| Revenue Recognition | Note 12 Revenue Recognition We recognize revenue when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. Contract drilling revenues are recorded over time utilizing the input method based on time elapsed. The measurement of progress considers the transfer of the service to the customer as we provide daily drilling services. We receive payment after the services have been performed by billing customers periodically (typically monthly). However, a portion of our revenues are recognized at a point-in-time as control is transferred at a distinct point in time such as with the sale of our top drives and other capital equipment. Within our drilling contracts, we have identified one performance obligation in which the transaction price is allocated. Disaggregation of revenue In the following table, revenue is disaggregated by geographical region. The table also includes a reconciliation of the disaggregated revenue with the reportable segments: Three Months Ended September 30, 2024 U.S. Drilling International Drilling Drilling Solutions Rig Technologies Other Total (In thousands) Lower 48 $ 217,138 $ — $ 42,161 $ 20,661 $ — $ 279,960 U.S. Offshore Gulf of Mexico 25,510 — 1,969 — — 27,479 Alaska 12,125 — 501 — — 12,626 Canada — — 416 936 — 1,352 Middle East & Asia — 250,740 13,321 19,067 — 283,128 Latin America — 94,140 20,735 3,361 — 118,236 Europe, Africa & CIS — 23,714 441 1,784 — 25,939 Eliminations & other — — — — (16,915) (16,915) Total $ 254,773 $ 368,594 $ 79,544 $ 45,809 $ (16,915) $ 731,805 Nine Months Ended September 30, 2024 U.S. Drilling International Drilling Drilling Solutions Rig Technologies Other Total (In thousands) Lower 48 $ 670,060 $ — $ 134,296 $ 66,735 $ — $ 871,091 U.S. Offshore Gulf of Mexico 82,555 — 7,429 — — 89,984 Alaska 33,870 — 1,856 — — 35,726 Canada — — 1,282 4,051 — 5,333 Middle East & Asia — 751,271 37,363 57,748 — 846,382 Latin America — 266,416 54,789 12,064 — 333,269 Europe, Africa & CIS — 56,999 1,064 4,913 — 62,976 Eliminations & other — — — — (44,454) (44,454) Total $ 786,485 $ 1,074,686 $ 238,079 $ 145,511 $ (44,454) $ 2,200,307 Three Months Ended September 30, 2023 U.S. Drilling International Drilling Drilling Solutions Rig Technologies Other Total (In thousands) Lower 48 $ 241,900 $ — $ 45,646 $ 27,453 $ — $ 314,999 U.S. Offshore Gulf of Mexico 25,768 — 2,974 — — 28,742 Alaska 8,717 — 469 — — 9,186 Canada — — 467 1,526 — 1,993 Middle East & Asia — 243,691 10,550 27,430 — 281,671 Latin America — 86,665 11,885 3,265 — 101,815 Europe, Africa & CIS — 14,424 840 1,763 — 17,027 Eliminations & other — — — — (21,459) (21,459) Total $ 276,385 $ 344,780 $ 72,831 $ 61,437 $ (21,459) $ 733,974 Nine Months Ended September 30, 2023 U.S. Drilling International Drilling Drilling Solutions Rig Technologies Other Total (In thousands) Lower 48 $ 820,927 $ — $ 148,587 $ 92,069 $ — $ 1,061,583 U.S. Offshore Gulf of Mexico 89,744 — 8,929 — — 98,673 Alaska 31,196 — 1,450 — — 32,646 Canada — — 1,137 5,539 — 6,676 Middle East & Asia — 704,918 32,587 70,190 — 807,695 Latin America — 251,300 30,446 7,776 — 289,522 Europe, Africa & CIS — 46,260 1,593 7,907 — 55,760 Eliminations & other — — — — (72,375) (72,375) Total $ 941,867 $ 1,002,478 $ 224,729 $ 183,481 $ (72,375) $ 2,280,180 Contract balances We perform our obligations under a contract with a customer by transferring goods or services in exchange for consideration from the customer. We recognize a contract asset or liability when we transfer goods or services to a customer and bill an amount which differs from the revenue allocated to the related performance obligations. The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) on our condensed consolidated balance sheet. In general, we receive payments from customers based on dayrates as stipulated in our contracts (e.g., operating rate, standby rate, etc.). The invoices billed to the customer are based on the varying rates applicable to the operating status on each rig. Accounts receivable are recorded when the right to consideration becomes unconditional. Dayrate contracts also may contain fees charged to the customer for up-front rig modifications, mobilization and demobilization of equipment and personnel. These fees are associated with contract fulfillment activities, and the related revenue (subject to any constraint on estimates of variable consideration) is allocated to a single performance obligation and recognized ratably over the initial term of the contract. Mobilization fees are generally billable to the customer in the initial phase of a contract and generate contract liabilities until they are recognized as revenue. Demobilization fees are generally received at the end of the contract and generate contract assets when they are recognized as revenue prior to becoming receivables from the customer. We receive reimbursements from our customers for the purchase of supplies, equipment, personnel services and other services provided at their request. Reimbursable revenues are variable and subject to uncertainty as the amounts received and timing thereof are dependent on factors outside of our influence. Accordingly, these revenues are constrained and not recognized until the uncertainty is resolved, which typically occurs when the related costs are incurred on behalf of the customer. We are generally considered a principal in these transactions and record the associated revenues at the gross amounts billed to the customer. The opening and closing balances of our receivables, contract assets and current and long-term contract liabilities are as follows: Contract Contract Contract Contract Contract Assets Assets Liabilities Liabilities Receivables (Current) (Long-term) (Current) (Long-term) (In thousands) As of December 31, 2023 $ 397,051 $ 8,434 $ 2,980 $ 20,295 $ 1,969 As of September 30, 2024 $ 431,925 $ 18,331 $ 6,057 $ 24,617 $ 1,918 Approximately 71% of the contract liability balance at the beginning of the period is expected to be recognized as revenue during 2024 2025 2026 Additionally, 69% of the contract asset balance at the beginning of the period is expected to be recognized as expense during 2024, of which 60% was recognized during the nine months ended September 30, 2024, and 21% is expected to be recognized during 2025. The remaining 10% of the contract asset balance at the beginning of the period is expected to be recognized as expense during 2026 or thereafter. This disclosure does not include variable consideration allocated entirely to a wholly unsatisfied performance obligation or promise to transfer a distinct good or service that forms part of a single performance obligation. |
