v3.26.1
Equity Method Investment In ARO (Tables)
 6 Months Ended
Jun. 30, 2026
Equity Method Investments and Joint Ventures [Abstract]  
Equity Method Investments A reconciliation of those components is presented below (in millions):
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
50% interest in ARO net income (loss) (1)
$7.4 $(4.3)$11.1 $(4.8)
Amortization of basis differences3.2 3.2 6.3 6.3 
Equity in earnings (losses) of ARO$10.6 $(1.1)$17.4 $1.5 
(1) The 50% interest in ARO net income for the three and six months ended June 30, 2026 includes the recognition of $14.3 million in additional income, which represents our proportionate share of adjustments recorded by ARO during the completion of its 2025 financial statements subsequent to the issuance of our Annual Report.
Schedule of Related Party Transactions
Revenues recognized by us related to the Lease Agreements are included within Revenues (exclusive of reimbursable revenues) and revenues related to certain reimbursable expenses in accordance with the Lease Agreements are recognized within Reimbursable revenues in our Condensed Consolidated Statements of Operations and were as follows (in millions):

Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Revenues (exclusive of reimbursable revenues) from Lease Agreements
$14.8 $16.9 $33.3 $30.4 
Reimbursable revenues from Lease Agreements
3.1 — 10.2 — 
Total operating revenues from Lease Agreements
$17.9 $16.9 $43.5 $30.4 

Our balances related to the ARO lease agreements were as follows (in millions):

June 30, 2026December 31, 2025
Accounts receivable
$34.1 $47.8 
Contract assets (1)
$0.6 $2.0 
Contract liabilities (1)
$26.2 $16.3 
Accounts payable (1)
$64.1 $61.8 

(1)The per day bareboat charter amount in the Lease Agreements is subject to adjustment based on actual performance of the respective rig and therefore, the corresponding contract assets and contract liabilities are subject to adjustment during the lease term. Upon completion of the lease term, such amounts become a payable to or a receivable from ARO. In addition, the accounts payable balance includes amounts owed to ARO for certain reimbursable costs.
The principal amount and discount of the Notes Receivable from ARO were as follows (in millions):

June 30, 2026December 31, 2025
Principal amount$400.7 $400.7 
Discount(43.5)(55.7)
Carrying value$357.2 $345.0 
Interest receivable (1) (2)
$11.1 $— 

(1)Our interest receivable from ARO is included in Accounts receivable, net in our Condensed Consolidated Balance Sheets.
(2)The 2025 interest on the Notes Receivable from ARO of approximately $24.1 million was paid in kind in December 2025 by increasing the principal balance of the Notes Receivable from ARO.

Interest income earned on the Notes Receivable from ARO was as follows (in millions):

Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Interest income$5.6 $4.0 $11.1 $8.0 
Non-cash amortization (1)
6.1 6.2 12.2 12.3 
Total interest income on the Notes Receivable from ARO$11.7 $10.2 $23.3 $20.3 

(1)Represents the amortization of the discount on the Notes Receivable from ARO using the effective interest method to interest income over the term of the notes.