Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

3.Revenue from Contracts with Customers

The following table summarizes revenues from our contracts disaggregated by revenue generating activity contained therein for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(in thousands)	2023		2022
Dayrate drilling	$	60,242	$	32,055
Mobilization		1,371		1,270
Reimbursables		1,902		1,666
Capital modification		218		—
Other		23		—
Total revenue	$	63,756	$	34,991

Three customers accounted for approximately 14%, 12% and 11% of consolidated revenue for the three months ended March 31, 2023. Three customers accounted for approximately 22%, 13% and 10% of consolidated revenue for the three months ended March 31, 2022.

Accounts receivable is our right to consideration once it becomes unconditional. Payment terms typically range from 30 to 60 days. The following table provides information about receivables and contract liabilities related to contracts with customers. There were no contract assets recorded as of March 31, 2023 or December 31, 2022.

	March 31,		December 31,
(in thousands)	2023		2022
Receivables, which are included in “Accounts receivable”	$	41,849	$	39,732
Contract liabilities, which are included in “Accrued liabilities”	$	(1,369)	$	(1,158)

The primary changes in contract liabilities balances during the period are as follows:

	Three Months Ended March 31,
(in thousands)	2023		2022
Revenue recognized that was included in contract liabilities at beginning of period	$	540	$	505
Increase in contract liabilities due to cash received, excluding amounts recognized as revenue	$	(751)	$	(1,664)

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2023. The estimated revenue does not include amounts of variable consideration that are constrained.

	Year Ending December 31,
(in thousands)	2023		2024		2025		2026
Revenue	$	1,365	$	4	$	—	$	—

The amounts presented in the table above consist only of fixed consideration related to fees for rig mobilizations and demobilizations, if applicable, which are allocated to the drilling services performance obligation as such performance obligation is satisfied. We have elected the exemption from disclosure of remaining performance obligations for variable consideration. Therefore, dayrate revenue to be earned on a rate scale associated with drilling conditions and level of service provided for each fractional-hour time increment over the contract term and other variable consideration such as penalties and reimbursable revenues, have been excluded from the disclosure.

Contract Costs

We capitalize costs incurred to fulfill our contracts that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy our performance obligations under the contract and (iii) are expected to be recovered through revenue generated under the contract. These costs, which principally relate to rig mobilization costs at the commencement of a new contract, are deferred as a current or noncurrent asset (depending on the length of the contract term), and amortized ratably to contract drilling expense as services are rendered over the initial term of the related drilling contract. Such contract costs, recorded as “Prepaid expenses and other current assets”, amounted to $0.7 million and $0.3 million on our consolidated balance sheets at March 31, 2023 and December 31, 2022, respectively. During the three months ended March 31, 2023, contract costs increased by $0.9 million and we amortized $0.5 million of contract costs. During the three months ended March 31, 2022, contract costs increased by $2.0 million, and we amortized $1.2 million of contract costs.