Fresh Start Accounting (Tables)

12 Months Ended

Dec. 31, 2023

Schedule of Reconciliation of Enterprise Value and Reorganization Value

The following table reconciles the enterprise value to the Successor equity as of the Emergence Effective Date:


	February 5, 2021
Enterprise value	$	1,300,300
Plus: Cash and cash equivalents	111,968
Less: Fair value of debt	(393,500)

Fair value of Successor equity	$	1,018,768

The following table reconciles the enterprise value to the reorganization value as of the Emergence Effective Date:


	February 5, 2021
Enterprise value	$	1,300,300
Plus: Cash and cash equivalents	111,968
Plus: Non-interest bearing current liabilities	185,410
Plus: Non-interest bearing non-current liabilities	108,268
Reorganization value of Successor assets	$	1,705,946

Schedule of Fresh Start Balance Sheet

The following table reflects the reorganization and application of ASC 852 on our consolidated balance sheet as of February 5, 2021:


	Predecessor		Reorganization Adjustments			Fresh Start Adjustments			Successor
ASSETS
Current assets
Cash and cash equivalents	$	317,962	$	(205,994)	(a)	$	—		$	111,968
Accounts receivable, net	189,207		—			—			189,207
Taxes receivable	32,556		—			—			32,556
Prepaid expenses and other current assets	63,056		(20,302)		(b)	(10,073)		(m)	32,681
Total current assets	602,781		(226,296)			(10,073)			366,412
Intangible assets	—		—			113,389		(n)	113,389
Property and equipment, at cost	4,787,661		—			(3,631,936)		(o)	1,155,725
Accumulated depreciation	(1,221,033)		—			1,221,033		(o)	—
Property and equipment, net	3,566,628		—			(2,410,903)			1,155,725
Other assets	69,940		10,983		(c)	(10,503)		(m)	70,420
Total assets	$	4,239,349	$	(215,313)		$	(2,318,090)		$	1,705,946
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	89,215	$	(7,266)	(d)	$	—		$	81,949
Accrued payroll and related costs	35,615		—			—			35,615
Taxes payable	34,211		—			—			34,211

Other current liabilities	64,943		21,305		(e)	(52,613)		(m)	33,635
Total current liabilities	223,984		14,039			(52,613)			185,410
Long-term debt	—		352,054		(f)	41,446		(p)	393,500
Deferred income taxes	9,303		(17,328)		(g)	29,550		(q)	21,525
Other liabilities	108,489		4,659		(h)	(26,405)		(m)	86,743
Liabilities subject to compromise	4,143,812		(4,143,812)		(i)	—			—
Total liabilities	4,485,588		(3,790,388)			(8,022)			687,178
Shareholders’ equity (deficit)
Common stock (Predecessor)	2,511		(2,511)		(j)	—			—
Common stock (Successor)	—		1		(k)	—			1
Additional paid-in capital (Predecessor)	815,505		(815,505)		(j)	—			—
Additional paid-in capital (Successor)	—		1,018,767		(k)	—			1,018,767
Accumulated deficit	(1,006,351)		3,374,323		(l)	(2,367,972)		(r)	—
Accumulated other comprehensive loss	(57,904)		—			57,904		(s)	—
Total shareholders’ equity (deficit)	(246,239)		3,575,075			(2,310,068)			1,018,768
Total liabilities and equity	$	4,239,349	$	(215,313)		$	(2,318,090)		$	1,705,946

Reorganization Adjustments

(a)Represents the reorganization adjustment to cash and cash equivalents:


Proceeds from Rights Offering	$	200,000
Proceeds from the Emergence Revolving Credit Facility, net of issuance costs	167,361
Transfer of cash from restricted cash	300
Payment of professional service fees	(23,261)
Payment of the pre-petition revolving credit facility principal and accrued interest	(550,019)
Deconsolidation of NHUK	(300)
Payment of recurring debt fees	(75)
Change in cash and cash equivalents	$	(205,994)

(b)Represents the reorganization adjustment for the following:


Payment of professional service fees from escrow	$	(12,380)
Payment of Paragon litigation settlement from escrow	(7,700)
Transfer of restricted cash to cash	(300)
Adjustment to miscellaneous receivables related to the deconsolidation of NHUK upon emergence	78
Change in prepaid expenses and other current assets	$	(20,302)

(c)Adjustments to other assets relates to capitalization of long-term debt issuance costs related to the Emergence Revolving Credit Facility of $11.1 million and the impact of reorganization adjustments on deferred tax assets of $(0.1) million.

(d)Adjustments to accounts payable related to the payment of professional fees $(15.2) million and the reinstatement of trade payables from liabilities subject to compromise of $8.0 million.

(e)Adjustment of $21.3 million to other current liabilities related to the reinstatement of liabilities subject to compromise.

(f)Represents $352.1 million of outstanding borrowings, net of financing costs, under the Second Lien Notes and Emergence Revolving Credit Facility.

(g)Represents the write-off of $(17.3) million deferred income taxes as the result of the Company’s internal restructuring.

(h)Represents cancellation of $(0.1) million cash-based compensation plans and the reinstatement of $4.7 million right-of-use lease liabilities.

(i)Liabilities subject to compromise settled or reinstated in accordance with the Plan and the resulting gain were determined as follows:


4.900% senior notes due August 2020	$	62,535
4.625% senior notes due March 2021	79,937
3.950% senior notes due March 2022	21,213
7.750% senior notes due January 2024	397,025
7.950% senior notes due April 2025	450,000
7.875% senior notes due February 2026	750,000
6.200% senior notes due August 2040	393,597
6.050% senior notes due March 2041	395,000
5.250% senior notes due March 2042	483,619
8.950% senior notes due April 2045	400,000
5.958% revolving credit facility maturing Jan. 2023	545,000
Accrued and unpaid interest	110,300
Protection and indemnity insurance liabilities	25,669
Accounts payable and other payables	8,163
Estimated loss on litigation	15,700
Lease liabilities	6,054
Total consolidated liabilities subject to compromise	4,143,812
Issuance of Successor common stock	(854,909)
Issuance of Successor warrants to certain Predecessor creditors	(141,029)
Payment of the pre-petition revolving credit facility principal and accrued interest	(550,020)
Payment of Paragon litigation settlement from escrow	(7,700)
Reinstatement of Transocean litigation liability	(8,000)
Reinstatement of protection and indemnity insurance liabilities	(11,791)
Reinstatement of trade payables and right-of-use lease liabilities	(14,216)
Gain on settlement of liabilities subject to compromise	$	2,556,147

(j)Represents the cancellation of the Predecessor’s common stock of $(2.5) million and Additional paid-in capital of $(815.5) million.

(k)Represents the reorganization adjustments to common stock and additional paid in capital:


Par value of 50 million shares of new common stock issued	$	1
Capital in excess of par value of 50 million issued and authorized shares of new common stock issued	875,931
Fair value of new warrants issued	142,836
Total Successor equity issued on the Emergence Effective Date	$	1,018,768

(l)Represents the reorganization adjustments to accumulated deficit:


Gain on settlement of liabilities subject to compromise	2,556,147
Professional fees and success fees	(15,017)
Write-off of unrecognized share-based compensation	(4,406)
Reorganization items, net	2,536,724
Cancellation of Predecessor common stock and additional paid-in capital	820,299
Cancellation of Predecessor cash and equity compensation plans	2,183
Issuance of Successor warrants to Predecessor equity holders	(1,807)
Deconsolidation of NHUK	(222)
Recognition of recurring debt fees	(75)
Tax impacts of reorganization	17,221
Net impact to Accumulated Deficit	$	3,374,323

Fresh Start Adjustments

(m)Reflects adjustments to capitalized deferred costs, deferred revenue, and pension balances due to the application of fresh start accounting as follows:


	Prepaid expenses and other current assets		Other assets		Other current liabilities		Other liabilities
Deferred contract assets and revenues	$	(10,073)	$	(2,616)	$	(52,616)	$	(20,320)
Write-off of certain financing costs	—		(6,238)		—		—
Pension assets and obligations	—		(1,010)		3		(6,085)
Fair value adjustments to other assets	—		(639)		—		—
	$	(10,073)	$	(10,503)	$	(52,613)	$	(26,405)

(n)Reflects the fair value adjustment of $113.4 million to record an intangible asset for favorable contracts with customers.

(o)Reflects the fair value adjustment of $2.4 billion to property and equipment of the Predecessor. The following table presents a comparison of the historical and new fair values upon emergence:


	Historical Value		Fair Value
Drilling equipment and facilities	$	4,355,384	$	1,070,931
Construction in progress	231,626		75,159
Other	200,651		9,635
Less: accumulated depreciation	(1,221,033)		—
Property and equipment, at cost	$	3,566,628	$	1,155,725

(p)Reflects a fair value adjustment of $41.4 million to the carrying value of the Second Lien Notes due to application of fresh start accounting.

(q)New deferred tax balances of $29.6 million were established for favorable contracts with customers due to application of fresh start accounting.

(r)The following table summarizes the cumulative impact of the fresh start adjustments, as discussed above, the elimination of the Predecessor’s accumulated other comprehensive loss, and the adjustments required to eliminate accumulated deficit:


Fair value adjustment to Prepaid and other current assets	$	(10,073)
Fair value adjustment to Intangible assets	113,389
Fair value adjustment to Property and equipment, net	(2,410,903)
Fair value adjustment to Other assets	(10,503)
Fair value adjustment to Other current liabilities	52,613
Fair value adjustment to Long-term debt	(41,446)
Fair value adjustment to Deferred income taxes	(9,829)
Fair value adjustment to Other liabilities	26,405
Derecognition of Predecessor Accumulated other comprehensive loss	(57,904)
Total fresh start adjustments included in Reorganization items, net	(2,348,251)
Tax impact of fresh start adjustments	(19,721)
Net change in accumulated deficit	$	(2,367,972)

(s)Reflects $57.9 million for the derecognition of Predecessor Accumulated other comprehensive loss through Reorganization items, net.