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| Revenue | Note 3 — Revenue Revenue Recognition The Company recognizes revenue when control of the promised services is transferred to its customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those services. Revenue is generally recognized over time as services are performed. Certain of the Company’s customer agreements related to the construction and operation of hybrid rigs (“ECHO Rigs”) contain lease and non-lease components. The Company has elected the lessor practical expedient under ASC 842, Leases to account for the lease and associated non-lease components as a single combined component because the timing and pattern of transfer of the components are the same and the lease components, if accounted for separately, would be classified as operating leases. Because the non-lease components are predominant, the combined components are accounted for as single performance obligations under ASC 606. Certain ECHO Rig agreements include upfront customer contributions and contractual hourly surcharges. Revenue associated with the customer contributions and contractual surcharges is recognized over time as the related rig services are performed, generally based on rig hours. All revenue associated with the ECHO Rig agreements is included in the High Specification Rigs segment. Revenue disaggregated by reportable segment is presented in Note 17 — Segment Reporting. Contract Balances Accounts receivable represent unconditional rights to consideration for billed revenue while Contract assets represent the Company’s earned, but unbilled revenue and conditional right to consideration for services transferred to customers. Contract liabilities represent consideration received from customers in advance of the Company’s satisfaction of its performance obligations. The Company’s contract liabilities primarily consist of advance customer consideration received under its ECHO Rig agreements. These amounts are recognized as revenue over time as the related rig services are performed. The following table presents the Company’s receivables, contract assets and contract liabilities (in millions):
The current portion of contract liabilities is included in Other current liabilities, and the noncurrent portion is presented as Contract liabilities in the Condensed Consolidated Balance Sheets. During the three months ended June 30, 2026, the Company recognized less than $0.1 million of revenue that was included in the contract liability balances as of March 31, 2026. During the six months ended June 30, 2026, the Company recognized $0.1 million of revenue that was included in the contract liability balances as of December 31, 2025. Remaining Performance Obligations In certain instances, the Company has entered into agreements with customers that contain provisions for certain performance obligations in exchange for upfront payments or hourly premiums. The upfront payments made are classified as contract liabilities until the related performance obligations are satisfied. Remaining performance obligations represent the aggregate amount of fixed contractual consideration included in the transaction price that is allocated to performance obligations that were unsatisfied or partially unsatisfied as of the end of the reporting period. Such amounts include contract liabilities and certain fixed consideration that will be invoiced in future periods. Certain ECHO Rig agreements contain termination provisions under which customer contributions received are nonrefundable and, for certain agreements, the customer may be required to pay remaining fixed contractual hourly surcharges upon termination. These provisions are considered in determining the fixed consideration included in the transaction price. The Company includes only fixed, enforceable amounts in the transaction price allocated to its remaining performance obligations. As of June 30, 2026, the aggregate transaction price allocated to remaining performance obligations was $15.5 million. The Company expects to recognize this amount as follows (in millions):
The Company applies the practical expedients that permit the exclusion from the disclosure of remaining performance obligations of (i) agreements with an original expected duration of one year or less and (ii) amounts for which the Company recognizes revenue in the amount to which it has a right to invoice when that amount corresponds directly with the value of the Company’s performance completed to date. The excluded performance obligations primarily relate to ordinary hourly well service agreements. The consideration under these agreements varies based on the actual rig hours performed and is generally resolved and invoiced as the services are provided over contractual periods that may extend up to 36 months. The Company has not excluded any other material consideration from the transaction price due to the application of the variable consideration constraint.
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