QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Ticker Symbol(s) | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | ☐ | ☒ | ||||||||||||||||||
Non-Accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
Successor | Predecessor | |||||||||||||
Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||||||||
OPERATING REVENUES | $ | $ | ||||||||||||
OPERATING EXPENSES | ||||||||||||||
Contract drilling (exclusive of depreciation) | ||||||||||||||
Depreciation | ||||||||||||||
General and administrative | ||||||||||||||
Total operating expenses | ||||||||||||||
OTHER OPERATING INCOME | ||||||||||||||
EQUITY IN EARNINGS OF ARO | ||||||||||||||
OPERATING INCOME (LOSS) | ( | |||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||
Interest income | ||||||||||||||
Interest expense, net (Unrecognized contractual interest expense for debt subject to compromise was $ | ( | ( | ||||||||||||
Reorganization items, net | ( | ( | ||||||||||||
Other, net | ( | |||||||||||||
( | ( | |||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | ( | |||||||||||||
PROVISION FOR INCOME TAXES | ||||||||||||||
Current income tax expense | ||||||||||||||
Deferred income tax expense | ||||||||||||||
NET LOSS | ( | ( | ||||||||||||
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | ( | |||||||||||||
NET LOSS ATTRIBUTABLE TO VALARIS | $ | ( | $ | ( | ||||||||||
LOSS PER SHARE - BASIC AND DILUTED | $ | ( | $ | ( | ||||||||||
WEIGHTED-AVERAGE SHARES OUTSTANDING | ||||||||||||||
Basic and Diluted |
Successor | Predecessor | |||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | ||||||||||||||||||
OPERATING REVENUES | $ | $ | $ | |||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Contract drilling (exclusive of depreciation) | ||||||||||||||||||||
Loss on impairment | ||||||||||||||||||||
Depreciation | ||||||||||||||||||||
General and administrative | ||||||||||||||||||||
Total operating expenses | ||||||||||||||||||||
OTHER OPERATING INCOME | ||||||||||||||||||||
EQUITY IN EARNINGS (LOSSES) OF ARO | ( | |||||||||||||||||||
OPERATING INCOME (LOSS) | ( | ( | ||||||||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||||||
Interest income | ||||||||||||||||||||
Interest expense, net (Unrecognized contractual interest expense for debt subject to compromise was $ | ( | ( | ( | |||||||||||||||||
Reorganization items, net | ( | ( | ( | |||||||||||||||||
Other, net | ||||||||||||||||||||
( | ( | ( | ||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES | ( | ( | ||||||||||||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | ||||||||||||||||||||
Current income tax expense (benefit) | ( | |||||||||||||||||||
Deferred income tax expense (benefit) | ( | ( | ||||||||||||||||||
( | ||||||||||||||||||||
NET LOSS | ( | ( | ( | |||||||||||||||||
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | ( | ( | ||||||||||||||||||
NET LOSS ATTRIBUTABLE TO VALARIS | $ | ( | $ | ( | $ | ( | ||||||||||||||
LOSS PER SHARE - BASIC AND DILUTED | $ | ( | $ | ( | $ | ( | ||||||||||||||
WEIGHTED-AVERAGE SHARES OUTSTANDING | ||||||||||||||||||||
Basic and Diluted |
Successor | Predecessor | |||||||||||||
Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||||||||
NET LOSS | $ | ( | $ | ( | ||||||||||
OTHER COMPREHENSIVE INCOME, NET | ||||||||||||||
Net change in fair value of derivatives | ||||||||||||||
Net changes in pension and postretirement plan assets and benefit obligations recognized in other comprehensive income | ( | |||||||||||||
Reclassification of net gains on derivative instruments from other comprehensive income into net loss | ( | |||||||||||||
Other | ( | |||||||||||||
NET OTHER COMPREHENSIVE INCOME | ||||||||||||||
COMPREHENSIVE LOSS | ( | ( | ||||||||||||
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | ( | |||||||||||||
COMPREHENSIVE LOSS ATTRIBUTABLE TO VALARIS | $ | ( | $ | ( |
Successor | Predecessor | |||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | ||||||||||||||||||
NET LOSS | $ | ( | $ | ( | $ | ( | ||||||||||||||
OTHER COMPREHENSIVE LOSS, NET | ||||||||||||||||||||
Net changes in pension and postretirement plan assets and benefit obligations recognized in other comprehensive loss | ( | |||||||||||||||||||
Net change in fair value of derivatives | ( | |||||||||||||||||||
Reclassification of net gains on derivative instruments from other comprehensive loss into net loss | ( | ( | ||||||||||||||||||
Other | ( | |||||||||||||||||||
NET OTHER COMPREHENSIVE LOSS | ( | ( | ( | |||||||||||||||||
COMPREHENSIVE LOSS | ( | ( | ( | |||||||||||||||||
COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | ( | ( | ||||||||||||||||||
COMPREHENSIVE LOSS ATTRIBUTABLE TO VALARIS | $ | ( | $ | ( | $ | ( |
Successor | Predecessor | |||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||
(Unaudited) | ||||||||||||||
ASSETS | ||||||||||||||
CURRENT ASSETS | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Accounts receivable, net | ||||||||||||||
Other current assets | ||||||||||||||
Total current assets | ||||||||||||||
PROPERTY AND EQUIPMENT, AT COST | ||||||||||||||
Less accumulated depreciation | ||||||||||||||
Property and equipment, net | ||||||||||||||
LONG-TERM NOTES RECEIVABLE FROM ARO | ||||||||||||||
INVESTMENT IN ARO | ||||||||||||||
OTHER ASSETS | ||||||||||||||
$ | $ | |||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
CURRENT LIABILITIES | ||||||||||||||
Accounts payable - trade | $ | $ | ||||||||||||
Accrued liabilities and other | ||||||||||||||
Total current liabilities | ||||||||||||||
LONG-TERM DEBT | ||||||||||||||
OTHER LIABILITIES | ||||||||||||||
Total liabilities not subject to compromise | ||||||||||||||
LIABILITIES SUBJECT TO COMPROMISE | ||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||
VALARIS SHAREHOLDERS' EQUITY | ||||||||||||||
Predecessor Class A ordinary shares, U.S. $ | ||||||||||||||
Predecessor Class B ordinary shares, £ | ||||||||||||||
Successor common shares, $ | ||||||||||||||
Successor preference shares, $ | ||||||||||||||
Successor stock warrants | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Retained deficit | ( | ( | ||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Predecessor Treasury shares, at cost, | ( | |||||||||||||
Total Valaris shareholders' equity | ||||||||||||||
NONCONTROLLING INTERESTS | ( | |||||||||||||
Total equity | ||||||||||||||
$ | $ |
Successor | Predecessor | |||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | ||||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | ||||||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||||||
Depreciation expense | ||||||||||||||||||||
Accretion of discount on shareholders note | ( | |||||||||||||||||||
Equity in losses (earnings) of ARO | ( | ( | ||||||||||||||||||
Deferred income tax expense (benefit) | ( | ( | ||||||||||||||||||
Amortization, net | ( | |||||||||||||||||||
Share-based compensation expense | ||||||||||||||||||||
Debt discounts and other | ||||||||||||||||||||
Loss on impairment | ||||||||||||||||||||
Adjustment to gain on bargain purchase | ||||||||||||||||||||
Gain on debt extinguishment | ( | |||||||||||||||||||
Debtor in possession financing fees and payments on Backstop Commitment Agreement | ||||||||||||||||||||
Reorganization items, net | ||||||||||||||||||||
Other | ( | ( | ||||||||||||||||||
Changes in operating assets and liabilities | ( | |||||||||||||||||||
Contributions to pension plans and other post-retirement benefits | ( | ( | ( | |||||||||||||||||
Net cash used in operating activities | ( | ( | ( | |||||||||||||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Additions to property and equipment | ( | ( | ( | |||||||||||||||||
Net proceeds from disposition of assets | ||||||||||||||||||||
Net cash provided by (used in) investing activities | ( | ( | ||||||||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Issuance of first lien notes | ||||||||||||||||||||
Payments to Predecessor creditors | ( | |||||||||||||||||||
Borrowings on credit facility | ||||||||||||||||||||
Debtor in possession financing fees and payments on Backstop Commitment Agreement | ( | |||||||||||||||||||
Repayments of credit facility borrowings | ( | |||||||||||||||||||
Reduction of long-term borrowings | ( | |||||||||||||||||||
Purchase of noncontrolling interests | ( | |||||||||||||||||||
Other | ( | ( | ||||||||||||||||||
Net cash provided by financing activities | ||||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | ( | ( | ( | |||||||||||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | ( | |||||||||||||||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD | ||||||||||||||||||||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD | $ | $ | $ |
$ | |||||
Amounts drawn under the Revolving Credit Facility | |||||
Accrued Interest on Senior Notes and Revolving Credit Facility | |||||
Rig holding costs(1) | |||||
Total liabilities subject to compromise | $ |
Successor | Predecessor | |||||||||||||||||||
Three Months Ended September 30, 2021 | Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Three and Nine Months Ended September 30, 2020 | |||||||||||||||||
DIP Facility fees | $ | $ | $ | $ | ||||||||||||||||
Professional fees | ||||||||||||||||||||
Contract items | ( | |||||||||||||||||||
Reorganization items (fees) | ||||||||||||||||||||
Write-off of unamortized debt discounts, premiums and issuance costs | $ | $ | $ | $ | ||||||||||||||||
Contract items | ||||||||||||||||||||
Backstop premium | ||||||||||||||||||||
Gain on settlement of liabilities subject to compromise | ( | |||||||||||||||||||
Issuance of Common Shares for backstop premium | ||||||||||||||||||||
Issuance of Common Shares to the Shipyard | ||||||||||||||||||||
Write-off of unrecognized share-based compensation expense | ||||||||||||||||||||
Impact of newbuild contract amendments | ||||||||||||||||||||
Loss on fresh start adjustments | ||||||||||||||||||||
Reorganization items (non-cash) | ||||||||||||||||||||
Total reorganization items, net | $ | $ | $ | $ | ||||||||||||||||
Reorganization items (fees) unpaid | $ | $ | $ | $ | ||||||||||||||||
Reorganization items (fees) paid | $ | $ | $ | $ |
April 30, 2021 | |||||
Enterprise Value | $ | ||||
Plus: Cash and cash equivalents | |||||
Less: Fair value of debt | ( | ||||
Less: Warrants | ( | ||||
Less: Noncontrolling interest | |||||
Less: Pension and other post retirement benefits liabilities | ( | ||||
Less: Adjustments not contemplated in Enterprise Value | ( | ||||
Fair value of Successor Common Shares | $ | ||||
Shares issued upon emergence | |||||
Per share value | $ |
April 30, 2021 | |||||
Enterprise Value | $ | ||||
Plus: Cash and cash equivalents | |||||
Plus: Non-interest bearing current liabilities | |||||
Less: Adjustments not contemplated in Enterprise Value | ( | ||||
Reorganization value of Successor assets | $ |
As of April 30, 2021 | |||||||||||||||||||||||
Predecessor | Reorganization Adjustments | Fresh Start Accounting Adjustments | Successor | ||||||||||||||||||||
ASSETS | |||||||||||||||||||||||
CURRENT ASSETS | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | (a) | $ | $ | ||||||||||||||||||
Restricted cash | (b) | ||||||||||||||||||||||
Accounts receivable, net | |||||||||||||||||||||||
Other current assets | (c) | ( | (o) | ||||||||||||||||||||
Total current assets | ( | ||||||||||||||||||||||
PROPERTY AND EQUIPMENT, NET | ( | (d) | ( | (p) | |||||||||||||||||||
LONG-TERM NOTES RECEIVABLE FROM ARO | ( | (q) | |||||||||||||||||||||
INVESTMENT IN ARO | ( | (r) | |||||||||||||||||||||
OTHER ASSETS | ( | (e) | (s) | ||||||||||||||||||||
$ | $ | ( | $ | ( | $ | ||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||||||
CURRENT LIABILITIES | |||||||||||||||||||||||
Accounts payable - trade | $ | $ | (f) | $ | ( | (t) | $ | ||||||||||||||||
Accrued liabilities and other | ( | (g) | ( | (u) | |||||||||||||||||||
Total current liabilities | ( | ||||||||||||||||||||||
LONG-TERM DEBT | (h) | ||||||||||||||||||||||
OTHER LIABILITIES | ( | (i) | ( | (v) | |||||||||||||||||||
Total liabilities not subject to compromise | ( | ||||||||||||||||||||||
LIABILITIES SUBJECT TO COMPROMISE | ( | (j) | |||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||||||||||||
VALARIS SHAREHOLDERS' EQUITY | |||||||||||||||||||||||
Predecessor Class A ordinary shares | ( | (k) | |||||||||||||||||||||
Predecessor Class B ordinary shares | ( | (k) | |||||||||||||||||||||
Successor common shares | (l) | ||||||||||||||||||||||
Successor stock warrants | (m) | ||||||||||||||||||||||
Predecessor additional paid-in capital | ( | (k) | |||||||||||||||||||||
Successor additional paid-in capital | (l) | ||||||||||||||||||||||
Retained deficit | ( | (n) | ( | (w) | |||||||||||||||||||
Accumulated other comprehensive loss | ( | (x) | |||||||||||||||||||||
Predecessor treasury shares | ( | (k) | |||||||||||||||||||||
Total Valaris shareholders' equity | ( | ||||||||||||||||||||||
NONCONTROLLING INTERESTS | ( | ( | |||||||||||||||||||||
Total equity | ( | ||||||||||||||||||||||
$ | $ | ( | $ | ( | $ |
Receipt of cash for First Lien Notes | $ | ||||
Loan proceeds from backstop lenders | |||||
Funds received for liquidation of rabbi trust related to certain employee benefits | |||||
Payments to Predecessor creditors | ( | ||||
Transfer of funds for payment of certain professional fees to escrow account | ( | ||||
Payment for certain professional services fees | ( | ||||
Various other | ( | ||||
$ |
Liquidation of rabbi trust related to certain employee benefits | $ | ( | |||
Elimination of right-of-use asset associated with Newbuild Rigs | ( | ||||
Fair value of options to purchase Newbuild Rigs | |||||
$ | ( |
Professional fees incurred upon emergence | $ | ||||
Payment of professional fees incurred prior to emergence | ( | ||||
Payment of certain accounts payable incurred prior to emergence | ( | ||||
$ |
Elimination of lease liabilities associated with Newbuild Rigs | $ | ( | |||
Elimination of accrued post-petition holding costs associated with Newbuild Rigs | ( | ||||
Payment of certain accrued liabilities incurred prior to emergence | ( | ||||
$ | ( |
Elimination of construction contract intangible liabilities associated with Newbuild Rigs | $ | ( | |||
Elimination of accrued post-petition holding costs associated with Newbuild Rigs | ( | ||||
Elimination of lease liabilities associated with Newbuild Rigs | ( | ||||
$ | ( |
Settlement of liabilities subject to compromise | $ | ||||
Issuance of common stock to Predecessor creditors | ( | ||||
Issuance of common stock to backstop parties | ( | ||||
Payment to Predecessor creditors | ( | ||||
Gain on settlement of liabilities subject to compromise | $ |
Gain on settlement of liabilities subject to compromise | $ | ( | |||
Issuance of Common Shares for backstop premium | |||||
Issuance of Common Shares to the Shipyard | |||||
Write-off of unrecognized share-based compensation expense | |||||
Professional fees and success fees | |||||
Backstop premium | |||||
Impact of newbuild contract amendments | |||||
Reorganization items, net | ( | ||||
Cancellation of Predecessor common shares | ( | ||||
Cancellation of Predecessor treasury shares | |||||
Cancellation of Predecessor additional paid in capital | ( | ||||
Cancellation of equity component of Predecessor convertible notes | ( | ||||
Cancellation of Predecessor cash and equity compensation plans | ( | ||||
Fair value of Warrants | |||||
$ | ( |
Elimination of materials and supplies | $ | ( | |||
Elimination of historical deferred contract drilling expenses | ( | ||||
$ | ( |
Deferred tax impacts of certain fresh start adjustments | $ | ||||
Fair value of contracts with customers | |||||
Fair value adjustments to right-of-use assets | |||||
Elimination of historical deferred contract drilling expenses | ( | ||||
Elimination of other deferred costs | ( | ||||
$ |
Elimination of customer payable balance | $ | ( | |||
Elimination of historical deferred revenues | ( | ||||
Fair value of contracts with customers | |||||
Fair value adjustment to lease liabilities | |||||
$ | ( |
Adjustment to fair value of pension and other post-retirement plan liabilities | $ | ( | |||
Elimination of historical deferred revenue | ( | ||||
Deferred tax impacts of certain fresh start adjustments | |||||
Fair value adjustments to lease liabilities | |||||
Fair value adjustments to other liabilities | |||||
$ | ( |
Fair value adjustments to prepaid and other current assets | $ | ( | |||
Fair value adjustments to property | ( | ||||
Fair value of intangible assets | |||||
Fair value adjustment to investment in ARO | ( | ||||
Fair value adjustment to note receivable from ARO | ( | ||||
Fair value adjustments to other assets | ( | ||||
Fair value adjustments to other current liability | |||||
Fair value of intangible liabilities | ( | ||||
Fair value adjustment to other liabilities | |||||
Elimination of Predecessor accumulated other comprehensive loss | ( | ||||
Total fresh start adjustments included in reorganization items, net | $ | ( | |||
Tax impact of fresh start adjustments | |||||
$ | ( |
Successor | Predecessor | |||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||
Current contract assets | $ | $ | ||||||||||||
Noncurrent contract assets | $ | $ | ||||||||||||
Current contract liabilities (deferred revenue) | $ | $ | ||||||||||||
Noncurrent contract liabilities (deferred revenue) | $ | $ |
Contract Assets | Contract Liabilities | ||||||||||
Balance as of December 31, 2020 (Predecessor) | $ | $ | |||||||||
Revenue recognized in advance of right to bill customer | — | ||||||||||
Increase due to cash received | — | ||||||||||
Decrease due to amortization of deferred revenue that was included in the beginning contract liability balance | — | ( | |||||||||
Decrease due to transfer to receivables during the period | ( | — | |||||||||
Fresh start accounting revaluation | ( | ( | |||||||||
Balance as of April 30, 2021 (Predecessor) | $ | $ | |||||||||
Balance as of May 1, 2021 (Successor) | $ | $ | |||||||||
Revenue recognized in advance of right to bill customer | — | ||||||||||
Increase due to cash received | — | ||||||||||
Decrease due to amortization of deferred revenue that was added during the period | — | ( | |||||||||
Decrease due to transfer to receivables and payables during the period | ( | ( | |||||||||
Balance as of September 30, 2021 (Successor) | $ | $ |
Remaining 2021 | 2022 | 2023 | 2024 and Thereafter | Total | |||||||||||||||||||||||||
Amortization of contract liabilities | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Amortization of deferred costs | $ | $ | $ | $ | $ |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |||||||||||||||||||||||
Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | ||||||||||||||||||||||||||
Depreciation | ||||||||||||||||||||||||||
General and administrative | ||||||||||||||||||||||||||
Operating income | ||||||||||||||||||||||||||
Other expense, net | ||||||||||||||||||||||||||
Provision (benefit) for income taxes | ( | ( | ||||||||||||||||||||||||
Net income (loss) | $ | ( | $ | $ | $ |
September 30, 2021 | December 31, 2020 | |||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Other current assets | ||||||||||||||
Non-current assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Current liabilities | $ | $ | ||||||||||||
Non-current liabilities | ||||||||||||||
Total liabilities | $ | $ |
Successor | Predecessor | |||||||||||||
Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||||||||
50% interest in ARO net income | $ | ( | $ | |||||||||||
Amortization of basis differences | ( | |||||||||||||
Equity in earnings of ARO | $ | $ |
Successor | Predecessor | |||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | ||||||||||||||||||
50% interest in ARO net income | $ | $ | $ | |||||||||||||||||
Amortization of basis differences | ( | ( | ||||||||||||||||||
Equity in earnings (losses) of ARO | $ | $ | $ | ( |
Successor | Predecessor | |||||||||||||
Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||||||||
Lease revenue | $ | $ | ||||||||||||
Secondment and Transition Services revenue | ||||||||||||||
Total revenue from ARO (1) | $ | $ | ||||||||||||
Successor | Predecessor | |||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | ||||||||||||||||||
Lease revenue | $ | $ | $ | |||||||||||||||||
Secondment and Transition Services revenue | ||||||||||||||||||||
Total revenue from ARO (1) | $ | $ | $ |
Successor | Predecessor | |||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||
Total assets | $ | $ | ||||||||||||
Less: total liabilities | ||||||||||||||
Maximum exposure to loss | $ | $ |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||
As of December 31, 2020 (Predecessor) | |||||||||||||||||||||||
Supplemental executive retirement plan assets | |||||||||||||||||||||||
Total financial assets | $ | $ | $ | $ |
Successor | Predecessor | |||||||||||||||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||||||||||
Secured first lien notes due 2028 | $ | $ | $ | $ | ||||||||||||||||||||||
Amounts borrowed under Revolving Credit Facility(2) | ||||||||||||||||||||||||||
Total debt | $ | $ | $ | $ | ||||||||||||||||||||||
Less : Liabilities Subject to Compromise(3) | ||||||||||||||||||||||||||
Total long-term debt | $ | $ | $ | $ | ||||||||||||||||||||||
Successor | Predecessor | ||||||||||||||||
September 30, 2021 | December 31, 2020 | ||||||||||||||||
Drilling rigs and equipment | $ | $ | |||||||||||||||
Work-in-progress | |||||||||||||||||
Other | |||||||||||||||||
$ | $ |
Successor | Predecessor | |||||||||||||
Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||||||||
Service cost (1) | $ | $ | ||||||||||||
Interest cost (2) | ||||||||||||||
Expected return on plan assets(2) | ( | ( | ||||||||||||
Net periodic pension and retiree medical cost (income) | $ | ( | $ | ( |
Successor | Predecessor | |||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | ||||||||||||||||||
Service cost (1) | $ | $ | $ | |||||||||||||||||
Interest cost (2) | ||||||||||||||||||||
Expected return on plan assets(2) | ( | ( | ( | |||||||||||||||||
Amortization of net loss (2) | ||||||||||||||||||||
Net periodic pension and retiree medical cost (income) | $ | ( | $ | ( | $ | ( |
Gain Recognized in Other Comprehensive Loss ("OCI") on Derivatives (Effective Portion) | Gain Reclassified from ("AOCI") into Income (Effective Portion)(1) | ||||||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||
Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | ||||||||||||||||||||
Foreign currency forward contracts(2) | $ | $ | $ | $ | ( | ||||||||||||||||||
Loss Recognized in Other Comprehensive Loss ("OCI") on Derivatives (Effective Portion) | Gain Reclassified from ("AOCI") into Income (Effective Portion)(1) | ||||||||||||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||
Foreign currency forward contracts(3) | $ | $ | $ | ( | $ | $ | ( | $ | ( | ||||||||||||||||||||
Shares | Par Value | Additional Paid-in Capital | Warrants | Retained Earnings (Deficit) | AOCI | Treasury Shares | Non-controlling Interest | ||||||||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2020 (Predecessor) | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||
Shares issued under share-based compensation plans, net | — | — | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Net changes in pension and other postretirement benefits | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Share-based compensation cost | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Net other comprehensive loss | — | — | — | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||
BALANCE, March 31, 2021 (Predecessor) | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||
Shares issued under share-based compensation plans, net | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Share-based compensation cost | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Net other comprehensive loss | — | — | — | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||
Cancellation of Predecessor equity | ( | ( | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of Successor Common Shares and Warrants | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
BALANCE, April 30, 2021 (Predecessor) | $ | $ | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||
BALANCE, May 1, 2021 (Successor) | $ | $ | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | — | — | $ | |||||||||||||||||||||||||||||||||||||||
Net other comprehensive loss | — | — | — | — | — | ( | — | $ | — | ||||||||||||||||||||||||||||||||||||||
BALANCE, June 30, 2021 (Successor) | $ | $ | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||
Share-based compensation cost | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
BALANCE, September 30, 2021 (Successor) | ( | ( |
Shares | Par Value | Additional Paid-in Capital | Retained Earnings (Deficit) | AOCI | Treasury Shares | Non-controlling Interest | |||||||||||||||||||||||||||||||||||
BALANCE, December 31, 2019 (Predecessor) | $ | $ | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Shares issued under share-based compensation plans, net | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||
Repurchase of shares | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||
Share-based compensation cost | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Net other comprehensive loss | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||
BALANCE, March 31, 2020 (Predecessor) | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Shares issued under share-based compensation plans, net | ( | — | — | — | |||||||||||||||||||||||||||||||||||||
Repurchase of shares | — | — | — | — | — | ( | — | ||||||||||||||||||||||||||||||||||
Share-based compensation cost | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Net other comprehensive loss | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||
BALANCE, June 30, 2020 (Predecessor) | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
Shares issued under share-based compensation plans, net | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||
Share-based compensation cost | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Purchase of noncontrolling interests | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||
Net other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
BALANCE, September 30, 2020 (Predecessor) | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( |
Floaters | Jackups | ARO | Other | Reconciling Items | Consolidated Total | ||||||||||||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | ( | ||||||||||||||||||||||||||||||||||
Depreciation | ( | ||||||||||||||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||||||||||||||
Equity in earnings of ARO | |||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Property and equipment, net | $ | $ | $ | $ | $ | ( | $ |
Floaters | Jackups | ARO | Other | Reconciling Items | Consolidated Total | ||||||||||||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | ( | ||||||||||||||||||||||||||||||||||
Depreciation | ( | ||||||||||||||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||||||||||||||
Equity in earnings of ARO | |||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | ( | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Property and equipment, net | $ | $ | $ | $ | $ | ( | $ |
Floaters | Jackups | ARO | Other | Reconciling Items | Consolidated Total | ||||||||||||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | ( | ||||||||||||||||||||||||||||||||||
Loss on impairment | |||||||||||||||||||||||||||||||||||
Depreciation | ( | ||||||||||||||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||||||||||||||
Equity in earnings of ARO | |||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||
Property and equipment, net | $ | $ | $ | $ | $ | ( | $ |
Floaters | Jackups | ARO | Other | Reconciling Items | Consolidated Total | ||||||||||||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | ( | ||||||||||||||||||||||||||||||||||
Depreciation | ( | ||||||||||||||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||||||||||||||
Other operating income | |||||||||||||||||||||||||||||||||||
Equity in earnings of ARO | |||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | $ | ( | $ | $ | $ | ( | $ | ( | ||||||||||||||||||||||||||
Property and equipment, net | $ | $ | $ | $ | $ | ( | $ |
Floaters | Jackups | ARO | Other | Reconciling Items | Consolidated Total | ||||||||||||||||||||||||||||||
Revenues | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | ( | ||||||||||||||||||||||||||||||||||
Loss on impairment | |||||||||||||||||||||||||||||||||||
Depreciation | ( | ||||||||||||||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||||||||||||||
Other operating income | |||||||||||||||||||||||||||||||||||
Equity in losses of ARO | ( | ( | |||||||||||||||||||||||||||||||||
Operating income (loss) | $ | ( | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||||
Property and equipment, net | $ | $ | $ | $ | $ | ( | $ |
Floaters | Jackups | Other | Total Valaris | ARO | |||||||||||||||||||||||||
North & South America | |||||||||||||||||||||||||||||
Europe & the Mediterranean | |||||||||||||||||||||||||||||
Middle East & Africa | |||||||||||||||||||||||||||||
Asia & Pacific Rim | |||||||||||||||||||||||||||||
Held-for-sale | |||||||||||||||||||||||||||||
Total |
Successor | Predecessor | |||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||
Trade | $ | $ | ||||||||||||
Income tax receivable | ||||||||||||||
Other | ||||||||||||||
Allowance for doubtful accounts | ( | ( | ||||||||||||
$ | $ |
Successor | Predecessor | |||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||
Prepaid taxes | $ | $ | ||||||||||||
Prepaid expenses | ||||||||||||||
Deferred costs | ||||||||||||||
Materials and supplies | ||||||||||||||
Other | ||||||||||||||
$ | $ |
Successor | Predecessor | |||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||
Tax receivables | $ | $ | ||||||||||||
Deferred tax assets | ||||||||||||||
Right-of-use assets | ||||||||||||||
Supplemental executive retirement plan assets | ||||||||||||||
Other | ||||||||||||||
$ | $ |
Successor | Predecessor | |||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||
Personnel costs | $ | $ | ||||||||||||
Income and other taxes payable | ||||||||||||||
Deferred revenue | ||||||||||||||
Accrued interest | ||||||||||||||
Lease liabilities | ||||||||||||||
Other | ||||||||||||||
$ | $ |
Successor | Predecessor | |||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||
Unrecognized tax benefits (inclusive of interest and penalties) | $ | $ | ||||||||||||
Pension and other post-retirement benefits | ||||||||||||||
Intangible liabilities | ||||||||||||||
Customer payable | — | |||||||||||||
Other | ||||||||||||||
$ | $ |
Successor | Predecessor | |||||||||||||
September 30, 2021 | December 31, 2020 | |||||||||||||
Pension and other post-retirement benefits | $ | ( | $ | ( | ||||||||||
Currency translation adjustment | ||||||||||||||
Derivative instruments | ||||||||||||||
Other | ( | |||||||||||||
$ | ( | $ | ( |
Successor | Predecessor | |||||||||||||
Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||||||||
Total(1) | % | % | ||||||||||||
BP(2) | % | % | ||||||||||||
Other | % | % | ||||||||||||
% | % |
Successor | Predecessor | |||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | ||||||||||||||||||
Total(1) | % | % | % | |||||||||||||||||
BP(2) | % | % | % | |||||||||||||||||
Other | % | % | % | |||||||||||||||||
% | % | % |
Successor | Predecessor | |||||||||||||
Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||||||||
United Kingdom(1) | $ | $ | ||||||||||||
Norway(1) | ||||||||||||||
U.S. Gulf of Mexico(2) | ||||||||||||||
Saudi Arabia(3) | ||||||||||||||
Mexico(4) | ||||||||||||||
Australia(5) | ||||||||||||||
Other | ||||||||||||||
$ | $ |
Successor | Predecessor | |||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | ||||||||||||||||||
United Kingdom(1) | $ | $ | $ | |||||||||||||||||
Norway(1) | ||||||||||||||||||||
U.S. Gulf of Mexico(2) | ||||||||||||||||||||
Saudi Arabia(3) | ||||||||||||||||||||
Mexico(4) | ||||||||||||||||||||
Australia(5) | ||||||||||||||||||||
Other | ||||||||||||||||||||
$ | $ | $ |
Successor | Predecessor | |||||||||||||
Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||||||||
Revenues | $ | 326.7 | $ | 285.3 | ||||||||||
Operating expenses | ||||||||||||||
Contract drilling (exclusive of depreciation) | 274.3 | 307.2 | ||||||||||||
Depreciation | 24.4 | 122.4 | ||||||||||||
General and administrative | 27.2 | 72.1 | ||||||||||||
Total operating expenses | 325.9 | 501.7 | ||||||||||||
Other operating income | — | 118.1 | ||||||||||||
Equity in earnings of ARO | 2.6 | 3.9 | ||||||||||||
Operating income (loss) | 3.4 | (94.4) | ||||||||||||
Other expense, net | (2.9) | (555.7) | ||||||||||||
Provision for income taxes | 53.3 | 21.9 | ||||||||||||
Net loss | (52.8) | (672.0) | ||||||||||||
Net (income) loss attributable to noncontrolling interests | (1.7) | 1.1 | ||||||||||||
Net loss attributable to Valaris | $ | (54.5) | $ | (670.9) |
Successor | Predecessor | Combined (Non-GAAP) | Predecessor | |||||||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | |||||||||||||||||||||||
Revenues | $ | 529.5 | $ | 397.4 | $ | 926.9 | $ | 1,130.7 | ||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | 443.0 | 337.8 | 780.8 | 1,153.9 | ||||||||||||||||||||||
Loss on impairment | — | 756.5 | 756.5 | 3,646.2 | ||||||||||||||||||||||
Depreciation | 41.0 | 159.6 | 200.6 | 418.4 | ||||||||||||||||||||||
General and administrative | 39.9 | 30.7 | 70.6 | 188.1 | ||||||||||||||||||||||
Total operating expenses | 523.9 | 1,284.6 | 1,808.5 | 5,406.6 | ||||||||||||||||||||||
Other operating income | — | — | — | 118.1 | ||||||||||||||||||||||
Equity in earnings (losses) of ARO | 7.4 | 3.1 | 10.5 | (7.6) | ||||||||||||||||||||||
Operating income (loss) | 13.0 | (884.1) | (871.1) | (4,165.4) | ||||||||||||||||||||||
Other expense, net | (1.5) | (3,563.5) | (3,565.0) | (769.0) | ||||||||||||||||||||||
Provision (benefit) for income taxes | 68.4 | 16.2 | 84.6 | (145.9) | ||||||||||||||||||||||
Net loss | (56.9) | (4,463.8) | (4,520.7) | (4,788.5) | ||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (3.8) | (3.2) | (7.0) | 3.9 | ||||||||||||||||||||||
Net loss attributable to Valaris | $ | (60.7) | $ | (4,467.0) | $ | (4,527.7) | $ | (4,784.6) |
2021 | 2020 | ||||||||||
Floaters | 16 | 16 | |||||||||
Jackups(1) | 33 | 36 | |||||||||
Other(2) | 8 | 9 | |||||||||
Held-for-sale(1)(2)(3) | 2 | 3 | |||||||||
Total Valaris | 59 | 64 | |||||||||
Valaris - Under construction(4) | 2 | 2 | |||||||||
ARO(5) | 7 | 7 | |||||||||
ARO - Under construction (6) | 2 | 2 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Rig Utilization(1) | |||||||||||||||||||||||
Floaters | 28 | % | 11 | % | 27 | % | 25 | % | |||||||||||||||
Jackups | 57 | % | 50 | % | 54 | % | 57 | % | |||||||||||||||
Other (2) | 100 | % | 94 | % | 100 | % | 98 | % | |||||||||||||||
Total Valaris | 56 | % | 45 | % | 55 | % | 53 | % | |||||||||||||||
ARO | 86 | % | 97 | % | 88 | % | 95 | % | |||||||||||||||
Average Day Rates(3) | |||||||||||||||||||||||
Floaters | $ | 189,582 | $ | 190,024 | $ | 194,687 | $ | 188,365 | |||||||||||||||
Jackups | 96,182 | 93,326 | 97,025 | 86,332 | |||||||||||||||||||
Other (2) | 30,589 | 36,144 | 30,956 | 38,660 | |||||||||||||||||||
Total Valaris | $ | 89,827 | $ | 79,574 | $ | 88,694 | $ | 88,286 | |||||||||||||||
ARO | $ | 95,176 | $ | 101,603 | $ | 94,709 | $ | 103,962 |
Floaters | Jackups | ARO | Other | Reconciling Items | Consolidated Total | ||||||||||||||||||||||||||||||
Revenues | $ | 104.3 | $ | 186.3 | $ | 117.7 | $ | 36.1 | $ | (117.7) | $ | 326.7 | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | 90.9 | 140.9 | 94.4 | 14.1 | (66.0) | 274.3 | |||||||||||||||||||||||||||||
Depreciation | 11.4 | 12.1 | 16.8 | .9 | (16.8) | 24.4 | |||||||||||||||||||||||||||||
General and administrative | — | — | 5.4 | — | 21.8 | 27.2 | |||||||||||||||||||||||||||||
Equity in earnings of ARO | — | — | — | — | 2.6 | 2.6 | |||||||||||||||||||||||||||||
Operating income (loss) | $ | 2.0 | $ | 33.3 | $ | 1.1 | $ | 21.1 | $ | (54.1) | $ | 3.4 |
Floaters | Jackups | ARO | Other | Reconciling Items | Consolidated Total | ||||||||||||||||||||||||||||||
Revenues | $ | 57.1 | $ | 186.8 | $ | 145.6 | $ | 41.4 | $ | (145.6) | $ | 285.3 | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | 112.1 | 140.7 | 99.0 | 16.4 | (61.0) | 307.2 | |||||||||||||||||||||||||||||
Depreciation | 55.8 | 52.9 | 14.8 | 11.3 | (12.4) | 122.4 | |||||||||||||||||||||||||||||
General and administrative | — | — | 5.8 | — | 66.3 | 72.1 | |||||||||||||||||||||||||||||
Other operating income | 118.1 | — | — | — | — | 118.1 | |||||||||||||||||||||||||||||
Equity in earnings of ARO | — | — | — | — | 3.9 | 3.9 | |||||||||||||||||||||||||||||
Operating income (loss) | $ | 7.3 | $ | (6.8) | $ | 26.0 | $ | 13.7 | $ | (134.6) | $ | (94.4) |
Floaters | Jackups | ARO | Other | Reconciling Items | Consolidated Total | ||||||||||||||||||||||||||||||
Revenues | $ | 154.0 | $ | 314.8 | $ | 201.7 | $ | 60.7 | $ | (201.7) | $ | 529.5 | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | 136.1 | 236.4 | 157.3 | 23.3 | (110.1) | 443.0 | |||||||||||||||||||||||||||||
Depreciation | 19.3 | 19.9 | 26.5 | 1.7 | (26.4) | 41.0 | |||||||||||||||||||||||||||||
General and administrative | — | — | 8.5 | — | 31.4 | 39.9 | |||||||||||||||||||||||||||||
Equity in earnings of ARO | — | — | — | — | 7.4 | 7.4 | |||||||||||||||||||||||||||||
Operating income (loss) | $ | (1.4) | $ | 58.5 | $ | 9.4 | $ | 35.7 | $ | (89.2) | $ | 13.0 |
Floaters | Jackups | ARO | Other | Reconciling Items | Consolidated Total | ||||||||||||||||||||||||||||||
Revenues | $ | 115.7 | $ | 232.4 | $ | 163.5 | $ | 49.3 | $ | (163.5) | $ | 397.4 | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | 106.0 | 169.3 | 116.1 | 19.8 | (73.4) | 337.8 | |||||||||||||||||||||||||||||
Loss on impairment | 756.5 | — | — | — | — | 756.5 | |||||||||||||||||||||||||||||
Depreciation | 72.1 | 69.7 | 21.0 | 14.8 | (18.0) | 159.6 | |||||||||||||||||||||||||||||
General and administrative | — | — | 4.2 | — | 26.5 | 30.7 | |||||||||||||||||||||||||||||
Equity in earnings of ARO | — | — | — | — | 3.1 | 3.1 | |||||||||||||||||||||||||||||
Operating income (loss) | $ | (818.9) | $ | (6.6) | $ | 22.2 | $ | 14.7 | $ | (95.5) | $ | (884.1) |
Floaters | Jackups | ARO | Other | Reconciling Items | Consolidated Total | ||||||||||||||||||||||||||||||
Revenues | $ | 400.3 | $ | 585.9 | $ | 431.9 | $ | 144.5 | $ | (431.9) | $ | 1,130.7 | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | 451.4 | 510.8 | 319.8 | 65.8 | (193.9) | 1,153.9 | |||||||||||||||||||||||||||||
Loss on impairment | 3,386.2 | 254.3 | — | 5.7 | — | 3,646.2 | |||||||||||||||||||||||||||||
Depreciation | 207.2 | 164.2 | 41.1 | 33.6 | (27.7) | 418.4 | |||||||||||||||||||||||||||||
General and administrative | — | — | 21.2 | — | 166.9 | 188.1 | |||||||||||||||||||||||||||||
Other operating income | 118.1 | — | — | — | — | 118.1 | |||||||||||||||||||||||||||||
Equity in losses of ARO | — | — | — | — | (7.6) | (7.6) | |||||||||||||||||||||||||||||
Operating income (loss) | $ | (3,526.4) | $ | (343.4) | $ | 49.8 | $ | 39.4 | $ | (384.8) | $ | (4,165.4) |
Floaters | Jackups | ARO | Other | Reconciling Items | Consolidated Total | ||||||||||||||||||||||||||||||
Revenues | $ | 269.7 | $ | 547.2 | $ | 365.2 | $ | 110.0 | $ | (365.2) | $ | 926.9 | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||
Contract drilling (exclusive of depreciation) | 242.1 | 405.7 | 273.4 | 43.1 | (183.5) | 780.8 | |||||||||||||||||||||||||||||
Loss on impairment | 756.5 | — | — | — | — | 756.5 | |||||||||||||||||||||||||||||
Depreciation | 91.4 | 89.6 | 47.5 | 16.5 | (44.4) | 200.6 | |||||||||||||||||||||||||||||
General and administrative | — | — | 12.7 | — | 57.9 | 70.6 | |||||||||||||||||||||||||||||
Equity in losses of ARO | — | — | — | — | 10.5 | 10.5 | |||||||||||||||||||||||||||||
Operating income (loss) | $ | (820.3) | $ | 51.9 | $ | 31.6 | $ | 50.4 | $ | (184.7) | $ | (871.1) |
Successor | Predecessor | |||||||||||||
Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | |||||||||||||
Interest income | $ | 9.7 | $ | 4.7 | ||||||||||
Interest expense, net: | ||||||||||||||
Interest expense | (11.3) | (59.9) | ||||||||||||
Capitalized interest | — | .1 | ||||||||||||
(11.3) | (59.8) | |||||||||||||
Reorganization items, net | (6.5) | (497.5) | ||||||||||||
Other, net | 5.2 | (3.1) | ||||||||||||
$ | (2.9) | $ | (555.7) |
Successor | Predecessor | Combined (Non-GAAP) | Predecessor | |||||||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2021 | Nine Months Ended September 30, 2020 | |||||||||||||||||||||||
Interest income | $ | 17.5 | $ | 3.6 | $ | 21.1 | $ | 15.2 | ||||||||||||||||||
Interest expense, net: | ||||||||||||||||||||||||||
Interest expense | (19.3) | (2.4) | (21.7) | (290.6) | ||||||||||||||||||||||
Capitalized interest | — | — | — | 1.4 | ||||||||||||||||||||||
(19.3) | (2.4) | (21.7) | (289.2) | |||||||||||||||||||||||
Reorganization items, net | (10.6) | (3,584.6) | (3,595.2) | (497.5) | ||||||||||||||||||||||
Other, net | 10.9 | 19.9 | 30.8 | 2.5 | ||||||||||||||||||||||
$ | (1.5) | $ | (3,563.5) | $ | (3,565.0) | $ | (769.0) |
Successor | Predecessor | ||||||||||||||||
September 30, 2021 | December 31, 2020 | ||||||||||||||||
Cash and cash equivalents | $ | 620.8 | $ | 325.8 | |||||||||||||
Available DIP Facility capacity(1) | — | 500.0 | |||||||||||||||
Total liquidity | $ | 620.8 | $ | 825.8 | |||||||||||||
Working capital | $ | 800.7 | $ | 746.1 | |||||||||||||
Current ratio(2) | 2.9 | 2.7 |
Successor | Predecessor | Predecessor | ||||||||||||||||||
Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | ||||||||||||||||||
Net cash used in operating activities | $ | (19.0) | $ | (39.8) | $ | (396.4) | ||||||||||||||
Capital expenditures | 23.7 | 8.7 | 82.9 |
Maturity Date | Principal Amount | ||||
October 2027 | $ | 265.0 | |||
October 2028 | 177.7 | ||||
Total | $ | 442.7 |
Successor | Predecessor | |||||||||||||
(in millions) | September 30, 2021 | December 31, 2020 | ||||||||||||
ASSETS | ||||||||||||||
Current assets | $ | 1,159.5 | $ | 901.8 | ||||||||||
Amounts due from non-guarantor subsidiaries, current | 737.5 | 756.5 | ||||||||||||
Amounts due from related party, current | 7.4 | 20.5 | ||||||||||||
Noncurrent assets | 992.0 | 10,514.5 | ||||||||||||
Amounts due from non-guarantor subsidiaries, noncurrent | 1,472.5 | 4,879.2 | ||||||||||||
LIABILITIES AND SHAREHOLDER'S EQUITY | ||||||||||||||
Current liabilities | 368.6 | 369.4 | ||||||||||||
Amounts due to non-guarantor subsidiaries, current | 64.2 | 865.5 | ||||||||||||
Amounts due to related party, current | 14.8 | — | ||||||||||||
Long-term debt | 545.1 | — | ||||||||||||
Noncurrent liabilities | 490.9 | 653.4 | ||||||||||||
Amounts due to non-guarantor subsidiaries, noncurrent | 1,921.2 | 7,848.6 | ||||||||||||
Noncontrolling interest | 2.6 | (4.4) |
Successor | Predecessor | |||||||||||||
(in millions) | Three Months Ended September 30, 2021 | Three Months Ended September 30, 2020 | ||||||||||||
Operating revenues | $ | 294.6 | $ | 335.4 | ||||||||||
Operating revenues from related party | 14.7 | 21.7 | ||||||||||||
Operating costs and expenses | 306.5 | 474.8 | ||||||||||||
Reorganization expense | (6.5) | (82.9) | ||||||||||||
Income (loss) from continuing operations before income taxes | (80.7) | (73.1) | ||||||||||||
Net income (loss) attributable to noncontrolling interest | (1.7) | 1.1 | ||||||||||||
Net income (loss) | (82.4) | (72.0) |
Successor | Predecessor | ||||||||||||||||
(in millions) | Five Months Ended September 30, 2021 | Four Months Ended April 30, 2021 | Nine Months Ended September 30, 2020 | ||||||||||||||
Operating revenues | $ | 520.3 | $ | 384.1 | $ | 1,166.3 | |||||||||||
Operating revenues from related party | 25.5 | 23.1 | 72.2 | ||||||||||||||
Operating costs and expenses | 508.0 | 1,262.2 | 5,286.8 | ||||||||||||||
Reorganization expense | (10.6) | (3,584.1) | (82.9) | ||||||||||||||
Income (loss) from continuing operations before income taxes | 93.1 | (4,337.0) | (3,830.8) | ||||||||||||||
Net income (loss) attributable to noncontrolling interest | (3.8) | (3.2) | 3.9 | ||||||||||||||
Net income (loss) | 89.3 | (4,340.2) | (3,826.9) |
Exhibit Number | Exhibit | ||||||||||
10.1* | |||||||||||
10.2* | |||||||||||
10.3* | |||||||||||
10.4* | |||||||||||
10.5* | |||||||||||
10.6* | |||||||||||
10.7* | |||||||||||
*31.1 | |||||||||||
*31.2 | |||||||||||
**32.1 | |||||||||||
**32.2 | |||||||||||
*101.INS | XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||||||||
*101.SCH | Inline XBRL Taxonomy Extension Schema Document | ||||||||||
*101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||
*101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||
*101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||||||||
*101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||
*104 | The cover page of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL (included with Exhibit 101 attachments). |
Valaris Limited | |||||||||||
Date: | November 2, 2021 | /s/ DARIN GIBBINS | |||||||||
Darin Gibbins Interim Chief Financial Officer and VP — Investor Relations & Treasurer (principal financial officer) | |||||||||||
/s/ COLLEEN W. GRABLE | |||||||||||
Colleen W. Grable Controller (principal accounting officer) |
1. DEFINITIONS | |||||
2. TERMINATION OF EMPLOYMENT | |||||
3. OFFICES AND DIRECTORSHIPS | |||||
4. TERMINATION PAYMENTS AND BENEFITS | |||||
5. CONDITION PRECEDENT | |||||
6. WAIVER OF CLAIMS | |||||
7. WARRANTIES | |||||
8. TAX INDEMNITY | |||||
9. COMPANY PROPERTY | |||||
10. CONFIDENTIAL INFORMATION | |||||
11. INDEPENDENT LEGAL ADVICE | |||||
12. COMPLIANCE WITH LEGISLATION | |||||
13. RESTRICTIVE COVENANTS | |||||
14. FUTURE COOPERATION | |||||
15. WITHOUT PREJUDICE STATUS | |||||
16. THIRD PARTIES RIGHTS | |||||
17. ENTIRE AGREEMENT | |||||
18. SEVERABILITY | |||||
19. COUNTERPARTS | |||||
20. GOVERNING LAW AND JURISDICTION | |||||
Letter from Adviser |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
“Employee” | |||||
/s/ Jonathan Baksht | |||||
Jonathan Baksht | |||||
11 |
/s/ Jonathan Baksht | |||||
Jonathan Baksht |
12 |
Item | Amount / Description | ||||
Cash Severance | $2,035,000, payable in a lump sum within 30 days following the effective date of the Release Agreement | ||||
Bonus for Performance Period of Termination | •$233,750, payable in a lump sum within 30 days following the effective date of the Release Agreement •An additional payment in an amount equal to the excess (if any) of (i) the actual bonus payment the Executive would have earned under the Company’s 2H 2021 bonus program had he remained employed through the payment date for such bonuses with targets and payouts as approved at the June 10, 2021 Board meeting and applicable to Company executives in the plan as of June 10, 2021; and (ii) his target bonus for such program of $233,750, which excess (if any) shall be payable in a lump sum at the time that other 2H 2021 bonuses are paid to Company executives, and in all events by March 15, 2022 | ||||
LTIP Awards | None; All forfeited | ||||
Health Benefit Continuation | Subject to timely election of continuation coverage under COBRA or other applicable law, subsidized COBRA premiums for up to 12 months, in accordance with Appendix A-1.4 of the Severance Plan |
13 |
Outplacement Services | Company-provided outplacement services for up to twelve (12) months following the Termination Date. | ||||
Legal Fees | Reimbursement for reasonable, documented legal fees of up to $10,000 in connection with the review of this Release Agreement. This provision does not include attorneys fees Employee incurred for legal services provided in connection with the exit from bankruptcy. |
14 |
/s/ Elizabeth D. Leykum____________________ Elizabeth D. Leykum Chair of the Board of Directors |
/s/ Anton Dibowitz_______________________ Anton Dibowitz |
/s/ Anton Dibowitz_________________________ Anton Dibowitz Director |
/s/ Darin Gibbins_________________________ Darin Gibbins |
Dated: | November 2, 2021 | ||||||||||
/s/ Anton Dibowitz | |||||||||||
Anton Dibowitz Interim President and Chief Executive Officer |
Dated: | November 2, 2021 | ||||||||||
/s/ Darin Gibbins | |||||||||||
Darin Gibbins Interim Chief Financial Officer and VP — Investor Relations & Treasurer (principal financial officer) |
/s/ Anton Dibowitz | ||||||||
Anton Dibowitz Interim President and Chief Executive Officer | ||||||||
November 2, 2021 |
/s/ Darin Gibbins | ||||||||
Darin Gibbins Interim Chief Financial Officer and VP — Investor Relations & Treasurer (principal financial officer) | ||||||||
November 2, 2021 |
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Condensed Consolidated Statements Of Operations - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |
---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Income Statement [Abstract] | |||||
OPERATING REVENUES | $ 326.7 | $ 285.3 | $ 397.4 | $ 529.5 | $ 1,130.7 |
OPERATING EXPENSES | |||||
Contract Drilling | 274.3 | 307.2 | 337.8 | 443.0 | 1,153.9 |
Asset Impairment Charges | 756.5 | 0.0 | 3,646.2 | ||
Depreciation expense | 24.4 | 122.4 | 159.6 | 41.0 | 418.4 |
General and administrative | 27.2 | 72.1 | 30.7 | 39.9 | 188.1 |
Costs and Expenses | 325.9 | 501.7 | 1,284.6 | 523.9 | 5,406.6 |
OTHER OPERATING INCOME | 0.0 | 118.1 | 0.0 | 0.0 | 118.1 |
Equity in losses (earnings) of ARO | (2.6) | (3.9) | (3.1) | (7.4) | 7.6 |
OPERATING INCOME (LOSS) | 3.4 | (94.4) | (884.1) | 13.0 | (4,165.4) |
OTHER INCOME (EXPENSE) | |||||
Other Interest and Dividend Income | 9.7 | 4.7 | 3.6 | 17.5 | 15.2 |
Interest expense, net | (11.3) | (59.8) | (2.4) | (19.3) | (289.2) |
Reorganization Items | (6.5) | (497.5) | (3,584.6) | (10.6) | (497.5) |
Other Nonoperating Income (Expense) | 5.2 | (3.1) | 19.9 | 10.9 | 2.5 |
OTHER INCOME (EXPENSE), NET | (2.9) | (555.7) | (3,563.5) | (1.5) | (769.0) |
INCOME (LOSS) BEFORE INCOME TAXES | 0.5 | (650.1) | (4,447.6) | 11.5 | (4,934.4) |
Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||||
Current Income Tax Expense (Benefit) | 53.2 | 16.4 | 34.4 | 67.2 | (42.3) |
Deferred income tax expense | 0.1 | 5.5 | (18.2) | 1.2 | (103.6) |
Total provision for income taxes | 53.3 | 21.9 | 16.2 | 68.4 | (145.9) |
Net loss | (52.8) | (672.0) | (4,463.8) | (56.9) | (4,788.5) |
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (1.7) | 1.1 | (3.2) | (3.8) | 3.9 |
NET LOSS ATTRIBUTABLE TO VALARIS | $ (54.5) | $ (670.9) | $ (4,467.0) | $ (60.7) | $ (4,784.6) |
LOSS PER SHARE - BASIC AND DILUTED | |||||
Continuing operations (in dollars per share) | $ (0.73) | $ (3.36) | $ (22.38) | $ (0.81) | $ (24.09) |
WEIGHTED-AVERAGE SHARES OUTSTANDING | |||||
Basic and Diluted (in shares) | 75.0 | 199.4 | 199.6 | 75.0 | 198.6 |
Condensed Consolidated Statement Of Operations (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 4 Months Ended | 9 Months Ended |
---|---|---|---|
Sep. 30, 2020 |
Apr. 30, 2021 |
Sep. 30, 2020 |
|
Income Statement [Abstract] | |||
Contractual interest expense | $ 45.9 | $ 132.9 | $ 45.9 |
Unaudited Condensed Consolidated Financial Statements |
9 Months Ended |
---|---|
Sep. 30, 2021 | |
Unaudited Condensed Consolidated Financial Statements [Abstract] | |
Unaudited Condensed Consolidated Financial Statements | Unaudited Condensed Consolidated Financial Statements We prepared the accompanying condensed consolidated financial statements of Valaris Limited and its subsidiaries (the "Company," "Valaris," "Successor," "our," "we" or "us") in accordance with accounting principles generally accepted in the United States of America ("GAAP"), pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") included in the instructions to Form 10-Q and Article 10 of Regulation S-X. The financial information included in this report is unaudited but, in our opinion, includes all adjustments (consisting of normal recurring adjustments) that are necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. The December 31, 2020 Condensed Consolidated Balance Sheet data was derived from our 2020 audited consolidated financial statements but does not include all disclosures required by GAAP. The preparation of our condensed consolidated financial statements requires us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the related revenues and expenses and disclosures of gain and loss contingencies as of the date of the financial statements. Actual results could differ from those estimates. On August 19, 2020 (the "Petition Date"), Valaris plc ("Legacy Valaris" or "Predecessor") and certain of its direct and indirect subsidiaries (collectively, the "Debtors"), filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code ("Bankruptcy Code") in the Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court"). The Debtors obtained joint administration of their chapter 11 cases under the caption In re Valaris plc, et al., Case No. 20-34114 (MI) (the "Chapter 11 Cases"). In connection with the Chapter 11 Cases, on and prior to April 30, 2021 (the "Effective Date"), Legacy Valaris effectuated certain restructuring transactions, pursuant to which the successor company, Valaris, was formed and through a series of transactions Legacy Valaris transferred to a subsidiary of the Successor substantially all of the subsidiaries, and other assets, of Legacy Valaris. References to the financial position and results of operations of the "Successor" or "Successor Company" relate to the financial position and results of operations of the Company after the Effective Date. References to the financial position and results of operations of the "Predecessor" or "Predecessor Company" refer to the financial position and results of operations of Legacy Valaris on and prior to the Effective Date. References to the “Company,” “we,” “us” or “our” in this Quarterly Report are to Valaris Limited, together with its consolidated subsidiaries, when referring to periods following the Effective Date, and to Legacy Valaris, together with its consolidated subsidiaries, when referring to periods prior to and including the Effective Date. Results of operations for the four months ended April 30, 2021 (Predecessor) and five months ended September 30, 2021 (Successor) are not necessarily indicative of the results of operations that will be realized from September 30, 2021 to December 31, 2021 (Successor), or for any future period. We recommend these condensed consolidated financial statements be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 2, 2021. Bankruptcy and Fresh Start Accounting On the Effective Date, the Debtors emerged from the Chapter 11 Cases. Upon emergence from the Chapter 11 Cases, we qualified for and adopted fresh start accounting. The application of fresh start accounting resulted in a new basis of accounting, and the Company became a new entity for financial reporting purposes. Accordingly, our financial statements and notes after the Effective Date are not comparable to our financial statements and notes on and prior to that date. Furthermore, the unaudited condensed consolidated financial statements and notes have been presented with a black line division to delineate the lack of comparability between the Predecessor and Successor. See “Note 2 – Chapter 11 Proceedings” and "Note 3 - Fresh Start Accounting" for additional details regarding the bankruptcy and fresh start accounting. Changes in Accounting Policies Upon emergence from bankruptcy, we elected to change our accounting policies related to property and equipment as well as materials and supplies. Prior to emergence from bankruptcy, we recorded our drilling rigs as a single asset with a useful life ascribed by the expected useful life of that asset. Upon emergence, we have identified the significant components of our drilling rigs and ascribed useful lives based on the expected time until the next required overhaul or the end of the expected economic lives of the components. Historically, we recognized materials and supplies on the balance sheet when purchased and subsequently expensed items when consumed. Following emergence, materials and supplies will be expensed as a period cost when received. Additionally, a customer arrangement provides that we take title to their materials and supplies for the duration of the contract and return or pay cash for them at the termination of the contract. Together with our policy change on materials and supplies, we elected to record these assets and the obligation to our customer on a net basis as opposed to on a gross basis. New Accounting Pronouncements Recently adopted accounting pronouncements Income Taxes - In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("Update 2019-12"), which removes certain exceptions for investments, intraperiod allocations and interim tax calculations and adds guidance to reduce complexity in accounting for income taxes. The various amendments in Update 2019-12 are applied on a retrospective basis, modified retrospective basis and prospective basis, depending on the amendment. We adopted Update 2019-12 effective January 1, 2021 with no material impact to our financial statements upon adoption. Accounting pronouncements to be adopted Reference Rate Reform - In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("Update 2020-04"), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in Update 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, for which an entity has elected certain optional expedients and that are retained through the end of the hedging relationship. The provisions in Update 2020-04 are effective upon issuance and can be applied prospectively through December 31, 2022. We are in the process of evaluating the impact this amendment will have on our condensed consolidated financial statements. Leases - In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842); Lessors - Certain Leases with Variable Lease Payments, ("Update 2021-05") which requires a lessor to classify a lease with entirely or partially variable payments that do not depend on an index or rate as an operating lease if another classification (i.e. sales-type or direct financing) would trigger a day-one loss. Update 2021-05 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. We are in the process of evaluating the impact this amendment will have on our condensed consolidated financial statements. With the exception of the updated standards discussed above, there have been no accounting pronouncements issued and not yet effective that have significance, or potential significance, to our condensed consolidated financial statements.
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Chapter 11 Proceedings and Ability to Continue as a Going Concern |
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Reorganizations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chapter 11 Proceedings and Ability to Continue as a Going Concern | Chapter 11 Proceedings Chapter 11 Cases and Emergence from Chapter 11 On the Petition Date, the Debtors filed voluntary petitions for reorganization under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Debtors obtained joint administration of the Chapter 11 Cases under the caption In re Valaris plc, et al., Case No. 20-34114 (MI). On March 3, 2021, the Bankruptcy Court confirmed the Debtors' chapter 11 plan of reorganization. On the Effective Date, we successfully completed our financial restructuring and together with the Debtors emerged from the Chapter 11 Cases. Upon emergence from the Chapter 11 Cases, we eliminated $7.1 billion of debt and obtained a $520 million capital injection by issuing the first lien secured notes (the "First Lien Notes"). See “Note 11 - Debt" for additional information on the First Lien Notes. On the Effective Date, the Legacy Valaris Class A ordinary shares were cancelled and common shares of Valaris with a nominal value of $0.01 per share (“Common Shares”) were issued. Also, former holders of Legacy Valaris' equity were issued warrants (the "Warrants") to purchase Common Shares. Below is a summary of the terms of the plan of reorganization: •Appointed six new members to the Company's Board of Directors to replace all of the directors of Legacy Valaris, other than the director also serving as President and Chief Executive Officer at the Effective Date, who was re-appointed pursuant to the plan of reorganization. All but one of the seven new directors, became directors as of the Effective Date and one became a director on July 1, 2021. •Obligations under Legacy Valaris's outstanding senior notes (the "Senior Notes") were cancelled and the related indentures were cancelled, except to the limited extent expressly set forth in the plan of reorganization and the holders thereunder received the treatment as set forth in the plan of reorganization; •The Legacy Valaris revolving credit facility (the "Revolving Credit Facility") was terminated and the holders thereunder received the treatment as set forth in the plan of reorganization; •Holders of the Senior Notes received their pro rata share of (1) 38.48%, or 28,859,900, of Common Shares and (2) approximately 97.6% of the subscription rights to participate in the rights offering (the "Rights Offering") through which the Company offered $550 million of the First Lien Notes, which includes the backstop premium; •Holders of the Senior Notes who participated in the Rights Offering received their pro rata share of approximately 29.3%, or 21,975,000, of Common Shares, and senior noteholders who agreed to backstop the Rights Offering received their pro rata share of approximately 2.63%, or 1,975,500 of Common Shares and approximately $48.8 million in First Lien Notes as a backstop premium; •Certain Revolving Credit Facility lenders ("RCF Lenders") who participated in the Rights Offering received their pro rata share of approximately 0.7%, or 525,000 Common Shares, RCF Lenders who agreed to backstop the Rights Offering received their pro rata share of 0.07%, or 49,500 of Common Shares and approximately $1.2 million in First Lien Notes as a backstop premium; •Senior noteholders, solely with respect to Pride International LLC's 6.875% senior notes due 2020 and 7.875% senior notes due 2040, Ensco International 7.20% Debentures due 2027, and the 4.875% senior notes due 2022, 4.75% senior notes due 2024, 7.375% senior notes due 2025, 5.4% senior notes due 2042 and 5.85% senior notes due 2044, received an aggregate cash payment of $26.0 million in connection with settlement of certain alleged claims against the Company; •The two RCF Lenders who chose to participate in the Rights Offering received their pro rata share of (1) 5.3%, or 4,005,000 of Common Shares (2) approximately 2.427% of the First Lien Notes (and associated Common Shares), (3) $7.8 million in cash, and (4) their pro rata share of the backstop premium. The RCF Lenders who entered into the amended restructuring support agreement and elected not to participate in the Rights Offering received their pro rata share of (1) 22.980%, or 17,235,000 of Common Shares and (2) $96.1 million in cash; •Holders of general unsecured claims are entitled to receive payment in full within ninety days after the later of (a) the Effective Date and (b) the date such claim comes due; •375,000 Common Shares were issued and $5.0 million was paid to Daewoo Shipbuilding & Marine Engineering Co., Ltd (the "Shipyard"); •Legacy Valaris Class A ordinary shares were cancelled and holders received 5,645,161 in Warrants exercisable for one Common Share per Warrant at initial exercise price of $131.88 per Warrant, in each case as may be adjusted from time to time pursuant to the applicable warrant agreement. The Warrants are exercisable for a period of seven years and will expire on April 29, 2028; •All equity-based awards of Legacy Valaris that were outstanding were cancelled; •On the Effective Date, Valaris Limited entered into a registration rights agreement with certain parties who received Common Shares; •On the Effective Date, Valaris Limited entered into a registration rights agreement with certain parties who received First Lien Notes; and •There were no borrowings outstanding against our debtor-in-possession ("DIP") facility and there were no DIP claims that were not due and payable on, or that otherwise survived, the Effective Date. The DIP Credit Agreement terminated on the Effective Date. Management Incentive Plan In accordance with the plan of reorganization, Valaris Limited adopted the 2021 Management Incentive Plan (the “MIP”) as of the Effective Date and authorized and reserved 8,960,573 Common Shares for issuance pursuant to equity incentive awards to be granted under the MIP, which may be in the form of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalents and cash awards or any combination thereof. Liabilities Subject to Compromise The Debtors' pre-petition Senior Notes and related unpaid accrued interest as of the Petition Date were classified as Liabilities Subject to Compromise on our Condensed Consolidated Balance Sheets as of December 31, 2020. The liabilities were reported at the amounts expected to be allowed as claims by the Bankruptcy Court. Liabilities subject to compromise at December 31, 2020 (Predecessor) consisted of the following (in millions):
(1) Represents the holding costs incurred to maintain VALARIS DS-13 and VALARIS DS-14 in the shipyard. The contractual interest expense on the outstanding Senior Notes and the Revolving Credit Facility was in excess of recorded interest expense by $132.9 million for the four months ended April 30, 2021 (Predecessor). The contractual interest expense on the Predecessor's Senior Notes and Revolving Credit Facility was in excess of recorded interest expense by $45.9 million for both the three and nine months ended September 30, 2020 (Predecessor). This excess contractual interest was not included as interest expense on our Condensed Consolidated Statements of Operations, as we had discontinued accruing interest on the Predecessor's Senior Notes and Revolving Credit Facility subsequent to the Petition Date. The Predecessor discontinued making interest payments on the Senior Notes beginning in June 2020. Pre-petition Charges We have reported the backstop commitment fee and legal and other professional advisor fees incurred in relation to the Chapter 11 Cases, but prior to the Petition Date, as general and administrative expenses in our unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2020 (Predecessor) in the amount of $42.6 million and $64.7 million, respectively. Reorganization Items Expenditures, gains and losses that are realized or incurred by the Debtors as of or subsequent to the Petition Date and as a direct result of the Chapter 11 Cases are reported as Reorganization items, net in our Condensed Consolidated Statements of Operations for the three and five months ended September 30, 2021 (Successor), four months ended April 30, 2021 (Predecessor) and three and nine months ended September 30, 2020 (Predecessor). These costs include legal and other professional advisory service fees pertaining to the Chapter 11 Cases, contract items related to rejecting certain operating leases ("Contract items") and the effects of the emergence from bankruptcy, including the application of fresh start accounting. Additionally, the three and nine months ended September 30, 2020 (Predecessor) included all adjustments made to the carrying amount of certain pre-petition liabilities reflecting claims that were expected to be allowed by the Bankruptcy Court and DIP Facility Fees. The components of reorganization items, net were as follows (in millions):
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Fresh Start Accounting Applicability of Fresh Start Accounting Upon emergence from bankruptcy, we qualified for and applied fresh start accounting, which resulted in the Company becoming a new entity for financial reporting purposes because (1) the holders of the then existing Class A ordinary shares of the Predecessor received less than 50 percent of the Common Shares of the Successor outstanding upon emergence and (2) the reorganization value of the Company’s assets immediately prior to confirmation of the plan of reorganization was less than the total of all post-petition liabilities and allowed claims. The reorganization value derived from the range of enterprise values associated with the plan of reorganization was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their fair values (except for deferred income taxes). The amount of deferred income taxes recorded was determined in accordance with the applicable income tax accounting standard. The April 30, 2021 fair values of the Company’s assets and liabilities differ materially from their recorded values as reflected on the historical balance sheets. Reorganization Value The reorganization value represents the fair value of the Successor's total assets and was derived from the enterprise value associated with the plan of reorganization, which represents the estimated fair value of an entity's long-term debt and equity less unrestricted cash upon emergence from chapter 11. As set forth in the disclosure statement and approved by the bankruptcy court, third-party valuation advisors estimated the enterprise value to be between $1,860.0 million and $3,145.0 million. The enterprise value range of the reorganized Debtors was determined primarily by using a discounted cash flow analysis. The value agreed in the plan of reorganization is indicative of an enterprise value at the low end of this range, or $1,860.0 million. The following table reconciles the enterprise value to the estimated fair value of Successor Common Shares as of the Effective Date (in millions, except per share value):
The following table reconciles the enterprise value to the reorganization value as of the Effective Date (in millions):
Adjustments not contemplated in Enterprise Value represent certain obligations of the Successor that were either not contemplated or contemplated in a different amount in the forecasted cash flows of the enterprise valuation performed by third-party valuation advisors that had they incorporated those anticipated cash flows into their analysis, the resulting valuation would have been different. For the reconciliation of Reorganization value of Successor assets, this item includes certain tax balances, contract liabilities, as well as an adjustment for the fair value of pension obligations. The reconciliation to Successor Common Share value includes these same reconciling items as well as other current and non-current liabilities of the Successor at the emergence. The enterprise value and corresponding implied equity value are dependent upon achieving the future financial results set forth in the valuation utilizing assumptions regarding future day rates, utilization, operating costs and capital requirements as of the emergence date. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, there is no assurance that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially. Valuation Process The fair values of the Company's principal assets and liabilities including property, plant and equipment as well as our 50% equity interest in Saudi Aramco Rowan Offshore Drilling Company ("ARO") and our notes receivable from ARO, the First Lien Notes, pensions and Warrants were estimated with the assistance of third-party valuation advisors. Property, Plant and Equipment The valuation of the Company’s drilling rigs was estimated by using an income approach or estimated sales price. These valuations were based on unobservable inputs that require significant judgments for which there is limited information, including, in the case of an income approach, assumptions regarding future day rates, utilization, operating costs, reactivation costs and capital requirements. In developing these assumptions, forecasted day rates and utilization took into account current market conditions and our anticipated business outlook. The cash flows were discounted at our weighted average cost of capital ("WACC"), which was derived from a blend of our after-tax cost of debt and our cost of equity, and computed using public share price information for similar offshore drilling market participants, certain U.S. Treasury rates and certain risk premiums specific to the Company. Our remaining property and equipment including owned real estate and other equipment was valued using a cost approach, in which the estimated replacement cost of the assets was adjusted for physical depreciation and obsolescence, where applicable, to arrive at estimated fair value. The estimated fair value of our property and equipment includes an adjustment to reconcile to our reorganization value. Notes Receivable from ARO The fair value of the long-term notes receivable from ARO was estimated using an income approach to value the forecasted cash flows attributed to the note receivable using a discount rate based on a comparable yield with a country-specific risk premium. Investment in ARO We estimated the fair value of the equity investment in ARO primarily by applying an income approach, using projected discounted cash flows of the underlying assets, a risk-adjusted discount rate and an estimated effective income tax rate. First Lien Notes The fair value of the First Lien Notes was determined to approximate the par value based on third-party valuation advisors’ analysis of the Company’s collateral coverage, financial metrics, and interest rate for the First Lien Notes relative to market rates of recent placements of a similar term for industry participants with similar credit risk. Pensions Our pension and other postretirement benefit liabilities and costs are based upon actuarial computations that reflect our assumptions about future events, including long-term asset returns, interest rates, annual compensation increases, mortality rates and other factors. Upon emergence, our pension and other post retirement plans were remeasured as of the Effective Date. Key assumptions at the Effective Date included (1) a weighted average discount rate of 2.81% to determine pension benefit obligations and (2) an expected long-term rate of return on pension plan assets of 6.03% to determine net periodic pension cost. Warrants The fair value of the Warrants was determined using an option pricing model considering the contractual terms of the Warrant issuance. The key market data assumptions for the option pricing model are the estimated volatility and the risk-free rate. The volatility assumption was estimated using market data for offshore drilling market participants with consideration for differences in leverage. The risk-free rate assumption was based on U.S. Treasury Constant Maturity rates with a comparable term. Condensed Consolidated Balance Sheet The adjustments included in the following condensed consolidated balance sheet reflect the effects of the transactions contemplated by the plan of reorganization and executed by the Company on the Effective Date (reflected in the column “Reorganization Adjustments”), and fair value and other required accounting adjustments resulting from the adoption of fresh start accounting (reflected in the column “Fresh Start Accounting Adjustments”). The explanatory notes provide additional information with regard to the adjustments recorded.
Reorganization Adjustments (a)Cash Represents the reorganization adjustments (in millions):
(b)Restricted cash Reflects the reorganization adjustment to record the transfer of cash for payment of certain professional fees to restricted cash, which will be held in escrow until billings from professionals have been received and reconciled at which time the funds in the account will be released. (c)Other current asset Reflects certain prepayments incurred upon emergence. (d)Property and Equipment, net Reflects the reorganization adjustment to remove $417.6 million of work-in-process related to the Newbuild Rigs. These values have been removed from property and equipment, net, based on the terms of the amended agreements with the Shipyard. As a result of the option to take delivery, we removed the historical work-in-process balances from the balance sheet. (e)Other assets Represents the reorganization adjustments (in millions):
Our supplemental executive retirement plans (the "SERPs") are non-qualified plans that provided eligible employees an opportunity to defer a portion of their compensation for use after retirement. The SERPs were frozen to the entry of new participants in November 2019 and to future compensation deferrals as of January 1, 2020. Upon emergence, assets previously held in a rabbi trust maintained for the SERP were liquidated and the SERPs were amended. In accordance with the amended agreement with the Shipyard, our leases were terminated and we have eliminated the historical right-of-use asset associated with the berthing locations of VALARIS DS-13 and VALARIS DS-14. Additionally, upon effectiveness of the plan of reorganization, the amended agreement with the Shipyard provides the Company with the option to purchase the Newbuild Rigs. The reorganization adjustments include a Contract Intangible asset that reflects the fair value of the option to purchase the Newbuild Rigs and embedded feature related to the ability, under the amended agreements with the Shipyard, for the equity issued pursuant to this arrangement to be put to the Company for $8.0 million of consideration for each rig, should we choose to take delivery. (f)Accounts payable - trade Reflects the following reorganization adjustments (in millions):
(g)Accrued liabilities and other Reflects the following reorganization adjustments (in millions):
In accordance with the amended agreement with the Shipyard, our leases were terminated and we have eliminated the historical lease liability associated with the berthing locations of VALARIS DS-13 and VALARIS DS-14. Accrued post-petition holding costs have also been eliminated as a result of the amendments executed upon emergence. Additionally, reorganization adjustments to accrued liabilities and other includes an amount primarily related to payment of professional fees incurred prior to emergence. (h)Long-term debt Reflects the reorganization adjustment to record the issuance of the $550.0 million aggregate principal amount of First Lien Notes and debt issuance costs of $5.2 million. (i)Other liabilities Reflects the following reorganization adjustments (in millions):
The reorganization adjustments to other liabilities primarily relate to the elimination of construction contract intangibles associated with the Newbuild Rigs. These construction contract intangible liabilities were recorded in purchase accounting for the original contracting entity. As the amended contract is structured as an option whereby we have the right, not the obligation to take delivery of the rigs, there is no longer an intangible liability associated with the contracts and it has been eliminated from the financial statements. We have eliminated the historical lease liability associated with the berthing locations of VALARIS DS-13 and VALARIS DS-14 and accrued post-petition holding costs as described in (g) above. (j) Liabilities subject to compromise Reflects the following reorganization adjustments (in millions):
(k)Predecessor ordinary shares, additional paid-in capital and treasury shares Represents the cancellation of the Predecessor's common shares of $82.6 million, additional paid-in capital of $8,644.0 million and treasury stock of $75.5 million. (l)Successor common shares and additional paid-in capital Represents par value of 75 million new Common Shares of $0.8 million and capital in excess of par value of $1,078.7 million. (m)Successor stock warrants On the Effective Date and pursuant to the plan of reorganization, Valaris Limited issued an aggregate of 5.6 million Warrants exercisable for up to an aggregate of 5.6 million Common Shares to former holders of Legacy Valaris's equity interests. The fair value of the Warrants as of the Effective Date was $16.4 million. (n)Retained deficit Represents the reorganization adjustments to total equity as follows (in millions):
Fresh Start Adjustments (o) Other current assets Reflects the fresh start adjustments to record the estimated fair value of other current assets as follows (in millions):
Primarily reflects the fresh start adjustment to eliminate the historical balance for materials and supplies as the result of a change in accounting policy upon emergence. The fresh start adjustment for the elimination of historical deferred contract drilling expenses primarily relates to deferred mobilization costs, deferred contract preparation costs. and deferred certification costs. Costs incurred for mobilization and contract preparation prior to the commencement of drilling services are deferred and subsequently amortized over the term of the related drilling contract. Additionally, we must obtain certifications from various regulatory bodies in order to operate our drilling rigs and must maintain such certifications through periodic inspections and surveys. The costs incurred in connection with maintaining such certifications, including inspections, tests, surveys and drydock, as well as remedial structural work and other compliance costs, are deferred and amortized on a straight-line basis over the corresponding certification periods. These deferred costs have no future economic benefit and are eliminated from the fresh start financial statements. (p) Property and equipment, net Reflects the fresh start adjustments to historical amounts to record the estimated fair value of property and equipment. (q) Long-term notes receivable from ARO Reflects the fresh start adjustment to record the estimated fair value of the long-term notes receivable from ARO. The fair value of the long-term notes receivable from ARO was estimated using an income approach to value the forecasted cash flows attributed to the note receivable using a discount rate based on comparable yield with a country-specific risk premium. (r) Investment in ARO Reflects the fresh start adjustment to record the estimated fair value of the equity investment in ARO. (s) Other assets Reflects the fresh start adjustments to record the estimated fair value of other assets as follows (in millions):
The fresh start adjustment for deferred income tax assets represents the estimated incremental deferred income taxes, which reflects the tax effect of the differences between the estimated fair value of certain assets and liabilities recorded under fresh start accounting and the carryover tax basis of those assets and liabilities. The fresh start adjustment to record the estimated fair value of contracts with customers represents the intangible assets recognized for firm customer contracts in place at the balance sheet date that have favorable contract terms as compared to current market day rates for comparable drilling rigs. The various factors considered in the adjustment are (1) the contracted day rate for each contract, (2) the remaining term of each contract, (3) the rig class and (4) the market conditions for each respective rig class at the emergence date. The intangible assets are computed based on the present value of the difference in cash inflows over the remaining contract term as compared to a hypothetical contract with the same remaining term at an estimated current market day rate using a risk-adjusted discount rate and an estimated effective income tax rate. This balance will be amortized to operating revenues over the respective remaining contract terms on a straight-line basis. The fresh start adjustment to right-of-use assets reflects the remeasuring of our operating leases as of the emergence date. Certain operating leases had unfavorable terms as of the emergence date, and as a result the right-of-use asset for such leases does not equal the lease liability upon emergence. The fresh start adjustment to eliminate historical deferred contract drilling expenses reflects the noncurrent portion of historical deferred contract drilling expenses described in (o) above as well as the elimination of customer contract intangibles previously recorded in purchase accounting. The fresh start adjustments to eliminate other deferred costs reflect non-operational deferred costs that have no future economic benefit to Valaris. (t) Accounts payable - trade The fresh start adjustment to accounts payable trade reflects the write off of certain deferred amounts related to our operating leases. This value was eliminated through the remeasurement of our leases as of the emergence date. (u)Accrued liabilities and other Reflects the fresh start adjustments to record the estimated fair value of current liabilities as follows (in millions):
The fresh start adjustment to eliminate the customer payable balance is related to a fresh start adjustment made to present the balance on a net basis. The fresh start adjustment to eliminate historical deferred revenues is primarily related to amounts previously received for the reimbursement for capital upgrades, upfront contract deferral fees and mobilization. Such amounts are deferred and subsequently amortized over the term of the related drilling contract. The deferred revenue does not represent future performance obligations of Valaris and are eliminated as fresh start accounting adjustments. The fresh start adjustment to record the estimated fair value of contracts with customers reflects the intangible liabilities recognized for firm customer contracts in place at the balance sheet date that have unfavorable contract terms as compared to current market day rates for comparable drilling rigs. The various factors considered in the adjustment are (1) the contracted day rate for each contract, (2) the remaining term of each contract, (3) the rig class and (4) the market conditions for each respective rig class at the emergence date. The intangible liabilities are computed based on the present value of the difference in cash inflows over the remaining contract term as compared to a hypothetical contract with the same remaining term at an estimated current market day rate using a risk-adjusted discount rate and an estimated effective income tax rate. This balance will be amortized to operating revenues over the respective remaining contract terms on a straight-line basis. The fresh start adjustment to lease liabilities reflects the remeasuring of our operating leases as of the emergence date. (v)Other liabilities Reflects the fresh start adjustments to record the estimated fair value of other liabilities as follows (in millions):
The fresh start adjustment to fair value pension and other post-retirement plan liabilities results from the remeasurement of the pension and other post-retirement benefit plans at the emergence date. The fresh start adjustment to eliminate deferred revenues reflects the noncurrent portion of deferred revenues described in (u) above. The fresh start adjustment for deferred income tax liabilities represents the estimated incremental deferred taxes, which reflects the tax effect of the differences between the estimated fair value certain assets and liabilities recorded under fresh start accounting and the carryover tax basis of those assets and liabilities. The fresh start adjustment to lease liabilities reflects the remeasuring of our operating leases as of the Effective Date. (w)Retained Deficit Reflects the fresh start adjustments to retained deficit as follows (in millions):
(x)Accumulated other comprehensive loss Reflects the fresh start adjustments for the elimination of Predecessor accumulated other comprehensive loss through reorganization items, net.
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Fresh Start Accounting |
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Reorganizations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chapter 11 Proceedings and Ability to Continue as a Going Concern | Chapter 11 Proceedings Chapter 11 Cases and Emergence from Chapter 11 On the Petition Date, the Debtors filed voluntary petitions for reorganization under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Debtors obtained joint administration of the Chapter 11 Cases under the caption In re Valaris plc, et al., Case No. 20-34114 (MI). On March 3, 2021, the Bankruptcy Court confirmed the Debtors' chapter 11 plan of reorganization. On the Effective Date, we successfully completed our financial restructuring and together with the Debtors emerged from the Chapter 11 Cases. Upon emergence from the Chapter 11 Cases, we eliminated $7.1 billion of debt and obtained a $520 million capital injection by issuing the first lien secured notes (the "First Lien Notes"). See “Note 11 - Debt" for additional information on the First Lien Notes. On the Effective Date, the Legacy Valaris Class A ordinary shares were cancelled and common shares of Valaris with a nominal value of $0.01 per share (“Common Shares”) were issued. Also, former holders of Legacy Valaris' equity were issued warrants (the "Warrants") to purchase Common Shares. Below is a summary of the terms of the plan of reorganization: •Appointed six new members to the Company's Board of Directors to replace all of the directors of Legacy Valaris, other than the director also serving as President and Chief Executive Officer at the Effective Date, who was re-appointed pursuant to the plan of reorganization. All but one of the seven new directors, became directors as of the Effective Date and one became a director on July 1, 2021. •Obligations under Legacy Valaris's outstanding senior notes (the "Senior Notes") were cancelled and the related indentures were cancelled, except to the limited extent expressly set forth in the plan of reorganization and the holders thereunder received the treatment as set forth in the plan of reorganization; •The Legacy Valaris revolving credit facility (the "Revolving Credit Facility") was terminated and the holders thereunder received the treatment as set forth in the plan of reorganization; •Holders of the Senior Notes received their pro rata share of (1) 38.48%, or 28,859,900, of Common Shares and (2) approximately 97.6% of the subscription rights to participate in the rights offering (the "Rights Offering") through which the Company offered $550 million of the First Lien Notes, which includes the backstop premium; •Holders of the Senior Notes who participated in the Rights Offering received their pro rata share of approximately 29.3%, or 21,975,000, of Common Shares, and senior noteholders who agreed to backstop the Rights Offering received their pro rata share of approximately 2.63%, or 1,975,500 of Common Shares and approximately $48.8 million in First Lien Notes as a backstop premium; •Certain Revolving Credit Facility lenders ("RCF Lenders") who participated in the Rights Offering received their pro rata share of approximately 0.7%, or 525,000 Common Shares, RCF Lenders who agreed to backstop the Rights Offering received their pro rata share of 0.07%, or 49,500 of Common Shares and approximately $1.2 million in First Lien Notes as a backstop premium; •Senior noteholders, solely with respect to Pride International LLC's 6.875% senior notes due 2020 and 7.875% senior notes due 2040, Ensco International 7.20% Debentures due 2027, and the 4.875% senior notes due 2022, 4.75% senior notes due 2024, 7.375% senior notes due 2025, 5.4% senior notes due 2042 and 5.85% senior notes due 2044, received an aggregate cash payment of $26.0 million in connection with settlement of certain alleged claims against the Company; •The two RCF Lenders who chose to participate in the Rights Offering received their pro rata share of (1) 5.3%, or 4,005,000 of Common Shares (2) approximately 2.427% of the First Lien Notes (and associated Common Shares), (3) $7.8 million in cash, and (4) their pro rata share of the backstop premium. The RCF Lenders who entered into the amended restructuring support agreement and elected not to participate in the Rights Offering received their pro rata share of (1) 22.980%, or 17,235,000 of Common Shares and (2) $96.1 million in cash; •Holders of general unsecured claims are entitled to receive payment in full within ninety days after the later of (a) the Effective Date and (b) the date such claim comes due; •375,000 Common Shares were issued and $5.0 million was paid to Daewoo Shipbuilding & Marine Engineering Co., Ltd (the "Shipyard"); •Legacy Valaris Class A ordinary shares were cancelled and holders received 5,645,161 in Warrants exercisable for one Common Share per Warrant at initial exercise price of $131.88 per Warrant, in each case as may be adjusted from time to time pursuant to the applicable warrant agreement. The Warrants are exercisable for a period of seven years and will expire on April 29, 2028; •All equity-based awards of Legacy Valaris that were outstanding were cancelled; •On the Effective Date, Valaris Limited entered into a registration rights agreement with certain parties who received Common Shares; •On the Effective Date, Valaris Limited entered into a registration rights agreement with certain parties who received First Lien Notes; and •There were no borrowings outstanding against our debtor-in-possession ("DIP") facility and there were no DIP claims that were not due and payable on, or that otherwise survived, the Effective Date. The DIP Credit Agreement terminated on the Effective Date. Management Incentive Plan In accordance with the plan of reorganization, Valaris Limited adopted the 2021 Management Incentive Plan (the “MIP”) as of the Effective Date and authorized and reserved 8,960,573 Common Shares for issuance pursuant to equity incentive awards to be granted under the MIP, which may be in the form of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalents and cash awards or any combination thereof. Liabilities Subject to Compromise The Debtors' pre-petition Senior Notes and related unpaid accrued interest as of the Petition Date were classified as Liabilities Subject to Compromise on our Condensed Consolidated Balance Sheets as of December 31, 2020. The liabilities were reported at the amounts expected to be allowed as claims by the Bankruptcy Court. Liabilities subject to compromise at December 31, 2020 (Predecessor) consisted of the following (in millions):
(1) Represents the holding costs incurred to maintain VALARIS DS-13 and VALARIS DS-14 in the shipyard. The contractual interest expense on the outstanding Senior Notes and the Revolving Credit Facility was in excess of recorded interest expense by $132.9 million for the four months ended April 30, 2021 (Predecessor). The contractual interest expense on the Predecessor's Senior Notes and Revolving Credit Facility was in excess of recorded interest expense by $45.9 million for both the three and nine months ended September 30, 2020 (Predecessor). This excess contractual interest was not included as interest expense on our Condensed Consolidated Statements of Operations, as we had discontinued accruing interest on the Predecessor's Senior Notes and Revolving Credit Facility subsequent to the Petition Date. The Predecessor discontinued making interest payments on the Senior Notes beginning in June 2020. Pre-petition Charges We have reported the backstop commitment fee and legal and other professional advisor fees incurred in relation to the Chapter 11 Cases, but prior to the Petition Date, as general and administrative expenses in our unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2020 (Predecessor) in the amount of $42.6 million and $64.7 million, respectively. Reorganization Items Expenditures, gains and losses that are realized or incurred by the Debtors as of or subsequent to the Petition Date and as a direct result of the Chapter 11 Cases are reported as Reorganization items, net in our Condensed Consolidated Statements of Operations for the three and five months ended September 30, 2021 (Successor), four months ended April 30, 2021 (Predecessor) and three and nine months ended September 30, 2020 (Predecessor). These costs include legal and other professional advisory service fees pertaining to the Chapter 11 Cases, contract items related to rejecting certain operating leases ("Contract items") and the effects of the emergence from bankruptcy, including the application of fresh start accounting. Additionally, the three and nine months ended September 30, 2020 (Predecessor) included all adjustments made to the carrying amount of certain pre-petition liabilities reflecting claims that were expected to be allowed by the Bankruptcy Court and DIP Facility Fees. The components of reorganization items, net were as follows (in millions):
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Fresh Start Accounting Applicability of Fresh Start Accounting Upon emergence from bankruptcy, we qualified for and applied fresh start accounting, which resulted in the Company becoming a new entity for financial reporting purposes because (1) the holders of the then existing Class A ordinary shares of the Predecessor received less than 50 percent of the Common Shares of the Successor outstanding upon emergence and (2) the reorganization value of the Company’s assets immediately prior to confirmation of the plan of reorganization was less than the total of all post-petition liabilities and allowed claims. The reorganization value derived from the range of enterprise values associated with the plan of reorganization was allocated to the Company’s identifiable tangible and intangible assets and liabilities based on their fair values (except for deferred income taxes). The amount of deferred income taxes recorded was determined in accordance with the applicable income tax accounting standard. The April 30, 2021 fair values of the Company’s assets and liabilities differ materially from their recorded values as reflected on the historical balance sheets. Reorganization Value The reorganization value represents the fair value of the Successor's total assets and was derived from the enterprise value associated with the plan of reorganization, which represents the estimated fair value of an entity's long-term debt and equity less unrestricted cash upon emergence from chapter 11. As set forth in the disclosure statement and approved by the bankruptcy court, third-party valuation advisors estimated the enterprise value to be between $1,860.0 million and $3,145.0 million. The enterprise value range of the reorganized Debtors was determined primarily by using a discounted cash flow analysis. The value agreed in the plan of reorganization is indicative of an enterprise value at the low end of this range, or $1,860.0 million. The following table reconciles the enterprise value to the estimated fair value of Successor Common Shares as of the Effective Date (in millions, except per share value):
The following table reconciles the enterprise value to the reorganization value as of the Effective Date (in millions):
Adjustments not contemplated in Enterprise Value represent certain obligations of the Successor that were either not contemplated or contemplated in a different amount in the forecasted cash flows of the enterprise valuation performed by third-party valuation advisors that had they incorporated those anticipated cash flows into their analysis, the resulting valuation would have been different. For the reconciliation of Reorganization value of Successor assets, this item includes certain tax balances, contract liabilities, as well as an adjustment for the fair value of pension obligations. The reconciliation to Successor Common Share value includes these same reconciling items as well as other current and non-current liabilities of the Successor at the emergence. The enterprise value and corresponding implied equity value are dependent upon achieving the future financial results set forth in the valuation utilizing assumptions regarding future day rates, utilization, operating costs and capital requirements as of the emergence date. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, there is no assurance that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially. Valuation Process The fair values of the Company's principal assets and liabilities including property, plant and equipment as well as our 50% equity interest in Saudi Aramco Rowan Offshore Drilling Company ("ARO") and our notes receivable from ARO, the First Lien Notes, pensions and Warrants were estimated with the assistance of third-party valuation advisors. Property, Plant and Equipment The valuation of the Company’s drilling rigs was estimated by using an income approach or estimated sales price. These valuations were based on unobservable inputs that require significant judgments for which there is limited information, including, in the case of an income approach, assumptions regarding future day rates, utilization, operating costs, reactivation costs and capital requirements. In developing these assumptions, forecasted day rates and utilization took into account current market conditions and our anticipated business outlook. The cash flows were discounted at our weighted average cost of capital ("WACC"), which was derived from a blend of our after-tax cost of debt and our cost of equity, and computed using public share price information for similar offshore drilling market participants, certain U.S. Treasury rates and certain risk premiums specific to the Company. Our remaining property and equipment including owned real estate and other equipment was valued using a cost approach, in which the estimated replacement cost of the assets was adjusted for physical depreciation and obsolescence, where applicable, to arrive at estimated fair value. The estimated fair value of our property and equipment includes an adjustment to reconcile to our reorganization value. Notes Receivable from ARO The fair value of the long-term notes receivable from ARO was estimated using an income approach to value the forecasted cash flows attributed to the note receivable using a discount rate based on a comparable yield with a country-specific risk premium. Investment in ARO We estimated the fair value of the equity investment in ARO primarily by applying an income approach, using projected discounted cash flows of the underlying assets, a risk-adjusted discount rate and an estimated effective income tax rate. First Lien Notes The fair value of the First Lien Notes was determined to approximate the par value based on third-party valuation advisors’ analysis of the Company’s collateral coverage, financial metrics, and interest rate for the First Lien Notes relative to market rates of recent placements of a similar term for industry participants with similar credit risk. Pensions Our pension and other postretirement benefit liabilities and costs are based upon actuarial computations that reflect our assumptions about future events, including long-term asset returns, interest rates, annual compensation increases, mortality rates and other factors. Upon emergence, our pension and other post retirement plans were remeasured as of the Effective Date. Key assumptions at the Effective Date included (1) a weighted average discount rate of 2.81% to determine pension benefit obligations and (2) an expected long-term rate of return on pension plan assets of 6.03% to determine net periodic pension cost. Warrants The fair value of the Warrants was determined using an option pricing model considering the contractual terms of the Warrant issuance. The key market data assumptions for the option pricing model are the estimated volatility and the risk-free rate. The volatility assumption was estimated using market data for offshore drilling market participants with consideration for differences in leverage. The risk-free rate assumption was based on U.S. Treasury Constant Maturity rates with a comparable term. Condensed Consolidated Balance Sheet The adjustments included in the following condensed consolidated balance sheet reflect the effects of the transactions contemplated by the plan of reorganization and executed by the Company on the Effective Date (reflected in the column “Reorganization Adjustments”), and fair value and other required accounting adjustments resulting from the adoption of fresh start accounting (reflected in the column “Fresh Start Accounting Adjustments”). The explanatory notes provide additional information with regard to the adjustments recorded.
Reorganization Adjustments (a)Cash Represents the reorganization adjustments (in millions):
(b)Restricted cash Reflects the reorganization adjustment to record the transfer of cash for payment of certain professional fees to restricted cash, which will be held in escrow until billings from professionals have been received and reconciled at which time the funds in the account will be released. (c)Other current asset Reflects certain prepayments incurred upon emergence. (d)Property and Equipment, net Reflects the reorganization adjustment to remove $417.6 million of work-in-process related to the Newbuild Rigs. These values have been removed from property and equipment, net, based on the terms of the amended agreements with the Shipyard. As a result of the option to take delivery, we removed the historical work-in-process balances from the balance sheet. (e)Other assets Represents the reorganization adjustments (in millions):
Our supplemental executive retirement plans (the "SERPs") are non-qualified plans that provided eligible employees an opportunity to defer a portion of their compensation for use after retirement. The SERPs were frozen to the entry of new participants in November 2019 and to future compensation deferrals as of January 1, 2020. Upon emergence, assets previously held in a rabbi trust maintained for the SERP were liquidated and the SERPs were amended. In accordance with the amended agreement with the Shipyard, our leases were terminated and we have eliminated the historical right-of-use asset associated with the berthing locations of VALARIS DS-13 and VALARIS DS-14. Additionally, upon effectiveness of the plan of reorganization, the amended agreement with the Shipyard provides the Company with the option to purchase the Newbuild Rigs. The reorganization adjustments include a Contract Intangible asset that reflects the fair value of the option to purchase the Newbuild Rigs and embedded feature related to the ability, under the amended agreements with the Shipyard, for the equity issued pursuant to this arrangement to be put to the Company for $8.0 million of consideration for each rig, should we choose to take delivery. (f)Accounts payable - trade Reflects the following reorganization adjustments (in millions):
(g)Accrued liabilities and other Reflects the following reorganization adjustments (in millions):
In accordance with the amended agreement with the Shipyard, our leases were terminated and we have eliminated the historical lease liability associated with the berthing locations of VALARIS DS-13 and VALARIS DS-14. Accrued post-petition holding costs have also been eliminated as a result of the amendments executed upon emergence. Additionally, reorganization adjustments to accrued liabilities and other includes an amount primarily related to payment of professional fees incurred prior to emergence. (h)Long-term debt Reflects the reorganization adjustment to record the issuance of the $550.0 million aggregate principal amount of First Lien Notes and debt issuance costs of $5.2 million. (i)Other liabilities Reflects the following reorganization adjustments (in millions):
The reorganization adjustments to other liabilities primarily relate to the elimination of construction contract intangibles associated with the Newbuild Rigs. These construction contract intangible liabilities were recorded in purchase accounting for the original contracting entity. As the amended contract is structured as an option whereby we have the right, not the obligation to take delivery of the rigs, there is no longer an intangible liability associated with the contracts and it has been eliminated from the financial statements. We have eliminated the historical lease liability associated with the berthing locations of VALARIS DS-13 and VALARIS DS-14 and accrued post-petition holding costs as described in (g) above. (j) Liabilities subject to compromise Reflects the following reorganization adjustments (in millions):
(k)Predecessor ordinary shares, additional paid-in capital and treasury shares Represents the cancellation of the Predecessor's common shares of $82.6 million, additional paid-in capital of $8,644.0 million and treasury stock of $75.5 million. (l)Successor common shares and additional paid-in capital Represents par value of 75 million new Common Shares of $0.8 million and capital in excess of par value of $1,078.7 million. (m)Successor stock warrants On the Effective Date and pursuant to the plan of reorganization, Valaris Limited issued an aggregate of 5.6 million Warrants exercisable for up to an aggregate of 5.6 million Common Shares to former holders of Legacy Valaris's equity interests. The fair value of the Warrants as of the Effective Date was $16.4 million. (n)Retained deficit Represents the reorganization adjustments to total equity as follows (in millions):
Fresh Start Adjustments (o) Other current assets Reflects the fresh start adjustments to record the estimated fair value of other current assets as follows (in millions):
Primarily reflects the fresh start adjustment to eliminate the historical balance for materials and supplies as the result of a change in accounting policy upon emergence. The fresh start adjustment for the elimination of historical deferred contract drilling expenses primarily relates to deferred mobilization costs, deferred contract preparation costs. and deferred certification costs. Costs incurred for mobilization and contract preparation prior to the commencement of drilling services are deferred and subsequently amortized over the term of the related drilling contract. Additionally, we must obtain certifications from various regulatory bodies in order to operate our drilling rigs and must maintain such certifications through periodic inspections and surveys. The costs incurred in connection with maintaining such certifications, including inspections, tests, surveys and drydock, as well as remedial structural work and other compliance costs, are deferred and amortized on a straight-line basis over the corresponding certification periods. These deferred costs have no future economic benefit and are eliminated from the fresh start financial statements. (p) Property and equipment, net Reflects the fresh start adjustments to historical amounts to record the estimated fair value of property and equipment. (q) Long-term notes receivable from ARO Reflects the fresh start adjustment to record the estimated fair value of the long-term notes receivable from ARO. The fair value of the long-term notes receivable from ARO was estimated using an income approach to value the forecasted cash flows attributed to the note receivable using a discount rate based on comparable yield with a country-specific risk premium. (r) Investment in ARO Reflects the fresh start adjustment to record the estimated fair value of the equity investment in ARO. (s) Other assets Reflects the fresh start adjustments to record the estimated fair value of other assets as follows (in millions):
The fresh start adjustment for deferred income tax assets represents the estimated incremental deferred income taxes, which reflects the tax effect of the differences between the estimated fair value of certain assets and liabilities recorded under fresh start accounting and the carryover tax basis of those assets and liabilities. The fresh start adjustment to record the estimated fair value of contracts with customers represents the intangible assets recognized for firm customer contracts in place at the balance sheet date that have favorable contract terms as compared to current market day rates for comparable drilling rigs. The various factors considered in the adjustment are (1) the contracted day rate for each contract, (2) the remaining term of each contract, (3) the rig class and (4) the market conditions for each respective rig class at the emergence date. The intangible assets are computed based on the present value of the difference in cash inflows over the remaining contract term as compared to a hypothetical contract with the same remaining term at an estimated current market day rate using a risk-adjusted discount rate and an estimated effective income tax rate. This balance will be amortized to operating revenues over the respective remaining contract terms on a straight-line basis. The fresh start adjustment to right-of-use assets reflects the remeasuring of our operating leases as of the emergence date. Certain operating leases had unfavorable terms as of the emergence date, and as a result the right-of-use asset for such leases does not equal the lease liability upon emergence. The fresh start adjustment to eliminate historical deferred contract drilling expenses reflects the noncurrent portion of historical deferred contract drilling expenses described in (o) above as well as the elimination of customer contract intangibles previously recorded in purchase accounting. The fresh start adjustments to eliminate other deferred costs reflect non-operational deferred costs that have no future economic benefit to Valaris. (t) Accounts payable - trade The fresh start adjustment to accounts payable trade reflects the write off of certain deferred amounts related to our operating leases. This value was eliminated through the remeasurement of our leases as of the emergence date. (u)Accrued liabilities and other Reflects the fresh start adjustments to record the estimated fair value of current liabilities as follows (in millions):
The fresh start adjustment to eliminate the customer payable balance is related to a fresh start adjustment made to present the balance on a net basis. The fresh start adjustment to eliminate historical deferred revenues is primarily related to amounts previously received for the reimbursement for capital upgrades, upfront contract deferral fees and mobilization. Such amounts are deferred and subsequently amortized over the term of the related drilling contract. The deferred revenue does not represent future performance obligations of Valaris and are eliminated as fresh start accounting adjustments. The fresh start adjustment to record the estimated fair value of contracts with customers reflects the intangible liabilities recognized for firm customer contracts in place at the balance sheet date that have unfavorable contract terms as compared to current market day rates for comparable drilling rigs. The various factors considered in the adjustment are (1) the contracted day rate for each contract, (2) the remaining term of each contract, (3) the rig class and (4) the market conditions for each respective rig class at the emergence date. The intangible liabilities are computed based on the present value of the difference in cash inflows over the remaining contract term as compared to a hypothetical contract with the same remaining term at an estimated current market day rate using a risk-adjusted discount rate and an estimated effective income tax rate. This balance will be amortized to operating revenues over the respective remaining contract terms on a straight-line basis. The fresh start adjustment to lease liabilities reflects the remeasuring of our operating leases as of the emergence date. (v)Other liabilities Reflects the fresh start adjustments to record the estimated fair value of other liabilities as follows (in millions):
The fresh start adjustment to fair value pension and other post-retirement plan liabilities results from the remeasurement of the pension and other post-retirement benefit plans at the emergence date. The fresh start adjustment to eliminate deferred revenues reflects the noncurrent portion of deferred revenues described in (u) above. The fresh start adjustment for deferred income tax liabilities represents the estimated incremental deferred taxes, which reflects the tax effect of the differences between the estimated fair value certain assets and liabilities recorded under fresh start accounting and the carryover tax basis of those assets and liabilities. The fresh start adjustment to lease liabilities reflects the remeasuring of our operating leases as of the Effective Date. (w)Retained Deficit Reflects the fresh start adjustments to retained deficit as follows (in millions):
(x)Accumulated other comprehensive loss Reflects the fresh start adjustments for the elimination of Predecessor accumulated other comprehensive loss through reorganization items, net.
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Revenue from Contracts with Customers |
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Revenue from Contract with Customer [Text Block] | Revenue from Contracts with Customers Our drilling contracts with customers provide a drilling rig and drilling services on a day rate contract basis. Under day rate contracts, we provide an integrated service that includes the provision of a drilling rig and rig crews for which we receive a daily rate that may vary between the full rate and zero rate throughout the duration of the contractual term, depending on the operations of the rig. We also may receive lump-sum fees or similar compensation for the mobilization, demobilization and capital upgrades of our rigs. Our customers bear substantially all of the costs of constructing the well and supporting drilling operations, as well as the economic risk relative to the success of the well. Our drilling service provided under each drilling contract is a single performance obligation satisfied over time and comprised of a series of distinct time increments, or service periods. Total revenue is determined for each individual drilling contract by estimating both fixed and variable consideration expected to be earned over the contract term. Fixed consideration generally relates to activities such as mobilization, demobilization and capital upgrades of our rigs that are not distinct performance obligations within the context of our contracts and is recognized on a straight-line basis over the contract term. Variable consideration generally relates to distinct service periods during the contract term and is recognized in the period when the services are performed. The amount estimated for variable consideration is only recognized as revenue to the extent that it is probable that a significant reversal will not occur during the contract term. We have applied the optional exemption afforded in ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), and have not disclosed the variable consideration related to our estimated future day rate revenues. The remaining duration of our drilling contracts based on those in place as of September 30, 2021 was between approximately 1 month and 3.5 years. Day Rate Drilling Revenue Our drilling contracts provide for payment on a day rate basis and include a rate schedule with higher rates for periods when the drilling rig is operating and lower rates or zero rates for periods when drilling operations are interrupted or restricted. The day rate invoiced to the customer is determined based on the varying rates applicable to specific activities performed on an hourly basis or other time increment basis. Day rate consideration is allocated to the distinct hourly or other time increment to which it relates within the contract term and is generally recognized consistent with the contractual rate invoiced for the services provided during the respective period. Invoices are typically issued to our customers on a monthly basis and payment terms on customer invoices typically range from 30 to 45 days. Certain of our contracts contain performance incentives whereby we may earn a bonus based on pre-established performance criteria. Such incentives are generally based on our performance over individual monthly time periods or individual wells. Consideration related to performance bonus is generally recognized in the specific time period to which the performance criteria was attributed. We may receive termination fees if certain drilling contracts are terminated by the customer prior to the end of the contractual term. Such compensation is recognized as revenue when our performance obligation is satisfied, the termination fee can be reasonably measured and collection is probable. Mobilization / Demobilization Revenue In connection with certain contracts, we receive lump-sum fees or similar compensation for the mobilization of equipment and personnel prior to the commencement of drilling services or the demobilization of equipment and personnel upon contract completion. Fees received for the mobilization or demobilization of equipment and personnel are included in operating revenues. The costs incurred in connection with the mobilization and demobilization of equipment and personnel are included in contract drilling expense. Mobilization fees received prior to commencement of drilling operations are recorded as a contract liability and amortized on a straight-line basis over the contract term. Demobilization fees expected to be received upon contract completion are estimated at contract inception and recognized on a straight-line basis over the contract term. In some cases, demobilization fees may be contingent upon the occurrence or non-occurrence of a future event. In such cases, this may result in cumulative-effect adjustments to demobilization revenues upon changes in our estimates of future events during the contract term. Capital Upgrade / Contract Preparation Revenue In connection with certain contracts, we receive lump-sum fees or similar compensation for requested capital upgrades to our drilling rigs or for other contract preparation work. Fees received for requested capital upgrades and other contract preparation work are recorded as a contract liability and amortized on a straight-line basis over the contract term to operating revenues. Costs incurred for capital upgrades are capitalized and depreciated over the useful life of the asset. Contract Assets and Liabilities Contract assets represent amounts recognized as revenue but for which the right to invoice the customer is dependent upon our future performance. Once the previously recognized revenue is invoiced, the corresponding contract asset, or a portion thereof, is transferred to accounts receivable. Contract liabilities generally represent fees received for mobilization or capital upgrades. Contract assets and liabilities are presented net on our Condensed Consolidated Balance Sheets on a contract-by-contract basis. Current contract assets and liabilities are included in other current assets and accrued liabilities and other, respectively, and noncurrent contract assets and liabilities are included in other assets and other liabilities, respectively, on our Condensed Consolidated Balance Sheets. As of September 30, 2021 and December 31, 2020, we have a contract liability with ARO, our 50/50 joint venture with Saudi Aramco, representing the difference between the amounts billed under the Lease Agreements and lease revenues earned up to the respective date. See “Note 5 – Equity Method Investment in ARO" for additional details regarding our balances with ARO. The following table summarizes our contract assets and contract liabilities (in millions):
Changes in contract assets and liabilities during the period are as follows (in millions):
Deferred Contract Costs Costs incurred for upfront rig mobilizations and certain contract preparations are attributable to our future performance obligation under each respective drilling contract. These costs are deferred and amortized on a straight-line basis over the contract term. Demobilization costs are recognized as incurred upon contract completion. Costs associated with the mobilization of equipment and personnel to more promising market areas without contracts are expensed as incurred. Deferred contract costs were included in other current assets and other assets on our Condensed Consolidated Balance Sheets and totaled $17.7 million and $13.8 million as of September 30, 2021 (Successor) and December 31, 2020 (Predecessor), respectively. For the Successor, during the three and five months ended September 30, 2021, amortization of such costs totaled $11.4 million and $13.2 million respectively. For the Predecessor, during the four months ended April 30, 2021, amortization of such costs totaled $7.6 million. During the three and nine months ended September 30, 2020, amortization of such costs for the Predecessor totaled $7.0 million and $35.9 million, respectively. Deferred Certification Costs We must obtain certifications from various regulatory bodies in order to operate our drilling rigs and must maintain such certifications through periodic inspections and surveys. The costs incurred in connection with maintaining such certifications, including inspections, tests, surveys and drydock, as well as remedial structural work and other compliance costs, are deferred and amortized on a straight-line basis over the corresponding certification periods. Deferred regulatory certification and compliance costs were included in other current assets and other assets on our Condensed Consolidated Balance Sheets and totaled $1.6 million and $8.4 million as of September 30, 2021 (Successor) and December 31, 2020 (Predecessor), respectively. For the Successor, during the three and five months ended September 30, 2021, amortization of these costs totaled $0.1 million and $0.2 million respectively. For the Predecessor, during the four months ended April 30, 2021, amortization of these cost totaled $3.1 million. During the three and nine months ended September 30, 2020, amortization of such costs for the Predecessor totaled $1.5 million and $7.2 million, respectively. Future Amortization of Contract Liabilities and Deferred Costs Our contract liabilities and deferred costs are amortized on a straight-line basis over the contract term or corresponding certification period to operating revenues and contract drilling expense, respectively, with the exception of the contract liabilities related to our Lease Agreements (as defined below) with ARO which would not be contractually payable until the end of the lease term or termination, if sooner. For the Successor, expected future amortization of our contract liabilities and deferred costs recorded as of September 30, 2021 is set forth in the table below (in millions):
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Equity Method Investment In ARO Equity Method Investment In ARO |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investment In ARO | Equity Method Investment in ARO Background ARO, a company that owns and operates offshore drilling rigs in Saudi Arabia, was formed and commenced operations in 2017 pursuant to the terms of an agreement entered into by Rowan Companies Limited (formerly Rowan Companies plc) ("Rowan") and Saudi Aramco to create a 50/50 joint venture ("Shareholder Agreement"). Pursuant to our completion of the combination with Rowan (the "Rowan Transaction") on April 11, 2019 (the "Transaction Date"), we acquired Rowan's interest in ARO making us a 50% partner. As of September 30, 2021, ARO owns seven jackup rigs, has ordered two newbuild jackup rigs, and leases eight rigs from us through bareboat charter arrangements (the "Lease Agreements") whereby substantially all operating costs are incurred by ARO. All of the leased rigs were operating under three-year drilling contracts with Saudi Aramco. The seven rigs owned by ARO, previously purchased from Rowan and Saudi Aramco, are currently operating under contracts with Saudi Aramco for an aggregate 15 years provided that the rigs meet the technical and operational requirements of Saudi Aramco. The Company and Saudi Aramco have agreed to take all steps necessary to ensure that ARO purchases 20 newbuild jackup rigs over an approximate 10-year period. In January 2020, ARO ordered the first two newbuild jackups, each with a shipyard price of $176.0 million, for delivery scheduled in 2022. The joint venture partners intend for the newbuild jackup rigs to be financed out of available cash from ARO's operations and/or funds available from third-party debt financing. In the event ARO has insufficient cash from operations or is unable to obtain third-party financing, each partner may periodically be required to make additional capital contributions to ARO, up to a maximum aggregate contribution of $1.25 billion from each partner to fund the newbuild program. Each partner's commitment shall be reduced by the actual cost of each newbuild rig, on a proportionate basis. The joint venture partners agreed that Saudi Aramco, as a customer, will provide drilling contracts to ARO in connection with the acquisition of the newbuild rigs. The initial contracts provided by Saudi Aramco for each of the newbuild rigs will be for an eight-year term. The day rate for the initial contracts for each newbuild rig will be determined using a pricing mechanism that targets a six-year payback period for construction costs on an EBITDA basis. The initial eight-year contracts will be followed by a minimum of another eight years of term, re-priced in three-year intervals based on a market pricing mechanism. Upon establishment of ARO, Rowan entered into (1) an agreement to provide certain back-office services for a period of time until ARO develops its own infrastructure (the "Transition Services Agreement"), and (2) an agreement to provide certain Rowan employees through secondment arrangements to assist with various onshore and offshore services for the benefit of ARO (the "Secondment Agreement"). These agreements remained in place subsequent to the Rowan Transaction. Pursuant to these agreements, we or our seconded employees provided various services to ARO, and in return, ARO provided remuneration for those services. During the quarter ended June 30, 2020, almost all remaining employees seconded to ARO became employees of ARO. Additionally, our services to ARO under the Transition Services Agreement were completed as of December 31, 2020. Summarized Financial Information The operating revenues of ARO presented below reflect revenues earned under drilling contracts with Saudi Aramco for the seven ARO-owned jackup rigs as well as the rigs leased from us. Contract drilling expense is inclusive of the bareboat charter fees for the rigs leased from us. Cost incurred under the Secondment Agreement are included in contract drilling expense and general and administrative, depending on the function to which the seconded employee's service related. Substantially all costs incurred under the Transition Services Agreement are included in general and administrative. See additional discussion below regarding these related-party transactions. Summarized financial information for ARO is as follows (in millions):
Equity in Earnings of ARO We account for our interest in ARO using the equity method of accounting and only recognize our portion of ARO's net income, adjusted for basis differences as discussed below, which is included in equity in earnings (losses) of ARO in our Condensed Consolidated Statements of Operations. ARO is a variable interest entity; however, we are not the primary beneficiary and therefore do not consolidate ARO. Judgments regarding our level of influence over ARO included considering key factors such as each partner's ownership interest, representation on the board of managers of ARO and ability to direct activities that most significantly impact ARO's economic performance, including the ability to influence policy-making decisions. Our investment in ARO would be assessed for impairment if there were changes in facts and circumstances that indicate a loss in value may have occurred. If a loss were deemed to have occurred and this loss was determined to be other than temporary, the carrying value of our investment would be written down to fair value and an impairment recorded. We have an equity method investment in ARO that was recorded at its estimated fair value as of the date we acquired our 50% interest on April 11, 2019 ("Investment Date"). We computed the difference between the fair value of ARO's net assets and the carrying value of those net assets in ARO's U.S. GAAP financial statements ("basis differences") on that date. These basis differences primarily relate to ARO's long-lived assets and the recognition of intangible assets associated with certain of ARO's drilling contracts that were determined to have favorable terms. Additionally, in fresh start accounting, we have recorded our investment in ARO at its estimated fair value as of the date of emergence. Basis differences on that date primarily related to ARO's long-lived assets. Basis differences are amortized over the remaining life of the assets or liabilities to which they relate and are recognized as an adjustment to the equity in earnings (losses) of ARO in our Condensed Consolidated Statements of Operations. The amortization of those basis differences are combined with our 50% interest in ARO's net income. A reconciliation of those components is presented below (in millions):
Related-Party Transactions Revenues recognized by us related to the Lease Agreements, Transition Services Agreement and Secondment Agreement are as follows (in millions):
(1) All of the revenues presented above are included in our Other segment in our segment disclosures. See "Note 15 - Segment Information" for additional information. Amounts receivable from ARO related to the items above totaled $6.5 million and $21.6 million as of September 30, 2021 (Successor) and December 31, 2020 (Predecessor), respectively, and are included in accounts receivable, net, on our Condensed Consolidated Balance Sheets. We had $28.5 million and $30.9 million of Contract Liabilities related to the Lease Agreements as of September 30, 2021 (Successor) and December 31, 2020 (Predecessor), respectively. Accounts payable to ARO totaled $14.8 million as of September 30, 2021 (Successor). There were no accounts payable to ARO as of December 31, 2020 (Predecessor). Contract liabilities related to the Lease Agreements are subject to adjustment during the lease term. The per day bareboat charter amount in the Lease Agreements is subject to adjustment based on actual performance of the respective rig. During 2017 and 2018, Rowan contributed cash to ARO in exchange for 10-year shareholder notes receivable at a stated interest rate of LIBOR plus two percent. As of September 30, 2021 (Successor) and December 31, 2020 (Predecessor), the carrying amount of the long-term notes receivable from ARO was $241.3 million and $442.7 million, respectively. The notes receivable were adjusted to fair value as of the emergence date. The discount to the principal amount of $442.7 million will be amortized using the effective interest method to interest income over the remaining terms of the notes. The Shareholders’ Agreement prohibits the sale or transfer of the shareholder note to a third party, except in certain limited circumstances. The notes receivable may be reduced by future Company obligations to the joint venture. Interest is recognized as interest income in our Condensed Consolidated Statement of Operations. For the Successor, during the three and five months ended September 30, 2021, interest totaled $2.7 million and $4.4 million, respectively. For the Predecessor, the four months ended April 30, 2021, interest totaled $3.5 million. Interest totaled $4.5 million and $13.7 million for the three and nine months ended September 30, 2020, respectively. As of September 30, 2021 (Successor), our interest receivable from ARO was $7.9 million, which is included in Accounts receivable, net, on our Condensed Consolidated Balance Sheet. There was no interest receivable from ARO as of December 31, 2020 (Predecessor). Maximum Exposure to Loss The following table summarizes the total assets and liabilities as reflected in our Condensed Consolidated Balance Sheets as well as our maximum exposure to loss related to ARO (in millions). Our maximum exposure to loss is limited to (1) our equity investment in ARO; (2) the carrying amount of our shareholder notes receivable; and (3) other receivables and contract assets related to services provided to ARO, partially offset by contract liabilities as well as payables for services received.
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Fair Value Measurements |
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Fair Value Measurements | Fair Value Measurements The following fair value hierarchy table categorizes information regarding our financial assets and liabilities measured at fair value on a recurring basis (in millions):
Supplemental Executive Retirement Plan Assets Our supplemental executive retirement plans (the "SERP") are non-qualified plans that provided eligible employees an opportunity to defer a portion of their compensation for use after retirement. The SERP were frozen to the entry of new participants in November 2019 and to future compensation deferrals as of January 1, 2020. Assets held in a rabbi trust maintained for the SERP were marketable securities measured at fair value on a recurring basis using Level 1 inputs and were included in other assets, net, on our Condensed Consolidated Balance Sheets as of December 31, 2020. The fair value measurements of assets held in the SERP were based on quoted market prices. Pursuant to the plan of reorganization, the assets held in the rabbi trust maintained for the SERP were liquidated upon emergence from Chapter 11 Cases and used to satisfy the claims of creditors. Commencing with the quarter ending September 30, 2021, we amended the SERP to provide for quarterly credits of an interest equivalent based upon the rate of interest paid on ten-year United States treasury notes in November of the immediately preceding calendar year and the participant plan balances as of the first day of such quarter. Other Financial Instruments The carrying values and estimated fair values of our debt instruments were as follows (in millions):
(1) For the Predecessor, the 3% exchangeable senior notes due 2024 (the "2024 Convertible Notes") were exchangeable into cash, our Class A ordinary shares or a combination thereof. The 2024 Convertible Notes were separated, at issuance, into their liability and equity components on our Condensed Consolidated Balance Sheet. The equity component was initially recorded to additional paid-in capital and as a debt discount and the discount was being amortized to interest expense over the life of the instrument. As discussed above, the carrying amount at December 31, 2020 represented the aggregate principal amount of these notes as of the Petition Date and were classified as Liabilities Subject to Compromise in our Condensed Consolidated Balance Sheet as of December 31, 2020. The Predecessor discontinued accruing interest on these notes as of the Petition Date. The equity component was $220.0 million and was classified as Additional Paid-in Capital as of December 31, 2020. On the Effective Date, in accordance with the plan of reorganization, all outstanding obligations under the 2024 Convertible Notes were cancelled and the equity component was written off to retained earnings. (2) In addition to the amount borrowed above, the Predecessor had $27.0 million in undrawn letters of credit issued under the Revolving Credit Facility as of December 31, 2020. On the emergence date, in accordance with the plan of reorganization, all undrawn letters of credit issued under the Revolving Credit Facility were collateralized pursuant to the terms of the Revolving Credit Facility. As of September 30, 2021 (Successor), we had $19.5 million of collateralized letters of credit issued by lenders of the Revolving Credit Facility and $29.9 million with respect to all letter of credit agreements. (3) As discussed in “Note 2 - Chapter 11 Proceedings” and “Note 3 - Fresh Start Accounting,” since the Petition Date and through the Effective Date, the Company operated as a debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the provisions of the Bankruptcy Code. Accordingly, all of our long-term debt obligations were presented as Liabilities Subject to Compromise in our Condensed Consolidated Balance Sheet as of December 31, 2020. All unamortized debt discounts, premiums or issuance costs related to our long-term debt obligations were written off to reorganization items as of the Petition Date in 2020. The estimated fair values of the Successor's First Lien Notes and the Predecessor's Senior Notes were determined using quoted market prices, which are level 1 inputs. As of September 30, 2021, the estimated fair value of our notes receivable was $244.2 million and was estimated by using an income approach to value the forecasted cash flows attributed to the notes receivable using a discount rate based on comparable yield with a country-specific risk premium. The estimated fair values of our cash and cash equivalents, restricted cash, accounts receivable and trade payables approximated their carrying values as of September 30, 2021 and December 31, 2020. As discussed above, the carrying amount of debt instruments at December 31, 2020 represents the Predecessor's outstanding borrowings as of the Petition Date and are classified as Liabilities Subject to Compromise in our Condensed Consolidated Balance Sheet as of December 31, 2020. We discontinued accruing interest on our indebtedness as of the Petition Date.
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Property and Equipment |
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Property and Equipment | Property and Equipment Property and equipment as of September 30, 2021 and December 31, 2020 consisted of the following (in millions):
Impairments of Long-Lived Assets Predecessor During the four months ended April 30, 2021, we recorded an aggregate pre-tax, non-cash impairment with respect to certain floaters of $756.5 million, which is included in loss on impairment in our Condensed Consolidated Statement of Operations. During the first and second quarters of 2020, we recorded an aggregate pre-tax, non-cash impairment with respect to certain floaters, jackups and spare equipment of $3.6 billion which is included in loss on impairment in our Condensed Consolidated Statement of Operations. Assets held-for-use On a quarterly basis, we evaluate the carrying value of our property and equipment to identify events or changes in circumstances ("triggering events") that indicate the carrying value may not be recoverable. For rigs whose carrying values were determined not to be recoverable, we recorded an impairment for the difference between their fair values and carrying values. Predecessor During the first quarter of 2021, as a result of challenging market conditions for certain of our floaters, we revised our near-term operating assumptions which resulted in a triggering event for purposes of evaluating impairment. We determined that the estimated undiscounted cash flows were not sufficient to recover the carrying values for certain rigs and concluded they were impaired as of March 31, 2021. Based on the asset impairment analysis performed as of March 31, 2021, we recorded a pre-tax, non-cash loss on impairment in the first quarter for certain floaters totaling $756.5 million. We measured the fair value of these assets to be $26.0 million at the time of impairment by applying either an income approach, using projected discounted cash flows or estimated sales price. These valuations were based on unobservable inputs that require significant judgments for which there is limited information, including, in the case of an income approach, assumptions regarding future day rates, utilization, operating costs and capital requirements. In instances where we applied an income approach, forecasted day rates and utilization took into account current market conditions and our anticipated business outlook. During the first quarter of 2020, the COVID-19 global pandemic and the response thereto negatively impacted the macro-economic environment and global economy. Global oil demand fell sharply at the same time global oil supply increased as a result of certain oil producers competing for market share which lead to a supply glut. As a consequence, Brent crude oil fell from around $60 per barrel at year-end 2019 to around $20 per barrel as of mid-April 2020. These adverse changes and impacts to our customer's capital expenditure plans in the first quarter resulted in further deterioration in our forecasted day rates and utilization for the remainder of 2020 and beyond. As a result, we concluded that a triggering event had occurred, and we performed a fleet-wide recoverability test. We determined that our estimated undiscounted cash flows were not sufficient to recover the carrying values of certain rigs and concluded such were impaired as of March 31, 2020. Based on the asset impairment analysis performed as of March 31, 2020, we recorded a pre-tax, non-cash loss on impairment in the first quarter with respect to certain floaters, jackups and spare equipment totaling $2.8 billion. We measured the fair value of these assets to be $72.3 million at the time of impairment by applying either an income approach, using projected discounted cash flows or estimated sales price. These valuations were based on unobservable inputs that require significant judgments for which there is limited information, including, in the case of an income approach, assumptions regarding future day rates, utilization, operating costs and capital requirements. In instances where we applied an income approach, forecasted day rates and utilization took into account then current market conditions and our anticipated business outlook at that time, both of which had been impacted by the adverse changes in the business environment observed during the first quarter of 2020. During the second quarter of 2020, given the anticipated sustained market impacts arising from the decline in oil price and demand late in the first quarter, we revised our long-term operating assumptions which resulted in a triggering event for purposes of evaluating impairment and we performed a fleet-wide recoverability test. As a result, we recorded a pre-tax, non-cash impairment with respect to two floaters and spare equipment totaling $817.3 million. We measured the fair value of these assets to be $69.0 million at the time of impairment by applying an income approach or estimated scrap value. These valuations were based on unobservable inputs that require significant judgments for which there is limited information including, in the case of the income approach, assumptions regarding future day rates, utilization, operating costs and capital requirements. Assets held-for-sale Our business strategy has been to focus on ultra-deepwater floater and premium jackup operations and de-emphasize other assets and operations that are not part of our long-term strategic plan or that no longer meet our standards for economic returns. We continue to focus on our fleet management strategy in light of the composition of our rig fleet. While taking into account certain restrictions on the sales of assets under our Indenture dated April 30, 2021 (the “First Lien Notes Indenture”), see “Note 11 – Debt" for additional details on restrictions, as part of our strategy, we may act opportunistically from time to time to monetize assets to enhance stakeholder value and improve our liquidity profile, in addition to reducing holding costs by selling or disposing of older, lower-specification or non-core rigs. To this end, we continually assess our rig portfolio and actively work with our rig broker to market certain rigs. On a quarterly basis, we assess whether any rig meets the criteria established for held-for-sale classification on our balance sheet. All rigs classified as held-for-sale are recorded at fair value, less costs to sell. We measure the fair value of our assets held-for-sale by applying a market approach based on unobservable third-party estimated prices that would be received in exchange for the assets in an orderly transaction between market participants or a negotiated sales price. We reassess the fair value of our held-for-sale assets on a quarterly basis and adjust the carrying value, as necessary. During the third quarter of 2021 (Successor), we classified VALARIS 142 and VALARIS 22, both rigs included in our Jackups segment, as held-for-sale. The fair value, less cost to sell, based on each rig's estimated sales price, was in excess of the respective carrying value. In October 2021, we completed the sale of both rigs. Assets held-for-sale had an aggregate carrying value of $2.3 million and is included in other assets, net, on our Condensed Consolidated Balance Sheet as of September 30, 2021 (Successor) and December 31, 2020 (Predecessor).
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Text Block] | Pension and Other Post-retirement Benefits We have defined-benefit pension plans and a retiree medical plan that provides post-retirement health and life insurance benefits. The components of net periodic pension and retiree medical cost were as follows (in millions):
(1)Included in contract drilling and general and administrative expense in our Condensed Consolidated Statements of Operations. (2)Included in other, net, in our Condensed Consolidated Statements of Operations. During the five months ended September 30, 2021 (Successor), we contributed $1.7 million to our pension and other post-retirement benefit plans. During the four months ended April 30, 2021 (Predecessor), we contributed $22.5 million to our pension and other post-retirement benefit plans, of which $7.0 million and $5.3 million relate to the 2020 and 2019 plan year contributions, respectively, that were deferred under the U. S. Cares Act. Additionally, in March 2021, the American Rescue Plan Act of 2021 ("ARPA-21") was passed. ARPA-21 provides funding relief for U.S. qualified pension plans which should lower pension contribution requirements over the next few years. As a result, we will not make contributions to certain plans for the remainder of 2021. However, we expect to make contributions to certain other plans for the remainder of 2021 of approximately $1.2 million. These amounts represent the minimum contributions we are required to make under relevant statutes. We do not expect to make contributions in excess of the minimum required amounts.
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Derivative Instruments |
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Derivative Instruments | Derivative Instruments Our functional currency is the U.S. dollar. As is customary in the oil and gas industry, a majority of our revenues are denominated in U.S. dollars; however, a portion of the revenues earned and expenses incurred by certain of our subsidiaries are denominated in currencies other than the U.S. dollar. These transactions are remeasured in U.S. dollars based on a combination of both current and historical exchange rates. We previously used derivatives to reduce our exposure to various market risks, primarily foreign currency exchange rate risk. The commencement of the Chapter 11 Cases constituted a termination event with respect to the Company’s derivative instruments, which permitted the counterparties of our derivative instruments to terminate their outstanding contracts. The exercise of these termination rights are not stayed under the Bankruptcy Code and the counterparties elected to terminate their outstanding derivatives with us in September 2020. As a result, we do not have derivative assets or liabilities on our Condensed Consolidated Balance Sheet as of December 31, 2020 (Predecessor). During the four months ended April 30, 2021 (Predecessor) and five months ended September 30, 2021 (Successor), we did not enter into derivative contracts; therefore, we do not have derivative assets or liabilities on our Condensed Consolidated Balance Sheet as of September 30, 2021. We previously utilized cash flow hedges to hedge forecasted foreign currency denominated transactions, primarily to reduce our exposure to foreign currency exchange rate risk associated with contract drilling expense and capital expenditures denominated in various currencies. Gains and losses, net of tax, on derivatives designated as cash flow hedges included in our Condensed Consolidated Statements of Operations and comprehensive loss were as follows (in millions):
(1)Changes in the fair value of cash flow hedges are recorded in AOCI. Amounts recorded in AOCI associated with cash flow hedges are subsequently reclassified into contract drilling, depreciation or interest expense as earnings are affected by the underlying hedged forecasted transaction. (2)During the three months ended September 30, 2020 (Predecessor), $0.5 million of gains were reclassified from AOCI into contract drilling expense and no gain or loss were reclassified from AOCI into depreciation expense in our Condensed Consolidated Statement of Operations. (3)During the four months ended April 30, 2021 (Predecessor), $5.6 million of gains were reclassified from AOCI into impairment expense in our Condensed Consolidated Statement of Operations in connection with the impairment of certain rigs. During the nine months ended September 30, 2020 (Predecessor), $2.0 million of losses were reclassified from AOCI into contract drilling expense and $13.5 million of gains were reclassified from AOCI into depreciation expense in our Condensed Consolidated Statement of Operations. We have net assets and liabilities denominated in numerous foreign currencies and use various methods to manage our exposure to foreign currency exchange rate risk. We predominantly structure our drilling contracts in U.S. dollars, which significantly reduces the portion of our cash flows and assets denominated in foreign currencies. Historically, we have occasionally entered into derivatives that hedge the fair value of recognized foreign currency denominated assets or liabilities but did not designate such derivatives as hedging instruments. In these situations, a natural hedging relationship generally existed whereby changes in the fair value of the derivatives offset changes in the fair value of the underlying hedged items. Net losses of $1.5 million and $0.2 million associated with our derivatives not designated as hedging instruments were included in other, net, in our Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2020 (Predecessor), respectively.
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Earnings Per Share |
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Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Weighted-average shares outstanding used in our computation of diluted EPS is calculated using the treasury stock method and for the Successor includes the effect of all potentially dilutive Warrants, restricted stock unit awards and performance stock unit awards and for the Predecessor includes the effect of all potentially dilutive stock options and excludes non-vested shares. For the Successor, during the three and five months ended September 30, 2021, our potentially dilutive instruments were not included in the computation of diluted EPS as the effect of including these shares in the calculation would have been anti-dilutive. Similarly, for the Predecessor, during the four months ended April 30, 2021 and three and nine months ended September 30, 2020, our potentially dilutive instruments were not included in the computation of diluted EPS as the effect of including these shares in the calculation would have been anti-dilutive. For the Successor, during the three and five months ended September 30, 2021, loss from continuing operations attributable to our shares was $54.5 million and $60.7 million respectively. For the Predecessor, during four months ended April 30, 2021, loss from continuing operations attributable to our shares was $4.5 billion. During three and nine months ended September 30, 2020, loss from continuing operations attributable to our shares were $0.7 billion and $4.8 billion respectively. No amounts were allocated to non-vested share awards in these periods given that losses are not allocated to non-vested share awards. For the Successor, during the three and five months ended September 30, 2021, there were approximately 600,000 and 400,000 anti-dilutive shares, respectively. For the Predecessor, during the four months ended April 30, 2021, anti-dilutive share awards totaling 300,000 were excluded from the computation of diluted EPS. Anti-dilutive share awards totaling 400,000 were excluded from the computation of diluted EPS for both the three and nine months ended September 30, 2020. Due to the net loss position, potentially dilutive share awards are excluded from the computation of diluted EPS. On the Effective Date and pursuant to the plan of reorganization, all of the Predecessor's ordinary shares were cancelled. In accordance with the plan of reorganization, all agreements, instruments and other documents evidencing, relating or otherwise connected with any of Legacy Valaris' equity interests outstanding prior to the Effective Date, including all equity-based awards, were cancelled. |
Debt |
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Debt Disclosure [Abstract] | |
Debt | Debt First Lien Notes Indenture On the Effective Date, in accordance with the plan of reorganization and Backstop Commitment Agreement, dated August 18, 2020 (as amended, the "BCA"), the Company consummated the rights offering of the First Lien Notes and associated shares in an aggregate principal amount of $550.0 million. In accordance with the BCA, certain holders of senior notes claims and certain holders of claims under the Revolving Credit Facility ("Backstop Parties") who provided backstop commitments received the backstop premium. The First Lien Notes were issued pursuant to the First Lien Notes Indenture, among the Company, certain direct and indirect subsidiaries of the Company as guarantors, and Wilmington Savings Fund Society, FSB, as collateral agent and trustee (in such capacities, the “Collateral Agent”). The First Lien Notes are guaranteed, jointly and severally, on a senior basis, by certain of the direct and indirect subsidiaries of the Company. The First Lien Notes and such guarantees are secured by first-priority perfected liens on 100% of the equity interests of each Restricted Subsidiary directly owned by the Company or any guarantor and a first-priority perfected lien on substantially all assets of the Company and each guarantor of the First Lien Notes, in each case subject to certain exceptions and limitations. The following is a brief description of the material provisions of the First Lien Notes Indenture and the First Lien Notes. The First Lien Notes are scheduled to mature on April 30, 2028. Interest on the First Lien Notes accrues, at our option, at a rate of: (i) 8.25% per annum, payable in cash; (ii) 10.25% per annum, with 50% of such interest to be payable in cash and 50% of such interest to be paid in kind; or (iii) 12% per annum, with the entirety of such interest to be paid in kind. The Company shall pay interest semi-annually in arrears on May 1 and November 1 of each year, commencing November 1, 2021. Interest on the First Lien Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from April 30, 2021. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. At any time prior to April 30, 2023, the Company may redeem up to 35% of the aggregate principal amount of the First Lien Notes at a redemption price of 104% up to the net cash proceeds received by the Company from equity offerings provided that at least 65% of the aggregate principal amount of the First Lien Notes remains outstanding and provided that the redemption occurs within 120 days after such equity offering of the Company. At any time prior to April 30, 2023, the Company may redeem the First Lien Notes at a redemption price of 104% plus a “make-whole” premium. On or after April 30, 2023, the Company may redeem all or part of the First Lien Notes at fixed redemption prices (expressed as percentages of the principal amount), plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The Company may also redeem the First Lien Notes, in whole or in part, at any time and from time to time on or after April 30, 2026 at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. Notwithstanding the foregoing, if a Change of Control (as defined in the First Lien Notes Indenture, with certain exclusions as provided therein) occurs, the Company will be required to make an offer to repurchase all or any part of each note holder’s notes at a purchase price equal to 101% of the aggregate principal amount of First Lien Notes repurchased, plus accrued and unpaid interest to, but excluding, the applicable date. The First Lien Notes Indenture contains covenants that limit, among other things, the Company’s ability and the ability of the guarantors and other restricted subsidiaries, to: (i) incur, assume or guarantee additional indebtedness; (ii) pay dividends or distributions on Equity Interests (as defined in the First Lien Notes Indenture) or redeem or repurchase equity interests; (iii) make investments; (iv) repay or redeem junior debt; (v) transfer or sell assets; (vi) enter into sale and lease back transactions; (vii) create, incur or assume liens; and (viii) enter into transactions with certain affiliates. These covenants are subject to a number of important limitations and exceptions. The First Lien Notes Indenture also provides for certain customary events of default, including, among other things, nonpayment of principal or interest, breach of covenants, failure to pay final judgments in excess of a specified threshold, failure of a guarantee to remain in effect, failure of a collateral document to create an effective security interest in collateral, with a fair market value in excess of a specified threshold, bankruptcy and insolvency events, cross payment default and cross acceleration, which could permit the principal, premium, if any, interest and other monetary obligations on all the then outstanding First Lien Notes to be declared due and payable immediately. The Company incurred $5.2 million in issuance costs in association with the First Lien Notes that are being amortized into interest expense over the expected life of the notes using the effective interest method. Predecessor Debtor in Possession Financing On September 25, 2020, following approval by the Bankruptcy Court, the Debtors entered into the Debtor-in-Possession ("DIP") Credit Agreement (the "DIP Credit Agreement"), by and among the Company and certain wholly owned subsidiaries of the Company, as borrowers, the lenders party thereto and Wilmington Savings Fund Society, FSB, as administrative agent and security trustee, in an aggregate amount not to exceed $500.0 million that will be used to finance, among other things, the ongoing general corporate needs of the Debtors during the course of the Chapter 11 Cases and to pay certain fees, costs and expenses associated with the Chapter 11 Cases. As of the Effective Date, there were no borrowings outstanding against our DIP facility and there were no DIP claims that were not due and payable on, or that otherwise survived, the Effective Date. The DIP Credit Agreement terminated on the Effective Date. Predecessor Senior Notes and Revolving Credit Facility On the Effective Date, in accordance with the plan of reorganization, all outstanding obligations under the Predecessor's Senior Notes, including the 2024 Convertible Notes, and the Revolving Credit Facility were cancelled and the holders thereunder received their pro rata share of certain Common Shares issued on the Effective Date. See “Note 12 - Shareholders' Equity" for additional information regarding the issuance of the Common Shares.
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Shareholders' Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity and Share-based Payments [Text Block] | Shareholders' Equity Activity in our various shareholders' equity accounts for the three and five months ended September 30, 2021 (Successor), four months ended April 30, 2021 (Predecessor), and three and nine months ended September 30, 2020 (Predecessor) were as follows (in millions, except per share amounts):
Valaris Limited Share Capital As of the Effective Date, the authorized share capital of Valaris Limited is $8.5 million divided into 700 million Common Shares of a par value of $0.01 each and 150 million preference shares of a par value of $0.01. Issuance of Common Shares On the Effective Date, pursuant to the plan of reorganization, we issued 75 million Common Shares. Cancellation of Predecessor Equity and Issuance of Warrants On the Effective Date and pursuant to the plan of reorganization, the Legacy Valaris Class A ordinary shares were cancelled and the Company issued 5,645,161 Warrants to the former holders of the Company's equity interests outstanding prior to the Effective Date. The Warrants are exercisable for one Common Share per Warrant at an initial exercise price of $131.88 per Warrant, in each case as may be adjusted from time to time pursuant to the applicable warrant agreement. The Warrants are exercisable for a period of seven years and will expire on April 29, 2028. The exercise of these Warrants into Common Shares would have a dilutive effect to the holdings of Valaris Limited's existing shareholders. Management Incentive Plan In accordance with the plan of reorganization, Valaris Limited adopted the 2021 Management Incentive Plan (the “MIP”) as of the Effective Date and authorized and reserved 8,960,573 Common Shares for issuance pursuant to equity incentive awards to be granted under the MIP, which may be in the form of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalents and cash awards or any combination thereof.
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Income Taxes |
9 Months Ended |
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Sep. 30, 2021 | |
Components of Income Tax Expense (Benefit), Continuing Operations [Abstract] | |
Income Taxes | Income Taxes Valaris Limited, the Successor Company and our parent company, is domiciled and resident in Bermuda. Our subsidiaries conduct operations and earn income in numerous countries and are subject to the laws of taxing jurisdictions within those countries. The income of our non-Bermuda subsidiaries is not subject to Bermuda taxation as there is not an income tax regime in Bermuda. Valaris plc, the Predecessor Company and our former parent company, was domiciled and resident in the U.K. The income of our non-U.K. subsidiaries was generally not subject to U.K. taxation. Income tax rates and taxation systems in the jurisdictions in which our subsidiaries conduct operations vary and our subsidiaries are frequently subjected to minimum taxation regimes. In some jurisdictions, tax liabilities are based on gross revenues, statutory deemed profits or other factors, rather than on net income and our subsidiaries are frequently unable to realize tax benefits when they operate at a loss. Accordingly, during periods of declining profitability, our income tax expense may not decline proportionally with income, which could result in higher effective income tax rates. Furthermore, we will continue to incur income tax expense in periods in which we operate at a loss. Our drilling rigs frequently move from one taxing jurisdiction to another to perform contract drilling services. In some instances, the movement of drilling rigs among taxing jurisdictions will involve the transfer of ownership of the drilling rigs among our subsidiaries. As a result of frequent changes in the taxing jurisdictions in which our drilling rigs are operated and/or owned, changes in profitability levels and changes in tax laws, our annual effective income tax rate may vary substantially from one reporting period to another. Historically, we calculated our provision for income taxes during interim reporting periods by applying the estimated annual effective tax rate for the full fiscal year to pre-tax income or loss, excluding discrete items, for the reporting period. We determined that since small changes in estimated pre-tax income or loss would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate of income taxes for the three and five months ended September 30, 2021 (Successor), four months ended April 30, 2021 (Predecessor), and three and nine months ended September 30, 2020 (Predecessor). We used a discrete effective tax rate method to calculate income taxes for the three and five months ended September 30, 2021 (Successor), four months ended April 30, 2021 (Predecessor), and three and nine months ended September 30, 2020 (Predecessor). We will continue to evaluate income tax estimates under the historical method in subsequent quarters and employ a discrete effective tax rate method if warranted. Discrete income tax expense for the three months ended September 30, 2021(Successor) was $39.2 million and was primarily attributable to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years. Discrete income tax expense for the five months ended September 30, 2021 (Successor) was $44.8 million and was primarily attributable to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years and resolution of other prior period tax matters. Discrete income tax expense for the four months ended April 30, 2021 (Predecessor) was $2.2 million and was primarily attributable to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years and resolution of other prior period tax matters offset by a discrete tax benefit related to fresh start accounting adjustments. Excluding the aforementioned discrete tax items, income tax expense for the three and five months ended September 30, 2021 (Successor) and four months ended April 30, 2021 (Predecessor) was $14.1 million, $23.6 million and $14.0 million, respectively. Discrete income tax expense for the three months ended September 30, 2020 (Predecessor) was $13.8 million and was primarily attributable to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years, rig sales and reorganization items. Discrete income tax benefit for the nine months ended September 30, 2020 (Predecessor) was $197.9 million and was primarily attributable to a restructuring transaction, rig impairments, implementation of the U.S. Cares Act, changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years, rig sales, reorganization items and the resolution of other prior period tax matters. Excluding the aforementioned discrete tax items, income tax expense for the three and nine months ended September 30, 2020 (Predecessor) was $8.1 million and $52.0 million, respectively. Unrecognized Tax Benefits (Predecessor) During 2019, the Luxembourg tax authorities issued aggregate tax assessments totaling approximately €142.0 million (approximately $164.5 million converted using the current period-end exchange rates) related to tax years 2014, 2015 and 2016 for several of Rowan's Luxembourg subsidiaries. We recorded a liability for uncertain tax positions of €93.0 million (approximately $107.7 million converted using the current period-end exchange rates) in purchase accounting related to these assessments. During the first quarter of 2020, in connection with the administrative appeals process, the tax authority withdrew assessments of €142.0 million (approximately $164.5 million converted using the current period-end exchange rates), accepting the associated tax returns as previously filed. Accordingly, we de-recognized previously accrued liabilities for uncertain tax positions and net wealth taxes of €79.0 million (approximately $91.5 million converted using the current period-end exchange rates) and €2.0 million (approximately $2.3 million converted using the current period-end exchange rates), respectively. The de-recognition of amounts related to these assessments was recognized as a tax benefit during the three-month period ended March 31, 2020 and is included in changes in operating assets and liabilities on the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2020.
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Contingencies |
9 Months Ended |
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Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Indonesian Well-Control Event In July 2019, a well being drilled offshore Indonesia by one of our jackup rigs experienced a well-control event requiring the cessation of drilling activities. In February 2020, the rig resumed operations. Indonesian authorities initiated an investigation into the event and have contacted the customer, us and other parties involved in drilling the well for additional information. We cooperated with the Indonesian authorities. We cannot predict the scope or ultimate outcome of this investigation. If the Indonesian authorities determine that we violated local laws in connection with this matter, we could be subject to penalties including environmental or other liabilities, which may have a material adverse impact on us. ARO Funding Obligations The Company and Saudi Aramco have agreed to take all steps necessary to ensure that ARO purchases 20 newbuild jackup rigs over an approximate 10-year period. In January 2020, ARO ordered the first two newbuild jackups for delivery scheduled in 2022. The partners intend for the newbuild jackup rigs to be financed out of available cash from ARO's operations and/or funds available from third-party debt financing. ARO paid a 25% down payment from cash on hand for each of the newbuilds ordered in January 2020. In the event ARO has insufficient cash from operations or is unable to obtain third-party financing, each partner may periodically be required to make additional capital contributions to ARO, up to a maximum aggregate contribution of $1.25 billion from each partner to fund the newbuild program. Each partner's commitment shall be reduced by the actual cost of each newbuild rig, on a proportionate basis. The partners agreed that Saudi Aramco, as a customer, will provide drilling contracts to ARO in connection with the acquisition of the newbuild rigs. The initial contracts for each newbuild rig will be determined using a pricing mechanism that targets a six-year payback period for construction costs on an EBITDA basis. The initial eight-year contracts will be followed by a minimum of another eight years of term, re-priced in three-year intervals based on a market pricing mechanism. Other Matters In addition to the foregoing, we are named defendants or parties in certain other lawsuits, claims or proceedings incidental to our business and are involved from time to time as parties to governmental investigations or proceedings, including matters related to taxation, arising in the ordinary course of business. Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, we do not expect these matters to have a material adverse effect on our financial position, operating results and cash flows. In the ordinary course of business with customers and others, we have entered into letters of credit to guarantee our performance as it relates to our drilling contracts, contract bidding, customs duties, tax appeals and other obligations in various jurisdictions. Letters of credit outstanding as of September 30, 2021 (Successor) totaled $151.1 million and are issued under facilities provided by various banks and other financial institutions. Obligations under these letters of credit are not normally called, as we typically comply with the underlying performance requirement. As of September 30, 2021 (Successor), we had collateral deposits in the amount of $31.4 million with respect to these agreements.
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Segment Information |
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Segment Reporting Information, Revenue for Reportable Segment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information Our business consists of four operating segments: (1) Floaters, which includes our drillships and semisubmersible rigs, (2) Jackups, (3) ARO and (4) Other, which consists of management services on rigs owned by third-parties and the activities associated with our arrangements with ARO under the Lease Agreements, the Secondment Agreement and the Transition Services Agreement. Floaters, Jackups and ARO are also reportable segments. Upon emergence, we ceased allocation of our onshore support costs included within contract drilling expenses to our operating segments for purposes of measuring segment operating income (loss) and as such, those costs are included in “Reconciling Items”. We have adjusted the historical periods to conform with current period presentation. Further, general and administrative expense and depreciation expense incurred by our corporate office are not allocated to our operating segments for purposes of measuring segment operating income (loss) and are included in "Reconciling Items." Substantially all of the expenses incurred associated with our Transition Services Agreement are included in general and administrative under "Reconciling Items" in the table set forth below. We measure segment assets as property and equipment. The full operating results included below for ARO are not included within our consolidated results and thus deducted under "Reconciling Items" and replaced with our equity in earnings of ARO. See "Note 5 - Equity Method Investment in ARO" for additional information on ARO and related arrangements. Three Months Ended September 30, 2021 (Successor)
Five Months Ended September 30, 2021 (Successor)
Four Months Ended April 30, 2021 (Predecessor)
Three Months Ended September 30, 2020 (Predecessor)
Nine Months Ended September 30, 2020 (Predecessor)
Information about Geographic Areas As of September 30, 2021, the geographic distribution of our and ARO's drilling rigs was as follows:
We provide management services on two rigs owned by third-parties not included in the table above. We are a party to contracts whereby we have the option to take delivery of two drillships, VALARIS DS-13 and VALARIS DS-14, that are not included in the table above. ARO has ordered two newbuild jackups which are under construction in the Middle East that are not included in the table above.
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Supplemental Financial Information |
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Supplemental Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Information | Supplemental Financial Information Condensed Consolidated Balance Sheet Information Accounts receivable, net, consisted of the following (in millions):
Other current assets consisted of the following (in millions):
Other assets consisted of the following (in millions):
Accrued liabilities and other consisted of the following (in millions):
Other liabilities consisted of the following (in millions):
Accumulated other comprehensive income (loss) consisted of the following (in millions):
Condensed Consolidated Statement of Cash Flows Information Our restricted cash of $33.9 million at September 30, 2021 consists primarily of approximately $31.4 million for the collateral on letters of credit. See" Note 14 - Contingencies" for more information regarding our letters of credit. Concentration of Risk We are exposed to credit risk relating to our receivables from customers and our cash and cash equivalents. We mitigate our credit risk relating to receivables from customers, which consist primarily of major international, government-owned and independent oil and gas companies, by performing ongoing credit evaluations. We also maintain reserves for potential credit losses, which generally have been within our expectations. We mitigate our credit risk relating to cash and investments by focusing on diversification and quality of instruments. Consolidated revenues by customer were as follows:
(1)During the three and five months ended September 30, 2021, all revenues provided by Total were attributable to our Floaters segment. During the three and nine months ended September 30, 2020, 32% and 75% of revenues provided by Total were attributable to the Floaters segment and the remaining were attributable to the Jackups segment. (2)During the three months ended September 30, 2021, 24% of the revenues provided by BP were attributable to our Jackups segment, 3% of the revenues were attributable to our Floaters segment and the remaining were attributable to our managed rigs. During the five months ended September 30, 2021, 24% of the revenues were attributable to our Jackups segment, 2% of the revenues were attributable to our Floaters segment and the remaining were attributable to our managed rigs. During the four months ended April 30, 2021, 37% of the revenue provided by BP were attributable to our Floaters segment, 17% of the revenue were attributable to our Jackups segment and the remaining were attributable to our managed rigs. During the three months ended September 30, 2020, 24% of the revenues provided by BP were attributable to our Jackups segment, 14% of the revenues were attributable to our Floaters segment and the remaining were attributable to our managed rigs. During the nine months ended September 30, 2020, 21% of the revenues provided by BP were attributable to our Jackups segment, 23% of the revenues were attributable to our Floaters segment and the remaining were attributable to our managed rigs. Consolidated revenues by region were as follows (in millions):
(1)During the three months ended September 30, 2021, five months ended September 30, 2021 and four months ended April 30, 2021 and three and nine months ended September 30, 2020, all revenues earned in the United Kingdom and Norway were attributable to our Jackups segment. (2)During the three and five months ended September 30, 2021, 46% and 50% of the revenues earned in U.S. Gulf of Mexico were attributable to our Floaters segment respectively. The remaining revenues were attributable to our managed rigs. During the four months ended April 30, 2021, 64% of the revenues earned in U.S. Gulf of Mexico were attributable to our Floaters segment. The remaining revenues were attributable to our managed rigs. During the three months ended September 30, 2020, 38% of the revenues earned in U.S. Gulf of Mexico were attributable to our Floaters segment, 11% were attributable to our Jackups segment and the remaining revenues were attributable to our managed rigs. During the nine months ended September 30, 2020, 56% of the revenues earned in U.S. Gulf of Mexico were attributable to our Floaters segment, 11% were attributable to our Jackups segment and the remaining revenues were attributable to our managed rigs. (3)During the three and five months ended September 30, 2021, 56% and 57%of the revenues earned in Saudi Arabia were attributable to our Jackups segment respectively. During the four months ended April 30, 2021, 57% of the revenues earned in Saudi Arabia were attributable to our Jackups segment. The remaining revenues were attributable to our Other segment and relates to our rigs leased to ARO and certain revenues related to our Secondment Agreement. During the three and nine months ended September 30, 2020, 55% and 56%, respectively, of the revenues earned in Saudi Arabia were attributable to our Jackups segment. The remaining revenues were attributable to our Other segment and relates to our rigs leased to ARO and certain revenues related to our Transition Services Agreement and Secondment Agreement. (4)During the three and five months ended September 30, 2021, 52% and 54% of the revenues earned in Mexico were attributable to our Jackups segment respectively and the remaining revenues were attributable to Floaters segment. During the four months ended April 30, 2021, 51% of the revenue earned in Mexico were attributable to our Jackups segment and the remaining revenues were attributable to our Floaters segment. During the three and nine months ended September 30, 2020, 74% and 54% of the revenues earned in Mexico were attributable to our Jackups segment respectively and the remaining revenues were attributable to our Floaters segment. (5)During the three and five months ended September 30, 2021, 64% and 62%, respectively, of the revenues earned in Australia were attributable to our Floaters segment and the remaining were attributable to Jackups segment. During the four months ended April 30, 2021, 77% of the revenues earned in Australia were attributable to our Floaters segment, and the remaining revenues earned in Australia were attributable to our Jackups segment. During the three and nine months ended September 30, 2020, 100% and 91%, respectively, of the revenues earned in Australia were attributable to our Floaters segment, and the remaining revenues were attributable to our Jackups segment.
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Unaudited Condensed Consolidated Financial Statements (Policies) |
9 Months Ended |
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Sep. 30, 2021 | |
Unaudited Condensed Consolidated Financial Statements [Abstract] | |
Chapter 11 Cases and Bankruptcy Accounting | Bankruptcy and Fresh Start Accounting On the Effective Date, the Debtors emerged from the Chapter 11 Cases. Upon emergence from the Chapter 11 Cases, we qualified for and adopted fresh start accounting. The application of fresh start accounting resulted in a new basis of accounting, and the Company became a new entity for financial reporting purposes. Accordingly, our financial statements and notes after the Effective Date are not comparable to our financial statements and notes on and prior to that date. Furthermore, the unaudited condensed consolidated financial statements and notes have been presented with a black line division to delineate the lack of comparability between the Predecessor and Successor. See “Note 2 – Chapter 11 Proceedings” and "Note 3 - Fresh Start Accounting" for additional details regarding the bankruptcy and fresh start accounting.
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Basis of Accounting, Policy | Changes in Accounting Policies Upon emergence from bankruptcy, we elected to change our accounting policies related to property and equipment as well as materials and supplies. Prior to emergence from bankruptcy, we recorded our drilling rigs as a single asset with a useful life ascribed by the expected useful life of that asset. Upon emergence, we have identified the significant components of our drilling rigs and ascribed useful lives based on the expected time until the next required overhaul or the end of the expected economic lives of the components. Historically, we recognized materials and supplies on the balance sheet when purchased and subsequently expensed items when consumed. Following emergence, materials and supplies will be expensed as a period cost when received. Additionally, a customer arrangement provides that we take title to their materials and supplies for the duration of the contract and return or pay cash for them at the termination of the contract. Together with our policy change on materials and supplies, we elected to record these assets and the obligation to our customer on a net basis as opposed to on a gross basis.
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New Accounting Pronouncements | New Accounting Pronouncements Recently adopted accounting pronouncements Income Taxes - In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("Update 2019-12"), which removes certain exceptions for investments, intraperiod allocations and interim tax calculations and adds guidance to reduce complexity in accounting for income taxes. The various amendments in Update 2019-12 are applied on a retrospective basis, modified retrospective basis and prospective basis, depending on the amendment. We adopted Update 2019-12 effective January 1, 2021 with no material impact to our financial statements upon adoption. Accounting pronouncements to be adopted Reference Rate Reform - In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("Update 2020-04"), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in Update 2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, for which an entity has elected certain optional expedients and that are retained through the end of the hedging relationship. The provisions in Update 2020-04 are effective upon issuance and can be applied prospectively through December 31, 2022. We are in the process of evaluating the impact this amendment will have on our condensed consolidated financial statements. Leases - In July 2021, the FASB issued ASU 2021-05, Leases (Topic 842); Lessors - Certain Leases with Variable Lease Payments, ("Update 2021-05") which requires a lessor to classify a lease with entirely or partially variable payments that do not depend on an index or rate as an operating lease if another classification (i.e. sales-type or direct financing) would trigger a day-one loss. Update 2021-05 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. We are in the process of evaluating the impact this amendment will have on our condensed consolidated financial statements. With the exception of the updated standards discussed above, there have been no accounting pronouncements issued and not yet effective that have significance, or potential significance, to our condensed consolidated financial statements.
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Chapter 11 Proceedings and Ability to Continue as a Going Concern (Tables) |
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Schedule Of Liabilities Subject to Compromise | Liabilities subject to compromise at December 31, 2020 (Predecessor) consisted of the following (in millions):
(1) Represents the holding costs incurred to maintain VALARIS DS-13 and VALARIS DS-14 in the shipyard.
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Schedule Of Reorganization Items | The components of reorganization items, net were as follows (in millions):
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Fresh Start Accounting (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reorganizations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fresh Start Accounting | The following table reconciles the enterprise value to the estimated fair value of Successor Common Shares as of the Effective Date (in millions, except per share value):
The following table reconciles the enterprise value to the reorganization value as of the Effective Date (in millions):
Represents the reorganization adjustments (in millions):
Represents the reorganization adjustments (in millions):
Reflects the following reorganization adjustments (in millions):
Reflects the following reorganization adjustments (in millions):
Reflects the following reorganization adjustments (in millions):
Reflects the following reorganization adjustments (in millions):
Represents the reorganization adjustments to total equity as follows (in millions):
Reflects the fresh start adjustments to record the estimated fair value of other current assets as follows (in millions):
Reflects the fresh start adjustments to record the estimated fair value of other assets as follows (in millions):
Reflects the fresh start adjustments to record the estimated fair value of current liabilities as follows (in millions):
Reflects the fresh start adjustments to record the estimated fair value of other liabilities as follows (in millions):
Reflects the fresh start adjustments to retained deficit as follows (in millions):
|
Revenue from Contracts with Customers (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block] | The following table summarizes our contract assets and contract liabilities (in millions):
Changes in contract assets and liabilities during the period are as follows (in millions):
|
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Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Table Text Block] | xpected future amortization of our contract liabilities and deferred costs recorded as of September 30, 2021 is set forth in the table below (in millions):
|
Equity Method Investment In ARO (Tables) |
3 Months Ended | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 |
Sep. 30, 2021 |
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Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments | A reconciliation of those components is presented below (in millions):
|
Summarized financial information for ARO is as follows (in millions):
The following table summarizes the total assets and liabilities as reflected in our Condensed Consolidated Balance Sheets as well as our maximum exposure to loss related to ARO (in millions). Our maximum exposure to loss is limited to (1) our equity investment in ARO; (2) the carrying amount of our shareholder notes receivable; and (3) other receivables and contract assets related to services provided to ARO, partially offset by contract liabilities as well as payables for services received.
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Schedule of Related Party Transactions | Revenues recognized by us related to the Lease Agreements, Transition Services Agreement and Secondment Agreement are as follows (in millions):
(1) All of the revenues presented above are included in our Other segment in our segment disclosures. See "Note 15 - Segment Information" for additional information.
|
Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Financial Assets And Liabilities Measured At Fair Value On A Recurring Basis | The following fair value hierarchy table categorizes information regarding our financial assets and liabilities measured at fair value on a recurring basis (in millions):
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Schedule Of Carrying Values And Estimated Fair Values Of Debt Instruments | The carrying values and estimated fair values of our debt instruments were as follows (in millions):
(1) For the Predecessor, the 3% exchangeable senior notes due 2024 (the "2024 Convertible Notes") were exchangeable into cash, our Class A ordinary shares or a combination thereof. The 2024 Convertible Notes were separated, at issuance, into their liability and equity components on our Condensed Consolidated Balance Sheet. The equity component was initially recorded to additional paid-in capital and as a debt discount and the discount was being amortized to interest expense over the life of the instrument. As discussed above, the carrying amount at December 31, 2020 represented the aggregate principal amount of these notes as of the Petition Date and were classified as Liabilities Subject to Compromise in our Condensed Consolidated Balance Sheet as of December 31, 2020. The Predecessor discontinued accruing interest on these notes as of the Petition Date. The equity component was $220.0 million and was classified as Additional Paid-in Capital as of December 31, 2020. On the Effective Date, in accordance with the plan of reorganization, all outstanding obligations under the 2024 Convertible Notes were cancelled and the equity component was written off to retained earnings. (2) In addition to the amount borrowed above, the Predecessor had $27.0 million in undrawn letters of credit issued under the Revolving Credit Facility as of December 31, 2020. On the emergence date, in accordance with the plan of reorganization, all undrawn letters of credit issued under the Revolving Credit Facility were collateralized pursuant to the terms of the Revolving Credit Facility. As of September 30, 2021 (Successor), we had $19.5 million of collateralized letters of credit issued by lenders of the Revolving Credit Facility and $29.9 million with respect to all letter of credit agreements. (3) As discussed in “Note 2 - Chapter 11 Proceedings” and “Note 3 - Fresh Start Accounting,” since the Petition Date and through the Effective Date, the Company operated as a debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the provisions of the Bankruptcy Code. Accordingly, all of our long-term debt obligations were presented as Liabilities Subject to Compromise in our Condensed Consolidated Balance Sheet as of December 31, 2020. All unamortized debt discounts, premiums or issuance costs related to our long-term debt obligations were written off to reorganization items as of the Petition Date in 2020.
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Property and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property And Equipment | Property and equipment as of September 30, 2021 and December 31, 2020 consisted of the following (in millions):
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Pension and Other Postretirement Benefits (Tables) |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs [Table Text Block] | The components of net periodic pension and retiree medical cost were as follows (in millions):
(1)Included in contract drilling and general and administrative expense in our Condensed Consolidated Statements of Operations. (2)Included in other, net, in our Condensed Consolidated Statements of Operations.
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Derivative Instruments (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains And Losses On Derivatives Designated As Cash Flow Hedges | Gains and losses, net of tax, on derivatives designated as cash flow hedges included in our Condensed Consolidated Statements of Operations and comprehensive loss were as follows (in millions):
(1)Changes in the fair value of cash flow hedges are recorded in AOCI. Amounts recorded in AOCI associated with cash flow hedges are subsequently reclassified into contract drilling, depreciation or interest expense as earnings are affected by the underlying hedged forecasted transaction. (2)During the three months ended September 30, 2020 (Predecessor), $0.5 million of gains were reclassified from AOCI into contract drilling expense and no gain or loss were reclassified from AOCI into depreciation expense in our Condensed Consolidated Statement of Operations. (3)During the four months ended April 30, 2021 (Predecessor), $5.6 million of gains were reclassified from AOCI into impairment expense in our Condensed Consolidated Statement of Operations in connection with the impairment of certain rigs. During the nine months ended September 30, 2020 (Predecessor), $2.0 million of losses were reclassified from AOCI into contract drilling expense and $13.5 million of gains were reclassified from AOCI into depreciation expense in our Condensed Consolidated Statement of Operations.
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Shareholders Equity (Tables) |
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Shareholders' Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Activity In Our Various Shareholders Equity [Table Text Block] | Activity in our various shareholders' equity accounts for the three and five months ended September 30, 2021 (Successor), four months ended April 30, 2021 (Predecessor), and three and nine months ended September 30, 2020 (Predecessor) were as follows (in millions, except per share amounts):
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Information, Revenue for Reportable Segment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Segment Reporting Information | Three Months Ended September 30, 2021 (Successor)
Five Months Ended September 30, 2021 (Successor)
Four Months Ended April 30, 2021 (Predecessor)
Three Months Ended September 30, 2020 (Predecessor)
Nine Months Ended September 30, 2020 (Predecessor)
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Schedule Of Geographic Distribution Of Rigs By Segment | As of September 30, 2021, the geographic distribution of our and ARO's drilling rigs was as follows:
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Supplemental Financial Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net | Accounts receivable, net, consisted of the following (in millions):
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Other Current Assets | Other current assets consisted of the following (in millions):
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Other Assets, Net | Other assets consisted of the following (in millions):
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Schedule of Accrued Liabilities | Accrued liabilities and other consisted of the following (in millions):
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Other Liabilities | Other liabilities consisted of the following (in millions):
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Accumulated other comprehensive income | Accumulated other comprehensive income (loss) consisted of the following (in millions):
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Schedule of Revenue by Major Customers by Reporting Segments | Consolidated revenues by customer were as follows:
(1)During the three and five months ended September 30, 2021, all revenues provided by Total were attributable to our Floaters segment. During the three and nine months ended September 30, 2020, 32% and 75% of revenues provided by Total were attributable to the Floaters segment and the remaining were attributable to the Jackups segment. (2)During the three months ended September 30, 2021, 24% of the revenues provided by BP were attributable to our Jackups segment, 3% of the revenues were attributable to our Floaters segment and the remaining were attributable to our managed rigs. During the five months ended September 30, 2021, 24% of the revenues were attributable to our Jackups segment, 2% of the revenues were attributable to our Floaters segment and the remaining were attributable to our managed rigs. During the four months ended April 30, 2021, 37% of the revenue provided by BP were attributable to our Floaters segment, 17% of the revenue were attributable to our Jackups segment and the remaining were attributable to our managed rigs. During the three months ended September 30, 2020, 24% of the revenues provided by BP were attributable to our Jackups segment, 14% of the revenues were attributable to our Floaters segment and the remaining were attributable to our managed rigs. During the nine months ended September 30, 2020, 21% of the revenues provided by BP were attributable to our Jackups segment, 23% of the revenues were attributable to our Floaters segment and the remaining were attributable to our managed rigs.
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Revenue from External Customers by Geographic Areas | Consolidated revenues by region were as follows (in millions):
(1)During the three months ended September 30, 2021, five months ended September 30, 2021 and four months ended April 30, 2021 and three and nine months ended September 30, 2020, all revenues earned in the United Kingdom and Norway were attributable to our Jackups segment. (2)During the three and five months ended September 30, 2021, 46% and 50% of the revenues earned in U.S. Gulf of Mexico were attributable to our Floaters segment respectively. The remaining revenues were attributable to our managed rigs. During the four months ended April 30, 2021, 64% of the revenues earned in U.S. Gulf of Mexico were attributable to our Floaters segment. The remaining revenues were attributable to our managed rigs. During the three months ended September 30, 2020, 38% of the revenues earned in U.S. Gulf of Mexico were attributable to our Floaters segment, 11% were attributable to our Jackups segment and the remaining revenues were attributable to our managed rigs. During the nine months ended September 30, 2020, 56% of the revenues earned in U.S. Gulf of Mexico were attributable to our Floaters segment, 11% were attributable to our Jackups segment and the remaining revenues were attributable to our managed rigs. (3)During the three and five months ended September 30, 2021, 56% and 57%of the revenues earned in Saudi Arabia were attributable to our Jackups segment respectively. During the four months ended April 30, 2021, 57% of the revenues earned in Saudi Arabia were attributable to our Jackups segment. The remaining revenues were attributable to our Other segment and relates to our rigs leased to ARO and certain revenues related to our Secondment Agreement. During the three and nine months ended September 30, 2020, 55% and 56%, respectively, of the revenues earned in Saudi Arabia were attributable to our Jackups segment. The remaining revenues were attributable to our Other segment and relates to our rigs leased to ARO and certain revenues related to our Transition Services Agreement and Secondment Agreement. (4)During the three and five months ended September 30, 2021, 52% and 54% of the revenues earned in Mexico were attributable to our Jackups segment respectively and the remaining revenues were attributable to Floaters segment. During the four months ended April 30, 2021, 51% of the revenue earned in Mexico were attributable to our Jackups segment and the remaining revenues were attributable to our Floaters segment. During the three and nine months ended September 30, 2020, 74% and 54% of the revenues earned in Mexico were attributable to our Jackups segment respectively and the remaining revenues were attributable to our Floaters segment. (5)During the three and five months ended September 30, 2021, 64% and 62%, respectively, of the revenues earned in Australia were attributable to our Floaters segment and the remaining were attributable to Jackups segment. During the four months ended April 30, 2021, 77% of the revenues earned in Australia were attributable to our Floaters segment, and the remaining revenues earned in Australia were attributable to our Jackups segment. During the three and nine months ended September 30, 2020, 100% and 91%, respectively, of the revenues earned in Australia were attributable to our Floaters segment, and the remaining revenues were attributable to our Jackups segment.
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Chapter 11 Proceedings and Ability to Continue as a Going Concern - Schedule of Reorganization Items (Details) - USD ($) $ in Millions |
1 Months Ended | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |
---|---|---|---|---|---|---|
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
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Reorganizations [Abstract] | ||||||
DIP Facility fees | $ 0.0 | $ 23.8 | $ 0.0 | $ 0.0 | ||
Professional fees | 6.5 | 25.8 | 93.4 | 12.1 | ||
Contract items | 0.0 | 0.0 | 3.9 | (1.5) | ||
Reorganization items (fees) | 6.5 | 49.6 | 97.3 | 10.6 | ||
Write-off of unamortized debt discounts, premiums and issuance costs | 0.0 | 447.9 | 0.0 | 0.0 | ||
Contract items | 0.0 | 0.0 | 0.5 | 0.0 | ||
Backstop premium | 0.0 | 0.0 | 30.0 | 0.0 | ||
Gain on settlement of liabilities subject to compromise | 0.0 | 0.0 | (6,139.0) | 0.0 | ||
Issuance of Common Shares for backstop premium | 0.0 | 0.0 | 29.1 | 0.0 | ||
Issuance of Common Shares to the Shipyard | 0.0 | 0.0 | 5.4 | 0.0 | ||
Write-off of unrecognized share-based compensation expense | 0.0 | 0.0 | 16.0 | 0.0 | ||
Impact of newbuild contract amendments | 0.0 | 0.0 | 350.7 | 0.0 | ||
Loss on fresh start adjustments | 0.0 | 0.0 | 9,194.6 | 0.0 | ||
Reorganization items (non-cash) | 0.0 | 447.9 | 3,487.3 | 0.0 | $ 447.9 | |
Total reorganization items, net | $ 3,584.6 | 6.5 | 497.5 | 3,584.6 | 10.6 | $ 497.5 |
Reorganization items (fees) unpaid | 3.0 | 25.8 | 38.3 | 3.0 | ||
Reorganization items (fees) paid | $ 3.5 | $ 23.8 | $ 59.0 | $ 7.6 |
Fresh Start Accounting - Narrative (Details) $ in Millions |
Apr. 30, 2021
USD ($)
|
---|---|
Reorganization, Chapter 11 [Line Items] | |
Enterprise Value | $ 1,860.0 |
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate | 2.81% |
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Rate of Return on Plan Assets | 6.03% |
Minimum [Member] | |
Reorganization, Chapter 11 [Line Items] | |
Enterprise Value | $ 1,860.0 |
Maximum [Member] | |
Reorganization, Chapter 11 [Line Items] | |
Enterprise Value | $ 3,145.0 |
Fresh Start Accounting - Schedule of Enterprise Value (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
Apr. 30, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Reorganization, Chapter 11 [Line Items] | |||
Enterprise Value | $ 1,860.0 | ||
Cash and cash equivalents | 607.6 | $ 620.8 | $ 325.8 |
Less: Fair value of debt | (544.8) | ||
Successor stock warrants | (16.4) | (16.4) | 0.0 |
NONCONTROLLING INTERESTS | 1.1 | $ (2.7) | 4.3 |
Less: Pension and other post retirement benefits liabilities | (189.0) | ||
Less: Adjustments not contemplated in Enterprise Value | (639.0) | ||
Total Valaris shareholders' equity | $ 1,079.5 | ||
Shares issued upon emergence (in shares) | 75 | ||
Per share value (in dollars per share) | $ 14.39 | $ 0.01 | |
Plus: Non-interest bearing current liabilities | $ 346.0 | ||
Less: Adjustments not contemplated in Enterprise Value | (218.0) | ||
Total assets | $ 2,595.6 | $ 2,602.5 | $ 12,873.2 |
Revenue from Contracts with Customers (Details) - USD ($) $ in Millions |
3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
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Capitalized Contract Cost [Line Items] | |||||||
Capitalized Contract Cost, Net | $ 19.3 | $ 19.3 | $ 19.3 | ||||
Upfront Rig Mobilizations And Certain Contract Preparation [Member] | |||||||
Capitalized Contract Cost [Line Items] | |||||||
Capitalized Contract Cost, Net | 17.7 | 17.7 | 17.7 | $ 13.8 | |||
Capitalized Contract Cost, Amortization | 11.4 | $ 7.0 | $ 7.6 | 13.2 | $ 35.9 | ||
Deferred Certification Costs | |||||||
Capitalized Contract Cost [Line Items] | |||||||
Capitalized Contract Cost, Net | 1.6 | 1.6 | $ 1.6 | $ 8.4 | |||
Capitalized Contract Cost, Amortization | $ 0.1 | $ 1.5 | $ 3.1 | $ 0.2 | $ 7.2 | ||
Minimum [Member] | |||||||
Capitalized Contract Cost [Line Items] | |||||||
Remaining duration of drilling contracts | 1 month | ||||||
Maximum [Member] | |||||||
Capitalized Contract Cost [Line Items] | |||||||
Remaining duration of drilling contracts | 3 years 6 months |
Revenue from Contracts with Customers Components of Contract Assets and Contract Liabilities (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Current contract assets | $ 1.5 | $ 1.4 |
Noncurrent contract assets | 0.0 | 0.4 |
Current contract liabilities (deferred revenue) | 32.5 | 57.6 |
Noncurrent contract liabilities (deferred revenue) | $ 11.9 | $ 14.3 |
Revenue from Contracts with Customers Schedule of Contract Assets and Liabilities (Details) - USD ($) $ in Millions |
4 Months Ended | 5 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2021 |
May 01, 2021 |
Dec. 31, 2020 |
|
Contract Assets | |||||
Fair value of contracts with customers | $ 2.2 | $ 1.5 | $ 1.5 | $ 2.2 | $ 1.8 |
Revenue recognized in advance of right to bill customer | 2.3 | 2.3 | |||
Decrease due to transfer to receivables during the period | (1.6) | (3.0) | |||
Fresh start accounting revaluation | (0.3) | ||||
Contract Liabilities | |||||
Fair value of contracts with customers | 35.7 | 44.4 | 44.4 | $ 35.7 | $ 71.9 |
Increase due to cash received | 10.2 | 34.2 | |||
Decrease due to amortization of deferred revenue that was included in the beginning contract liability balance | $ (14.8) | ||||
Decrease due to amortization of deferred revenue that was added during the period | (10.7) | ||||
Increase (Decrease) in Contract with Customer, Liability | $ (14.8) | ||||
Fresh start accounting revaluation | $ (31.6) |
Equity Method Investment in ARO - Schedule of Related Parties (Details) - ARO - USD ($) $ in Millions |
3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |
---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Schedule of Equity Method Investments [Line Items] | |||||
Lease revenue | $ 14.2 | $ 21.0 | $ 21.7 | $ 24.5 | $ 62.4 |
Secondment Revenue, Related Party | 0.5 | 1.0 | 1.1 | 0.9 | 23.0 |
Total revenue from ARO | $ 14.7 | $ 22.0 | $ 22.8 | $ 25.4 | $ 85.4 |
Property and Equipment (Schedule of Property and Equipment) (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
PROPERTY AND EQUIPMENT, AT COST | $ 933.1 | $ 13,209.3 |
Drilling rigs and equipment | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY AND EQUIPMENT, AT COST | 865.6 | 12,584.4 |
Work-in-progress | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY AND EQUIPMENT, AT COST | 33.3 | 446.1 |
Other | ||
Property, Plant and Equipment [Line Items] | ||
PROPERTY AND EQUIPMENT, AT COST | $ 34.2 | $ 178.8 |
Pension and other Postretirement Benefits - Narrative (Schedule of Net Benefit Costs) (Details) - USD ($) $ in Millions |
3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |
---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Retirement Benefits [Abstract] | |||||
Defined Benefit Plan, Service Cost | $ 0.0 | $ 0.7 | $ 0.0 | $ 0.0 | $ 2.0 |
Defined Benefit Plan, Interest Cost | 5.8 | 6.6 | 6.6 | 9.6 | 19.5 |
Defined Benefit Plan, Expected Return (Loss) on Plan Assets | (9.5) | (9.6) | (12.1) | (15.7) | (28.6) |
Defined Benefit Plan, Amortization of Gain (Loss) | 0.1 | 0.0 | 0.0 | ||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) | $ (3.7) | $ (2.3) | $ (5.4) | $ (6.1) | $ (7.1) |
Pension and Other Postretirement Benefits (Details) - USD ($) $ in Millions |
4 Months Ended | 5 Months Ended | 9 Months Ended | |
---|---|---|---|---|
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Retirement Benefits [Abstract] | ||||
Defined Benefit Plan, Plan Assets, Contributions by Employer | $ 22.5 | $ 1.7 | ||
Defined Benefit Plan, Plan Assets, Contributions By Employer, Related To Prior Year | $ 7.0 | $ 5.3 | ||
Defined Benefit Plan, Expected Future Employer Contributions, Current Fiscal Year | $ 1.2 |
Derivative Instruments (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2020 |
Sep. 30, 2020 |
|
Not Designated as Hedging Instrument | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Net gains (losses) on derivatives not designated as hedging instruments | $ (1.5) | $ (0.2) |
Earnings Per Share (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|---|---|
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Apr. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
Earnings Per Share [Abstract] | |||||||
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent | $ (60.7) | $ (54.5) | $ (700.0) | $ (4,500.0) | $ (4,800.0) | ||
Antidilutive share options excluded from computation of diluted earnings per share (in shares) | 300,000 | 600,000 | 400,000 | 300,000 | 400,000 | 400,000 | |
Class of Warrant or Right, Outstanding | 5,645,161 | 5,645,161 | 5,645,161 | ||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 131.88 | $ 131.88 | $ 131.88 | ||||
Warranted, Period Exercisable | 7 years |
Shareholders Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions |
9 Months Ended | |
---|---|---|
Apr. 30, 2021 |
Sep. 30, 2021 |
|
Class of Stock [Line Items] | ||
Common Stock, Value, Outstanding | $ 8.5 | |
Class of Warrant or Right, Outstanding | 5,645,161 | |
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 131.88 | |
Warranted, Period Exercisable | 7 years | |
Common shares, shares issued (in shares) | 75,000,000 | |
Shares issued upon emergence (in shares) | 75,000,000 | |
Management Incentive Plan | ||
Class of Stock [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 8,960,573 | |
Common Stock [Member] | ||
Class of Stock [Line Items] | ||
Common shares, shares issued (in shares) | 700,000,000 | |
Common Stock, No Par Value | $ 0.01 | |
Shares issued upon emergence (in shares) | 75,000,000 | |
Preferred Stock | ||
Class of Stock [Line Items] | ||
Common shares, shares issued (in shares) | 150,000,000 | 0 |
Common Stock, No Par Value | $ 0.01 |
Contingencies (Narrative) (Details) $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2021
USD ($)
jackup
drillship
| |
Commitments and Contingencies Disclosure [Abstract] | |
Number of Newbuild Jackup Rigs | jackup | 20 |
Order Period | 10 years |
ARO Rigs Under Construction | drillship | 2 |
Percentage of Down Payment Paid for ARO Newbuilds | 25.00% |
Maximum Contingent Contributions To Joint Venture | $ 1,250.0 |
Minimum Renewal Contract Terms For NewBuild Rigs | 8 years |
Letters of credit outstanding, amount | $ 151.1 |
Deposit Liabilities, Collateral Issued, Financial Instruments | $ 31.4 |
Supplemental Financial Information (Accounts Receivable, Net) (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Apr. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Trade receivables | $ 472.2 | $ 465.4 | |
Allowance for doubtful accounts | (16.4) | (16.2) | |
Accounts receivable, net | 455.8 | $ 425.9 | 449.2 |
Trade | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Trade receivables | 301.1 | 260.1 | |
Income Tax Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Trade receivables | 160.0 | 190.6 | |
Other Accounts Receivable | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Trade receivables | $ 11.1 | $ 14.7 |
Supplemental Financial Information (Other Current Assets) (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Apr. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Supplemental Financial Information [Abstract] | |||
Prepaid taxes | $ 45.4 | $ 32.9 | |
Prepaid expenses | 28.4 | 43.4 | |
Elimination of other deferred costs | 17.3 | 17.4 | |
Materials and supplies | 0.0 | 279.4 | |
Other | 25.9 | 13.4 | |
Other current assets | $ 117.0 | $ 90.5 | $ 386.5 |
Supplemental Financial Information (Other Assets, Net) (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Apr. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Supplemental Financial Information [Abstract] | |||
Tax receivables | $ 64.6 | $ 66.8 | |
Deferred Income Tax Assets, Net | 39.5 | 21.9 | |
Right-of-use assets | 23.9 | 35.8 | |
Supplemental executive retirement plan assets | 0.0 | 22.6 | |
Other | 25.5 | 29.1 | |
Other assets, net | $ 153.5 | $ 165.3 | $ 176.2 |
Supplemental Financial Information (Accrued Liabilities) (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Dec. 31, 2020 |
---|---|---|
Supplemental Financial Information [Abstract] | ||
Personnel costs | $ 75.6 | $ 95.6 |
Income and other taxes payable | 58.5 | 50.8 |
Deferred revenue | 32.5 | 57.6 |
Operating Lease, Liability, Current | 11.6 | 15.7 |
Accrued interest | 18.9 | 0.0 |
Other | 26.7 | 30.7 |
Accrued liabilities and other | $ 223.8 | $ 250.4 |
Supplemental Financial Information (Other Liabilities) (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Apr. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Supplemental Financial Information [Abstract] | |||
Unrecognized tax benefits (inclusive of interest and penalties) | $ 330.7 | $ 286.1 | |
Pension and other post-retirement benefits | 178.4 | 296.6 | |
Intangible Liabilities Noncurrent | 0.0 | 50.4 | |
Customer payable | 35.5 | ||
Other | 82.2 | 93.8 | |
Other liabilities | $ 591.3 | $ 565.4 | $ 762.4 |
Supplemental Financial Information (Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Millions |
Sep. 30, 2021 |
Apr. 30, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Supplemental Financial Information [Abstract] | |||
Currency translation adjustment | $ 0.0 | $ 6.5 | |
AOCI, Derivative Qualifying as Hedge, Excluded Component, after Tax | 0.0 | 5.6 | |
Accumulated Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax | (0.2) | (98.2) | |
Other | 0.0 | (1.8) | |
Accumulated other comprehensive loss | $ (0.2) | $ 0.0 | $ (87.9) |
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