Note 10— Revenue and Customers

Contract Balances

Accounts receivable are recognized when the right to consideration becomes unconditional based upon contractual billing schedules. Payment terms on invoiced amounts are typically 30 days. Current contract asset and liability balances are included in “Prepaid expenses and other current assets” and “Other current liabilities,” respectively, and noncurrent contract assets and liabilities are included in “Other assets” and “Other liabilities,” respectively, on our Consolidated Balance Sheets.

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



	December 31, 2018			January 1, 2018
Current contract assets	$	25,298		$	21,229
Noncurrent contract assets	22,366			34,520
Total contract assets	47,664			55,749

Current contract liabilities (deferred revenue)	(32,906		)	(35,422		)
Noncurrent contract liabilities (deferred revenue)	(47,847		)	(73,439		)
Total contract liabilities	$	(80,753	)	$	(108,861	)

Significant changes in the remaining performance obligation contract assets and the contract liabilities balances for the year ended December 31, 2018 are as follows:



	Contract Assets			Contract Liabilities
Net balance at January 1, 2018	$	55,749		$	(108,861	)

Amortization of deferred costs	(32,420		)	—
Additions to deferred costs	24,335			—
Amortization of deferred revenue	—			47,798
Additions to deferred revenue	—			(19,690		)
Total	(8,085		)	28,108

Net balance at December 31, 2018	$	47,664		$	(80,753	)

We have elected, as a practical expedient, not to disclose significant changes in the remaining performance obligation for the year ended December 31, 2017, which was before our adoption date of January 1, 2018.

Contract Costs

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

Costs incurred for the demobilization of rigs at contract completion are recognized as incurred during the demobilization process. Costs incurred for rig modifications or upgrades required for a contract, which are considered to be capital improvements, are capitalized as drilling and other property and equipment and depreciated over the estimated useful life of the improvement.

Transaction Price Allocated to the Remaining Performance Obligations

The following table reflects revenue expected to be recognized in the future related to unsatisfied performance obligations, by rig type, at the end of the reporting period:



	Year Ending December 31,
	2019		2020		2021		2022		2023 and beyond		Total
Drillships	$	20,658	$	15,677	$	15,677	$	9,266	$	3,572	$	64,850
Semisubmersibles	363		—		—		—		—		363
Jackups	11,868		3,672		—		—		—		15,540
Total	$	32,889	$	19,349	$	15,677	$	9,266	$	3,572	$	80,753

The revenue included above consists of expected mobilization, demobilization, and upgrade revenue for unsatisfied performance obligations. The amounts are derived from the specific terms within drilling contracts that contain such provisions, and the expected timing for recognition of such revenue is based on the estimated start date and duration of each respective contract based on information known at December 31, 2018. The actual timing of recognition of such amounts may vary due to factors outside of our control. We have taken the optional exemption, permitted by accounting standards, to exclude disclosure of the estimated transaction price related to the variable portion of unsatisfied performance obligations at the end of the reporting period, as our transaction price is based on a single performance obligation consisting of a series of distinct hourly, or more frequent, periods, the variability of which will be resolved at the time of the future services.

Our revenue recognition pattern under ASC 606 is materially equivalent to revenue recognition under the previous guidance. For the year ended December 31, 2018, there were no material effects to our Consolidated Balance Sheets, Consolidated Statements of Operations, or Consolidated Statements of Cash Flows.

Disaggregation of Revenue

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



	Three Months Ended December 31, 2018		Twelve Months Ended December 31, 2018
Drillships	$	155,305	$	532,833
Semisubmersibles	10,344		28,992
Jackups	126,400		474,257
Total	$	292,049	$	1,036,082