Revenue and Customers

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue and Customers

Note 8— 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 Condensed Consolidated Balance Sheets.

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

	Successor
	March 31, 2022		December 31, 2021
Current contract assets	$	6,930	$	5,744
Noncurrent contract assets	—		—
Total contract assets	6,930		5,744
Current contract liabilities (deferred revenue)	(29,185)		(18,403)
Noncurrent contract liabilities (deferred revenue)	(9,362)		(9,352)
Total contract liabilities	$	(38,547)	$	(27,755)

Significant changes in the remaining performance obligation contract assets and the contract liabilities balances for the three months ended March 31, 2022, the period from February 6 through March 31, 2021 and the period from January 1 through February 5, 2021 are as follows:

	Contract Assets		Contract Liabilities
Net balance at 12/31/2020 (Predecessor)	$	13,861	$	(59,886)
Amortization of deferred costs	(1,607)		—
Additions to deferred costs	432		—
Amortization of deferred revenue	—		4,142
Additions to deferred revenue	—		(25,479)
Fresh start accounting revaluation	(12,686)		72,936
Total	(13,861)		51,599
Net balance at 2/5/2021 (Predecessor)	$	—	$	(8,287)
Net balance at 2/6/2021 (Successor)	$	—	$	(8,287)
Amortization of deferred costs	888		—
Additions to deferred costs	(42)		—
Amortization of deferred revenue	—		—
Additions to deferred revenue	—		(3,129)
Total	846		(3,129)
Net balance at 3/31/2021 (Successor)	$	846	$	(11,416)
Net balance at 12/31/2021 (Successor)	$	5,744	$	(27,755)
Amortization of deferred costs	(3,866)		—
Additions to deferred costs	5,052		—
Amortization of deferred revenue	—		8,219
Additions to deferred revenue	—		(19,011)
Total	1,186		(10,792)
Net balance at 3/31/2022 (Successor)	$	6,930	$	(38,547)

Customer Contract Intangible Assets

Upon emergence from the Chapter 11 Cases, the Company recognized a fair value adjustment of $113.4 million related to intangible assets for certain favorable customer contracts. These intangible assets will be amortized as a reduction of contract drilling services revenue from the Effective Date through the remainder of the contracts, approximately 18 months and 32 months, respectively. As of March 31, 2022, the net carrying amount was $47.8 million, $113.4 million gross less $65.6 million accumulated amortization. The expected remaining amortization is as follows: $29.4 million for the nine-month period ending December 31, 2022 and $18.4 million for the year ending December 31, 2023. We assess the recoverability of the unamortized balance when indicators of impairment are present. Should the review indicate that the carrying value is not fully recoverable, the portion not fully recoverable would be recognized as an impairment loss.

Future Amortization of Deferred Revenue

The following table reflects revenue expected to be recognized in the future related to deferred revenue, by rig type, as of March 31, 2022:    

	For the Years Ended December 31,
	2022		2023		2024		2025		2026 and beyond		Total
Floaters	$	21,591	$	12,615	$	37	$	—	$	—	$	34,243
Jackups	4,304		—		—		—		—		4,304
Total	$	25,895	$	12,615	$	37	$	—	$	—	$	38,547

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 March 31, 2022. 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.

Disaggregation of Revenue

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

	Successor				Predecessor
			Period From		Period From
			February 6, 2021		January 1, 2021
	Three Months Ended March 31, 2022		through		through
			March 31, 2021		February 5, 2021
Floaters	$	141,213	$	56,048	$	50,057
Jackups	53,822		28,581		23,994
Total	$	195,035	$	84,629	$	74,051