Attached files

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EX-31.1 - EXHIBIT 31.1 - Ensco plcesv-6302015xexhibit311.htm
EX-32.1 - EXHIBIT 32.1 - Ensco plcesv-6302015xexhibit321.htm
EX-32.2 - EXHIBIT 32.2 - Ensco plcesv-6302015xexhibit322.htm
EX-12.1 - EXHIBIT 12.1 - Ensco plcesv-6x30x2015xexhibit121.htm
EX-31.2 - EXHIBIT 31.2 - Ensco plcesv-6302015xexhibit312.htm
EX-15.1 - EXHIBIT 15.1 - Ensco plcesv-6302015xexhibit151.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
     Washington, D.C. 20549     
 
FORM 10-Q

(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2015
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from                   to                  

Commission File Number 1-8097

 Ensco plc
(Exact name of registrant as specified in its charter)

England and Wales
(State or other jurisdiction of
incorporation or organization)
 
6 Chesterfield Gardens
London, England
(Address of principal executive offices)
 
98-0635229
(I.R.S. Employer
Identification No.)
 
W1J 5BQ
(Zip Code)
 Registrant's telephone number, including area code:  44 (0) 20 7659 4660
  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x        No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
x
  
Accelerated filer
 
o
 
 
 
 
 
 
 
Non-Accelerated filer
 
o  (Do not check if a smaller reporting company)
  
Smaller reporting company
 
o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o      No  x
 
As of July 24, 2015, there were 235,678,744 Class A ordinary shares of the registrant issued and outstanding.





ENSCO PLC
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2015

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





FORWARD-LOOKING STATEMENTS
  
Statements contained in this report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "could," "may," "might," "should," "will" and similar words and specifically include statements regarding expected financial performance; expected utilization, day rates, revenues, operating expenses, contract term, contract backlog, capital expenditures, insurance, financing and funding; the timing of availability, delivery, mobilization, contract commencement or relocation or other movement of rigs; future rig construction (including construction in progress and completion thereof), enhancement, upgrade or repair and timing and cost thereof; the suitability of rigs for future contracts; the offshore drilling market, including supply and demand, utilization rates, dayrates, customer drilling programs, commodity prices, stacking of rigs, effects of new rigs on the market and effects of declines in commodity prices; general market, business and industry conditions, trends and outlook; future operations; the impact of increasing regulatory complexity; expected contributions from our rig fleet expansion program and our program to high-grade the rig fleet by investing in new equipment and divesting selected assets and underutilized rigs; expense management; and the likely outcome of litigation, legal proceedings, investigations or insurance or other claims and the timing thereof.

Such statements are subject to numerous risks, uncertainties and assumptions that may cause actual results to vary materially from those indicated, including:
 
downtime and other risks associated with offshore rig operations or rig relocations, including rig or equipment failure, damage and other unplanned repairs, the limited availability of transport vessels, hazards, self-imposed drilling limitations and other delays due to severe storms and hurricanes and the limited availability or high cost of insurance coverage for certain offshore perils, such as hurricanes in the Gulf of Mexico or associated removal of wreckage or debris;

changes in worldwide rig supply and demand, competition or technology, including changes as a result of delivery of newbuild drilling rigs;

changes in future levels of drilling activity and expenditures, whether as a result of global capital markets and liquidity, prices of oil and natural gas or otherwise, which may cause us to idle or stack additional rigs;

governmental action, terrorism, piracy, military action and political and economic uncertainties, including uncertainty or instability resulting from civil unrest, political demonstrations, mass strikes, or an escalation or additional outbreak of armed hostilities or other crises in oil or natural gas producing areas of the Middle East, North Africa, West Africa or other geographic areas, which may result in expropriation, nationalization, confiscation or deprivation of our assets or suspension and/or termination of contracts based on force majeure events;

risks inherent to shipyard rig construction, repair or enhancement, including risks associated with concentration of our construction contracts with three shipyards, unexpected delays in equipment delivery, engineering, design or commissioning issues following delivery, or changes in the commencement, completion or service dates;

possible cancellation, suspension or termination of drilling contracts as a result of mechanical difficulties, performance, termination without cause or other reasons;

the outcome of litigation, legal proceedings, investigations or other claims or contract disputes, including any inability to collect receivables or resolve significant contractual or day rate disputes, any purported renegotiation, nullification, cancellation or breach of contracts with customers or other parties and any failure to execute definitive contracts following announcements of letters of intent;

1




governmental regulatory, legislative and permitting requirements affecting drilling operations, including limitations on drilling locations (such as the Gulf of Mexico during hurricane season);

new and future regulatory, legislative or permitting requirements, future lease sales, changes in laws, rules and regulations that have or may impose increased financial responsibility, additional oil spill abatement contingency plan capability requirements and other governmental actions that may result in claims of force majeure or otherwise adversely affect our existing drilling contracts;

our ability to attract and retain skilled personnel on commercially reasonable terms, whether due to labor regulations, unionization or otherwise;

environmental or other liabilities, risks or losses, whether related to storm or hurricane damage, losses or liabilities (including wreckage or debris removal), collisions, groundings, blowouts, fires, explosions and other accidents or terrorism or otherwise, for which insurance coverage and contractual indemnities may be insufficient, unenforceable or otherwise unavailable;

our ability to obtain financing and pursue other business opportunities may be limited by our debt levels and debt agreement restrictions;

our ability to realize expected benefits from the 2009 redomestication as a U.K. public limited company and the related reorganization of Ensco’s corporate structure, including the effect of any changes in laws, rules and regulations, or the interpretation thereof, or in the applicable facts, that could adversely affect our status as a non-U.S. corporation for U.S. tax purposes or otherwise adversely affect our anticipated consolidated effective income tax rate;

delays in actual contract commencement dates or the cancellation of drilling programs by operators;

adverse changes in foreign currency exchange rates, including their effect on the fair value measurement of our derivative instruments; and

potential long-lived asset and/or goodwill impairments.

In addition to the numerous risks, uncertainties and assumptions described above, you should also carefully read and consider "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part I and "Item 1A. Risk Factors" in Part II of this report and "Item 1A. Risk Factors" in Part I and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our annual report on Form 10-K for the year ended December 31, 2014, which is available on the U.S. Securities and Exchange Commission website at www.sec.gov. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward looking statements, except as required by law.



2





PART I - FINANCIAL INFORMATION

Item 1.Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
The Board of Directors and Shareholders
Ensco plc:
 

We have reviewed the condensed consolidated balance sheet of Ensco plc and subsidiaries (the Company) as of June 30, 2015, the related condensed consolidated statements of operations and comprehensive income (loss) for the three-month and six-month periods ended June 30, 2015 and 2014, and the related condensed consolidated statements of cash flows for the six-month periods ended June 30, 2015 and 2014. These condensed consolidated financial statements are the responsibility of the Company’s management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Ensco plc and subsidiaries as of December 31, 2014, and the related consolidated statements of operations, comprehensive income (loss), and cash flows for the year then ended (not presented herein); and in our report dated March 2, 2015, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2014, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
 
/s/ KPMG LLP
 
Houston, Texas
July 30, 2015

3



ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
 
Three Months Ended
June 30,
 
2015
 
2014
OPERATING REVENUES
$
1,059.0

 
$
1,136.6

OPERATING EXPENSES
 
 
 
Contract drilling (exclusive of depreciation)
502.6

 
542.5

Loss on impairment

 
703.5

Depreciation
140.5

 
132.2

General and administrative
29.7

 
36.2

 
672.8

 
1,414.4

OPERATING INCOME (LOSS)
386.2

 
(277.8
)
OTHER INCOME (EXPENSE)
 
 
 
Interest income
3.4

 
3.5

Interest expense, net
(51.2
)
 
(36.4
)
Other, net
(7.6
)
 
2.1

 
(55.4
)
 
(30.8
)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
330.8

 
(308.6
)
PROVISION FOR INCOME TAXES
 
 
 
Current income tax expense
43.9

 
47.2

Deferred income tax expense (benefit)
14.1

 
(4.6
)
 
58.0

 
42.6

INCOME (LOSS) FROM CONTINUING OPERATIONS
272.8

 
(351.2
)
LOSS FROM DISCONTINUED OPERATIONS, NET
(10.1
)
 
(818.4
)
NET INCOME (LOSS)
262.7

 
(1,169.6
)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(2.4
)
 
(3.1
)
NET INCOME (LOSS) ATTRIBUTABLE TO ENSCO
$
260.3

 
$
(1,172.7
)
EARNINGS (LOSS) PER SHARE - BASIC AND DILUTED
 
 
 
Continuing operations
$
1.15

 
$
(1.53
)
Discontinued operations
(0.04
)
 
(3.54
)
 
$
1.11

 
$
(5.07
)
 
 
 
 
NET INCOME (LOSS) ATTRIBUTABLE TO ENSCO SHARES - BASIC AND DILUTED
$
256.7

 
$
(1,174.8
)
 
 
 
 
WEIGHTED-AVERAGE SHARES OUTSTANDING
 
 
 
Basic
232.1

 
231.5

Diluted
232.2

 
231.5

 
 
 
 
CASH DIVIDENDS PER SHARE
$
0.15

 
$
0.75

The accompanying notes are an integral part of these condensed consolidated financial statements.

4



ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
 
Six Months Ended
June 30,
 
2015
 
2014
OPERATING REVENUES
$
2,222.9

 
$
2,203.3

OPERATING EXPENSES
 
 
 
Contract drilling (exclusive of depreciation)
1,020.9

 
1,062.7

Loss on impairment

 
703.5

Depreciation
277.6

 
263.3

General and administrative
59.8

 
74.3

 
1,358.3

 
2,103.8

OPERATING INCOME
864.6

 
99.5

OTHER INCOME (EXPENSE)
 

 
 

Interest income
5.8

 
7.1

Interest expense, net
(103.6
)
 
(71.0
)
Other, net
(30.2
)
 
4.0

 
(128.0
)
 
(59.9
)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
736.6

 
39.6

PROVISION FOR INCOME TAXES
 
 
 
Current income tax expense
106.6

 
102.4

Deferred income tax expense (benefit)
29.1

 
(10.3
)
 
135.7

 
92.1

INCOME (LOSS) FROM CONTINUING OPERATIONS
600.9

 
(52.5
)
LOSS FROM DISCONTINUED OPERATIONS, NET
(10.3
)
 
(820.4
)
NET INCOME (LOSS)
590.6

 
(872.9
)
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(5.6
)
 
(7.3
)
NET INCOME (LOSS) ATTRIBUTABLE TO ENSCO
$
585.0

 
$
(880.2
)
EARNINGS (LOSS) PER SHARE - BASIC AND DILUTED
 
 
 
Continuing operations
$
2.53

 
$
(0.27
)
Discontinued operations
(0.04
)
 
(3.55
)
 
$
2.49

 
$
(3.82
)
 
 
 
 
NET INCOME (LOSS) ATTRIBUTABLE TO ENSCO SHARES - BASIC AND DILUTED
$
577.7

 
$
(884.1
)
 
 

 
 

WEIGHTED-AVERAGE SHARES OUTSTANDING
 
 
 
Basic
232.0

 
231.4

Diluted
232.1

 
231.4

 
 
 
 
CASH DIVIDENDS PER SHARE
$
0.30

 
$
1.50

The accompanying notes are an integral part of these condensed consolidated financial statements.

5



ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
(Unaudited)

 
 
Three Months Ended
June 30,
 
2015
 
2014
 
 
 
 
NET INCOME (LOSS)
$
262.7

 
$
(1,169.6
)
OTHER COMPREHENSIVE INCOME, NET
 
 
 
Net change in fair value of derivatives
8.7

 
5.0

Reclassification of net losses (gains) on derivative instruments from other comprehensive income into net income
5.1

 
(2.4
)
Other
(1.3
)
 
.5

NET OTHER COMPREHENSIVE INCOME
12.5

 
3.1

 
 
 
 
COMPREHENSIVE INCOME (LOSS)
275.2

 
(1,166.5
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(2.4
)
 
(3.1
)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENSCO
$
272.8

 
$
(1,169.6
)

The accompanying notes are an integral part of these condensed consolidated financial statements.

6



ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
(Unaudited)

 
Six Months Ended
June 30,
 
2015
 
2014
 
 
 
 
NET INCOME (LOSS)
$
590.6

 
$
(872.9
)
OTHER COMPREHENSIVE INCOME, NET
 
 
 
Net change in fair value of derivatives
(8.7
)
 
9.9

Reclassification of net losses (gains) on derivative instruments from other comprehensive income into net income
10.1

 
(1.9
)
Other
1.3

 
.5

NET OTHER COMPREHENSIVE INCOME
2.7

 
8.5

 
 
 
 
COMPREHENSIVE INCOME (LOSS)
593.3

 
(864.4
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(5.6
)
 
(7.3
)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO ENSCO
$
587.7

 
$
(871.7
)

The accompanying notes are an integral part of these condensed consolidated financial statements.


7



ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share and par value amounts)
 
June 30,
2015
 
December 31,
2014
 
(Unaudited)
 
 
ASSETS
CURRENT ASSETS
 
 
 
    Cash and cash equivalents
$
648.3

 
$
664.8

    Short-term investments
650.0

 
757.3

    Accounts receivable, net
714.4

 
883.3

    Other
627.9

 
629.4

Total current assets
2,640.6

 
2,934.8

PROPERTY AND EQUIPMENT, AT COST
15,886.8

 
14,975.5

    Less accumulated depreciation
2,716.9

 
2,440.7

       Property and equipment, net
13,169.9

 
12,534.8

GOODWILL
276.1

 
276.1

OTHER ASSETS, NET
251.5

 
314.2

 
$
16,338.1

 
$
16,059.9

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
 
 
 
Accounts payable - trade
$
318.9

 
$
373.2

Accrued liabilities and other
595.0

 
696.6

Current maturities of long-term debt
14.4

 
34.8

Total current liabilities
928.3

 
1,104.6

LONG-TERM DEBT
5,911.3

 
5,885.6

DEFERRED INCOME TAXES
210.0

 
179.5

OTHER LIABILITIES
526.6

 
667.3

COMMITMENTS AND CONTINGENCIES


 


ENSCO SHAREHOLDERS' EQUITY
 

 
 

Class A ordinary shares, U.S. $.10 par value, 450.0 million shares authorized, 243.1 and 240.7 million shares issued as of June 30, 2015 and December 31, 2014
24.3

 
24.1

Class B ordinary shares, £1 par value, 50,000 shares authorized and issued as of June 30, 2015 and December 31, 2014
.1

 
.1

Additional paid-in capital
5,538.7

 
5,517.5

Retained earnings
3,236.0

 
2,720.4

Accumulated other comprehensive income
14.6

 
11.9

Treasury shares, at cost, 7.4 million and 6.5 million shares as of June 30, 2015 and December 31, 2014
(63.1
)
 
(59.0
)
Total Ensco shareholders' equity
8,750.6

 
8,215.0

NONCONTROLLING INTERESTS
11.3

 
7.9

Total equity
8,761.9

 
8,222.9

 
$
16,338.1

 
$
16,059.9

     The accompanying notes are an integral part of these condensed consolidated financial statements.

8



ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 
Six Months Ended
June 30,
 
2015
 
2014
OPERATING ACTIVITIES
 

 
 

Net income (loss)
$
590.6

 
$
(872.9
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities of continuing operations:
 
 
 
Loss from discontinued operations, net
10.3

 
820.4

Depreciation expense
277.6

 
263.3

Loss on extinguishment of debt
33.5

 

Deferred income tax expense (benefit)
29.1

 
(10.3
)
Share-based compensation expense
23.0

 
24.2

Amortization of intangibles and other, net
(13.0
)
 
(4.2
)
Loss on impairment

 
703.5

Other
(9.9
)
 
(3.6
)
Changes in operating assets and liabilities
(50.2
)
 
42.5

Net cash provided by operating activities of continuing operations
891.0

 
962.9

 
 
 
 
INVESTING ACTIVITIES
 
 
 
Additions to property and equipment
(913.9
)
 
(629.7
)
Maturities of short-term investments
757.3

 
50.0

Purchases of short-term investments
(650.0
)
 
(33.3
)
Other 
1.1

 
2.4

Net cash used in investing activities of continuing operations
(805.5
)
 
(610.6
)
 
 
 
 
FINANCING ACTIVITIES
 
 
 
Proceeds from issuance of senior notes
1,078.7

 

Reduction of long-term borrowings
(1,058.0
)
 
(23.7
)
Cash dividends paid
(70.5
)
 
(351.2
)
Premium paid on redemption of debt
(30.3
)
 

Debt financing costs
(10.5
)
 

Other
(6.8
)
 
(13.4
)
Net cash used in financing activities
(97.4
)
 
(388.3
)
 
 
 
 
DISCONTINUED OPERATIONS
 
 
 
Operating activities
(4.2
)
 
(41.5
)
Investing activities
(.6
)
 
56.7

Net cash (used in) provided by discontinued operations
(4.8
)
 
15.2

Effect of exchange rate changes on cash and cash equivalents
.2

 
.2

DECREASE IN CASH AND CASH EQUIVALENTS
(16.5
)
 
(20.6
)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
664.8

 
165.6

CASH AND CASH EQUIVALENTS, END OF PERIOD
$
648.3

 
$
145.0


The accompanying notes are an integral part of these condensed consolidated financial statements.

9



ENSCO PLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 -Unaudited Condensed Consolidated Financial Statements
 
We prepared the accompanying condensed consolidated financial statements of Ensco plc and subsidiaries (the "Company," "Ensco," "our," "we" or "us") in accordance with accounting principles generally accepted in the United States of America ("GAAP"), pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") included in the instructions to Form 10-Q and Article 10 of Regulation S-X. The financial information included in this report is unaudited but, in our opinion, includes all adjustments (consisting of normal recurring adjustments) that are necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. The December 31, 2014 condensed consolidated balance sheet data were derived from our 2014 audited consolidated financial statements, but do not include all disclosures required by GAAP. Certain previously reported amounts have been reclassified to conform to the current year presentation. The preparation of our condensed consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the related revenues and expenses and disclosures of gain and loss contingencies as of the date of the financial statements. Actual results could differ from those estimates.
 
The financial data for the three-month and six-month periods ended June 30, 2015 and 2014 included herein have been subjected to a limited review by KPMG LLP, our independent registered public accounting firm. The accompanying independent registered public accounting firm's review report is not a report within the meaning of Sections 7 and 11 of the Securities Act of 1933, and the independent registered public accounting firm's liability under Section 11 does not extend to it.
 
Results of operations for the three-month and six-month periods ended June 30, 2015 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2015. We recommend these condensed consolidated financial statements be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2014 filed with the SEC on March 2, 2015, and our quarterly report on Form 10-Q filed with the SEC on April 30, 2015.

New Accounting Pronouncements

During 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ("Update 2015-03"), which requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. Update 2015-03 is effective for annual and interim periods for fiscal years beginning after December 15, 2015. Early application is permitted. We will adopt the accounting standard on a retrospective basis effective January 1, 2016. There will be no impact to the manner in which debt issuance costs are amortized in our condensed consolidated financial statements.

During 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) ("Update 2014-09"), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. In July 2015, the Financial Accounting Standards Board voted to delay the effective date one year. The ASU is now effective for annual and interim periods for fiscal years beginning after December 15, 2017, though companies have an option of adopting the standard for fiscal years beginning after December 15, 2016. The ASU will replace most existing revenue recognition guidance in U.S. GAAP and may be adopted using a retrospective, modified retrospective or prospective with a cumulative catch-up approach. We are currently evaluating the effect that ASU 2014-09 will have on our condensed consolidated financial statements and related disclosures.
  

10



Note 2 -Fair Value Measurements
 
The following fair value hierarchy table categorizes information regarding our net financial assets measured at fair value on a recurring basis (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 June 30, 2015
 
 
 

 
 

 
 

Supplemental executive retirement plan assets 
$
44.8

 
$

 
$

 
$
44.8

Total financial assets
$
44.8

 
$

 
$

 
$
44.8

Derivatives, net 
$

 
$
(16.4
)
 
$

 
$
(16.4
)
Total financial liabilities
$

 
$
(16.4
)
 
$

 
$
(16.4
)
 
 
 
 
 
 
 
 
As of December 31, 2014
 
 
 

 
 

 
 

Supplemental executive retirement plan assets
$
43.2

 
$

 
$

 
$
43.2

Total financial assets
$
43.2

 
$

 
$

 
$
43.2

Derivatives, net 

 
(26.3
)
 

 
(26.3
)
Total financial liabilities
$

 
$
(26.3
)
 
$

 
$
(26.3
)

Supplemental Executive Retirement Plan Assets
 
Our supplemental executive retirement plans (the "SERP") are non-qualified plans that provide eligible employees an opportunity to defer a portion of their compensation for use after retirement. Assets held in the SERP were marketable securities measured at fair value on a recurring basis using Level 1 inputs and were included in other assets, net, on our condensed consolidated balance sheets. The fair value measurement of assets held in the SERP was based on quoted market prices.
 
Derivatives
 
Our derivatives were measured at fair value on a recurring basis using Level 2 inputs. See "Note 3 - Derivative Instruments" for additional information on our derivatives, including a description of our foreign currency hedging activities and related methodologies used to manage foreign currency exchange rate risk. The fair value measurement of our derivatives was based on market prices that are generally observable for similar assets or liabilities at commonly-quoted intervals.
 

11



Other Financial Instruments
 
The carrying values and estimated fair values of our long-term debt instruments were as follows (in millions):
 
June 30,
2015
 
December 31,
2014
 
Carrying Value  
 
Estimated Fair Value  
 
Carrying Value  
 
Estimated Fair Value  
4.70% Senior notes due 2021
$
1,481.3

 
$
1,554.1

 
$
1,479.9

 
$
1,505.3

5.75% Senior notes due 2044
1,003.8

 
1,015.6

 
622.3

 
615.8

6.875% Senior notes due 2020
999.7

 
1,029.1

 
1,008.2

 
1,008.5

5.20% Senior notes due 2025
697.4

 
696.4

 

 

4.50% Senior notes due 2024
624.2

 
592.3

 
624.2

 
602.0

8.50% Senior notes due 2019
575.2

 
593.0

 
583.8

 
611.8

7.875% Senior notes due 2040
380.5

 
333.0

 
381.2

 
363.8

7.20% Debentures due 2027
149.2

 
177.2

 
149.2

 
171.4

4.33% MARAD bonds, including current maturities, due 2016
14.4

 
14.5

 
46.6

 
46.8

4.65% MARAD bonds, including current maturities, due 2020

 

 
27.0

 
29.7

3.25% Senior notes due 2016

 

 
998.0

 
1,018.3

Total
$
5,925.7

 
$
6,005.2

 
$
5,920.4

 
$
5,973.4


The estimated fair values of our senior notes and debentures were determined using quoted market prices. The estimated fair values of our Maritime Administration ("MARAD") bonds were determined using an income approach valuation model.

The estimated fair values of our cash and cash equivalents, short-term investments, receivables, trade payables and other liabilities approximated their carrying values as of June 30, 2015 and December 31, 2014.

Note 3 -Derivative Instruments
    
Our functional currency is the U.S. dollar. As is customary in the oil and gas industry, a majority of our revenues are denominated in U.S. dollars; however, a portion of the revenues earned and expenses incurred by certain of our subsidiaries are denominated in currencies other than the U.S. dollar ("foreign currencies"). These transactions are remeasured in U.S. dollars based on a combination of both current and historical exchange rates. We use foreign currency forward contracts to reduce our exposure to various market risks, primarily foreign currency exchange rate risk.
 
All derivatives were recorded on our condensed consolidated balance sheets at fair value. Derivatives subject to legally enforceable master netting agreements were not offset in our condensed consolidated balance sheets. 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.  Net liabilities of $16.4 million and $26.3 million associated with our foreign currency forward contracts were included on our condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014, respectively.  All of our derivatives mature during the next 18 months.  See "Note 2 - Fair Value Measurements" for additional information on the fair value measurement of our derivatives.
 

12



Derivatives recorded at fair value on our condensed consolidated balance sheets consisted of the following (in millions):
 
Derivative Assets
 
Derivative Liabilities
 
June 30,
2015
 
December 31,
2014
 
June 30,
2015
 
December 31,
2014
Derivatives Designated as Hedging Instruments
 
 
 

 
 

 
 

Foreign currency forward contracts - current(1)
$
1.4

 
$
.4

 
$
18.8

 
$
17.2

Foreign currency forward contracts - non-current(2)
.9

 
.1

 
.9

 
2.9

 
2.3

 
.5

 
19.7

 
20.1

 
 
 
 
 
 
 
 
Derivatives Not Designated as Hedging Instruments
 
 
 

 
 

 
 

Foreign currency forward contracts - current(1)
2.2

 
.2

 
1.2

 
6.9

 
2.2

 
.2

 
1.2

 
6.9

Total
$
4.5

 
$
.7

 
$
20.9

 
$
27.0

 
(1) 
Derivative assets and liabilities that have maturity dates equal to or less than twelve months from the respective balance sheet date were included in other current assets and accrued liabilities and other, respectively, on our condensed consolidated balance sheets.

(2) 
Derivative assets and liabilities that have maturity dates greater than twelve months from the respective balance sheet date were included in other assets, net, and other liabilities, respectively, on our condensed consolidated balance sheets.
 
We utilize cash flow hedges to hedge forecasted foreign currency denominated transactions, primarily to reduce our exposure to foreign currency exchange rate risk associated with contract drilling expenses and capital expenditures denominated in various currencies. As of June 30, 2015, we had cash flow hedges outstanding to exchange an aggregate $359.3 million for various foreign currencies, including $164.1 million for British pounds, $92.9 million for Brazilian reais, $41.7 million for euros, $23.6 million for Singapore dollars, $21.6 million for Australian dollars and $15.4 million for other currencies.

Gains and losses, net of tax, on derivatives designated as cash flow hedges included in our condensed consolidated statements of operations and comprehensive income were as follows (in millions):

Three Months Ended June 30, 2015 and 2014
 
Gain Recognized in Other Comprehensive Income (Effective Portion)  
 
(Loss) Gain Reclassified from Accumulated Other Comprehensive Income ("AOCI") into Income (Effective Portion)(1)
 
Gain Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)(2)
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Interest rate lock contracts(3)
$

 
$

 
$
(.4
)
 
$
(.1
)
 
$

 
$

Foreign currency forward contracts(4)
8.7

 
5.0

 
(4.7
)
 
2.5

 
.3

 
1.2

Total
$
8.7

 
$
5.0

 
$
(5.1
)
 
$
2.4

 
$
.3

 
$
1.2



13



Six Months Ended June 30, 2015 and 2014
 
(Loss) Gain Recognized in Other Comprehensive Income (Effective Portion)  
 
(Loss) Gain Reclassified from AOCI into Income (Effective Portion)(1)
 
Gain Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)(2)
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
Interest rate lock contracts(3)
$

 
$

 
$
(.5
)
 
$
(.2
)
 
$

 
$

Foreign currency forward contracts(5)
(8.7
)
 
9.9

 
(9.6
)
 
2.1

 
.2

 
1.9

Total
$
(8.7
)
 
$
9.9

 
$
(10.1
)
 
$
1.9

 
$
.2

 
$
1.9


(1)
Changes in the fair value of cash flow hedges are recorded in AOCI.  Amounts recorded in AOCI associated with cash flow hedges are subsequently reclassified into contract drilling, depreciation or interest expense as earnings are affected by the underlying hedged forecasted transaction.

(2)
Gains and losses recognized in income for ineffectiveness and amounts excluded from effectiveness testing were included in other, net, in our condensed consolidated statements of operations.

(3)
Losses on interest rate lock derivatives reclassified from AOCI into income (effective portion) were included in interest expense, net in our condensed consolidated statements of operations.

(4) 
During the three-month period ended June 30, 2015, $4.9 million of losses were reclassified from AOCI into contract drilling expense and $200,000 of gains were reclassified from AOCI into depreciation expense in our condensed consolidated statement of operations. During the three-month period ended June 30, 2014, $2.3 million of gains were reclassified from AOCI into contract drilling expense and $200,000 of gains were reclassified from AOCI into depreciation expense in our condensed consolidated statement of operations.

(5) 
During the six-month period ended June 30, 2015, $10.0 million of losses were reclassified from AOCI into contract drilling expense and $400,000 of gains were reclassified from AOCI into depreciation expense in our condensed consolidated statement of operations. During the six-month period ended June 30, 2014, $1.7 million of gains were reclassified from AOCI into contract drilling expense and $400,000 of gains were reclassified from AOCI into depreciation expense in our condensed consolidated statement of operations.

We have net assets and liabilities denominated in numerous foreign currencies and use various methods to manage our exposure to foreign currency exchange rate risk. We predominantly structure our drilling contracts in U.S. dollars, which significantly reduces the portion of our cash flows and assets denominated in foreign currencies. We occasionally enter into derivatives that hedge the fair value of recognized foreign currency denominated assets or liabilities but do not designate such derivatives as hedging instruments.  In these situations, a natural hedging relationship generally exists whereby changes in the fair value of the derivatives offset changes in the fair value of the underlying hedged items. As of June 30, 2015, we held derivatives not designated as hedging instruments to exchange an aggregate $169.5 million for various foreign currencies, including $86.5 million for euros, $23.2 million for Swiss francs, $15.4 million for British pounds, $15.1 million for Indonesian rupiah, $12.8 million for Mexican Pesos and $16.5 million for other currencies.
     
Net gains of $4.5 million and $900,000 associated with our derivatives not designated as hedging instruments were included in other, net, in our condensed consolidated statements of operations for the three-month periods ended June 30, 2015 and 2014, respectively. Net losses of $9.0 million and net gains of $300,000 associated with our derivatives not designated as hedging instruments were included in other, net in our condensed consolidated statements of operations for the six-month periods ended June 30, 2015 and 2014, respectively. These gains and losses were largely offset by net foreign currency exchange gains and losses during the respective periods.


14



As of June 30, 2015, the estimated amount of net losses associated with derivative instruments, net of tax, that would be reclassified into earnings during the next twelve months totaled $9.9 million.

Note 4 - Noncontrolling Interests

Third parties hold a noncontrolling ownership interest in certain of our non-U.S. subsidiaries. Noncontrolling interests are classified as equity on our condensed consolidated balance sheets, and net income attributable to noncontrolling interests is presented separately in our condensed consolidated statements of operations.
    
Income (loss) from continuing operations attributable to Ensco for the three-month and six-month periods ended June 30, 2015 and 2014 was as follows (in millions):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
Income (loss) from continuing operations
$
272.8

 
$
(351.2
)
 
$
600.9

 
$
(52.5
)
Income from continuing operations attributable to noncontrolling interests
(2.4
)
 
(3.0
)
 
(5.6
)
 
(7.1
)
Income (loss) from continuing operations attributable to Ensco
$
270.4

 
$
(354.2
)
 
$
595.3

 
$
(59.6
)

Loss from discontinued operations attributable to Ensco for the three-month and six-month periods ended June 30, 2015 and 2014 was as follows (in millions):

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
Loss from discontinued operations, net
$
(10.1
)
 
$
(818.4
)
 
$
(10.3
)
 
$
(820.4
)
Income from discontinued operations attributable to noncontrolling interests

 
(.1
)
 

 
(.2
)
Loss from discontinued operations attributable to Ensco
$
(10.1
)
 
$
(818.5
)
 
$
(10.3
)
 
$
(820.6
)

Note 5 - Earnings Per Share
 
We compute basic and diluted earnings per share ("EPS") in accordance with the two-class method. Net income (loss) attributable to Ensco used in our computations of basic and diluted EPS is adjusted to exclude net income allocated to non-vested shares granted to our employees and non-employee directors. Weighted-average shares outstanding used in our computation of diluted EPS is calculated using the treasury stock method and excludes non-vested shares.
    

15



The following table is a reconciliation of income (loss) from continuing operations attributable to Ensco shares used in our basic and diluted EPS computations for the three-month and six-month periods ended June 30, 2015 and 2014 (in millions):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
Income (loss) from continuing operations attributable to Ensco
$
270.4

 
$
(354.2
)
 
$
595.3

 
$
(59.6
)
Income from continuing operations allocated to non-vested share awards
(3.7
)
 
(2.1
)
 
(7.4
)
 
(3.9
)
Income (loss) from continuing operations attributable to Ensco shares
$
266.7

 
$
(356.3
)
 
$
587.9

 
$
(63.5
)
 
The following table is a reconciliation of the weighted-average shares used in our basic and diluted EPS computations for the three-month and six-month periods ended June 30, 2015 and 2014 (in millions):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
Weighted-average shares - basic
232.1

 
231.5

 
232.0

 
231.4

Potentially dilutive shares
.1

 

 
.1

 

Weighted-average shares - diluted
232.2

 
231.5

 
232.1

 
231.4

 
Antidilutive share options totaling 500,000 were excluded from the computation of diluted EPS for the three-month and six-month periods ended June 30, 2015 and 2014.

Note 6 -Debt

Senior Notes

During the first quarter of 2015, we issued $700.0 million aggregate principal amount of unsecured 5.20% senior notes due 2025 (the “2025 Notes”) at a discount of $2.6 million and $400.0 million aggregate principal amount of unsecured 5.75% senior notes due 2044 (the “New 2044 Notes”) at a discount of $18.7 million in a public offering. Interest on the 2025 Notes is payable semiannually on March 15 and September 15 of each year commencing September 15, 2015. Interest on the New 2044 Notes is payable semiannually on April 1 and October 1 of each year commencing on April 1, 2015.

The 2025 Notes were issued pursuant to the Indenture between us and Deutsche Bank Trust Company Americas, as trustee (the “Trustee”), dated March 17, 2011 (the “Base Indenture”), as supplemented by the Third Supplemental Indenture between us and the Trustee, dated as of March 12, 2015 (the “Third Supplemental Indenture”).  The New 2044 Notes were issued as additional notes under the Base Indenture, as supplemented by the Second Supplemental Indenture between us and the Trustee, dated September 29, 2014 (the “Second Supplemental Indenture”), pursuant to which we previously issued $625.0 million aggregate principal amount of 5.75% senior notes due 2044 (the “Existing 2044 Notes”) in September 2014 (the Base Indenture, as amended and supplemented by the Second Supplemental Indenture and the Third Supplement Indenture, the “Indenture”).  The New 2044 Notes and Existing 2044 Notes are treated as a single series of debt securities under the Indenture (collectively, the “2044 Notes”).

We may redeem the 2025 Notes and 2044 Notes, in whole at any time or in part from time to time, prior to maturity. If we elect to redeem the 2025 Notes before the date that is three months prior to the maturity date or the 2044 Notes before the date that is six months prior to the maturity date, we will pay an amount equal to 100% of the principal amount of the notes redeemed plus accrued and unpaid interest and a “make-whole” premium. If we elect to redeem the 2025 Notes or 2044 Notes on or after the aforementioned dates, we will pay an amount equal to 100% of

16



the principal amount of the notes redeemed plus accrued and unpaid interest, but are not required to pay a "make-whole" premium.

The 2025 Notes, 2044 Notes and Indenture also contain customary events of default, including failure to pay principal or interest on the 2025 Notes or 2044 Notes when due, among others. The Indenture contains certain restrictions, including, among others, restrictions on our ability and the ability of our subsidiaries to create liens on certain assets, enter into certain sale-leaseback transactions, enter into certain merger or consolidation transactions or transfers of all or substantially all of our assets.

Redemption of 2016 Senior Notes and MARAD Obligations

During 2011, we issued $1.0 billion of 3.25% senior notes with a maturity in 2016 (the “2016 Notes”). In March 2015, we commenced a cash tender offer (the “Tender Offer”) for the $1.0 billion outstanding aggregate principal amount of our 2016 Notes. Senior notes totaling $854.6 million were settled on March 12, 2015 for $878.0 million (excluding accrued interest) using a portion of the net proceeds from the public offering of the 2025 Notes and New 2044 Notes. Under the terms of the Tender Offer, we paid a premium totaling approximately $23.4 million, which approximates the “make-whole” premium that would have been required had we elected to redeem the debt. The premium was recorded as a loss on debt extinguishment and included in other, net in our condensed consolidated statement of operations for the six-month period ended June 30, 2015. Additionally, we wrote-off $1.7 million of unamortized debt discount and $1.5 million of unamortized debt issuance costs associated with the $854.6 million of notes tendered, resulting in a total pre-tax loss on debt extinguishment of $26.6 million.

Concurrent with the settlement of the Tender Offer, we exercised our right to redeem the remaining 2016 Notes. In April 2015, we completed the redemption of the $145.4 million of 2016 Notes that remained outstanding using a portion of the net proceeds from the public offering of the 2025 Notes and New 2044 Notes. The redemption payment included a "make-whole" premium of $3.8 million which was recorded as a loss on debt extinguishment and included in other, net in our condensed consolidated statement of operations for the three-month and six-month periods ended June 30, 2015.

In April 2015, we used the remaining net proceeds from our March 2015 public offering, together with cash on hand, to redeem $51.0 million of our 4.33% MARAD notes due 2016 and our 4.65% MARAD bonds due 2020 (the “MARAD Obligations”). We incurred additional losses on debt extinguishment of $3.1 million, which were included in other, net in our condensed consolidated statement of operations for the three-month and six-month periods ended June 30, 2015. These losses primarily consisted of a "make-whole" premium.

In July 2015, we redeemed the remaining $14.3 million aggregate principal amount of the MARAD Obligations.

Revolving Credit
    
We have a $2.25 billion senior unsecured revolving credit facility with a syndicate of banks to be used for general corporate purposes with a term expiring on September 30, 2019 (the "Credit Facility"). Advances under the Credit Facility bear interest at Base Rate or LIBOR plus an applicable margin rate (currently 0.125% per annum for Base Rate advances and 1.125% per annum for LIBOR advances) depending on our credit rating. Amounts repaid may be re-borrowed during the term of the Credit Facility. We are required to pay a quarterly commitment fee (currently 0.125% per annum) on the undrawn portion of the $2.25 billion commitment which is also based on our credit rating. In addition to other customary restrictive covenants, the Credit Facility requires us to maintain a total debt to total capitalization ratio that is less than or equal to a specified percentage. In March 2015, we amended the Credit Facility to increase the percentage from 50% to 60%.
    
We have the right, subject to receipt of commitments from new or existing lenders, to increase the commitments under the Credit Facility to an aggregate amount of up to $2.75 billion. We had no amounts outstanding under the Credit Facility as of June 30, 2015 and December 31, 2014.


17


Note 7 -Impairment

Impairment of Long-Lived Assets

On a quarterly basis, we evaluate the carrying value of our property and equipment to identify events or changes in circumstances ("triggering events") that indicate the carrying value may not be recoverable. During the second quarter, we concluded that a triggering event had occurred on several rigs due to contract concessions and performed an asset impairment analysis. Based on the analysis performed, we concluded the carrying values of these rigs were recoverable. We continue to have ongoing discussions with certain customers requesting contract concessions. The outcome of these negotiations remains uncertain; however, deterioration of existing contract terms and/or change in our long-term operating assumptions resulting from these negotiations could lead to a material impairment charge in future periods.

During the second quarter of 2014, demand for floaters deteriorated as a result of continued reduction in capital spending by customers in addition to delays in customers’ drilling programs. The reduction in demand, combined with the increasing supply from newbuild floater deliveries, led to a very competitive market. In general, contracting activity for floaters declined significantly, and new day rate fixtures were substantially lower than rates previously realized. In response to the adverse change in the floaters business climate, management evaluated our older, less capable floaters and committed to a plan to sell five rigs. ENSCO 5000, ENSCO 5001, ENSCO 5002, ENSCO 6000 and ENSCO 7500 were removed from our portfolio of rigs marketed for contract drilling services and actively marketed for sale. These rigs were written down to fair value, less costs to sell, as of May 31, 2014 and classified as "held for sale." We completed the sale of ENSCO 5000 during the fourth quarter of 2014 and ENSCO 5002 during the second quarter of 2015. The remaining three floaters were classified as "held for sale" on our June 30, 2015 condensed consolidated balance sheet.

We measured the fair value of the "held for sale" rigs by applying a market approach, which was based on unobservable third-party estimated prices that would be received in exchange for the assets in an orderly transaction between market participants. We recorded a pre-tax, non-cash loss on impairment totaling $546.4 million during the three-month and six-month periods ended June 30, 2014. The impairment charge was included in loss from discontinued operations, net in our condensed consolidated statement of operations for the three-month and six-month periods ended June 30, 2014. See "Note 9 - Discontinued Operations" for additional information on our "held for sale" rigs.

As a result of the adverse change in the floater business climate observed during the second quarter of 2014, management's commitment to a plan to sell five floaters during the second quarter of 2014 and the impairment charge incurred on the "held for sale" floaters, management concluded that a triggering event had occurred during the second quarter of 2014 and performed an asset impairment analysis on our remaining older, less capable floaters.

Based on the analysis performed as of May 31, 2014, we recorded an additional non-cash loss on impairment with respect to four other floaters totaling $991.5 million, of which $288.0 million related to ENSCO DS-2 which was removed from our portfolio of rigs marketed for contract drilling services during the fourth quarter of 2014. As a result, the ENSCO DS-2 impairment charge was reclassified to loss from discontinued operations, net in our condensed consolidated statement of operations for the three-month and six-month periods ended June 30, 2014. The remaining $703.5 million impairment charge was included in loss on impairment in our condensed consolidated statement of operations for the three-month and six-month periods ended June 30, 2014. We measured the fair value of these rigs by applying an income approach, using projected discounted cash flows. These valuations were based on unobservable inputs that require significant judgments for which there is limited information, including assumptions regarding future day rates, utilization, operating costs and capital requirements.


18



Note 8 -Shareholders' Equity

Consistent with prior years' practice, during the three-month period ended June 30, 2015, we granted 1.7 million non-vested share awards to our employees, officers and non-employee directors for annual equity awards and for equity awards granted to new or recently promoted employees, pursuant to our 2012 Long-Term Incentive Plan. 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 at the time of the grant. Our non-vested share awards have dividend rights effective on the date of grant and are measured at fair value using the market value of our shares on the date of grant. The weighted-average grant-date fair value of non-vested share awards granted during the three-month period ended June 30, 2015 was $23.41 per share.

Note 9 -Discontinued Operations
    
During 2014, management committed to a plan to sell six floaters and two jackups. ENSCO 5000, ENSCO 5001, ENSCO 5002, ENSCO 6000, ENSCO 7500, ENSCO DS-2, ENSCO 58 and ENSCO 90 were removed from our portfolio of rigs marketed for contract drilling services. These rigs were written down to fair value, less costs to sell. We measured the fair value of these rigs by applying a market approach, which was based on unobservable third-party estimated prices that would be received in exchange for the assets in an orderly transaction between market participants. The operating results from these rigs were included in loss from discontinued operations, net in our condensed consolidated statements of operations for the three-month and six-month periods ended June 30, 2015 and 2014. On a quarterly basis, we reassess the fair values of our "held for sale" assets to determine whether any adjustments to the carrying values are necessary.

During the three-month period ended June 30, 2015, we sold ENSCO 5002 for net proceeds of $1.6 million. The proceeds from the sale were included in investing activities of discontinued operations in our condensed consolidated statement of cash flows for the six-month period ended June 30, 2015. We recognized a pre-tax gain of $1.6 million in connection with the disposal. The gain on sale was included in loss from discontinued operations, net in our condensed consolidated statement of operations for the three-month and six-month periods ended June 30, 2015.

During the fourth quarter of 2014, we completed the sale of ENSCO 5000 for net proceeds of $1.3 million. The remaining six rigs (ENSCO 5001, ENSCO 6000, ENSCO 7500, ENSCO DS-2, ENSCO 58 and ENSCO 90) are being actively marketed and were classified as "held for sale" on our June 30, 2015 condensed consolidated balance sheet.

During the third quarter of 2014, we sold ENSCO 93, a jackup contracted to Pemex. In connection with the sale, we executed a charter agreement with the purchaser to continue operating the rig for the remainder of the Pemex contract, which ended in June 2015. As a result, ENSCO 93 operating results were included in loss from discontinued operations, net in our condensed consolidated statement of operations for the three-month and six-month periods ended June 30, 2015 and 2014.

During the three-month period ended June 30, 2014, we sold jackup rig ENSCO 85 for net proceeds of $64.4 million. The proceeds from the sale were included in investing activities of discontinued operations in our condensed consolidated statement of cash flows for the six-month period ended June 30, 2014. We recognized a pre-tax gain of $10.3 million in connection with the disposal. The gain on sale and operating results were included in loss from discontinued operations, net in our condensed consolidated statement of operations for the three-month and six-month periods ended June 30, 2014.

19




During the six-month period ended June 30, 2014, we sold ENSCO 69 and Pride Wisconsin for net proceeds of $32.2 million and recorded a pre-tax gain of $23.6 million. The gain on sale and operating results were included in loss from discontinued operations, net in our condensed consolidated statement of operations for the six-month period ended June 30, 2014. The net proceeds from the sale were received in December 2013 and included in investing activities of discontinued operations in our condensed consolidated statement of cash flows for the year ended December 31, 2013.

The following table summarizes loss from discontinued operations, net for the three-month and six-month periods ended June 30, 2015 and 2014 (in millions):
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
Revenues
$
8.1

 
$
99.1

 
$
17.7

 
$
219.4

Operating expenses
11.3

 
114.9

 
33.2

 
251.6

Operating loss
(3.2
)

(15.8
)
 
(15.5
)
 
(32.2
)
Income tax (expense) benefit
(2.9
)
 
(6.5
)
 
9.2

 
(11.5
)
Loss on impairment, net
(7.2
)
 
(796.8
)
 
(7.2
)
 
(796.8
)
Gain on disposal of discontinued operations, net
3.2

 
.7

 
3.2

 
20.1

Loss from discontinued operations, net
$
(10.1
)
 
$
(818.4
)
 
$
(10.3
)
 
$
(820.4
)

Income tax benefit from discontinued operations for the six-month period ended June 30, 2015 included $13.3 million of discrete tax benefits. 

Debt and interest expense are not allocated to our discontinued operations.
    
Note 10 -Income Taxes
 
Our consolidated effective income tax rate for the three-month and six-month periods ended June 30, 2015 was 17.5% and 18.4%, respectively. There were no material discrete tax items for the three-month period ended June 30, 2015. Excluding the impact of discrete income tax items for the six-month period ended June 30, 2015, our consolidated effective income tax rate was 17.5%. These discrete tax items were primarily attributable to the recognition of liabilities for unrecognized tax benefits associated with tax positions taken in prior years.

Excluding the impact of the $703.5 million loss on impairment and discrete income tax expense, our consolidated effective income tax rate for the three-month and six-month periods ended June 30, 2014 was 10.4% and 10.5%, respectively.

The increase in our effective tax rate, excluding discrete items, during 2015 is primarily attributable to an increase in the relative components of our estimated 2015 earnings, excluding discrete items, generated in tax jurisdictions with higher tax rates and tax legislation enacted by the U.K. government that became effective on April 1, 2014.


20



Note 11 -Contingencies

Brazil Internal Investigation

Pride International, Inc. (“Pride”) commenced drilling operations in Brazil during 2001, and, in 2008, entered into a drilling contract with Petrobras for DS-5, a rig Pride had ordered from a shipyard in South Korea. At the time Ensco acquired Pride in mid-2011, Pride’s Brazil fleet had grown to ten rigs.

Beginning in 2006, Pride conducted periodic compliance reviews of its business with Petrobras, and, after the acquisition, Ensco conducted similar compliance reviews, the most recent of which commenced after media reports surfaced regarding ongoing investigations of various kickback and bribery schemes in Brazil.

While conducting our most recent compliance review, we became aware of an internal audit report prepared by Petrobras, after media reports surfaced regarding its contents. The audit report alleges irregularities in relation to DS-5 - specifically, that Petrobras overpaid under the DS-5 drilling contract, purportedly because the terms of the DS-5 contract were more favorable to Pride than the terms that Petrobras had negotiated with other offshore drilling contractors during that time. We believe this allegation by Petrobras is inaccurate, as publicly available data show that the DS-5 contract terms were comparable to other contracts signed by Petrobras in late 2007 and early 2008. We have provided this information to Petrobras as relevant to their internal audit report. Petrobras submitted its internal audit report to Brazilian governmental authorities, who have subsequently requested a copy of the DS-5 drilling contract from Petrobras.

Statements from the internal audit report, including those relating to alleged overpayments for the DS-5 contract, were subsequently cited along with other allegations in Brazilian court procedural documents used in the arrest of a former Petrobras director. While the Petrobras internal audit report became public more than two months ago, we have not been contacted by Brazil authorities.

Nevertheless, upon learning of the Petrobras internal audit report, our Audit Committee expanded the scope of our most recent review of our business with Petrobras. Also, our Audit Committee appointed independent counsel to commission and undertake an internal investigation to examine the facts and circumstances surrounding the allegations set forth in the internal audit report and court documents related to the arrest of the former Petrobras director. Our investigation is ongoing, but to date we have found no evidence that Pride was involved in any wrongdoing.

Our rigs working for Petrobras continue to operate under their existing contracts. Further, we have voluntarily contacted the SEC and the U.S. Department of Justice (“DOJ”) to advise them of the internal audit report and our Audit Committee’s independent investigation. We cannot predict whether any governmental authority will seek to investigate this matter, or if a proceeding were opened, the scope or ultimate outcome of any such investigation. If the SEC or DOJ determines that violations of the U.S. Foreign Corrupt Practices Act of 1977 (the "FCPA") have occurred, or if any governmental authority determines that we have violated applicable anti-bribery laws, they could seek civil and criminal sanctions, including monetary penalties, against us, as well as changes to our business practices and compliance programs, any of which could have a material adverse effect on our business and financial condition.

ENSCO 74 Loss

During 2008, ENSCO 74 was lost as a result of Hurricane Ike in the U.S. Gulf of Mexico.  The ENSCO 74 sunken rig hull was located approximately 95 miles from the original drilling location when it was struck by an oil tanker during 2009.  Wreck removal operations on the sunken rig hull of ENSCO 74 were completed during 2010.


21



We filed a petition for exoneration or limitation of liability under U.S. admiralty and maritime law during 2009. A number of claimants presented claims in the exoneration/limitation proceedings. We have liability insurance policies that provide coverage for such claims as well as removal of wreckage and debris in excess of the property insurance policy sublimit, subject to a $10.0 million per occurrence deductible for third-party claims and an annual aggregate limit of $490.0 million

The owner of a pipeline filed claims alleging that ENSCO 74 caused the pipeline to rupture during Hurricane Ike and sought damages for the cost of repairs and business interruption in an amount in excess of $26.0 million. During 2014, we reached an agreement with the owner of the pipeline to settle the claims for $9.6 million. Prior to the settlement, we incurred legal fees of $3.6 million for this matter. During the second quarter of 2014, we paid the remaining $6.4 million of our deductible under our liability insurance policy. The remaining $3.2 million of settlement proceeds was paid by our underwriters under the terms of the related insurance policies.

The owner of the oil tanker that struck the hull of ENSCO 74 filed claims seeking monetary damages currently in excess of $5.0 million for losses incurred when the tanker struck the ENSCO 74 hull. This matter went to trial in June 2014, and we won a directed verdict on all claims. The plaintiff appealed the decision to the United States Court of Appeals for the Fifth Circuit. We believe that it is not probable that a liability exists with respect to these claims. 

We believe all liabilities associated with the ENSCO 74 loss during Hurricane Ike resulted from a single occurrence under the terms of the applicable insurance policies. However, legal counsel for certain liability underwriters have asserted that the liability claims arise from separate occurrences. In the event of multiple occurrences, the self-insured retention is $15.0 million for two occurrences and $1.0 million for each occurrence thereafter.

Although we do not expect final disposition of the claims associated with the ENSCO 74 loss to have a material adverse effect upon our financial position, operating results or cash flows, there can be no assurances as to the ultimate outcome.

ENSCO 29 Wreck Removal

During 2005, a portion of the ENSCO 29 platform drilling rig was lost over the side of a customer's platform as a result of Hurricane Katrina. In June 2014, we received a letter from an operator demanding that Ensco retrieve the derrick and drawworks from the seabed.
Our property insurance policies include coverage for ENSCO 29 wreckage and debris removal costs up to $3.8 million. We also maintain liability insurance policies that provide coverage under certain circumstances for wreckage and debris removal costs in excess of the $3.8 million coverage provided under the property insurance policies. We believe that it is not probable a liability exists with respect to this matter, and no liability has been recorded on our condensed consolidated balance sheet as of June 30, 2015. While we cannot reasonably estimate a range of possible loss at this time, it is possible that removal costs may be in excess of our insurance coverage. Although we do not expect costs associated with the ENSCO 29 wreck removal to have a material adverse effect upon our financial position, operating results or cash flows, there can be no assurances as to the ultimate outcome.

Asbestos Litigation

We and certain subsidiaries have been named as defendants, along with numerous third-party companies as co-defendants, in multi-party lawsuits filed in Illinois, Mississippi, Texas, Louisiana and the U.K. by approximately 65 plaintiffs. The lawsuits seek an unspecified amount of monetary damages on behalf of individuals alleging personal injury or death, primarily under the Jones Act, purportedly resulting from exposure to asbestos on drilling rigs and associated facilities during the 1960s through the 1980s.
    
During 2013, we reached an agreement in principle with 58 plaintiffs to settle lawsuits filed in Mississippi for a nominal amount. A special master reviewed all 58 cases and made an allocation of settlement funds among the parties.  The District Court Judge reviewed the allocations and accepted the special master’s recommendations and approved

22



the settlements.  The settlement documents and final documentation for the individual plaintiffs are continuing to be processed.

We intend to vigorously defend against the remaining claims and have filed responsive pleadings preserving all defenses and challenges to jurisdiction and venue. However, discovery is still ongoing and, therefore, available information regarding the nature of all pending claims is limited. At present, we cannot reasonably determine how many of the claimants may have valid claims under the Jones Act or estimate a range of potential liability exposure, if any. 
    
In addition to the pending cases in Illinois, Mississippi, Texas, Louisiana and the U.K., we have other asbestos or lung injury claims pending against us in litigation in other jurisdictions. Although we do not expect final disposition of these asbestos or lung injury lawsuits to have a material adverse effect upon our financial position, operating results or cash flows, there can be no assurances as to the ultimate outcome of the lawsuits.

   Other Matters

In addition to the foregoing, we are named defendants or parties in certain other lawsuits, claims or proceedings incidental to our business and are involved from time to time as parties to governmental investigations or proceedings, including matters related to taxation, arising in the ordinary course of business. Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, we do not expect these matters to have a material adverse effect on our financial position, operating results or cash flows.

In the ordinary course of business with customers and others, we have entered into letters of credit and surety bonds to guarantee our performance as it relates to our drilling contracts, contract bidding, customs duties, tax appeals and other obligations in various jurisdictions. Letters of credit and surety bonds outstanding as of June 30, 2015 totaled $229.6 million and were issued under facilities provided by various banks and other financial institutions. Obligations under these letters of credit and surety bonds are not normally called as we typically comply with the underlying performance requirement. As of June 30, 2015, we had not been required to make collateral deposits with respect to these agreements.

Note 12 -Sale-leaseback

During the third quarter of 2014, we sold jackup rigs ENSCO 83, ENSCO 89, ENSCO 93 and ENSCO 98, all of which are contracted to Petroleos Mexicanos (“Pemex”). In connection with this sale, we executed charter agreements with the purchaser to continue operating the rigs for the remainder of the Pemex contracts, which had anticipated completion dates in either 2015 or 2016. We accounted for the transaction as a sale-leaseback, whereby we retain a significant portion of the remaining use of the rigs as a result of the charter agreements.

We recorded an aggregate gain on sale of $7.5 million at the time of disposal, which represented the portion of the gain that exceeded the present value of payments due under the charter agreements. The remaining $29.4 million gain was deferred and amortized to contract drilling expense within the Jackup segment over the remaining charter term of each rig. Of the $29.4 million deferred gain, $6.9 million and $14.0 million were recognized in contract drilling expense in our condensed consolidated statements of operations for the three-month and six-month periods ended June 30, 2015 and $8.4 million was included in accrued liabilities and other on our condensed consolidated balance sheet as of June 30, 2015.

Due to our charter agreements with the purchaser, ENSCO 83, ENSCO 89 and ENSCO 98 operating results for periods beginning after the date of sale (September 30, 2014) were included in income (loss) from continuing operations within the Other segment. Operating results for these rigs prior to September 30, 2014 were included in income (loss) from continuing operations within the Jackup segment.
    

23



The ENSCO 93 contract with Pemex ended in June 2015. As a result, ENSCO 93 operating results were included in loss from discontinued operations, net in our condensed consolidated statements of operations for the three-month and six-month periods ended June 30, 2015 and 2014. See "Note 9 - Discontinued Operations" for additional information.
  
Note 13 -Segment Information
 
Our business consists of three operating segments: (1) Floaters, which includes our drillships and semisubmersible rigs, (2) Jackups and (3) Other, which consists of management services on rigs owned by third-parties. Our two reportable segments, Floaters and Jackups, provide one service, contract drilling.
    
Segment information for the three-month and six-month periods ended 2015 and 2014 is presented below (in millions). 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." We measure segment assets as property and equipment. Prior year information has been reclassified to conform to the current year presentation.

Three Months Ended June 30, 2015
 
Floaters
 
Jackups
 
Other
 
Operating Segments Total
 
Reconciling Items
 
Consolidated Total
Revenues
$
634.3

 
$
384.1

 
$
40.6

 
$
1,059.0

 
$

 
$
1,059.0

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
Contract drilling (exclusive of depreciation)
277.7

 
192.7

 
32.2

 
502.6

 

 
502.6

Depreciation
94.4

 
43.6

 

 
138.0

 
2.5

 
140.5

General and administrative

 

 

 

 
29.7

 
29.7

Operating income (loss)
$
262.2

 
$
147.8

 
$
8.4

 
$
418.4

 
$
(32.2
)
 
$
386.2

Property and equipment, net
$
9,870.7

 
$
3,223.4

 
$

 
$
13,094.1

 
$
75.8

 
$
13,169.9


Three Months Ended June 30, 2014
 
Floaters
 
Jackups
 
Other
 
Operating Segments Total
 
Reconciling Items
 
Consolidated Total
Revenues
$
679.5

 
$
440.6

 
$
16.5

 
$
1,136.6

 
$

 
$
1,136.6

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
Contract drilling (exclusive of depreciation)
309.9

 
220.9

 
11.7

 
542.5

 

 
542.5

Loss on impairment
703.5

 

 

 
703.5

 

 
703.5

Depreciation
88.3

 
41.8

 

 
130.1

 
2.1

 
132.2

General and administrative

 

 

 

 
36.2

 
36.2

Operating (loss) income
$
(422.2
)
 
$
177.9

 
$
4.8

 
$
(239.5
)
 
$
(38.3
)
 
$
(277.8
)
Property and equipment, net
$
9,661.1

 
$
3,152.9

 
$

 
$
12,814.0

 
$
67.2

 
$
12,881.2


Six Months Ended June 30, 2015
 
Floaters
 
Jackups
 
Other
 
Operating Segments Total
 
Reconciling Items
 
Consolidated Total
Revenues
$
1,329.3

 
$
812.4

 
$
81.2

 
$
2,222.9

 
$

 
$
2,222.9

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
Contract drilling (exclusive of depreciation)
571.2

 
384.2

 
65.5

 
1,020.9

 

 
1,020.9

Depreciation
187.4

 
85.1

 

 
272.5

 
5.1

 
277.6

General and administrative

 

 

 

 
59.8

 
59.8

Operating income (loss)
$
570.7

 
$
343.1

 
$
15.7

 
$
929.5

 
$
(64.9
)
 
$
864.6

Property and equipment, net
$
9,870.7

 
$
3,223.4

 
$

 
$
13,094.1

 
$
75.8

 
$
13,169.9



24



Six Months Ended June 30, 2014
 
Floaters
 
Jackups
 
Other
 
Operating Segments Total
 
Reconciling Items
 
Consolidated Total
Revenues
$
1,331.1

 
$
839.1

 
$
33.1

 
$
2,203.3

 
$

 
$
2,203.3

Operating expenses
 
 
 
 
 
 
 
 
 
 
 
Contract drilling (exclusive of depreciation)
616.5

 
423.2

 
23.0

 
1,062.7

 

 
1,062.7

Loss on impairment
703.5

 

 

 
703.5

 

 
703.5

Depreciation
179.0

 
80.3

 

 
259.3

 
4.0

 
263.3

General and administrative

 

 

 

 
74.3

 
74.3

Operating (loss) income
$
(167.9
)
 
$
335.6

 
$
10.1

 
$
177.8

 
$
(78.3
)
 
$
99.5

Property and equipment, net
$
9,661.1

 
$
3,152.9

 
$

 
$
12,814.0

 
$
67.2

 
$
12,881.2


Information about Geographic Areas    

As of June 30, 2015, the geographic distribution of our drilling rigs by reportable segment was as follows:
 
Floaters
 
Jackups
 
Total(1)
North & South America (excluding Brazil)
9
 
7
 
16
Middle East & Africa
3
 
12
 
15
Europe & Mediterranean
1
 
11
 
12
Asia & Pacific Rim
4
 
7
 
11
Brazil
4
 
 
4
Asia & Pacific Rim (under construction)
2
 
1
 
3
Middle East & Africa (under construction)
 
2
 
2
Held for sale
4
 
2
 
6
Total
27
 
42
 
69

(1) 
We provide management services on six rigs owned by third-parties not included in the table above.

Note 14 -Supplemental Financial Information

Consolidated Balance Sheet Information

Accounts receivable, net, consisted of the following (in millions):
 
June 30,
2015
 
December 31,
2014
Trade
$
709.9

 
$
878.8

Other
19.8

 
15.9

 
729.7

 
894.7

Allowance for doubtful accounts
(15.3
)
 
(11.4
)
 
$
714.4

 
$
883.3



25



Other current assets consisted of the following (in millions):
 
June 30,
2015
 
December 31,
2014
Inventory
$
251.7

 
$
240.3

Assets held for sale
145.7

 
152.4

Prepaid taxes
79.0

 
90.6

Deferred costs
60.5

 
61.9

Deferred tax assets
43.9

 
43.8

Prepaid expenses
35.1

 
33.8

Other
12.0

 
6.6

 
$
627.9

 
$
629.4

 
    
Other assets, net consisted of the following (in millions):
 
June 30,
2015
 
December 31,
2014
Deferred costs
$
86.9

 
$
82.3

Supplemental executive retirement plan assets
44.8

 
43.2

Prepaid taxes on intercompany transfers of property
38.4

 
39.7

Deferred tax assets
36.8

 
38.4

Intangible assets
31.7

 
49.0

Unbilled receivables
1.7

 
18.6

Warranty and other claim receivables

 
30.6

Other
11.2

 
12.4

 
$
251.5

 
$
314.2

    
Accrued liabilities and other consisted of the following (in millions):
 
June 30,
2015
 
December 31,
2014
Deferred revenue
$
218.2

 
$
241.3

Personnel costs
143.9

 
214.0

Taxes
98.6

 
97.0

Accrued interest
89.7

 
83.8

Derivative liabilities
20.0

 
24.1

Other
24.6

 
36.4

 
$
595.0

 
$
696.6

        
Other liabilities consisted of the following (in millions):
 
June 30,
2015
 
December 31,
2014
Deferred revenue
$
265.8

 
$
373.2

Unrecognized tax benefits (inclusive of interest and penalties)
143.8

 
142.4

Supplemental executive retirement plan liabilities
46.3

 
45.1

Intangible liabilities
21.2

 
40.7

Personnel costs
15.3

 
26.1

Other
34.2

 
39.8

 
$
526.6

 
$
667.3


26



    
Accumulated other comprehensive income consisted of the following (in millions):
 
June 30,
2015
 
December 31,
2014
Derivative Instruments
$
9.4

 
$
8.0

Other
5.2

 
3.9

 
$
14.6

 
$
11.9


Concentration of Risk

We are exposed to credit risk relating to our receivables from customers, our cash and cash equivalents, our short-term investments and our use of derivatives in connection with the management of foreign currency exchange rate risk. We mitigate our credit risk relating to receivables from customers, which consist primarily of major international, government-owned and independent oil and gas companies, by performing ongoing credit evaluations. We also maintain reserves for potential credit losses, which generally have been within management's expectations. We mitigate our credit risk relating to cash and cash equivalents by focusing on diversification and quality of instruments. Cash equivalents consist of a portfolio of high-grade instruments. Custody of cash and cash equivalents is maintained at several well-capitalized financial institutions, and we monitor the financial condition of those financial institutions.  

We mitigate our credit risk relating to derivative counterparties through a variety of techniques, including transacting with multiple, high-quality financial institutions, thereby limiting our exposure to individual counterparties and by entering into International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements, which include provisions for a legally enforceable master netting agreement, with almost all of our derivative counterparties. The terms of the ISDA agreements may also include credit support requirements, cross default provisions, termination events or set-off provisions.  Legally enforceable master netting agreements reduce credit risk by providing protection in bankruptcy in certain circumstances and generally permitting the closeout and netting of transactions with the same counterparty upon the occurrence of certain events.  See "Note 3 - Derivative Instruments" for additional information on our derivatives.

Consolidated revenues by customer for the three-month and six-month periods ended June 30, 2015 and 2014 were as follows:

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
BP (1)
16
%
 
17
%
 
14
%
 
17
%
Petrobras(2)
15
%
 
10
%
 
13
%
 
10
%
Total(2)
10
%
 
8
%
 
9
%
 
10
%
Anadarko(2)
5
%
 
10
%
 
5
%
 
11
%
Other
54
%
 
55
%
 
59
%
 
52
%
 
100
%
 
100
%
 
100
%
 
100
%

(1) 
During the three-month periods ended June 30, 2015 and 2014, 79% and 81% of the revenues provided by BP, respectively, were attributable to our Floaters segment. During the six-month period ended June 30, 2015 and 2014, 82% and 80% of the revenues provided by BP, respectively, were attributable to our Floaters segment.

(2) 
During the three-month and six-month periods ended June 30, 2015 and 2014, all revenues were provided by our Floaters segment.


27



Consolidated revenues by region for the three-month and six-month periods ended June 30, 2015 and 2014 were as follows:

 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
2015
 
2014
 
2015
 
2014
U.S. Gulf of Mexico(1)
$
271.0

 
$
464.7

 
$
609.8

 
$
873.5

Angola(2)
182.4

 
157.8

 
351.7

 
308.4

Brazil(3)
115.7

 
111.2

 
238.4

 
245.7

United Kingdom(4)
104.3

 
86.1

 
224.9

 
150.9

Other
385.6

 
316.8

 
798.1

 
624.8

 
$
1,059.0

 
$
1,136.6

 
$
2,222.9

 
$
2,203.3


(1) 
During the three-month period ended June 30, 2015 and 2014, 83% and 77% of the revenues earned in the U.S. Gulf of Mexico, respectively, were attributable to our Floaters segment. During the six-month period ended June 30, 2015 and 2014, 84% and 77% of the revenues earned in the U.S. Gulf of Mexico, respectively, were attributable to our Floaters segment.

(2) 
During the three-month period ended June 30, 2015 and 2014, 91% and 100% of the revenues earned in Angola, respectively, were attributable to our Floaters segment. During the six-month period ended June 30, 2015 and 2014, 90% and 100% of the revenues earned in Angola, respectively, were attributable to our Floaters segment.

(3) 
During the three-month and six-month periods ended June 30, 2015 and 2014, all revenues were provided by our Floaters segment.

(4) 
During the three-month and six-month periods ended June 30, 2015 and 2014, all revenues were provided by our Jackups segment.
    
Note 15 -Guarantee of Registered Securities

On May 31, 2011, Ensco plc completed a merger transaction (the "Merger") with Pride. In connection with the Merger, Ensco plc and Pride entered into a supplemental indenture to the indenture dated as of July 1, 2004 between Pride and the Bank of New York Mellon, as indenture trustee, providing for, among other matters, the full and unconditional guarantee by Ensco plc of Pride’s 8.5% unsecured senior notes due 2019, 6.875% unsecured senior notes due 2020 and 7.875% unsecured senior notes due 2040, which had an aggregate outstanding principal balance of $1.7 billion as of June 30, 2015. The Ensco plc guarantee provides for the unconditional and irrevocable guarantee of the prompt payment, when due, of any amount owed to the holders of the notes.
 
Ensco plc is also a full and unconditional guarantor of the 7.2% debentures due 2027 issued by ENSCO International Incorporated during 1997, which had an aggregate outstanding principal balance of $150.0 million as of June 30, 2015.
    
All guarantees are unsecured obligations of Ensco plc ranking equal in right of payment with all of its existing and future unsecured and unsubordinated indebtedness.
   
The following tables present the unaudited condensed consolidating statements of operations for the three-month and six-month periods ended June 30, 2015 and 2014; the unaudited condensed consolidating statements of comprehensive income for the three-month and six-month periods ended June 30, 2015 and 2014; the condensed consolidating balance sheets as of June 30, 2015 (unaudited) and December 31, 2014; and the unaudited condensed consolidating statements of cash flows for the six-month periods ended June 30, 2015 and 2014, in accordance with Rule 3-10 of Regulation S-X.


28



ENSCO PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
Three Months Ended June 30, 2015
(in millions)
(Unaudited)

 
Ensco plc
 
ENSCO International Incorporated
 
Pride International, Inc.
 
Other Non-Guarantor Subsidiaries of Ensco
 
Consolidating Adjustments
 
Total
OPERATING REVENUES
$
8.7

 
$
34.5

 
$

 
$
1,086.6

 
$
(70.8
)
 
$
1,059.0

OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Contract drilling (exclusive of depreciation)
6.3

 
34.5

 

 
532.6

 
(70.8
)
 
502.6

Depreciation

 
2.4

 

 
138.1

 

 
140.5

General and administrative
13.7

 

 

 
16.0

 

 
29.7

OPERATING (LOSS) INCOME
(11.3
)
 
(2.4
)



399.9




386.2

OTHER (EXPENSE) INCOME, NET
(36.3
)
 
2.4

 
(15.2
)
 
(6.3
)
 

 
(55.4
)