifications required for the contract. These services represent a single performance obligation under our drilling contracts with customers that is satisfied over time.

The duration of our performance obligation varies by contract. At December 31, 2019, the drilling contract with the longest expected remaining duration, excluding unexercised options, extends through February 2028. In the year ended December 31, 2019, we recognized revenues of $10 million for performance obligations satisfied in previous periods due to certain revenues recognized on a cash basis. In the year ended December 31, 2018, we recognized revenues of $174 million for performance obligations satisfied in previous periods, primarily related to revenues for a customer’s contract termination and certain revenues recognized on a cash basis.

To obtain contracts with our customers, we incur pre-operating costs to prepare a rig for contract and deliver or mobilize the rig to the drilling location. We defer such pre-operating costs and recognize the costs on a straight-line basis, consistent with the general pace of activity, in operating and maintenance costs over the estimated contract period. In the years ended December 31, 2019, 2018 and 2017, we recognized pre-operating costs of $18 million, $45 million and $45 million, respectively. At December 31, 2019 and 2018, the unrecognized pre-operating costs to obtain contracts was $34 million and $2 million, respectively, recorded in other assets.

Disaggregation—We recognized revenues as follows (in millions):


		Year ended December 31, 2019
		U.S.			Norway			Brazil			Other			Total

Ultra-deepwater floaters		$	1,264		$	—		$	119		$	574		$	1,957
Harsh environment floaters			—			775			—			294			1,069
Deepwater floaters			—			—			6			1			7
Midwater floaters			—			—			—			55			55
Total revenues		$	1,264		$	775		$	125		$	924		$	3,088


		Year ended December 31, 2018
		U.S.			Norway			Brazil			Other			Total

Ultra-deepwater floaters		$	1,496		$	—		$	26		$	266		$	1,788
Harsh environment floaters			—			651			—			323			974
Deepwater floaters			—			—			84			40			124
Midwater floaters			—			—			—			74			74
High-specification jackups			—			—			—			58			58
Total revenues		$	1,496		$	651		$	110		$	761		$	3,018


		Year ended December 31, 2017
		U.S.			Norway			Brazil			Other			Total

Ultra-deepwater floaters		$	1,519		$	—		$	235		$	294		$	2,048
Harsh environment floaters			8			83			—			365			456
Deepwater floaters			—			—			100			44			144
Midwater floaters			—			—			—			153			153
High-specification jackups			—			—			—			172			172
Total revenues		$	1,527		$	83		$	335		$	1,028		$	2,973

Contract liabilities—We recognize contract liabilities, recorded in other current liabilities and other long-term liabilities, for mobilization, contract preparation, capital upgrades and deferred revenues for declining dayrate contracts using the straight-line method over the remaining contract term. Contract liabilities for our contracts with customers were as follows (in millions):


		December 31,
		2019			2018
Deferred contract revenues, recorded in other current liabilities		$	100		$	87
Deferred contract revenues, recorded in other long-term liabilities			429			399
Total contract liabilities		$	529		$	486

Significant changes in contract liabilities were as follows (in millions):


		Years ended December 31,
		2019			2018
Total contract liabilities, beginning of period		$	486		$	625
Decrease due to recognition of revenues for goods and services			(114)			(239)
Increase due to goods and services transferred over time			157			100
Total contract liabilities, end of period		$	529		$	486