| General Information (Policies) | 12 Months Ended |
| Dec. 31, 2018 |
| Accounting Policies [Abstract] | |
| Principles of Consolidation | Principles of Consolidation
Our consolidated financial statements include the accounts of
Diamond Offshore Drilling, Inc. and our wholly-owned subsidiaries
after elimination of intercompany transactions and balances. |
| Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial
Statements
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States, or
U.S., or GAAP, requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Actual results
could differ from those estimated. |
| Changes in Accounting Principles | Changes in Accounting Principles
Revenue Recognition No. 2014-09, Revenue from Contracts with Customers 2014-09,
We adopted ASU 2014-09
Our adoption of ASU 2014-09
Income Taxes No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other
Than Inventory, 2016-16. 2016-16 2016-16
The aggregate impact of the changes in accounting principles, as
discussed above, to our Consolidated Balance Sheets on
January 1, 2018 was as follows (in thousands):
Retained Prepaid Expenses Other Deferred
Balance as of January 1, 2018 before adoption $ 1,964,497 $ 157,625 $ 102,276 $ 167,299
Adjustments for adoption of:
Topic 606 2,589 610 2,107 128
ASU 2016-16 (17,401 )
—
— 17,401
Balance as of January 1, 2018 after adoption $ 1,949,685 $ 158,235 $ 104,383 $ 184,828 |
| Other Recently Adopted Accounting Pronouncements | Other Recently Adopted Accounting Pronouncements
In August 2018, the FASB issued ASU No. 2018-13, Fair Value
Measurement (Topic 820): Disclosure Framework – Changes to
the Disclosure Requirements for Fair Value Measurement 2018-13. 2018-13 2018-13.
In February 2018, the FASB issued ASU No. 2018-02, 2018-02. 2018-02 one-time 2018-02 , 2018-02 2018-02 tax-related 2018-02
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash
Flows (Topic 230): Classification of Certain Cash Receipts and Cash
Payments 2016-15. 2016-15 zero-coupon 2016-15 |
| Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted
In February 2016, the FASB issued ASU No. 2016-02, 2016-02, 2016-02
During our evaluation of ASU 2016-02, non-lease Revenue from Contracts with
Customers
With respect to leases whereby we are the lessee, we expect to
recognize lease liabilities and offsetting right of use assets of
between $120 million and $130 million, primarily related
to certain leased subsea equipment. However, we are still
finalizing our evaluation of the overall impact. |
| Cash and Cash Equivalents | Cash and Cash Equivalents
We consider short-term, highly liquid investments that have an
original maturity of three months or less and deposits in money
market mutual funds that are readily convertible into cash to be
cash equivalents.
The effect of exchange rate changes on cash balances held in
foreign currencies was not material for the years ended
December 31, 2018, 2017 and 2016. |
| Provision for Bad Debts | Provision for Bad Debts
We record a provision for bad debts on a case-by-case |
| Assets Held For Sale | Assets Held for Sale
We reported the $96.3 million carrying value of two of our
rigs, the Ocean Scepter Ocean Victory Ocean Victory, Ocean Scepter pre-tax |
| Drilling and Other Property and Equipment | Drilling and Other Property and Equipment
We carry our drilling and other property and equipment at cost,
less accumulated depreciation. Maintenance and routine repairs are
charged to income currently while replacements and betterments that
upgrade or increase the functionality of our existing equipment and
that significantly extend the useful life of an existing asset are
capitalized. Significant judgments, assumptions and estimates may
be required in determining whether or not such replacements and
betterments meet the criteria for capitalization and in determining
useful lives and salvage values of such assets. Changes in these
judgments, assumptions and estimates could produce results that
differ from those reported. During the years ended
December 31, 2018 and 2017, we capitalized $243.6 million
and $69.4 million, respectively, in replacements and
betterments of our drilling fleet.
Costs incurred for major rig upgrades and/or the construction of
rigs are accumulated in construction work-in-progress, |
| Capitalized Interest | Capitalized Interest
We capitalize interest cost for rig construction and other
qualifying projects. A reconciliation of our total interest cost to
“Interest expense, net of amounts capitalized” as
reported in our Consolidated Statements of Operations is as follows
(in thousands):
For the Year Ended
December 31,
2018 2017 2016
Total interest cost including amortization of debt issuance
costs $ 123,816 $ 113,618 $ 110,748
Capitalized interest (576 ) (90 ) (20,814 )
Total interest expense as reported $ 123,240 $ 113,528 $ 89,934 |
| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets
We evaluate our property and equipment for impairment whenever
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable (such as, but not limited to, cold
stacking a rig, the expectation of cold stacking a rig in the near
term, contracted backlog of less than one year for a rig, a
decision to retire or scrap a rig, or excess spending over budget
on a newbuild, construction project or major rig upgrade). We
utilize an undiscounted probability-weighted cash flow analysis in
testing an asset for potential impairment. Our assumptions and
estimates underlying this analysis include the following:
•
dayrate by rig;
•
utilization rate by rig if active, warm stacked or
cold stacked (expressed as the actual percentage of time per year
that the rig would be used at certain dayrates);
•
the per day operating cost for each rig if active,
warm stacked or cold stacked;
•
the estimated annual cost for rig replacements and/or
enhancement programs;
•
the estimated maintenance, inspection or other
reactivation costs associated with a rig returning to work;
•
salvage value for each rig; and
•
estimated proceeds that may be received on disposition
of each rig.
Based on these assumptions, we develop a matrix for each rig under
evaluation using multiple utilization/dayrate scenarios, to each of
which we have assigned a probability of occurrence. We arrive at a
projected probability-weighted cash flow for each rig based on the
respective matrix and compare such amount to the carrying value of
the asset to assess recoverability.
The underlying assumptions and assigned probabilities of occurrence
for utilization and dayrate scenarios are developed using a
methodology that examines historical data for each rig, which
considers the rig’s age, rated water depth and other
attributes and then assesses its future marketability in light of
the current and projected market environment at the time of
assessment. Other assumptions, such as operating, maintenance,
inspection and reactivation costs, are estimated using historical
data adjusted for known developments, cost projections for
re-entry
Management’s assumptions are necessarily subjective and are
an inherent part of our asset impairment evaluation , oil-producing |
| Fair Value of Financial Instruments | Fair Value of Financial Instruments
We believe that the carrying amount of our current financial
instruments approximates fair value because of the short maturity
of these instruments. See Note 8. |
| Debt Issuance Costs | Debt Issuance Costs
Deferred costs associated with our credit facilities are presented
in “Other assets” in our Consolidated Balance Sheets at
December 31, 2018 and 2017 and amortized as interest expense
over the respective terms of the credit facilities. During 2018, we
paid $5.7 million in debt issuance and arrangement fees in
connection with our credit facilities. Deferred costs associated
with our senior notes are presented in our Consolidated Balance
Sheets at December 31, 2018 and 2017 as a reduction in the
related long-term debt and are amortized over the respective terms
of the related debt. See Note 10. |
| Income Taxes | Income Taxes
We account for income taxes in accordance with accounting standards
that require the recognition of the amount of taxes payable or
refundable for the current year and an asset and liability approach
in recognizing the amount of deferred tax liabilities and assets
for the future tax consequences of events that have been currently
recognized in our financial statements or tax returns. In each of
our tax jurisdictions we recognize a current tax liability or asset
for the estimated taxes payable or refundable on tax returns for
the current year and a deferred tax asset or liability for the
estimated future tax effects attributable to temporary differences
and carryforwards. Deferred tax assets are reduced by a valuation
allowance, if necessary, which is determined by the amount of any
tax benefits that, based on available evidence, are not expected to
be realized under a “more likely than not” approach.
Deferred tax assets and liabilities are classified as noncurrent in
a classified statement of financial position. We make judgments
regarding future events and related estimates especially as they
pertain to the forecasting of our effective tax rate, the potential
realization of deferred tax assets such as utilization of foreign
tax credits, and exposure to the disallowance of items deducted on
tax returns upon audit.
We record interest related to accrued unrecognized tax positions in
“Interest expense, net of amounts capitalized” and
recognize penalties associated with uncertain tax positions in
“Income tax benefit” in our Consolidated Statements of
Operations. Liabilities for uncertain tax positions, including any
penalty, are denominated in the currency of the related tax
jurisdiction and are revalued for changes in currency exchange
rates. The revaluation of such liabilities for uncertain tax
positions is reported in “Income tax benefit” in our
Consolidated Statements of Operations. See Note 16. |
| Treasury Stock | Treasury Stock
In connection with the vesting of restricted stock units held by
certain individuals, we acquired 87,799 and 29,416 shares of our
common stock during 2018 and 2017, respectively (valued at
$1.3 million in 2018 and $0.5 million in 2017), in
satisfaction of tax withholding obligations that were incurred on
the vesting date. See Note 5.
Depending on market conditions, we may, from time to time, purchase
shares of our common stock in the open market or otherwise. We
account for the purchase of treasury stock using the cost method,
which reports the cost of the shares acquired in “Treasury
stock” as a deduction from stockholders’ equity in our
Consolidated Balance Sheets. We did not repurchase any shares of
our outstanding common stock during 2018, 2017 or 2016. |
| Comprehensive (Loss) Income | Comprehensive (Loss) Income
Comprehensive (loss) income is the change in equity of a business
enterprise during a period from transactions and other events and
circumstances except those transactions resulting from investments
by owners and distributions to owners. Comprehensive (loss) income
for the three years ended December 31, 2018, 2017 and 2016
includes net (loss) income and unrealized holding gains and losses
on marketable securities and financial derivatives designated as
cash flow accounting hedges. See Note 11. |
| Foreign Currency | Foreign Currency
Our functional currency is the U.S. dollar. Transactions incurred
in currencies other than the U.S. dollar are subject to gains or
losses due to fluctuations in those currencies. We report foreign
currency transaction gains and losses as “Foreign currency
transaction (loss) gain” in our Consolidated Statements of
Operations. The revaluation of assets and liabilities related to
foreign income taxes, including deferred tax assets and liabilities
and uncertain tax positions, including any penalty, is reported in
“Income tax benefit (expense)” in our Consolidated
Statements of Operations. |
| Revenue from Contracts with Customers | Revenue from Contracts with Customers
The activities that primarily drive the revenue earned from our
drilling contracts include (i) providing a drilling rig and
the crew and supplies necessary to operate the rig,
(ii) mobilizing and demobilizing the rig to and from the drill
site and (iii) performing rig preparation activities and/or
modifications required for the contract. Consideration received for
performing these activities may consist of dayrate drilling
revenue, mobilization and demobilization revenue, contract
preparation revenue and reimbursement revenue. We account for these
integrated services provided within our drilling contracts as a
single performance obligation satisfied over time and comprised of
a series of distinct time increments in which we provide drilling
services.
Consideration for activities that are not distinct within the
context of our contracts and do not correspond to a distinct time
increment within the contract term are allocated across the single
performance obligation and recognized ratably over the initial term
of the contract (which is the period we estimate to be benefited
from the corresponding activities and generally ranges from two to
60 months). Consideration for activities that correspond to a
distinct time increment within the contract term is recognized in
the period when the services are performed. The total transaction
price is determined for each individual contract by estimating both
fixed and variable consideration expected to be earned over the
term of the contract. See below for further discussion regarding
the allocation of the transaction price to the remaining
performance obligations.
The amount estimated for variable consideration may be constrained
(reduced) and is only included in the transaction price to the
extent that it is probable that a significant reversal of
previously recognized revenue will not occur throughout the term of
the contract. When determining if variable consideration should be
constrained, management considers whether there are factors outside
of our control that could result in a significant reversal of
revenue as well as the likelihood and magnitude of a potential
reversal of revenue. These estimates
are re-assessed
Dayrate Drilling Revenue.
Mobilization/Demobilization Revenue. lump-sum
In some contracts, there is uncertainty as to the likelihood and
amount of expected demobilization revenue to be received. For
example, contractual provisions may require that a rig demobilize a
certain distance before the demobilization revenue is payable or
the amount may vary dependent upon whether or not the rig has
additional contracted work within a certain distance from the
wellsite. Therefore, the estimate for such revenue may be
constrained, as described above, depending on the facts and
circumstances pertaining to the specific contract. We assess the
likelihood of receiving such revenue based on our past experience
and knowledge of market conditions.
Contract Preparation Revenue. lump-sum
Capital Modification Revenue lump-sum
Revenues Related to Reimbursable Expenses
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. Contract
asset balances consist primarily of demobilization revenue that we
expect to receive and is recognized ratably throughout the contract
term, but invoiced upon completion of the demobilization
activities. Once the demobilization revenue is invoiced, the
corresponding contract asset is transferred to accounts receivable.
Contract assets may also include amounts recognized in advance of
amounts invoiced due to the blending of rates when a contract has
operating dayrates that increase over the initial contract term.
Contract liabilities include payments received for mobilization as
well as rig preparation and upgrade activities which are allocated
to the overall performance obligation and recognized ratably over
the initial term of the contract. Contract liabilities may also
include amounts invoiced in advance of amounts recognized due to
the blending of rates when a contract has operating dayrates that
decrease over the initial contract term.
Contract balances are netted at a contract level, such that
deferred revenue for mobilization, contract preparation and capital
modifications (contract liabilities) is netted with any accrued
demobilization revenue (contract asset) for each applicable
contract.
The following table provides information about receivables,
contract assets and contract liabilities from our contracts with
customers (in thousands):
December 31, January 1,
Trade receivables $ 160,478 $ 247,453
Current contract assets (1) 6,832 611
Noncurrent contract assets (1) 2,107 2,107
Current contract liabilities (deferred revenue) (1) (2,803 ) (11,371 )
Noncurrent contract liabilities (deferred revenue) (1) (17,723 ) (8,972 )
(1)
Contract assets and contract liabilities may reflect
balances that have been netted together on a contract basis. Net
current contract asset and liability balances are included in
“Prepaid expenses and other current assets” and
“Accrued liabilities,” respectively, and net noncurrent
contract asset and liability balances are included in “Other
assets” and “Other liabilities,” respectively, in
our Consolidated Balance Sheets as of December 31, 2018.
Significant changes in the contract assets and the contract
liabilities balances during the period are as follows (in
thousands):
Net
Contract assets at January 1, 2018 $ 2,718
Contract liabilities at January 1, 2018 (20,343 )
Net balance at January 1, 2018 (17,625 )
Decrease due to amortization of revenue that was included in the
beginning contract liability balance 19,026
Increase due to cash received, excluding amounts recognized as
revenue during the period (19,353 )
Increase due to revenue recognized during the period but contingent
on future performance 7,114
Decrease due to transfer to receivables during the period (893 )
Adjustments 144
Net balance at December 31, 2018 $ (11,587 )
Contract assets at December 31, 2018 $ 8,939
Contract liabilities at December 31, 2018 (20,526 )
Deferred Contract Costs
Certain direct and incremental costs incurred for upfront
preparation, initial mobilization and modifications of contracted
rigs represent costs of fulfilling a contract as they relate
directly to a contract, enhance resources that will be used in
satisfying our performance obligations in the future and are
expected to be recovered. Such costs are deferred and amortized
ratably to contract drilling expense as services are rendered over
the initial term of the related drilling contract. Such deferred
contract costs in the amount of $70.0 million and
$13.1 million are reported in “Prepaid expenses and
other current assets” and “Other assets,”
respectively, in our Consolidated Balance Sheets at
December 31, 2018. During the year ended December 31,
2018, the amount of amortization of such costs was
$67.7 million. There was no impairment loss in relation to
capitalized costs.
Costs incurred for the demobilization of rigs at contract
completion are recognized as incurred during the demobilization
process. Costs incurred for rig modifications or upgrades required
for a contract, which are considered to be capital improvements,
are capitalized as drilling and other property and equipment and
depreciated over the estimated useful life of the improvement.
Transaction Price Allocated to Remaining Performance
Obligations
The following table reflects revenue expected to be recognized in
the future related to unsatisfied performance obligations as of
December 31, 2018 (in thousands):
For the Years Ending
December 31,
2019 2020 2021 2022 Total
Mobilization and contract preparation revenue $ 5,671 $ 391 $ 511 $ 83 $ 6,656
Capital modification revenue 10,441 4,725
—
— 15,166
Other deferred revenue
— 7,626 9,799
— 17,425
Total $ 16,112 $ 12,742 $ 10,310 $ 83 $ 39,247
The revenue included above consists primarily of expected fixed
mobilization and upgrade revenue for both wholly and partially
unsatisfied performance obligations as well as expected variable
mobilization and upgrade revenue for partially unsatisfied
performance obligations, which has been estimated for purposes of
allocating across the entire corresponding performance obligations.
Revenue expected to be recognized in the future related to the
blending of rates when a contract has operating dayrates that
decrease over the initial contract term is also included. 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 December 31, 2018. The actual timing of recognition of such
amounts may vary due to factors outside of our control. We have
applied the disclosure practical expedient in Accounting Standards
Codification 606-10-50-14A(b)
Impact of Topic 606 on Financial Statement Line Items
Our revenue recognition pattern under Topic 606 is similar to
revenue recognition under the previous guidance, except for the
recognition of demobilization revenue. Such revenue, which was
recognized upon completion of a contract under the previous
guidance, is now estimated at contract inception and recognized
ratably as contract drilling revenue over the initial term of the
contract with an offset to a contract asset under Topic 606.
The following tables summarize the impacts of adopting Topic 606 on
our selected Consolidated Balance Sheets, Consolidated Statements
of Operations and Consolidated Statements of Cash Flows
information, as of and for the year ended December 31, 2018
(in thousands, except per share data):
December 31, 2018
Balances as reported Adjustments Balances
Consolidated Balance Sheets
Prepaid and other current assets $ 163,396 $ (3,785 ) $ 159,611
Other assets 65,534 (2,107 ) 63,427
Deferred tax liability 104,380 (795 ) 103,585
Retained earnings 1,769,415 (5,097 ) 1,764,318
Consolidated Statements of Operations
Contract drilling revenues $ 1,059,973 $ (3,174 ) $ 1,056,799
Income tax benefit 46,353 666 47,019
Loss per share, basic and diluted (1.31 ) (0.02 ) (1.33 )
Consolidated Statements of Cash Flows
Cash flow from operating activities:
Net loss $ (180,272 ) $ (2,508 ) $ (182,780 )
Adjustments to reconcile net loss to net cash
Deferred tax provision (75,993 ) (666 ) (76,659 )
Contract assets, net (6,221 ) 3,174 (3,047 ) |
