Statements contained in this report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").  Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "likely," "plan," "project," "could," "may," "might," "should," "will" and similar words and specifically include statements regarding expected financial performance; dividends; expected utilization, day rates, revenues, operating expenses, cash flow, contract terms, contract backlog, capital expenditures, insurance, financing and funding; expected work commitments, awards and contracts; the timing of availability, delivery, mobilization, contract commencement or relocation or other movement of rigs;rigs and the timing thereof; future rig construction (including construction in progresswork-in-progress and completion thereof), enhancement, upgrade or repair and timing and cost thereof; the suitability of rigs for future contracts; the offshore drilling market, including supply and demand, customer drilling programs, stacking of rigs, effects of new rigs on the market and effects of declines in commodity prices; performance of our joint venture with Saudi Aramco; expected divestitures of assets; general market, business and industry conditions, trends and outlook; future operations; the impact of increasing regulatory complexity; our program to high-grade the rig fleet by investing in new equipment and divesting selected assets and underutilized rigs; expense management; and the likely outcome of litigation, legal proceedings, investigations or insurance or other claims or contract disputes and the timing thereof.

We prepared the accompanying condensed consolidated financial statements of Ensco Rowan plc and subsidiaries (the "Company," "Ensco,"EnscoRowan," "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, 20172018 condensed consolidated balance sheet data werewas derived from our 20172018 audited consolidated financial statements, but dodoes 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.

The financial data for the three-monthquarters ended March 31, 2019 and six-month periods ended June 30, 2018 and 2017 included herein have been subjected to a limited review by KPMG LLP, our independent registered public accounting firm. The accompanying independent registered public accounting firm's review report is not a report within the meaning of Sections 7 and 11 of the Securities Act, and the independent registered public accounting firm's liability under Section 11 does not extend to it.

Results of operations for the three-month and six-month periodsquarter ended June 30, 2018March 31, 2019 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2018.2019. 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, 2017,2018, filed with the SEC on February 27, 2018,28, 2019. On April 11, 2019, we completed our combination with Rowan Companies plc and our quarterly report on Form 10-Q filed with the SEC on April 26, 2018.effected a four-to-one share consolidation (being a reverse stock under English law). See "Note 3 - Rowan Transaction" and "Note 14 - Subsequent Events" for additional information.

WeOur 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 integrated 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 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 Update 2014-09 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 June 30, 2018March 31, 2019 was between approximately one month and fivefour years.

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 or other 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 revenues whenwhereby our performance obligation is satisfied, the termination fee can be reasonably measured and collection is probable.

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.

Contract assets and liabilities are presented net on our condensed consolidated balance sheet 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.

Costs incurred for upfront rig mobilizations and certain contract preparationspreparation are attributable to our future performance obligation under each respective drilling contract. Such 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 $39.2$26.6 million and $40.6$23.5 million as of June 30, 2018March 31, 2019 and December 31, 2017,2018, respectively. During the three-monththree months ended March 31, 2019 and six-month periods ended June 30, 2018, amortization of such costs totaled $9.1$6.4 million and $15.9 million, respectively. During the three-month and six-month periods ended June 30, 2017, amortization of such costs totaled $8.2 million and $14.7$6.8 million, respectively.

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 $14.2$13.4 million and $15.3$13.6 million as of June 30, 2018March 31, 2019 and December 31, 2017,2018, respectively. During the three-monththree months ended March 31, 2019 and six-month periods ended June 30, 2018, amortization of such costs totaled $3.2 million and $6.3 million, respectively. During the three-month and six-month periods ended June 30, 2017, amortization of such costs totaled $2.8 million and $5.9$3.1 million, respectively.    

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. Expected future amortization of our contract liabilities and deferred costs recorded as of June 30, 2018March 31, 2019 is set forth in the table below (in millions):

On October 6, 20177, 2018, we entered into a transaction agreement ("the Transaction Agreement") with Rowan Companies plc ("Rowan"). On April 11, 2019 (the "Merger"Transaction Date"), we completed our combination with Rowan pursuant to the Transaction Agreement (the "Rowan Transaction"). On the Transaction Date, we changed our name to Ensco Rowan plc. Rowan's financial results will be included in our consolidated results beginning on the Transaction Date.

Prior to the Rowan Transaction, Rowan and Saudi Aramco formed a merger transaction (the "Merger"50/50 joint venture to own, manage and operate drilling rigs offshore Saudi Arabia ("Saudi Aramco Rowan Offshore Drilling Company" or "ARO"). ARO currently owns a fleet of seven jackup rigs, leases another nine jackup rigs from us and has plans to order up to 20 newbuild jackup rigs over the next 10 years.

The Rowan Transaction is expected to enhance the market leadership of the combined company with Atwood Oceanics, Inc. ("Atwood")a fleet of high-specification floaters and Echo Merger Sub, LLC,jackups and position us well to meet increasing and evolving customer demand. The increased scale, diversification and financial strength of the combined company will provide us advantages to better serve our wholly-owned subsidiary. customers. Exclusive of two older jackup rigs marked for retirement, Rowan’s offshore rig fleet consists of four ultra-deepwater drillships and 19 jackup rigs.

Under U.S. GAAP, Ensco plc is considered to be the acquirer for accounting purposes. As a result, Rowan's assets acquired and liabilities assumed in the Merger wereRowan Transaction will be recorded at their estimated fair values as of the MergerTransaction Date under the acquisition method of accounting. When the fair value of the net assets acquired exceeds the consideration transferred in an acquisition, the difference is recorded as a bargain purchase gain in the period in which the transaction occurs. WithWe have not finalized the exception of certain spare parts and equipment and legal and tax exposures, we have substantially completed our fair value assessmentsvalues of assets acquired and liabilities assumed. Whileassumed; therefore, the fair value estimates set forth below are subject to adjustment during a one year measurement period subsequent to the Transaction Date. The estimated fair values of certain assets and liabilities including materials and supplies, long-lived assets and contingencies require judgments and assumptions that increase the likelihood that adjustments may be recordedmade to these estimates during the remainder of the measurement period, we do not expect them toand those adjustments could be material.

The provisional amounts and respective measurement period adjustments recorded for assets acquired and liabilities assumed are based on preliminary estimates of their fair values as of the MergerTransaction Date and wereare as follows (in millions):

The estimated fair values assigned to assets acquired net of liabilities assumed exceeded the consideration transferred, resulting in a bargain purchase gain primarily due to depressed offshore drilling company valuations. Market capitalizations across the offshore drilling industry have declined significantly since mid-2014 due to the decline in commodity prices and the related imbalance of supply and demand for drilling rigs. The resulting bargain purchase gain was further driven by the decline in our share price from $6.70$33.92 to $5.83$15.88 between the last trading day prior to the announcement of the MergerRowan Transaction and the MergerTransaction Date. The estimated gain will be reflected in other, net, in our condensed consolidated statement of operations during the second quarter.

The following unaudited supplemental pro forma results present consolidated information as if the Rowan Transaction was completed on January 1, 2018. The pro forma results include, among others, (i) the amortization associated with acquired intangible assets and liabilities (ii) a reduction in depreciation expense for adjustments to property and equipment (iii) the amortization of premiums and discounts recorded intangibleon Rowan's debt (iv) removal of the historical amortization of unrealized gains and losses related to Rowan's pension plans and (v) the amortization of basis differences in assets and liabilities of $60.0 million forARO. The pro forma results do not include any potential synergies or non-recurring charges that may result directly from the estimated fair value of unfavorable drillship construction contracts, which were determined by comparing the firm obligations for the remaining construction of ENSCO DS-13 and ENSCO DS-14 to the estimated current market rates for the construction of a comparable drilling rig. The liabilities will be amortized over the estimated life of ENSCO DS-13 and ENSCO DS-14 as a reduction of depreciation expense beginning on the date the rig is placed into service.Rowan Transaction.

The following fair value hierarchy table categorizes information regarding our net financial assets and liabilities measured at fair value on a recurring basis (in millions):

Our supplemental executive retirement plans (the "SERP") are non-qualified plans that provide eligible employees an opportunity to defer a portion of their compensation for use after retirement. Assets held in the SERP were marketable securities measured at fair value on a recurring basis using Level 1 inputs and were included in other assets on our condensed consolidated balance sheets. The fair value measurement of assets held in the SERP was based on quoted market prices.

Our derivatives arewere measured at fair value on a recurring basis using Level 2 inputs. See "Note 5 - Derivative Instruments" for additional information on our derivatives, including a description of our foreign currency hedging activities and related methodologies used to manage foreign currency exchange rate risk. The fair value measurement of our derivatives was based on market prices that are generally observable for similar assets or liabilities at commonly-quoted intervals.

The estimated fair values of our cash and cash equivalents, short-term investments, receivables, trade payables and other liabilities approximated their carrying values as of June 30, 2018March 31, 2019 and December 31, 2017.2018. Our short-term investments consisted of time deposits with initial maturities in excess of three months but less than one year as of each respective balance sheet date. The estimated fair values of our senior notes and debentures were determined using quoted market prices.

    

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 use foreign currency forward contracts to reduce our exposure to various market risks, primarily foreign currency exchange rate risk.

Derivatives recorded at fair value on our condensed consolidated balance sheets consisted of the following (in millions):

We utilize 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 expenses and capital expenditures denominated in various currencies. As of June 30, 2018,March 31, 2019, we had cash flow hedges outstanding to exchange an aggregate $212.1$169.6 million for various foreign currencies, including $82.5$88.3 million for British pounds, $69.2$39.8 million for Australian dollars, $24.2$21.5 million for euros, $14.9$12.9 million for Brazilian reals $14.5 million for Singapore dollars and $6.8$7.1 million for other currencies.

Gains and losses, net of tax, on derivatives designated as cash flow hedges included in our condensed consolidated statements of operations and comprehensive income (loss)loss for the quarters ended March 31, 2019 and 2018 were as follows (in millions):

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. We occasionally enter into derivatives that hedge the fair value of recognized foreign currency denominated assets or liabilities but do not designate such derivatives as hedging instruments. In these situations, a natural hedging relationship generally exists whereby changes in the fair value of the derivatives offset changes in the fair value of the underlying hedged items. As of June 30, 2018,March 31, 2019, we held derivatives not designated as hedging instruments to exchange an aggregate $153.2$191.8 million for various foreign currencies, including $96.8$84.3 million for euros, $22.2$31.7 million for Australian dollars, $11.6$18.5 million for Qatari riyals, $13.2 million for British pounds, $10.1 million for Indonesian rupiahs $8.4 million for Brazilian reals, $6.5 million for British pounds, and $7.7$34.0 million for other currencies.

We compute basic and diluted earnings per share ("EPS") in accordance with the two-class method. Net lossincome attributable to EnscoEnscoRowan used in our computations of basic and diluted EPS is adjusted to exclude net income allocated to non-vested shares granted to our employees and non-employee directors. Weighted-average shares outstanding used in our computation of diluted EPS is calculated using the treasury stock method and excludes non-vested shares.

During the three-month and six-month periodsperiod ended June 30, 2018 and 2017,March 31, 2019, all income attributable to noncontrolling interestsinterest was from continuing operations. The following table is a reconciliation of lossincome from continuing operations attributable to EnscoEnscoRowan shares used in our basic and diluted EPS computations for the three-monthquarters ended March 31, 2019 and six-month periods ended June 30, 2018 and 2017 (in millions):

Anti-dilutive share awards totaling 1.7 million200,000 and 400,000 were excluded from the computation of diluted EPS for the three-monthquarters ended March 31, 2019 and six-month periods ended June 30, 2018. Anti-dilutive share awards totaling 1.3 million were excluded from the computation of diluted EPS for the three-month and six-month periods ended June 30, 2017.2018, respectively.

We have the option to settle our 2024 Convertible Notes in cash, shares or a combination thereof for the aggregate amount due upon conversion. Our intent is to settle the principal amount of the 2024 Convertible Notes in cash upon conversion. If the conversion value exceeds the principal amount, (i.e., our share price exceeds the exchange price on the date of conversion), we expect to deliver shares equal to the remainder of our conversion obligation in excess of the principal amount.

In January 2018, Moody's downgraded our senior unsecured bond credit rating from B2 to B3. The rating actions resulted inconnection with the Rowan Transaction, on April 11, 2019, we issued 88.3 million Class A Ordinary shares with an increase to the interest rates applicable to our borrowings and the quarterly commitment fee on the undrawn portionaggregate value of the $2.0 billion commitment. The applicable margin rates are 3.00% per annum$1.4 billion. See "Note 3 - Rowan Transaction" for Base Rate advances and 4.00% per annum for LIBOR advances. The quarterly commitment fee is 0.75% per annum on the undrawn portion of the $2.0 billion commitment. 

The Credit Facility also includesAdditionally, on April 11, 2019, we effected a covenant restricting our ability to repay indebtedness maturing after September 2022, which is the final maturity date of our Credit Facility. This covenant is subject to certain exceptions that permit us to manage our balance sheet, including the ability to make repayments of indebtedness (i) of acquired companies within 90 days of the completion of the acquisition or (ii) if, after giving effect to such repayments, available cash is greater than $250 million and there are no amounts outstanding under the Credit Facility.four-for-one reverse stock split. See "Note 14 - Subsequent Events" for additional information.

DuringEnsco Rowan plc, our parent company, is domiciled and resident in the quarter ended June 30, 2018, we granted 4.7 million non-vested share awardsU.K. Our subsidiaries conduct operations and earn income in numerous countries and are subject to our employees pursuant to our 2018 Long-Term Incentive Plan, which was approved by our shareholders at our annual general meeting in May. Grantsthe laws of taxing jurisdictions within those countries. The income of our non-vested share awardsnon-U.K. subsidiaries is generally vestnot subject to U.K. taxation. Income tax rates imposed in the tax jurisdictions in which our subsidiaries conduct operations vary, as does the tax base to which the rates are applied. In some cases, tax rates may be applicable to gross revenues, statutory or negotiated deemed profits or other bases utilized under local tax laws, rather than to net income. Therefore, we generally incur income tax expense in periods in which we operate at ratesa loss.

Our drilling rigs frequently move from one taxing jurisdiction to another to perform contract drilling services. In some instances, the movement of 20% per year, as determined by a committee or subcommitteeour drilling rigs among taxing jurisdictions will involve the transfer of ownership of the Boarddrilling rigs among our subsidiaries. As a result of Directors atfrequent changes in the timetaxing jurisdictions in which our drilling rigs are operated and/or owned, changes in the overall level of grant. The non-vested share awards have dividend rightsour income and changes in tax laws, our consolidated effective onincome tax rate may vary substantially from one reporting period to another.

Income tax rates and taxation systems in the date of grant. Compensation expense for awardsjurisdictions in which our subsidiaries conduct operations vary and our subsidiaries are frequently subjected to be settled in cash is remeasured each quarter with a cumulative adjustment to compensation cost during the periodminimum taxation regimes. In some jurisdictions, tax liabilities are based on changesgross revenues, statutory or negotiated 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 consolidated income tax expense generally does not decline proportionally with consolidated income, which results in our share price. The weighted-average grant date fair value for our non-vested share awards that were granted during the quarter ended June 30, 2018 was $6.58.

    

Historically, we have 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-month and six-month periodsquarter ended June 30, 2018 and 2017.March 31, 2019. We used a discrete effective tax rate method to calculate income taxes for the three-monthquarters ended March 31, 2019 and six-month periods ended June 30, 2018. 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 benefitexpense for the three-month periodquarter ended June 30, 2018March 31, 2019 was $2.3$0.6 million and was primarily attributable to U.S. tax reform, partially offset by discrete tax expense related to rig sales and unrecognized tax benefits associated with tax positions taken in prior years. Discrete income tax benefit for the six-month periodquarter ended June 30,March 31, 2018 was $11.2$8.9 million and was primarily attributable to U.S. tax reform and a restructuring transaction, partially offset by discrete tax expense related to the repurchase and redemption of senior notes the effective settlement of liabilities forand unrecognized tax benefits associated with tax positions taken in prior years and rig sales.years.

Pride International LLC, formerly Pride International, Inc. (“Pride”),On January 4, 2016, Petrobras sent a company we acquired in 2011, commenced drilling operations in Brazil in 2001. In 2008, Pride entered into anotice to us declaring the drilling services agreement with Petrobras (the "DSA") for ENSCO DS-5, a drillship ordered from Samsung Heavy Industries, a shipyard in South Korea ("SHI"). Beginning in 2006, Pride conducted periodic compliance reviews of its business with Petrobras, and, after the acquisition of Pride, Ensco conducted similar compliance reviews.

In November 2016, we initiated separate arbitration proceedings in the U.K. against SHI for anythe losses we incurincurred in connection with the foregoing Petrobras arbitration.arbitration and certain other losses relating to the DSA. SHI subsequently filed a statement of defense disputing our claim. In January 2018, the arbitration tribunal for the SHI matter issued an award on liability fully in Ensco’sour favor. In August 2018, the tribunal awarded us approximately $2.8 million in costs and legal fees incurred to date, plus interest, which was collected during the fourth quarter of 2018.

The January 2018 arbitration award provides that SHI is liable to us for $10$10.0 million or damages that we can prove. AsWe submitted our claim for damages to the losses sufferedtribunal, and the arbitral hearing on damages owed to us by us will dependSHI took place in part on the outcomefirst quarter of 2019. We are awaiting the result of the Petrobras arbitration described above, the amount of damages to be paid by SHI will be determined after the conclusion of the Petrobras arbitration.  Wetribunal’s decision, and we are unable to estimate the ultimate outcome of recovery for damages at this time.

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 or cash flows.

Our business consists of three operating segments: (1) Floaters, which includes our drillships and semisubmersible rigs, (2) Jackups and (3) Other, which consists of management services on rigs owned by third-parties. Our two reportable segments, Floaters and Jackups, provide one service, contract drilling.

    

Segment information for the three-monthquarters ended March 31, 2019 and six-month periods ended June 30, 2018 and 2017 is presented below (in millions). 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 and arewere included in "Reconciling Items." We measure segment assets as property and equipment.