Valaris Limited (VAL) 8-K 8 Jun 10 Other Events Financial data

Document and Entity Information

Document and Entity Information
	12 Months Ended Dec. 31, 2009
Document Type	8-K
Amendment Flag	false
Document Period End Date	2010-06-08
Entity Registrant Name	Ensco plc
Entity Central Index Key	0000314808

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Millions, except Per Share data	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
OPERATING REVENUES	1927.8	$2,267	1953.3
OPERATING EXPENSES
Contract drilling (exclusive of depreciation)	707.8	720.8	617.4
Depreciation	197.1	178	170.7
General and administrative	64	53.8	59.5
Total operating expenses	968.9	952.6	847.6
OPERATING INCOME	958.9	1314.4	1105.7
OTHER INCOME (EXPENSE), NET	8.8	-4.2	37.8
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	967.7	1310.2	1143.5
PROVISION FOR INCOME TAXES
Current income tax expense	157.8	213.2	233.2
Deferred income tax expense	20.6	7.2	1.6
Total provision for income taxes	178.4	220.4	234.8
INCOME FROM CONTINUING OPERATIONS	789.3	1089.8	908.7
DISCONTINUED OPERATIONS
Income from discontinued operations, net	7	90.4	90.2
Loss on disposal of discontinued operations, net	-11.8	-23.5
Total income (loss) from discontinued operations, net	-4.8	66.9	90.2
NET INCOME	784.5	1156.7	998.9
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	-5.1	-5.9	-6.9
NET INCOME ATTRIBUTABLE TO ENSCO	779.4	1150.8	992
EARNINGS (LOSS) PER SHARE - BASIC
Continuing operations	5.51	7.57	6.1
Discontinued operations	-0.03	0.47	0.61
Total earnings per share - basic	5.48	8.04	6.71
EARNINGS (LOSS) PER SHARE - DILUTED
Continuing operations	5.51	7.55	6.08
Discontinued operations	-0.03	0.47	0.61
Total earnings per share - diluted	5.48	8.02	6.69
NET INCOME ATTRIBUTABLE TO ENSCO SHARES
Basic	769.7	1138.2	984.7
Diluted	769.7	1138.2	984.7
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic	140.4	141.6	146.7
Diluted	140.5	141.9	147.2
CASH DIVIDENDS PER SHARE	0.1	0.1	0.1

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)
In Millions	Dec. 31, 2009	Dec. 31, 2008
CURRENT ASSETS
Cash and cash equivalents	1141.4	789.6
Accounts receivable, net	324.6	482.7
Other	186.8	128.6
Total current assets	1652.8	1400.9
PROPERTY AND EQUIPMENT, AT COST	6151.2	5376.3
Less accumulated depreciation	1673.9	1,505
Property and equipment, net	4477.3	3871.3
GOODWILL	336.2	336.2
LONG-TERM INVESTMENTS	60.5	64.2
OTHER ASSETS, NET	220.4	157.5
Total assets	6747.2	5830.1
CURRENT LIABILITIES
Accounts payable - trade	159.1	195.8
Accrued liabilities and other	308.6	214.9
Current maturities of long-term debt	17.2	17.2
Total current liabilities	484.9	427.9
LONG-TERM DEBT	257.2	274.3
DEFERRED INCOME TAXES	377.3	340.5
OTHER LIABILITIES	120.7	103.8
COMMITMENTS AND CONTINGENCIES
ENSCO SHAREHOLDERS' EQUITY
Common shares, value		18.2
Additional paid-in capital	602.6	1761.2
Retained earnings	4879.2	4,114
Accumulated other comprehensive income (loss)	5.2	(17)
Treasury shares, at cost, 7.5 million shares and 40.1 million shares	-2.9	-1199.5
Total Ensco shareholders' equity	5499.2	4676.9
NONCONTROLLING INTERESTS	7.9	6.7
Total equity	5507.1	4683.6
Total liabilities and equity	6747.2	5830.1
Common Class A, par value in USD [Member]
ENSCO SHAREHOLDERS' EQUITY
Common shares, value	15
Common Class B, par value in GBP [Member]
ENSCO SHAREHOLDERS' EQUITY
Common shares, value	0.1

1_CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS (Parenthetical)
	Dec. 31, 2009	Dec. 31, 2008
Common shares, par value		0.1
Common shares, shares authorized		250,000,000
Common shares, shares issued		181,900,000
Treasury shares, shares held	7,500,000	40,100,000
Common Class A, par value in USD [Member]
Common shares, par value	0.1
Common shares, shares authorized	250,000,000
Common shares, shares issued	150,000,000
Common Class B, par value in GBP [Member]
Common shares, par value	1
Common shares, shares authorized	50,000
Common shares, shares issued	50,000

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
OPERATING ACTIVITIES
Net income	784.5	1156.7	998.9
Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:
Depreciation expense	197.1	178	170.7
Share-based compensation expense	35.5	27.3	36.9
Amortization expense	31.3	31.9	10.3
Deferred income tax expense	20.6	7.2	1.6
Income from discontinued operations, net	(7)	-90.4	-90.2
Loss on disposal of discontinued operations, net	11.8	23.5
Other	0.1	4.6	-6.2
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable	185	-110.7	-45.8
Decrease (increase) in trading securities	5.5	-72.3
Increase in other assets	-72.6	-40.5	-133.6
Increase (decrease) in liabilities	25.2	-67.9	200.3
Net cash provided by operating activities of continuing operations	1,217	1047.4	1142.9
INVESTING ACTIVITIES
Additions to property and equipment	-859.1	-767.2	-517.6
Proceeds from disposal of discontinued operations	9.6	45.1
Proceeds from disposition of assets	2.6	4.8	7.5
Net cash used in investing activities	-846.9	-717.3	-510.1
FINANCING ACTIVITIES
Reduction of long-term borrowings	-17.2	(19)	-165.3
Cash dividends paid	-14.2	-14.3	-14.8
Proceeds from exercise of share options	9.6	27.3	35.8
Repurchase of shares	-6.5	-259.7	-527.6
Other	-5.9	1.5	0.9
Net cash used in financing activities	-34.2	-264.2	(671)
Effect of exchange rate changes on cash and cash equivalents	0.5	(15)	-0.8
Net cash provided by operating activities of discontinued operations	15.4	109.2	102.7
INCREASE IN CASH AND CASH EQUIVALENTS	351.8	160.1	63.7
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	789.6	629.5	565.8
CASH AND CASH EQUIVALENTS, END OF YEAR	1141.4	789.6	629.5

DESCRIPTION OF THE BUSINESS AND

DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	12 Months Ended Dec. 31, 2009
DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	1.DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a)Business We are one of the leading providers of offshore contract drilling services to the international oil and gas industry. We have one of the largest and most capable offshore drilling rig fleets in the world comprised of 45 drilling rigs, including 40 jackup rigs, four ultra-deepwater semisubmersible rigs and one barge rig. Additionally, we have four ultra-deepwater semisubmersible rigs under construction. We drill and complete offshore oil and natural gas wells for major international, government-owned and independent oil and gas companies on a "day rate" contract basis, under which we provide our drilling rigs and rig crews and receive a fixed amount per day for drilling the well. Our customers bear substantially all of the ancillary costs of constructing the well and supporting drilling operations, as well as the economic risk relative to the success of the well. Our contract drilling operations are integral to the exploration, development and production of oil and natural gas. Our business levels and corresponding operating results are significantly affected by worldwide levels of offshore exploration and development spending by oil and gas companies. Such spending may fluctuate substantially from year-to-year and from region-to-region based on various social, political, economic and environmental factors. See "Note 13 - Segment Information" for additional information on our operations by segment and geographic region. b) Redomestication On December 23, 2009, we completed a reorganization of the corporate structure of the group of companies controlled by our predecessor, ENSCO International Incorporated ("Ensco Delaware"), pursuant to which an indirect, wholly-owned subsidiary merged with Ensco Delaware, and Ensco plc became our publicly-held parent company incorporated under English law (the "redomestication"). In connection with the redomestication, each issued and outstanding share of common stock of Ensco Delaware was converted into the right to receive one American depositary share ("ADS" or "share"), each representing one Class A ordinary share, par value U.S. $0.10 per share, of Ensco plc. The ADSs are governed by a deposit agreement with Citibank, N.A. as depositary and trade on the New York Stock Exchange (the "NYSE") under the symbol "ESV," the symbol for Ensco Delaware common stock before the redomestication. We are now incorporated under English law as a public limited company and have relocated our principal executive offices to London, England. Unless the context requires otherwise, the terms "Ensco," "Company," "we," "us" and "our" refer to Ensco plc together with all subsidiaries and predecessors. The redomestication was accounted for as an internal reorganization of entities under common control and, therefore, Ensco Delaware's assets and liabilities were accounted for at their historical cost basis and not revalued in the transaction. We remain subject to the U.S. Securities and Exchange Commission (the "SEC") reporting requirements, the mandates of the Sarbanes-Oxley Act and the applicable corporate governance rules o

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT
	12 Months Ended Dec. 31, 2009
PROPERTY AND EQUIPMENT	2.PROPERTY AND EQUIPMENT Property and equipment as of December 31, 2009 and 2008 consisted of the following (in millions): 2009 2008 Drilling rigs and equipment $4,801.1 $3,829.8 Other 47.0 45.5 Work in progress 1,303.1 1,501.0 $6,151.2 $5,376.3 Work in progress as of December 31, 2009 primarily consisted of $1,262.5 million related to the construction of our ENSCO 8500 Series ultra-deepwater semisubmersible rigs and costs associated with various modification and enhancement projects. ENSCO 8502 was delivered in January 2010 and the related construction costs will remain classified as work in progress until the rig is placed into service during the third quarter of 2010. Work in progress as of December 31, 2008 primarily consisted of $1,445.2 million related to the construction of our ENSCO 8500 Series rigs and costs associated with various modification and enhancement projects.

LONG-TERM INVESTMENTS

LONG-TERM INVESTMENTS
	12 Months Ended Dec. 31, 2009
LONG-TERM INVESTMENTS	3.LONG-TERM INVESTMENTS As of December 31, 2009 and 2008, we held $66.8 million and $72.3 million (par value), respectively, of long-term debt instruments with variable interest rates that periodically reset through an auction process ("auction rate securities"). Our auction rate securities were originally acquired in January 2008 and have final maturity dates ranging from 2025 to 2047. Auctions for our auction rate securities began to fail in February 2008 as there were more sellers than buyers at the scheduled interest rate auctions and parties desiring to sell their auction rate securities were unable to do so. When an auction fails, the interest rate is adjusted according to the provisions of the associated security agreement. Through December 31, 2009, auctions for our auction rate securities continued to fail with the exception of the successful auction of $4.7 million of our securities during June 2008. Auction rate securities totaling $5.5 million and $6.0 million were redeemed at par during the years ended December 31, 2009 and 2008, respectively. Additionally, $2.5 million of our auction rate securities were redeemed at par in January 2010. Our investments in auction rate securities as of December 31, 2009 were diversified across fifteen separate issues and each issue maintains scheduled interest rate auctions in either 28-day or 35-day intervals. The majority of our auction rate securities are currently rated Aaa by Moody's, AAA by Standard Poor's and/or AAA by Fitch. An aggregate $64.3 million (par value), or 96%, of our auction rate securities were issued by state agencies and are supported by student loans for which repayment is substantially guaranteed by the U.S. government under the Federal Family Education Loan Program ("FFELP"). Upon acquisition in January 2008, we designated our auction rate securities as trading securities as it was our intent to sell them in the near-term. Due to illiquidity in the auction rate securities market, we intend to hold our auction rate securities until they can be redeemed by issuers, repurchased by brokerage firms or sold in a market that facilitates orderly transactions. Although we will hold our auction rate securities longer than originally anticipated, we continue to designate them as trading securities. Our auction rate securities were measured at fair value as of December 31, 2009 and 2008, and net unrealized gains of $1.8 million and unrealized losses of $8.1 million were included in other income (expense), net, in our consolidated statements of income for the years ended December 31, 2009 and 2008, respectively. See "Note 8 - Fair Value Measurements" for additional information on the fair value measurement of our auction rate securities. The carrying value of our auction rate securities was $60.5 million and $64.2 million as of December 31, 2009 and 2008, respectively. We are currently unable to determine whether issuers of our auction rate securities will attempt and/or be able to refinance them and have classified our auction rate securities as long-term investments on our consolidated balance sheets. Cash flows from purchases and sales of our auction rate secu

LONG-TERM DEBT

LONG-TERM DEBT
	12 Months Ended Dec. 31, 2009
LONG-TERM DEBT	4.LONG-TERM DEBT Long-term debt as of December 31, 2009 and 2008 consisted of the following (in millions): 2009 2008 7.20% Debentures due 2027 $148.9 $148.8 6.36% Bonds due 2015 76.0 88.7 4.65% Bonds due 2020 49.5 54.0 274.4 291.5 Less current maturities (17.2 ) (17.2 ) Total long-term debt $257.2 $274.3 Debentures Due 2027 In November 1997, Ensco Delaware issued $150.0 million of unsecured 7.20% Debentures due November 15, 2027 (the "Debentures") in a public offering. Interest on the Debentures is payable semiannually in May and November and may be redeemed at any time at our option, in whole or in part, at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, and a make-whole premium. The indenture under which the Debentures were issued contains limitations on the incurrence of indebtedness secured by certain liens and limitations on engaging in certain sale/leaseback transactions and certain merger, consolidation or reorganization transactions. The Debentures are not subject to any sinking fund requirements. On December 22, 2009, in connection with the redomestication, Ensco plc entered into a supplemental indenture to unconditionally guarantee the principal and interest payments on the Debentures. Bonds Due 2015 and 2020 In January 2001, a subsidiary of Ensco Delaware issued $190.0 million of 15-year bonds to provide long-term financing for ENSCO 7500. The bonds will be repaid in 30 equal semiannual principal installments of $6.3 million ending in December 2015. Interest on the bonds is payable semiannually, in June and December, at a fixed rate of 6.36%. In October 2003, a subsidiary of Ensco Delaware issued $76.5 million of 17-year bonds to provide long-term financing for ENSCO 105. The bonds will be repaid in 34 equal semiannual principal installments of $2.3 million ending in October 2020. Interest on the bonds is payable semiannually, in April and October, at a fixed rate of 4.65%. Both bond issuances are guaranteed by the United States of America, acting by and through the United States Department of Transportation, Maritime Administration ("MARAD"), and Ensco Delaware issued separate guaranties to MARAD, guaranteeing the performance of obligations under the bonds. On February 19, 2010, the documents governing MARAD's guarantee commitments were amended to address certain changes arising from the redomestication and to include Ensco plc as an additional guarantor of the debt obligations. Revolving Credit Facility In June 2005, Ensco Delaware executed a $350.0 million unsecured revolving credit facility (the "Credit Facility") with a syndicate of lenders for a five-year term, expiring in June 2010. The Credit Facility was amended on December 22, 2009 to address certain changes arising from the redomestication and to include Ensco plc as an additional guarantor. Advances under the Credit Facility bear interest at LIBOR plus an applicable margin rate (currently .35% per annum), depending on our credit rating. We pay a facility fee (currently .10% per annum) on the tota

DERIVATIVE INSTRUMENTS

DERIVATIVE INSTRUMENTS
	12 Months Ended Dec. 31, 2009
DERIVATIVE INSTRUMENTS	5.DERIVATIVE INSTRUMENTS On January 1, 2009, we adopted certain disclosure provisions of FASB ASC 815-10-50 (previously SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities"). These provisions require enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB ASC 815 (previously SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities") and (c) how derivative instruments and related hedged items affect an entity's financial position, operating results and cash flows. We use derivatives to reduce our exposure to various market risks, primarily foreign currency exchange rate risk. We maintain a foreign currency risk management strategy that utilizes derivatives to reduce our exposure to unanticipated fluctuations in earnings and cash flows caused by changes in foreign currency exchange rates. Although no interest rate related derivative instruments were outstanding as of December 31, 2009 and 2008, we occasionally employ an interest rate risk management strategy that utilizes derivative instruments to minimize or eliminate unanticipated fluctuations in earnings and cash flows arising from changes in, and volatility of, interest rates. We minimize our credit risk relating to the counterparties of our derivatives by transacting with multiple, high-quality financial institutions, thereby limiting exposure to individual counterparties, and by monitoring the financial condition of our counterparties. We do not enter into derivatives for trading or other speculative purposes. All derivatives were recorded on our consolidated balance sheets at fair value. Accounting for the gains and losses resulting from changes in the fair value of derivatives depends on the use of the derivative and whether it qualifies for hedge accounting. See "Note 1 - Description of the Business and Summary of Significant Accounting Policies" for additional information on how derivatives are accounted for under FASB ASC 815. As of December 31, 2009 and 2008, our consolidated balance sheets included net foreign currency derivative assets of $13.2 million and net foreign currency derivative liabilities of $20.3 million, respectively. See "Note 8 - Fair Value Measurements" for additional information on the fair value measurement of our derivatives. Derivatives recorded at fair value on our consolidated balance sheets as of December 31, 2009 and 2008 consisted of the following (in millions): Assets Liabilities 2009 2008 2009 2008 Derivatives Designated as Hedging Instruments Foreign currency forward contracts - current(1) $10.2 $.3 $1.1 $25.8 Foreign currency forward contracts - non-current(2) 3.8 5.1 -- .0 14.0 5.4 1.1 25.8 Derivatives not Designated as Hedging Instruments Foreign currency forward contracts - current(1) .3 .1 .0 .0 .3 .1 .0 .0 Total $14.3 $5.5 $1.1 $25.8 (1) Derivative assets and liabilities that have maturity dates equal to or less than twelve months from the respec

COMPREHENSIVE INCOME

COMPREHENSIVE INCOME
	12 Months Ended Dec. 31, 2009
COMPREHENSIVE INCOME	6.COMPREHENSIVE INCOME Accumulated other comprehensive income (loss) as of December 31, 2009, 2008 and 2007 was comprised of net gains and losses on derivative instruments, net of tax. The components of our comprehensive income, net of tax, for each of the years in the three-year period ended December 31, 2009 were as follows (in millions): 2009 2008 2007 Net Income $784.5 $1,156.7 $998.9 Other comprehensive income: Net change in fair value of derivatives 13.5 (16.4 ) 8.2 Reclassification of unrealized gains and losses on derivative instruments from other comprehensive loss (income) into net income 8.7 3.6 (6.9 ) Net other comprehensive income (loss) 22.2 (12.8 ) 1.3 Comprehensive income 806.7 1,143.9 1,000.2 Comprehensive income attributable to noncontrolling interests (5.1) (5.9 ) (6.9 ) Comprehensive income attributable to Ensco $801.6 $1,138.0 $993.3

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY
	12 Months Ended Dec. 31, 2009
SHAREHOLDERS' EQUITY	7.SHAREHOLDERS' EQUITY In conjunction with the redomestication in December 2009, each issued and outstanding share of common stock of Ensco Delaware was converted into the right to receive one American depositary share, each representing one Class A ordinary share, par value U.S. $0.10 per share, of Ensco plc. In total, 150.0 million Class A ordinary shares were issued, with 142.6 million exchanged for shares of common stock of Ensco Delaware. The remaining 7.4 million Class A ordinary shares were held as treasury shares on our December 31, 2009 consolidated balance sheet. Prior to the redomestication, Ensco plc also issued 50,000 Class B ordinary shares, par value 1 per share, to Ensco Delaware. The Class B ordinary shares have no voting rights or rights to dividends or distributions. Prior to the redomestication, Ensco Delaware retired 40.2 million treasury shares with a historical cost totaling $1,203.9 million under authorization from our Board of Directors. Pursuant to its certificate of incorporation in effect prior to the redomestication, Ensco Delaware had 20.0 million authorized shares of preferred stock, U.S. $1 par value, and none had been issued as of December 31, 2008. Activity in our various shareholders' equity accounts for each of the years in the three-year period ended December 31, 2009 was as follows (in millions): Accumulated Other Additional Comprehensive Paid-In Retained Income Treasury Noncontrolling Shares ParValue Capital Earnings (Loss) Shares Interest BALANCE, December 31, 2006 178.7 $17.9 $1,621.3 $1,994.5 $(5.5 ) $(412.2 ) $3.4 Cumulative effect of adoption of FIN 48 -- -- -- 5.8 -- -- -- Net income -- -- -- 992.0 -- -- 6.9 Cash dividends paid -- -- -- (14.8 ) -- -- -- Distributions to noncontrolling interests -- -- -- -- -- -- (5.7 ) Sharesissuedundersharebased compensationplans, net 1.6 .1 35.7 -- -- -- -- Tax benefit from share-based compensation -- -- 6.6 -- -- -- -- Repurchase of shares -- -- -- -- -- (527.6 ) -- Share-based compensation cost -- -- 36.9 -- -- -- -- Net other comprehensive income -- -- -- -- 1.3 -- -- BALANCE, December 31, 2007 180.3 18.0 1,700.5 2,977.5 (4.2 ) (939.8 ) 4.6 Net income -- -- -- 1,150.8 -- -- 5.9 Cash dividends paid -- -- -- (14.3 ) -- -- -- Distributions to noncontrolling interests -- -- -- -- -- -- (3.8 ) Sharesissuedundersharebased compensation plans, net 1.6 .2 27.1 -- -- -- -- Tax benefit from share-based compensation -- -- 5.3 -- -- -- Repurchase of shares -- -- -- -- -- (259.7 ) -- Share-based compensation cost

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS
	12 Months Ended Dec. 31, 2009
FAIR VALUE MEASUREMENTS	8.FAIR VALUE MEASUREMENTS The following fair value hierarchy table categorizes information regarding our financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2009 and 2008 (in millions): Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total As of December 31, 2009 Auction rate securities $-- $-- $60.5 $60.5 Supplemental executive retirement plan assets 18.7 -- -- 18.7 Derivatives, net -- 13.2 -- 13.2 Total financial assets $18.7 $13.2 $60.5 $92.4 As of December 31, 2008 Auction rate securities $-- $-- $64.2 $64.2 Supplemental executive retirement plan assets 13.9 -- -- 13.9 Total financial assets $13.9 $-- $64.2 $78.1 Derivatives, net $-- $20.3 $-- $20.3 Total financial liabilities $-- $20.3 $-- $20.3 Auction Rate Securities As of December 31, 2009 and 2008, we held long-term debt instruments with variable interest rates that periodically reset through an auction process totaling $66.8 million and $72.3 million (par value), respectively. These auction rate securities were classified as long-term investments on our consolidated balance sheets. Our auction rate securities were originally acquired in January 2008 and have maturity dates ranging from 2025 to 2047. Our auction rate securities were measured at fair value on a recurring basis using significant Level 3 inputs as of December 31, 2009 and 2008. The following table summarizes the fair value measurements of our auction rate securities using significant Level 3 inputs, and changes therein, for each of the years in the two-year period ended December 31, 2009 (in millions): 2009 2008 Beginning Balance $64.2 $-- (Sales) purchases, net (5.5) 72.3 Unrealized gains (losses)* 1.8 (8.1) Realized losses -- -- Transfers in and/or out of Level 3 -- -- Ending balance $60.5 $64.2 * Unrealized gains (losses) are included in other income (expense), net, in our consolidated statement of income. Before utilizing Level 3 inputs in our fair value measurements, we considered whether observable inputs were available. As a result of continued auction failures, quoted prices for our auction rate securities did not exist as of December 31, 2009. Accordingly, we concluded that Level 1 inputs were not available. Brokerage statements received from the five broker/dealers that held our auction rate securities included their estimated market value as of December 31, 2009. Four broker/dealers valued our auction rate securities at par and the fifth valued our auction rate securities at 88%

BENEFIT PLANS

BENEFIT PLANS
	12 Months Ended Dec. 31, 2009
BENEFIT PLANS	9.BENEFIT PLANS Non-Vested Share Awards During 2005, our shareholders approved the 2005 Long-Term Incentive Plan (the "LTIP") to provide for the issuance of non-vested share awards, share option awards and performance awards. Under the LTIP, 10.0 million shares were reserved for issuance as awards to officers, non-employee directors and key employees who are in a position to contribute materially to our growth, development and long-term success. The LTIP originally provided for the issuance of non-vested share awards up to a maximum of 2.5 million new shares. In May 2009, our shareholders approved an amendment to the LTIP to increase the maximum number of non-vested share awards from 2.5 million to 6.0 million. As of December 31, 2009, there were 3.3 million shares available for issuance of non-vested share awards under the LTIP. Non-vested share awards may be issued as new shares or issued out of treasury at the Company's discretion. Under the LTIP, grants of non-vested share awards generally vest at rates of 20% or 33% per year, as determined by a committee or subcommittee of the Board of Directors. Prior to the adoption of the LTIP, non-vested share awards were issued under a predecessor plan and generally vested at a rate of 10% per year. All non-vested share awards have voting and dividend rights effective on the date of grant. Compensation expense is measured using the market value of our shares on the date of grant and is recognized on a straight-line basis over the requisite service period (usually the vesting period). During 2007, we entered into a retirement agreement with our former CEO and non-executive Chairman of our Board of Directors. The agreement provided that, upon retirement, he would receive a grant of 92,000 non-vested share awards which vest at a rate of one-third per year upon each of the first three anniversaries of his retirement date. Furthermore, the agreement modified the vesting term of 28,750 unvested share options and 105,000 non-vested share awards previously granted to him so that such awards vested upon his retirement. We recognized an additional $10.4 million of non-vested share award compensation expense during 2007 as a result of the retirement agreement, of which $5.0 million related to the modification of his previous awards. The following table summarizes non-vested share award related compensation expense recognized during each of the years in the three-year period ended December 31, 2009 (in millions): 2009 2008 2007 Contract drilling $16.8 $11.4 $5.5 General and administrative 11.4 7.6 17.5 Non-vested share award related compensation expense included in operating expenses 28.2 19.0 23.0 Tax benefit (7.0 ) (4.7 ) (7.1 ) Total non-vested share award related compensation expense included in net income $21.2 $14.3 $15.9 The following table summarizes the value of non-vested share awards granted and vested during each of the years in the three-year period ended December 31, 2009: 2009 2008 2007 Weighted-averag

INCOME TAXES

INCOME TAXES
	12 Months Ended Dec. 31, 2009
INCOME TAXES	10.INCOME TAXES Ensco Delaware, our predecessor company, was domiciled in the U.S. and subject to a statutory rate of 35% through December 23, 2009, the effective date of the redomestication. We were subject to the U.K. statutory rate of 28% for the remaining nine days of 2009. The income tax information for the years ended December 31, 2009, 2008 and 2007 has been presented from the perspective of an enterprise domiciled in the U.S. We generated $286.5 million, $383.2 million and $319.5 million of income from continuing operations before income taxes in the U.S. and $681.2 million, $927.0 million and $824.0 million of income from continuing operations before income taxes in non-U.S. countries for the years ended December 31, 2009, 2008 and 2007, respectively. The following table summarizes components of the provision for income taxes from continuing operations for each of the years in the three-year period ended December 31, 2009 (in millions): 2009 2008 2007 Current income tax expense: U.S. $63.8 $101.4 $ 96.1 Non-U.S. 94.0 111.8 137.1 157.8 213.2 233.2 Deferred income tax expense (benefit): U.S. 25.1 12.5 5.5 Non-U.S. (4.5 ) (5.3 ) (3.9 ) 20.6 7.2 1.6 Total income tax expense $178.4 $220.4 $234.8 The following table summarizes significant components of deferred income tax assets (liabilities) as of December 31, 2009 and 2008 (in millions): 2009 2008 Deferred tax assets: Deferred revenue $34.1 $9.7 Employee benefits, including share-based compensation 25.6 21.2 Other 18.3 24.2 Total deferred tax assets 78.0 55.1 Deferred tax liabilities: Property and equipment (348.9 ) (320.2 ) Intercompany transfers of property (45.5 ) (36.6 ) Deferred costs (23.5 ) (18.5 ) Other (7.7 ) (.4 ) Total deferred tax liabilities (425.6 ) (375.7 ) Net deferred tax liability $(347.6 ) $(320.6 ) Net current deferred tax asset $29.7 $19.9 Net noncurrent deferred tax liability (377.3 ) (340.5 ) Net deferred tax liability $(347.6 ) $(320.6 ) The income tax rates imposed in the taxing jurisdictions in which our non-U.S. 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. In addition, our drilling rigs frequently move from one taxing jurisdiction to another. As a result, our consolidated effective income tax rate may vary substantially from year-to-year, depending on the relative components of our earnings generated in taxing jurisdictions with higher tax rates and lower tax rates. In December 2009, we incurred an $8.8 million current income tax expense in connection with certain rest

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS
	12 Months Ended Dec. 31, 2009
DISCONTINUED OPERATIONS	11.DISCONTINUED OPERATIONS ENSCO 50 AND ENSCO 51 In March 2010, we sold ENSCO 50 and ENSCO 51 for an aggregate $94.7 million, of which $4.7 million was received in December 2009. ENSCO 50 and ENSCO 51 operating results were reclassified as discontinued operations in our consolidated statements of income for each of the years in the three-year period ended December 31, 2009. The rigs' aggregate net book value and inventory and other assets as of December 31, 2009 totaled $62.9 million. ENSCO 69 From May 2007 to June 2009, ENSCO 69 was contracted to Petrosucre, a subsidiary of Petrleos de Venezuela S.A., the national oil company of Venezuela ("PDVSA"). During portions of 2008 and 2009, PDVSA subsidiaries reportedly lacked funds and generally were not paying their contractors and service providers. In January 2009, we suspended drilling operations on ENSCO 69 after Petrosucre failed to satisfy its contractual obligations and meet commitments relative to the payment of past due invoices. Petrosucre then took over complete control of ENSCO 69 drilling operations utilizing Petrosucre employees and a portion of the Venezuelan rig crews we had utilized. Petrosucre initially advised us that it was temporarily taking over operations on the rig, and our supervisory rig personnel remained onboard to observe Petrosucre's operations. On June 4, 2009, after Petrosucre's failure to satisfy its contractual payment obligations, failure to reach a mutually acceptable agreement with us and denial of our request to demobilize ENSCO 69 from Venezuela, Petrosucre advised that it would not return the rig and would continue to operate it without our consent. Petrosucre further advised that it would release ENSCO 69 after a six-month period, subject to a mutually agreed accord addressing the resolution of all remaining obligations under the ENSCO 69 drilling contract. On June 6, 2009, we terminated our contract with Petrosucre and removed all remaining Ensco employees from the rig. Due to Petrosucre's failure to satisfy its contractual obligations and meet payment commitments, and in consideration of the Venezuelan government's recent nationalization of assets owned by international oil and gas companies and oilfield service companies, we concluded it was remote that ENSCO 69 would be returned to us by Petrosucre and operated again by Ensco. Therefore, we recorded the disposal of ENSCO 69 during the second quarter of 2009 and recognized a pre-tax loss of $18.1 million representing the rig's net book value of $17.3 million and inventory and other assets totaling $800,000. The disposal was classified as loss on disposal of discontinued operations, net, in our consolidated statement of income for the year ended December 31, 2009. ENSCO 69 operating results were reclassified as discontinued operations in our consolidated statements of income for each of the years in the three-year period ended December 31, 2009. In November 2009, we executed an agreement with Petrosucre to mitigate our losses and resolve issues relative to outstanding amounts owed by Petrosucre for drilling operations performed by Ensco through the date of termination of the dri

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES
	12 Months Ended Dec. 31, 2009
COMMITMENTS AND CONTINGENCIES	12.COMMITMENTS AND CONTINGENCIES Leases We are obligated under leases for certain of our offices and equipment. Rental expense relating to operating leases was $14.2 million, $13.9 million and $12.0 million during the years ended December 31, 2009, 2008 and 2007, respectively. Future minimum rental payments under our noncancellable operating lease obligations are as follows: $7.5 million during 2010; $3.4 million during 2011; $2.2 million during 2012; $1.9 million during 2013 and $7.3 million thereafter. Capital Commitments The following table summarizes the aggregate contractual commitments related to our four ENSCO 8500 Series rigs currently under construction (in millions): 2010 $482.4 2011 425.5 2012 219.0 Total $1,126.9 The actual timing of these expenditures may vary based on the completion of various construction milestones, which are, to a large extent, beyond our control. FCPA Internal Investigation Following disclosures by other offshore service companies announcing internal investigations involving the legality of amounts paid to and by customs brokers in connection with temporary importation of rigs and vessels into Nigeria, the Audit Committee of our Board of Directors and management commenced an internal investigation in July 2007. The investigation initially focused on our payments to customs brokers relating to the temporary importation of ENSCO 100, our only rig that operated offshore Nigeria during the pertinent period. As is customary for companies operating offshore Nigeria, we had engaged independent customs brokers to process customs clearance of routine shipments of equipment, materials and supplies and to process the ENSCO 100 temporary importation permits, extensions and renewals. One or more of the customs brokers that our subsidiary in Nigeria used to obtain the ENSCO 100 temporary import permits, extensions and renewals also provided this service to other offshore service companies that have undertaken Foreign Corrupt Practices Act ("FCPA") compliance internal investigations. The principal purpose of our investigation was to determine whether any of the payments made to or by our customs brokers were inappropriate under the anti-bribery provisions of the FCPA or whether any violations of the recordkeeping or internal accounting control provisions of the FCPA occurred. Our Audit Committee engaged a Washington, D.C. law firm with significant experience in investigating and advising upon FCPA matters to assist in the internal investigation. Following notification to the Audit Committee and to KPMG LLP, our independent registered public accounting firm, in consultation with the Audit Committee's external legal counsel, we voluntarily notified the United States Department of Justice and the SEC that we had commenced an internal investigation. We expressed our intention to cooperate with both agencies, comply with their directives and fully disclose the results of the investigation. The internal investigation process has involved extensive reviews of documents and records, as well as production to the authorities, and interviews of relevant personn

SEGMENT INFORMATION

SEGMENT INFORMATION
	12 Months Ended Dec. 31, 2009
SEGMENT INFORMATION	13.SEGMENT INFORMATION We are in the process of developing a fleet of ultra-deepwater semisubmersible rigs and established a separate business unit to manage our deepwater operations during 2008. Our jackup rigs and barge rig are managed by major geographic region. Accordingly, our business consists of four operating segments: (1) Deepwater, (2) Asia Pacific, (3) Europe and Africa and (4) North and South America. Each of our four operating segments provides one service, contract drilling. Segment information for each of the years in the three-year period ended December 31, 2009 is presented below. 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 were included in "Reconciling Items." Assets not allocated to our operating segments were also included in "Reconciling Items." As of December 31, 2009, 2008 and 2007, total asset reconciling items consisted primarily of cash and cash equivalents and goodwill. Year Ended December 31, 2009 (in millions) North Europe and Operating Asia and South Segments Reconciling Consolidated Deepwater Pacific Africa America Total Items Total Revenue $254.1 $705.9 $569.1 $398.7 $1,927.8 $-- $1,927.8 Operating expenses Contract drilling (exclusive of depreciation) 108.1 231.3 208.8 159.6 707.8 -- 707.8 Depreciation 22.2 79.2 44.5 49.9 195.8 1.3 197.1 General and administrative -- -- -- -- -- 64.0 64.0 Operating income $123.8 $395.4 $315.8 $189.2 $1,024.2 $(65.3) $958.9 Total assets $2,444.6 $1,290.6 $779.9 $856.0 $5,371.1 $1,376.1 $6,747.2 Capital expenditures 644.4 43.5 66.2 102.3 856.4 2.7 859.1 Year Ended December 31, 2008 (in millions) North Europe and Operating Asia and South Segments Reconciling Consolidated Deepwater Pacific Africa America Total Items Total Revenue $84.4 $ 926.3 $804.1 $452.2 $2,267.0 $-- $2,267.0 Operating expenses Contract drilling (exclusive of depreciation) 31.2 284.8 246.7 158.1 720.8 -- 720.8 Depreciation 9.1 76.7 43.0 47.3 176.1 1.9 178.0 General and administrative -- -- -- -- -- 53.8 53.8 Operating income $44.1 $564.8 $514.4 $246.8 $1,370.1 $(55.7) $1,314.4 Total assets $1,759.9 $1,327.7 $806.7 $773.1 $4,667.4 $1,162.7 $5,830.1 Capital expenditures 657.8

SUPPLEMENTAL FINANCIAL INFORMAT

SUPPLEMENTAL FINANCIAL INFORMATION
	12 Months Ended Dec. 31, 2009
SUPPLEMENTAL FINANCIAL INFORMATION	14.SUPPLEMENTAL FINANCIAL INFORMATION Consolidated Balance Sheet Information Accounts receivable, net, as of December 31, 2009 and 2008 consisted of the following (in millions): 2009 2008 Trade $310.1 $483.5 Other 17.9 19.7 328.0 503.2 Allowance for doubtful accounts (3.4 ) (20.5 ) $324.6 $482.7 Other current assets as of December 31, 2009 and 2008 consisted of the following (in millions): 2009 2008 Inventory $53.1 $47.0 Prepaid taxes 39.6 16.4 Deferred tax assets 30.0 20.3 Deferred mobilization costs 29.0 24.4 Prepaid expenses 13.6 9.4 Other 21.5 11.1 $186.8 $128.6 Other assets, net, as of December 31, 2009 and 2008 consisted of the following (in millions): 2009 2008 Prepaid taxes on intercompany transfers of property $99.0 $91.3 Wreckage and debris removal receivables 55.8 18.8 Deferred mobilization costs 23.7 23.1 Supplemental executive retirement plan assets 18.7 13.9 Other 23.2 10.4 $220.4 $157.5 Accrued liabilities and other as of December 31, 2009 and 2008 consisted of the following (in millions): 2009 2008 Taxes $97.3 $48.2 Deferred revenue 89.0 67.7 Wreckage and debris removal 50.3 15.0 Personnel costs 48.6 50.5 Derivative liabilities 1.1 25.8 Other 22.3 7.7 $308.6 $214.9 Other liabilities as of December 31, 2009 and 2008 consisted of the following (in millions): 2009 2008 Deferred revenue $51.2 $34.4 Unrecognized tax benefits (inclusive of interest and penalties) 33.4 39.7 Supplemental executive retirement plan liabilities 21.0 13.9 Other 15.1 15.8 $120.7 $103.8 Consolidated Statement of Income Information Repair and maintenance expense related to continuing operations for each of the years in the three-year period ended December 31, 2009 was as follows (in millions): 2009 2008 2007 Repair and maintenance expense $121.5 $115.9 $93.4 Consolidated Statement of Cash Flows Information Cash paid for interest and income taxes for each of the years in the three-year period ended December 31, 2009 was as follows (in millions): 2009 2008 2007 Interest, net of amounts capitalized $.1 $.5 $4.6 Income taxes 153.5 332.1 203.9 Capitalized interest totaled $20.9 million, $21.6 million and $30.4 million during the years ended December 31, 2009, 2008 and 2007, respectively. Capital expenditure accruals totaling $83.8 million, $105.1 million and $96.1 million for the years ended December 31, 2009, 2008 and 2007, respectively, were excluded from investing activities in our consolidated statement of cash flows. Concentration of Credit Risk We are exposed to credit risk relating to our receivables from customers, our cash and cash equivalents and investments and our use of derivatives in connection with the man

UNAUDITED QUARTERLY FINANCIAL D

UNAUDITED QUARTERLY FINANCIAL DATA
	12 Months Ended Dec. 31, 2009
UNAUDITED QUARTERLY FINANCIAL DATA	15.UNAUDITED QUARTERLY FINANCIAL DATA The following table summarizes our unaudited quarterly consolidated income statement data for the years ended December 31, 2009 and 2008 (in millions, except per share amounts): 2009 First Quarter Second Quarter Third Quarter Fourth Quarter Year Operating revenues $499.9 $511.6 $424.5 $491.8 $1,927.8 Operating expenses Contract drilling (exclusive of depreciation) 157.7 174.1 180.2 195.8 707.8 Depreciation 45.1 47.0 51.1 53.9 197.1 General and administrative 12.0 16.0 13.6 22.4 64.0 Operating income 285.1 274.5 179.6 219.7 958.9 Other income (expense), net (4.3 ) 6.9 3.6 2.6 8.8 Income from continuing operations before income taxes 280.8 281.4 183.2 222.3 967.7 Provision for income taxes 54.6 50.0 29.1 44.7 178.4 Income from continuing operations 226.2 231.4 154.1 177.6 789.3 (Loss) income from discontinued operations, net (4.1 ) (30.0 ) (3.3 ) 32.6 (4.8 ) Net income 222.1 201.4 150.8 210.2 784.5 Net income attributable to noncontrolling interests (1.4 ) (1.1 ) (1.1 ) (1.5 ) (5.1 ) Net income attributable to Ensco $220.7 $200.3 $149.7 $208.7 $779.4 Earnings (loss) per share - basic Continuing operations $1.59 $1.62 $1.07 $1.23 $5.51 Discontinued operations (.03 ) (.21 ) (.02 ) .23 (.03 ) $1.56 $1.41 $1.05 $1.46 $5.48 Earnings (loss) per share - diluted Continuing operations $1.59 $1.62 $1.07 $1.23 $5.51 Discontinued operations (.03 ) (.21 ) (.02 ) .23 (.03 ) $1.56 $1.41 $1.05 $1.46 $5.48 2008 First Quarter Second Quarter Third Quarter Fourth Quarter Year Operating revenues $535.8 $575.4 $585.2 $570.6 $2,267.0 Operating expenses Contract drilling (exclusive of depreciation) 169.2 195.5 178.2 177.9 720.8 Depreciation 43.5 44.7 44.8 45.0 178.0 General and administrative 12.7 13.8 15.2 12.1 53.8 Operating income 310.4 321.4 347.0 335.6 1,314.4 Other income (expense), net 4.5 6.8 (6.5 ) (9.0 ) (4.2 ) Income from continuing operations before income taxes 314.9 32

SUBSEQUENT EVENT

SUBSEQUENT EVENT
	12 Months Ended Dec. 31, 2009
SUBSEQUENT EVENT	16.SUBSEQUENT EVENT During 2009, we adopted FASB ASC 855 (previously SFAS No. 165, "Subsequent Events") which establishes general standards regarding the accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Adoption of this standard did not result in significant changes in the subsequent events that we are required to recognize or disclosure in our financial statements. We account for and disclose events that occur after the balance sheet date but before financial statements are issued or are available to be issued. We evaluated subsequent events through February 25, 2010, the date these consolidated financial statements were filed with the SEC.