Revenue and Customers

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue and Customers

Note 7 — Revenue and Customers

Disaggregation of Revenue

The following table provides information about contract drilling services revenue by rig types:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Floaters	$	517,755	$	493,983	1,012,222		970,216
Jackups	142,955		112,197		260,913		211,254
Total	$	660,710	$	606,180	$	1,273,135	$	1,181,470

Contract Balances

Accounts receivable are recognized when the right to the consideration becomes unconditional based upon contractual billing schedules. Payment terms on invoiced amounts are typically 30 to 60 days. Customer contract assets and liabilities generally consist of deferred revenue and contract costs resulting from past transactions related to the provision of services under contracts with customers. Current contract asset and liability balances are included in “Prepaid expenses and other current assets” and “Other current liabilities,” respectively, and noncurrent contract assets and liabilities are included in “Other assets” and “Other liabilities,” respectively, on our Condensed Consolidated Balance Sheets. Off-market customer contract assets and liabilities have been recognized in connection with our emergence from Chapter 11 and the Business Combination with Maersk Drilling and are included in “Intangible assets” and “Noncurrent contract liabilities,” respectively.

The following table provides information about contract assets and contract liabilities from contracts with customers:

	June 30, 2024		December 31, 2023
Current customer contract assets	$	22,453	$	4,208
Noncurrent customer contract assets	12,625		208
Total customer contract assets	35,078		4,416
Current deferred revenue	(42,948)		(19,679)
Noncurrent deferred revenue	(28,898)		(23,393)
Total deferred revenue	$	(71,846)	$	(43,072)

Significant changes in the remaining performance obligation contract assets and the contract liabilities balances for the six months ended June 30, 2024 and 2023, are as follows:

	Contract Assets		Contract Liabilities
Net balance at December 31, 2023	$	4,416	$	(43,072)
Amortization of deferred costs	(7,029)		—
Additions to deferred costs	37,691		—
Amortization of deferred revenue	—		23,710
Additions to deferred revenue	—		(52,484)
Total	30,662		(28,774)
Net balance at June 30, 2024	$	35,078	$	(71,846)
Net balance at December 31, 2022	$	11,537	$	(59,797)
Amortization of deferred costs	(14,206)		—
Additions to deferred costs	12,009		—
Amortization of deferred revenue	—		38,481
Additions to deferred revenue	—		(19,575)
Total	(2,197)		18,906
Net balance at June 30, 2023	$	9,340	$	(40,891)

Contract Costs

Certain direct and incremental costs incurred for upfront preparation, initial rig mobilization and modifications are costs of fulfilling a contract and are recoverable. These recoverable costs are deferred and amortized ratably to contract drilling expense as services are rendered over the initial term of the related drilling contract. Certain of our contracts include capital rig enhancements used to satisfy our performance obligations.

Off-market Customer Contract Assets and Liabilities

Upon emergence from Chapter 11 the Company recognized fair value adjustments of $113.4 million related to intangible assets for certain favorable customer contracts, which were fully amortized as of August 2023. In addition, in connection with the Business Combination with Maersk Drilling, the Company recognized additional fair value adjustments of $23.0 million, These intangible assets will be amortized as a reduction of contract drilling services revenue from the Closing Date through the remainder of the contracts.

In connection with the Business Combination with Maersk Drilling, the Company recognized a fair value adjustment of $237.7 million related to certain unfavorable customer contracts acquired. These liabilities will be amortized as an increase to contract drilling services revenue from the Closing Date through the remainder of the contracts.

	Unfavorable contracts		Favorable contracts
Balance at December 31, 2023	$	(50,863)	$	10,128
Amortization	48,622		(5,772)
Balance at June 30, 2024	$	(2,241)	$	4,356
Balance at December 31, 2022	$	(181,883)	$	34,372
Amortization	102,091		(17,354)
Balance at June 30, 2023	$	(79,792)	$	17,018

Estimated future amortization over the expected remaining contract periods:

	For the Year Ended December 31,
	2024		Total
Unfavorable contracts	$	2,241	$	2,241
Favorable contracts	(4,356)		(4,356)
Total	$	(2,115)	$	(2,115)