Business Segment and Significant Customer Information

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Business Segment and Significant Customer Information

10. Business Segment and Significant Customer Information

Our operations are dependent on the global oil and gas industry and our rigs are relocated based on demand for our services and customer requirements. Our customers consist primarily of large international oil and gas companies, national or government-controlled oil and gas companies, and other international exploration and production companies. As the result of an increase in activity related to operating, management and marketing services for rigs owned by third-parties, the Company has two reportable segments: (1) “Drilling Services,” which includes activities related to owned jackup rigs and drillships and (2) “Managed Services,” which consists of activities related to rigs owned by third-parties. The chief operating decision maker evaluates the performance of our reportable segments using adjusted operating income (loss), which is a segment performance measure, because this financial measure reflects our ongoing profitability and performance. Adjusted operating income (loss) is defined as segment income (loss) from operations plus general and administrative expenses and depreciation. General and administrative expenses, other (expense) income, and income taxes are not allocated to the operating segments for purposes of measuring segment income (loss) from operations and are included in “Unallocated” in the table below. There are no intersegment revenues. Our segment results were as follows:

	Three Months Ended March 31, 2022
	Drilling Services		Managed Services		Unallocated			Consolidated
(unaudited, in thousands)
Revenue
Contract drilling services	$	44,913	$	—	$	—		$	44,913
Management fees		—		1,103		—			1,103
Reimbursables and other		5,183		7,132		—			12,315
Total revenue		50,096		8,235		—			58,331
Operating costs and expenses
Operating costs		36,438		7,495		—			43,933
General and administrative		—		—		6,582			6,582
Depreciation		10,856		—		439			11,295
Total operating costs and expenses		47,294		7,495		7,021			61,810
Income (loss) from operations		2,802		740		(7,021	)		(3,479	)
Other (expense) income
Interest income		—		—		4			4
Interest expense and financing charges		—		—		(8,504	)		(8,504	)
Other, net		—		—		(775	)		(775	)
Total other expense		—		—		(9,275	)		(9,275	)
Income (loss) before income taxes	$	2,802	$	740	$	(16,296	)	$	(12,754	)
Reconciliation of income from operations to segment adjusted operating income:	Drilling Services		Managed Services
Income from operations	$	2,802	$	740
Depreciation		10,856		—
Segment adjusted operating income	$	13,658	$	740

	Three Months Ended March 31, 2021
	Drilling Services			Managed Services		Unallocated			Consolidated
(unaudited, in thousands)
Revenue
Contract drilling services	$	17,725		$	—	$	—		$	17,725
Management fees		—			98		—			98
Reimbursables and other		2,343			—		—			2,343
Total revenue		20,068			98		—			20,166
Operating costs and expenses
Operating costs		25,357			—		—			25,357
General and administrative		—			—		5,495			5,495
Depreciation		13,715			—		410			14,125
Total operating costs and expenses		39,072			—		5,905			44,977
(Loss) income from operations		(19,004	)		98		(5,905	)		(24,811	)
Other (expense) income
Interest income		—			—		100			100
Interest expense and financing charges		—			—		(8,510	)		(8,510	)
Other, net		—			—		(614	)		(614	)
Total other expense		—			—		(9,024	)		(9,024	)
(Loss) income before income taxes	$	(19,004	)	$	98	$	(14,929	)	$	(33,835	)
Reconciliation of (loss) income from operations to segment adjusted operating (loss) income:	Drilling Services			Managed Services
(Loss) income from operations	$	(19,004	)	$	98
Depreciation		13,715			—
Segment adjusted operating (loss) income	$	(5,289	)	$	98

Our revenue by country and segment was as follows for the periods indicated (periods representing revenues of less than 10% are included in “Other countries”):

		Three months ended March 31,
Country	Segment	2022		2021
(unaudited, in thousands)
Egypt	Drilling Services	$	17,121	$	—
India	Drilling Services		13,289		8,855
UAE	Managed Services		8,188		—
Qatar	Drilling Services		7,385		7,197
Indonesia	Drilling Services		—		3,970
Other countries (1)	Drilling Services and Managed Services		12,348		144
Total revenues		$	58,331	$	20,166

(1) “Other countries” represent countries in which we operate that individually had operating revenues representing less than 10% of total revenues earned.

For the three months ended March 31, 2022 and 2021, a substantial amount of our revenue was derived from countries outside of the United States. Consequently, we are exposed to the risk of changes in economic, political and social conditions inherent in foreign operations. Three customers in our Drilling Services segment accounted for approximately 29%, 23% and 13% of consolidated revenue and one customer in our Managed Services segment accounted for approximately 14% of consolidated revenue for the three months ended March 31, 2022. Three customers in our Drilling Services segment accounted for approximately 44%, 36% and 20% of consolidated revenue for the three months ended March 31, 2021.

Information related to the Company’s “Total Assets” as reported on the Consolidated Balance Sheets is not available by reportable segment; however, a substantial portion of our assets are mobile drilling units included in the Drilling Services segment. Asset locations at the end of the period are not necessarily indicative of the geographic distribution of the revenues generated by such assets during the periods. Our property and equipment, net by country, was as follows as of the dates indicated (as of dates representing property and equipment of less than 10% are included in “Other countries”):

	March 31, 2022		December 31, 2021
(unaudited, in thousands)
Egypt	$	168,696	$	173,187
India		92,754		96,583
Indonesia		62,188		63,581
Other countries (1)		45,233		46,253
Total property and equipment	$	368,871	$	379,604

(1) “Other countries” represent countries in which we individually had property and equipment, net, representing less than 10% of total property and equipment, net.