ARO is a 50/50 unconsolidated joint venture between the Company and Saudi Aramco that owns and operates jackup drilling rigs in Saudi Arabia. As of June 30, 2026, ARO owned nine jackup rigs, had ordered two newbuild jackup rigs and leased seven rigs from us through bareboat charter arrangements (the "Lease Agreements") whereby substantially all operating costs are incurred by ARO.

The shareholder agreement governing the joint venture (the "Shareholder Agreement") specifies that ARO shall purchase 20 newbuild jackup rigs. Under this program, two newbuild jackups have been built and are in service and two additional newbuild jackups, Kingdom 3 and Kingdom 4, were ordered in October 2024 and November 2025, respectively. In connection with these plans, we have a potential obligation to fund ARO for newbuild jackup rigs. See "Note 11 - Contingencies" for additional information.

We account for our interest in ARO using the equity method of accounting and only recognize our portion of ARO's net income, adjusted for basis differences as discussed below, which is included in Equity in earnings (losses) of ARO in our Condensed Consolidated Statements of Operations.

Our equity method investment in ARO was recorded at its estimated fair value in fresh start accounting upon emergence from bankruptcy in 2021. We computed the difference between the fair value of ARO's net assets and the carrying value of those net assets in ARO's U.S. GAAP financial statements ("basis differences") at that date. These basis differences primarily related to ARO's long-lived assets and the recognition of intangible assets associated with certain of ARO's drilling contracts that were determined to have favorable terms relative to market terms as of the measurement date.

Basis differences are amortized over the remaining life of the assets or liabilities to which they relate and are recognized as an adjustment to the Equity in earnings (losses) of ARO in our Condensed Consolidated Statements of Operations. The amortization of those basis differences is combined with our 50% interest in ARO's net income. A reconciliation of those components is presented below (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
50% interest in ARO net income (loss) (1)	$	7.4	$	(4.3)	$	11.1	$	(4.8)
Amortization of basis differences	3.2		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.

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,
	2026		2025		2026		2025
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


	June 30, 2026		December 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.

During 2017 and 2018, the Company contributed assets to ARO in exchange for a 10-year shareholder notes receivable due from ARO (the "Notes Receivable from ARO"), which bear interest based on a one-year term Secured Overnight Financing Rate ("SOFR"), set as of the end of the year prior to the applicable year, plus 2.10%. The Notes Receivable from ARO were adjusted to their estimated fair value in fresh start accounting in 2021 and the resulting discount to the principal amount is being amortized using the effective interest method to interest income over the remaining terms of the notes.


	June 30, 2026		December 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.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
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.