UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
     Washington, D.C. 20549     

FORM 10-Q

(Mark One)

OR

Commission File Number 1-8097

ENSCO International IncorporatedEnsco plc
(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code:(214) 397-300044 (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 ý        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 ý        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.
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes o          No ý

ThereAs of April 21, 2010, there were 142,506,762142,519,853 American depositary shares of Common Stock, $.10 par value, of the registrant issued and outstanding, as of October 21, 2009.


each representing one Class A ordinary share.

ENSCO INTERNATIONAL INCORPORATEDPLC

INDEX TO FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2009MARCH 31, 2010

FORWARD-LOOKING STATEMENTS

       This report contains forward-looking statements that are subject to a number of risks and uncertainties and are based on information as of the date of this report. We assume no obligation to update these statements based on information after the date of this report.

       Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "could," "may," "might," "should," "will" and words and phrases of similar import. The forward-looking statements include, but are not limited to, statements about the impact of the December 2009 reorganization of the Company's corporate structure (referred to elsewhere herein as the "redomestication") and our plans, objectives, expectations and intentions with respect thereto and with respect to future operations, including the tax savings or other benefits that we expect to achieve as a result of the redomestication. Forward-looking statements also include statements regarding future operations, market conditions, cash generation, the impact of recently contracted premium jackups, contributions from the deepwaterour ultra-deepwater semisubmersible rig fleet expansion program, and expense management, industry trends or conditions and the overall business environment; statements regarding future levels of, or trends in, utilization, day rates, revenues, operating expenses, contract term, contract backlog, capital expenditures, insurance, financing and funding; statements regarding future rig construction (including construction in progress and completion thereof), enhancement, upgrade or repair of rigs and timing thereof; statements regarding future delivery, mobilization, contract commencement, relocation or other movement of rigs and timing thereof; statements regarding future availability or suitability of rigs and the timing thereof,thereof; and statements regarding the likely outcome of litigation, legal proceedings, investigations or insurance or other claims and the timing thereof.

       Forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Numerous factors could cause actual results to differ materially from those in the forward-looking statements, including:
 

       Moreover, the United States Congress, the Internal Revenue Service (the "IRS"), the United Kingdom Parliament or Her Majesty's Revenue and Customs ("HMRC") may enact new statutory or regulatory provisions that could adversely affect our status as a non-U.S. corporation or otherwise adversely affect our anticipated consolidated effective income tax rate. Retroactive statutory or regulatory actions have occurred in the past, and there can be no assurance that any such provisions, if enacted or promulgated, would not have retroactive application.

       In addition to the numerous factors described above and in "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part I, you should carefully read and consider "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, 2008, as updated in the Current Report on Form 8-K dated October 13, 2009.

2

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
ENSCO International Incorporated:Ensco plc:

We have reviewed the condensed consolidated balance sheet of ENSCO International IncorporatedEnsco plc and subsidiaries as of September 30, 2009,March 31, 2010, the related condensed consolidated statements of income for the three-month and nine-month periods ended September 30,March 31, 2010 and 2009, and 2008, and the related condensed consolidated statements of cash flows for the nine-month periodsthree month-periods ended September 30, 2009March 31, 2010 and 2008.2009. 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 International IncorporatedEnsco plc and subsidiaries as of December 31, 2008,2009, and the related consolidated statements of income and cash flows for the year then ended (not presented herein); and in our report dated February 26, 2009,25, 2010, 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, 2008,2009, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ KPMG LLP

Dallas, Texas
OctoberApril 22, 20092010

3

ENSCO INTERNATIONAL INCORPORATEDPLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)

ENSCO INTERNATIONAL INCORPORATEDPLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEBALANCE SHEETS

(In millions, except per share and par value amounts)
(Unaudited)

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

5

ENSCO INTERNATIONAL INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value amounts)

ENSCO INTERNATIONAL INCORPORATEDPLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

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

7

6

ENSCO INTERNATIONAL INCORPORATEDPLC 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 International IncorporatedEnsco plc and subsidiaries (the "Company," "Ensco,""Company", "Ensco", "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, 20082009 condensed consolidated balance sheet data were derived from our 20082009 audited consolidated financial statements as updated in the Current Report on Form 8-K dated October 13, 2009, 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-monthquarters ended March 31, 2010 and nine-month periods ended September 30, 2009 and 2008 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 nine-month periodsquarter ended September 30, 2009March 31, 2010 are not necessarily indicative of the results of operations that will be realized for the year ending December 31, 2009.2010. It is recommended that these condensed consolidated financial statements be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 20082009 included in our Annual Report on Form 10-K datedfiled with the SEC on February 26, 2009, as updated in the Current Report on Form 8-K dated October 13, 2009.25, 2010.

Note 2 - Noncontrolling Interests

       On January 1, 2009, we adopted certain provisions of FASB ASC 810-10 (previously SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements"). This standard clarifies that a noncontrolling interest should be reported as equity in the consolidated financial statements and requires net income attributable to both the parent and the noncontrolling interest to be disclosed separately on the face of the consolidated statement of income. These presentation and disclosure provisions require retrospective application to all prior periods presented.

       Noncontrolling interests wereare classified as equity on our condensed consolidated balance sheets, as of September 30, 2009 and December 31, 2008, and net income attributable to noncontrolling interests wasis presented separately on our condensed consolidated statements of income for the three-month and nine-month periods ended September 30, 2009 and 2008. Localincome. In our Asia Pacific operating segment, local third parties hold a noncontrolling ownership interest in three of our international subsidiaries. No changes in the ownership interests of these subsidiaries occurred during the nine-month periodquarters ended September 30,March 31, 2010 and 2009.

87

       The following table is a reconciliation of income from continuing operations attributable to Ensco duringfor the three-monthquarters ended March 31, 2010 and nine-month periods ended September 30, 2009 and 2008 (in millions):
 

       Income (loss) from discontinued operations, net, for the three-monthquarters ended March 31, 2010 and nine-month periods ended September 30, 2009 and 2008 was attributable to Ensco.

Note 3 - Earnings Per Share

       On January 1, 2009, we adopted certain provisions of FASB ASC 260-10-45 (previously FASB Staff Position EITF 03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities"). This standard addresses whether instruments granted in share-based payment transactions are participating securities prior to vestingWe compute basic and therefore, need to be included in the earnings allocation in computingdiluted earnings per share ("EPS") underin accordance with the two-class method. Non-vested share awards grantedNet income attributable to Ensco used in our employees and non-employee directors contain nonforfeitable dividend rights and, therefore, are now considered participating securities. We have prepared our current periodcomputations of basic and diluted EPS computations and retrospectively revised our comparative prior period computationsis 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 includes the dilutive effect of share awards.options using the treasury stock method and excludes non-vested shares.

       The following table is a reconciliation of net income attributable to Ensco common shares used in our basic and diluted EPS computations for the three-monthquarters ended March 31, 2010 and nine-month periods ended September 30, 2009 and 2008 (in millions):

       The following table is a reconciliation of the weighted-average common shares used in our basic and diluted EPS computations for the three-monthquarters ended March 31, 2010 and nine-month periods ended September 30, 2009 and 2008 (in millions):

9

       Antidilutive share options totaling 1.11.0 million and 361,0001.5 million were excluded from the computation of diluted EPS duringfor the three-month periodsquarters ended September 30,March 31, 2010 and 2009, and 2008, respectively. Antidilutive share options totaling 1.3 million and 546,000 were excluded from the computation of diluted EPS during the nine-month periods ended September 30, 2009 and 2008, respectively.

8

Note 4 - Derivative Financial Instruments

       On January 1, 2009, we adopted certain disclosure provisionsOur functional currency is the U.S. dollar. As is customary in the oil and gas industry, a majority of FASB ASC 815-10-50 (previously SFAS No. 161, "Disclosures about Derivative Instrumentsour revenues are denominated in U.S. dollars, however, a portion of the revenues earned and Hedging Activities"expenses incurred by some of our subsidiaries are denominated in currencies other than the U.S. dollar ("foreign currencies"). These provisions require enhanced disclosures about (a) howtransactions are remeasured in U.S. dollars based on a combination of both current and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB ASC 815 (previously SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities") and its related interpretations and (c) how derivative instruments and related hedged items affect an entity's financial position, operating results and cash flows.

historical exchange rates. We use derivative financial instrumentsforeign currency forward contracts ("derivatives") to reduce our exposure to various market risks, primarily foreign currency exchange rate risk. We maintain a foreign currency exchange rate risk management strategy that utilizes derivatives to reduce our exposure to unanticipated fluctuations in earnings and cash flows caused by changes in foreign currency exchange rates. Although no interest rate related derivatives were outstanding as of September 30, 2009March 31, 2010 and December 31, 2008,2009, we occasionally employ an interest rate risk management strategy that utilizes derivatives to minimize or eliminate unanticipated fluctuations in earnings and cash flows arising from changes in, and volatility of, interest rates. We minimize our credit risk relating to the counterparties of our derivative counterpartiesderivatives by transacting with multiple, high-quality financial institutions, thereby limiting exposure to individual counterparties, and by monitoring the financial condition of our counterparties. We do not enter into derivatives for trading or other speculative purposes.

       All derivatives were recorded on our condensed consolidated balance sheets at fair value. 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. As of September 30, 2009March 31, 2010 and December 31, 2008,2009, our condensed consolidated balance sheets included net foreign currency derivative assets of $12.5$7.0 million and net foreign currency derivative liabilities of $20.3$13.2 million, respectively. See "Note 7 - Fair Value Measurements" for additional information on the fair value measurement of our derivatives.

       Derivatives recorded at fair value in our condensed consolidated balance sheets as of September 30, 2009March 31, 2010 and December 31, 20082009 consisted of the following (in millions):

10
9

       We utilize derivatives designated as hedging instruments to hedge forecasted foreign currency denominated transactions ("cash flow hedges"), primarily to reduce our exposure to foreign currency exchange rate risk associated with the portion of our remaining ENSCO 8500 Series® construction obligations denominated in Singapore dollars and contract drilling expenses denominated in various otherforeign currencies. As of September 30, 2009,March 31, 2010, we had cash flow hedges outstanding to exchange an aggregate $339.3$241.6 million for various foreign currencies, including $237.3$160.7 million for Singapore dollars, $58.7$48.5 million for British pounds, $23.1$20.7 million for Australian dollars and $20.2$11.7 million for various other foreign currencies.

       Gains and losses on derivatives designated as cash flow hedges included in our condensed consolidated statements of income for the three-monthquarters ended March 31, 2010 and nine-month periods ended September 30, 2009 and 2008 were as follows (in millions):

Three Months Ended September 30, 2009 and 2008

Nine Months Ended September 30, 2009 and 2008

       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, or the derivatives otherwise do not qualify for hedge accounting.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 September 30, 2009,March 31, 2010, we had derivatives not designated as hedging instruments outstanding to exchange an aggregate $31.7$58.6 million for various foreign currencies, including $9.5$24.5 million for Singapore dollars, $15.5 million for Australian dollars, $7.6$7.5 million for British pounds $6.2and $11.1 million for Mexican pesos, $3.6 million for Danish kroner and $4.8 million for various other foreign currencies.

       Net gains of $1.6 million$600,000 and net losses of $4.6$1.0 million associated with our derivatives not designated as hedging instruments were included in other income (expense), net, in our condensed consolidated statements of income for the quarters ended September 30,March 31, 2010 and 2009, and 2008, respectively. Net gains of $3.8 million and $100,000 associated with our derivatives not designated as hedging instruments were included in other income (expense), net, in our condensed consolidated statements of income for the nine-month periods ended September 30, 2009 and 2008, respectively.

       If we were to incur a hypothetical 10% adverse change in foreign currency exchange rates, net unrealized losses associated with our foreign currency denominated assets and liabilities and related derivatives as of September 30, 2009 would approximate $32.5 million, including $24.2 million related to our Singapore dollar exposures. All of our outstanding derivatives mature during the next three years.
10

       As of September 30, 2009,March 31, 2010, the estimated amount of net gains associated with derivatives,derivative instruments, net of tax, that will be reclassified to earnings during the next twelve months was as follows (in millions):

Note 5 - Stockholders' EquityAccrued Liabilities and Other

       In August 2009, under authorization from our BoardAccrued liabilities and other as of Directors, 40.2 million treasury shares with a historical cost totaling $1,203.7 million were retired. As of September 30, 2009March 31, 2010 and December 31, 2008, our treasury stock balance totaled $2.2 million and $1,199.5 million, respectively, our additional paid-in capital balance totaled $594.0 million and $1,761.2 million, respectively, and our common stock balance totaled $14.3 million and $18.2 million, respectively.2009 consisted of the following (in millions):
 

12

Note 6 - Comprehensive Income

       Accumulated other comprehensive income (loss) as of September 30, 2009March 31, 2010 and December 31, 20082009 was comprised of net gains and losses on derivative instruments, net of tax. The components of other comprehensive income,loss, net of tax, for the three-monthquarters ended March 31, 2010 and nine-month periods ended September 30, 2009 and 2008 were as follows (in millions):

11

Note 7 - Fair Value Measurements

       The following fair value hierarchy table categorizes information regarding our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2009March 31, 2010 and December 31, 20082009 (in millions):

13

    Auction Rate Securities

       As of September 30, 2009March 31, 2010 and December 31, 2008,2009, we held long-term debt instruments with variable interest rates that periodically reset through an auction process ("auction rate securities") totaling $68.7$61.4 million and $72.3$66.8 million (par value), respectively. AuctionThese auction rate securities were classified as long-term investments on our condensed consolidated balance sheets. Our auction rate securities were originally acquired in January 2008 and have maturity dates ranging from 2025 to 2047. Our auction rate securities were measured at fair value on a recurring basis using significant Level 3 inputs as of September 30, 2009March 31, 2010 and December 31, 2008.2009. The following table summarizes the fair value measurements of our auction rate securities using significant Level 3 inputs, and changes therein, for the three-monthquarters ended March 31, 2010 and nine-month periods ended September 30, 2009 and 2008 (in millions):
 

12

       Before utilizing Level 3 inputs in our fair value measurements, we considered whether observable inputs were available. As a result of continued auction failures, quoted prices for our auction rate securities did not exist as of September 30, 2009.March 31, 2010. Accordingly, we concluded that Level 1 inputs were not available. Brokerage statements received from the fivefour broker/dealers that held our auction rate securities included their estimated market value as of September 30, 2009. FourMarch 31, 2010. Three broker/dealers valued our auction rate securities at par and the fifthfourth valued our auction rate securities at 93%91% of par. Due to the lack of transparency into the methodologies used to determine the estimated market values, we have concluded that estimated market values provided on our brokerage statements do not constitute valid inputs, and we do not utilize them in measuring the fair value of our auction rate securities.

       We determined that use of a valuation model was the best available technique for measuring the fair value of our auction rate securities. We used an income approach valuation model to estimate the price that would be received in exchange for our auction rate securities in an orderly transaction between market participants ("exit price") as of September 30, 2009.March 31, 2010. The exit price was derived as the weighted-average present value of expected cash flows over various periods of illiquidity, using a risk-adjusted discount rate that was based on the credit risk and liquidity risk of our auction rate securities.

       While our valuation model was based on both Level 2 (credit quality and interest rates) and Level 3 inputs, we determined that our Level 3 inputs were most significant to the overall fair value measurement of our auction rate securities, particularly the estimates of risk-adjusted discount rates and ranges of expected periods of illiquidity. We believe that we have the ability to maintain our investment in these securities until they are redeemed, repurchased or sold in a market that facilitates orderly transactions.

14

    Supplemental Executive Retirement PlansPlan Assets

       The ENSCO Supplemental Executive Retirement PlansOur Ensco supplemental executive retirement plans (the "SERP") are non-qualified plans wherethat provide for eligible employees and non-employee directors mayto 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 as of September 30, 2009March 31, 2010 and December 31, 2008.2009. The fair value measurement of assets held in the SERP was based on quoted market prices.

    Derivative InstrumentsDerivatives

       Our derivative instrumentsderivatives were measured at fair value on a recurring basis using Level 2 inputs as of September 30, 2009March 31, 2010 and December 31, 2008.2009. See "Note 4 - Derivative Financial 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 quotedcommonly-quoted intervals.

13

    Other Financial Instruments

       The carrying values and estimated fair values of our debt instruments as of September 30, 2009March 31, 2010 and December 31, 20082009 were as follows (in millions):
 

       The estimated fair value of our 7.20% Debentures was determined using quoted market prices. The estimated fair values of our 4.65%6.36% Bonds and 6.36%4.65% Bonds were determined using an income approach valuation model. The estimated fair valuevalues of our cash and cash equivalents, receivables, trade payables and other liabilities approximated their carrying values as of September 30, 2009March 31, 2010 and December 31, 2008.2009.

Note 8 - Discontinued Operations

ENSCO 50 and ENSCO 51

       In March 2010, we sold ENSCO 50 and ENSCO 51 for an aggregate $94.7 million, of which $4.7 million was received in December 2009. We recognized an aggregate pre-tax gain of $33.9 million in connection with the disposals of ENSCO 50 and ENSCO 51, which was included in gain on disposal of discontinued operations, net, in our condensed consolidated statement of income for the quarter ended March 31, 2010. The rigs' aggregate net book value and inventory and other assets on the date of sale totaled $60.8 million. ENSCO 50 and ENSCO 51 operating results were reclassified as discontinued operations in our condensed consolidated statements of income for the quarters ended March 31, 2010 and 2009.

ENSCO 69

       From May 2007 to June 2009, ENSCO 69 was contracted to Petrosucre, a subsidiary of Petróleos de Venezuela S.A., the national oil company of Venezuela ("PDVSA"). PDVSA subsidiaries reportedly lack funds and generally have not been paying their contractors and service providers since the latter portions of 2008. In January 2009, we suspended drilling operations on ENSCO 69 after Petrosucre failed to satisfy its contractual obligations and meet commitments relative to the payment of past due invoices. Petrosucre then took over complete control of ENSCO 69 drilling operations utilizing Petrosucre employees and a portion of the Venezuelan rig crews we had utilized. When Petrosucre initially advised us that it temporarily was taking over operations on the rig, we placed our supervisory rig personnel on ENSCO 69 to observe Petrosucre's operations.

1514

       On April 30, 2009, we submitted a notice of termination to Petrosucre for non-payment of past due invoices. The terms of the ENSCO 69 drilling contract provided for termination of the contract upon Petrosucre's failure to satisfy its contractual payment obligations during the 30-day period subsequent to our notice.       On June 4, 2009, after Petrosucre's failure to satisfy its contractual payment obligations, failure to reach a mutually acceptable agreement with us and denial of our request to demobilize ENSCO 69 from Venezuela, Petrosucre advised that it would not return the rig and would continue to operate it without our consent. Petrosucre further advised that it would release ENSCO 69 after a six-month period, subject to a mutually agreed accord addressing the resolution of all remaining obligations under the ENSCO 69 drilling contract. On June 6, 2009, we terminated our contract with Petrosucre and removed all remaining Ensco employees from the rig. On July 17, 2009, we received an $11.5 million payment from Petrosucre, which represented less than 25% of the $47.9 million contractually due to us as of June 30, 2009.

       Due to Petrosucre's longstanding failure to satisfy its contractual obligations and meet payment commitments, and in consideration of the Venezuelan government's recent nationalization of assets owned by international oil and gas companies and oilfield service companies, we believeconcluded it iswas remote that ENSCO 69 willwould be returned to us by Petrosucre and operated again by Ensco. Therefore, we recorded the disposal of ENSCO 69 during the second quarter ended June 30,of 2009. ENSCO 69 results of operations have been reclassified as discontinued operations in our condensed consolidated statements of income for the three-month and nine-month periods ended September 30, 2009 and 2008.

       At the time of disposal, ENSCO 69 had a net book value of $17.3 million and inventory and other assets totaling $800,000. In connection with the disposal of ENSCO 69 during the quarter ended June 30, 2009, we recognized a pre-tax loss of $18.1 million, which was classified as loss on disposal of discontinued operations, net, in our condensed consolidated statements of income for the nine-month period ended September 30, 2009.

       Loss on discontinued operations, net, for the nine-month period ended September 30, 2009 included a bad debt provision totaling $8.0 million to fully reserve our net outstanding receivable from Petrosucre. We did not recognize revenue associated with ENSCO 69 drilling operations subsequent to January 2009 when Petrosucre initially assumed control of our rig.

       The ENSCO 69 drilling contract is governed by Venezuelan law and there can be no assurances relative to the recovery of outstanding contract entitlements. We have filed an insurance claim under our package policy, which includes coverage for certain political risks, and are evaluating legal remedies against Petrosucre for contractual and other ENSCO 69 related damages. ENSCO 69 has an insured value of $65.0 million under our package policy, subject to a $10.0 million deductible.

       By letter dated September 30, 2009, legal counsel acting for the package policy underwriters denied coverage under the package policy and reserved rights. We have retained coverage counsel who are reviewing the letter from underwriters' counsel. We were unable to conclude that collection of insurance proceeds associated with the loss of ENSCO 69 was probable as of September 30, 2009. Accordingly, no ENSCO 69 related insurance recoveries were recognized in our condensed consolidated statements of income for the three-month and nine-month periods ended September 30, 2009.

    ENSCO 74

       In September 2008, ENSCO 74 was lost as a result of Hurricane Ike. Portions of its legs remained underwater adjacent to the customer's platform, and we conducted extensive aerial and sonar reconnaissance but failed to locate the rig hull. In March 2009, the sunken hull of ENSCO 74 was located on the seabed approximately 95 miles from the original drilling location when it was struck by an oil tanker. The rig was a total loss, as defined under the terms of our insurance policies. The operating results of ENSCO 74 were reclassified as discontinued operations in our condensed consolidated statements of income for the three-monthquarters ended March 31, 2010 and nine-month periods2009.

       In November 2009, we executed an agreement with Petrosucre to mitigate our losses and resolve issues relative to outstanding amounts owed by Petrosucre for drilling operations performed by Ensco through the date of termination of the drilling contract in June 2009 (the "agreement"). Although ENSCO 69 will continue to be fully controlled and operated by Petrosucre, the agreement requires Petrosucre to compensate us for its ongoing use of the rig. We recognized $6.9 million of pre-tax income from discontinued operations for the quarter ended September 30, 2008.March 31, 2010 associated with collections under the agreement.

       Although the agreement obligates Petrosucre to make additional payments for its use of the rig through March 31, 2010, the associated income was not recognized in our condensed consolidated statement of income, as collectability was not reasonably assured. There can be no assurances relative to the recovery of outstanding contract entitlements, insurance recovery and related pending litigation, the possible return of ENSCO 69 to us by Petrosucre or the imposition of customs duties in relation to the rig's ongoing presence in Venezuela. See "Note 9 - Contingencies" for additional information on the loss ofinsurance and legal remedies related to ENSCO 74 and associated contingencies.

1669.

       The following table summarizes our income (loss) from discontinued operations for the three-monthquarters ended March 31, 2010 and nine-month periods ended September 30, 2009 and 2008 (in millions):
 

       Debt and interest expense are not allocated to our discontinued operations.

15

Note 9 - Contingencies

    FCPA Internal Investigation

       Following disclosures by other offshore service companies announcing internal investigations involving the legality of amounts paid to and by customs brokers in connection with temporary importation of rigs and vessels into Nigeria, the Audit Committee of our Board of Directors and management commenced an internal investigation in July 2007. The investigation initially focused on our payments to customs brokers relating to the temporary importation of ENSCO 100, our only rig that operated offshore Nigeria during the pertinent period.

       As is customary for companies operating offshore Nigeria, we had engaged independent customs brokers to process customs clearance of routine shipments of equipment, materials and supplies and to process the ENSCO 100 temporary importation permits, extensions and renewals. One or more of the customs brokers that our subsidiary in Nigeria used to obtain the ENSCO 100 temporary import permits, extensions and renewals also provided this service to other offshore service companies that have undertaken Foreign Corrupt Practices Act ("FCPA") compliance internal investigations.

       The principal purpose of our investigation was to determine whether any of the payments made to or by our customs brokers were inappropriate under the anti-bribery provisions of the FCPA or whether any violations of the recordkeeping or internal accounting control provisions of the FCPA occurred. Our Audit Committee engaged a Washington, D.C. law firm with significant experience in investigating and advising upon FCPA matters to assist in the internal investigation.

       Following notification to the Audit Committee and to KPMG LLP, our independent registered public accounting firm, in consultation with the Audit Committee's external legal counsel, we voluntarily notified the United States Department of Justice and the SEC that we had commenced an internal investigation. We expressed our intention to cooperate with both agencies, comply with their directives and fully disclose the results of the investigation. The internal investigation process has involved extensive reviews of documents and records, as well as production to the authorities, and interviews of relevant personnel. In addition to the temporary importation of ENSCO 100, the investigation has examined our customs clearance of routine shipments and immigration activities in Nigeria.

17

       Our internal investigation has essentially been concluded. MeetingsDiscussions were held with the authorities to review the results of the investigation with the authorities were held on February 24,and discuss associated matters during 2009 and September 14, 2009.the first quarter of 2010. We expect to discuss a possible negotiated disposition with the authorities in the near-term.

       Although we believe the U.S. authorities will take into account our voluntary disclosure, our cooperation with the agencies and the remediation and compliance enhancement activities that are underway, we are unable to predict the ultimate disposition of this matter, whether we will be charged with violation of the anti-bribery, recordkeeping or internal accounting control provisions of the FCPA or whether the scope of the investigation will be extended to other issues in Nigeria or to other countries. We also are unable to predict what potential corrective measures, fines, sanctions or other remedies, if any, the agencies may seek against us or any of our employees.

16

       In November 2008, our Board of Directors approved enhanced FCPA compliance recommendations issued by the Audit Committee's external legal counsel, and the Company embarked upon an enhanced compliance initiative that included appointment of a Chief Compliance Officer and a Director - Corporate Compliance. We engaged consultants to assist us in implementing the compliance recommendations approved by our Board of Directors, which include an enhanced compliance policy, increased training and testing, prescribed contractual provisions for our service providers that interface with foreign government officials, due diligence for the selection of such service providers and an increased Company-wide awareness initiative that includes periodic issuance of FCPA Alerts.

       Since ENSCO 100 completed its contract commitment and departed Nigeria in August 2007, this matter is not expected to have a material effect on or disrupt our current operations. As noted above, we are unable to predict the outcome of this matter or estimate the extent to which we may be exposed to any resulting potential liability, sanctions or significant additional expense.

    ENSCO 74 Loss

       In September 2008, ENSCO 74 was lost as a result of Hurricane Ike in the Gulf of Mexico. Portions of its legs remained underwater adjacent to the customer's platform, and we conducted extensive aerial and sonar reconnaissance but failed todid not locate the rig hull. The rig was a total loss, as defined under the terms of our insurance policies.

       In March 2009, the sunken rig hull of ENSCO 74 was located on the seabed approximately 95 miles from the original drilling location when it was struck by an oil tanker. Following discovery of the sunken rig hull, we removed the accessible hydrocarbons onboard the rig and began planning for removal of the wreckage. As an interim measure, the wreckage has been appropriately marked, and the U.S. Coast Guard has issued a Notice to Mariners. We are currently communicating with various government agencies to addressrecently commenced removal of the hull wreckage and related debris.

       Physical damage to our rigs caused by a hurricane, the associated "sue and labor" costs to mitigate the insured loss and removal, salvage and recovery costs are all covered by our property insurance policies subject to a $50.0 million per occurrence retention (deductible).self-insured retention. The insured value of ENSCO 74 was $100.0 million, and we have received the net $50.0 million due under our policies for loss of the rig.

       Coverage for ENSCO 74 sue and labor costs and wreckage and debris removal costs under our property insurance policies is limited to $25.0 million and $50.0 million, respectively. Supplemental wreckage and debris removal coverage is provided under our liability insurance policies, subject to an annual aggregate limit of $500.0 million. We also have a customer contractual indemnification that provides for reimbursement of any ENSCO 74 wreckage and debris removal costs that are not recovered under our insurance policies.

18

       We believe it is probable that we will beare required to remove the leg sections of ENSCO 74 remaining adjacent to the customer's platform because they may interfere with the customer's future operations. We also believe it is probable that we will beare required to remove the ENSCO 74 rig hull and related debris from the seabed due to the navigational risk it imposes. We estimate the leg removal costs to range from $16.0 million to $30.0 million and the hull and related debris removal costs to range from $30.0$36.0 million to $55.0 million. We expect the cost of removal of the legs and the hull and related debris to be fully covered by our insurance without any additional retention.

17

       A $16.0 million liability, representing the low end of the range of estimated leg removal costs, and a corresponding receivable for recovery of those costs was recorded as of September 30, 2009.March 31, 2010. A $30.0$34.3 million liability, representing the low end of the range of estimated remaining hull and related debris removal costs, and a corresponding receivable for recovery of those costs was recorded as of September 30, 2009.March 31, 2010. As of March 31, 2010, $1.7 million of wreckage and debris removal costs had been incurred and paid, primarily related to removal of hydrocarbons from the rig. The remaining estimated aggregate $46.0$50.3 million liability and receivable for the leg and hull and related debris removal costs werewas included in accrued liabilities and other on our March 31, 2010 condensed consolidated balance sheet. Of the aggregate $52.0 million receivable for recovery of those costs, $1.2 million was included in other current assets and $50.8 million was included in other assets, net, on our September 30, 2009March 31, 2010 condensed consolidated balance sheet.

       OnIn March 17, 2009, we received notice from legal counsel representing certain underwriters in a subrogation claim alleging that ENSCO 74 caused a pipeline to rupture during Hurricane Ike. On September 4, 2009, civil litigation was filed seeking damages for the cost of repairs and business interruption in an amount in excess of $26.0 million. Based on information currently available, primarily the adequacy of available defenses, we have not concluded that it is probable that a liability exists with respect to this matter.

       OnIn March 18, 2009, the owner of the oil tanker that struck the hull of ENSCO 74 commenced civil litigation against us seeking monetary damages in the aggregate amount of $10.0 million for losses incurred.incurred when the tanker struck the sunken hull of ENSCO 74. Based on information currently available, primarily the adequacy of available defenses, we have not concluded that it is probable a liability exists with respect to this matter.

       On June 9, 2009, we received noticeWe filed a petition for exoneration or limitation of liability under U.S. admiralty and maritime law in September 2009. The petition seeks exoneration from legal counsel representing another pipeline owner which allegedly sustained damages to a subsea pipelineor limitation of liability for any and all injury, loss or damage caused, by ENSCO 74 in the aftermath of Hurricane Ike. On September 18, 2009, the owner of the pipeline commenced civil litigation against us seeking unspecified damagesoccasioned or occurred in relation to the costENSCO 74 loss in September 2008. The owner of repairing damage to the pipeline, loss of revenue, survey and other damages. Based on information currently available, we have concludedtanker that it is remote that a liability exists with respect to this matter.

       On July 23, 2009, we received notice from legal counsel representing another tanker owner alleging thatstruck the sunken hull of the ENSCO 74 caused hull damage to a tanker in January 2009 resulting in unspecified damages and losses. We presently are unable to determine whether the alleged damage to this tanker was caused by ENSCO 74 or the extent of the cost and losses associated with the damage. Based on information currently available, we have not concluded that it is probable that a liability exists with respect to this matter.

19

       Based on communications received by our external legal counsel, we understand that the owners of two otherfour subsea pipelines may presenthave presented claims alleging that their pipelines were damaged by the ENSCO 74 in the aftermath of Hurricane Ike. We presently are unable to determine whether any of these pipeline damages were caused by ENSCO 74 or the extent of the cost and losses associated with the damage. Based on information currently available, we have not concluded that it is probable that a liability exists with respect to these matters.exoneration/limitation proceedings.

       We have liability insurance policies that provide coverage for third-party claims such as the tanker and pipeline 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 self-insured retention for third-party claims and an annual aggregate limit of $500.0 million. 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.

       We plan to undertake all appropriate defensive measures and filed a petition for exoneration or limitation of liability under U.S. admiralty and maritime law on September 2, 2009. The petition seeks exoneration from or limitation of liability for any and all injury, loss or damage caused, occasioned or occurred in relation to the ENSCO 74 loss in September 2008. 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 69

       We have filed an insurance claim under our package policy, which includes coverage for certain political risks, and are evaluating legal remedies against Petrosucre for contractual and other ENSCO 69 related damages. ENSCO 69 has an insured value of $65.0 million under our package policy, subject to a $10.0 million deductible.

       By letter dated September 30, 2009, legal counsel acting for the package policy underwriters denied coverage under the package policy and reserved rights. On March 15, 2010, underwriters commenced litigation for purposes of enforcing mediation under the disputes clause of our package policy and precluding us from pursuing litigation in the United States. On that date, we commenced litigation to recover on our political risk package policy claim. Our lawsuit seeks recovery under the policy for the loss of ENSCO 69 and includes claims for wrongful denial of coverage, breach of contract, breach of the Texas insurance code, failure to timely respond to the claim and bad faith. Our lawsuit seeks actual damages in the amount of $55.0 million (insured value of $65.0 million less a $10.0 million deductible), punitive damages and attorneys' fees. On March 30, 2010, we obtained a temporary restraining order barring underwriters from pursuing the lawsuit in the U.K.

18

       We were unable to conclude that collection of insurance proceeds associated with the loss of ENSCO 69 was probable as of March 31, 2010. Accordingly, no ENSCO 69 related insurance receivables were recorded on our condensed consolidated balance sheet as of March 31, 2010. See "Note 8 - Discontinued Operations" for additional information on ENSCO 69.

    ENSCO 29 Wreck Removal

       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 during 2005. Although beneficial ownership of ENSCO 29 was transferred to our insurance underwriters when the rig was determined to be a total loss, management believes we may be legally required to remove ENSCO 29 wreckage and debris from the seabed and currently estimates the removal cost to range from $5.0 million to $15.0 million. Our property insurance policies include coverage for ENSCO 29 wreckage and debris removal costs up to $3.8 million. We also have liability insurance policies that provide specified coverage for wreckage and debris removal costs in excess of the $3.8 million coverage provided under our property insurance policies.

       Our liability insurance underwriters have issued letters reserving rights and effectively denying coverage by questioning the applicability of coverage for the potential ENSCO 29 wreckage and debris removal costs. During 2007, we commenced litigation against certain underwriters alleging breach of contract, wrongful denial, bad faith and other claims which seek a declaration that removal of wreckage and debris is covered under our liability insurance, monetary damages, attorneys' fees and other remedies. The United States Court of Appeals recently upheld the United States District Court's order to remand the case back to the Texas District Court. The litigationmatter is scheduled for trial in an early stage.August 2010.

       While we anticipate that any ENSCO 29 wreckage and debris removal costs incurred will be largely or fully covered by insurance, a $1.2 million provision, representing the portion of the $5.0 million low end of the range of estimated removal cost we believe is subject to liability insurance coverage, was recognized during 2006.

20

    Asbestos Litigation

       During 2004, we and certain current and former subsidiaries were named as defendants, along with numerous other third-party companies as co-defendants, in three multi-party lawsuits filed in the Circuit Courts of Jones County (Second Judicial District) and Jasper County (First Judicial District), Mississippi. The lawsuits sought 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 period 1965 through 1986.

       In compliance with the Mississippi Rules of Civil Procedure, the individual claimants in the original multi-party lawsuits whose claims were not dismissed were ordered to file either new or amended single plaintiff complaints naming the specific defendant(s) against whom they intended to pursue claims. As a result, out of more than 600 initial multi-party claims, we have been named as a defendant by 65 individual plaintiffs. Of these claims, 62 claims or lawsuits are pending in Mississippi state courts and three are pending in the U.S. District Court as a result of their removal from state court.

       The Mississippi state court cases are under an informal stay of discovery issued by a Special Master, while discovery is conducted for a select and limited group of plaintiffs, some of whom have cases pending against us. Currently, two discovery groups have been designated by the Special Master, with a third discovery group due to be formed in connection with a status conference called by the Special Master for October 26, 2009.19

       To date, written discovery and plaintiff depositions have taken place in eight cases involving us. However, no further activity is expected in theseWhile several cases until they arehave been selected for trial. Currently,trial during 2010 and 2011, none of the cases pending against us in Mississippi have been set for trial.

       In addition to the pending state court cases, there are also three cases pending in Mississippi federal court. These three cases were recently consolidated with 441 other lawsuits and assigned to the Multi-District Litigation 875, which is currently before the U.S. District Court for the Eastern District of Pennsylvania. However, the Houston law firm representing these plaintiffs has filed a Motion to Remand, seeking to bring the cases back to Mississippi state court.included within those selected cases.

       We intend to vigorously defend against these 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 Mississippi, we have eightthree other asbestos or lung injury claims pending against us in litigation in various other jurisdictions. Although we do not expect the final disposition of the Mississippi and other 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.

21

    Working Time Directive

       Legislation known as the U.K. Working Time Directive ("WTD") was introduced during 2003 and may be applicable to our employees and employees of other drilling contractors that work offshore in United Kingdom ("U.K.") territorial waters or in the U.K. sector of the North Sea. Certain trade unions representing offshore employees have claimed that drilling contractors are not in compliance with the WTD in respect of paid time off (vacation time) for employees working offshore on a rotational basis (generally equal time working and off).

       A Labor Tribunal in Aberdeen, Scotland, rendered decisions in claims involving other offshore drilling contractors and offshore service companies in February 2008. The Tribunal decisions effectively held that employers of offshore workers in the U.K. sector employed on an equal time on/time off rotation are obligated to accord such rotating personnel two-weeks annual paid time off from their scheduled offshore work assignment period. Both sides of the matter, employee and employer groups, appealed the Tribunal decision. The appeals were heard by the Employment Appeal Tribunal ("EAT") in December 2008.

       In an opinion rendered onin March 9, 2009, the EAT determined that the time off work enjoyed by U.K. offshore oil and gas workers, typically 26 weeks per year, meets the amount of annual leave employers must provide to employees under the WTD. The employer group was successful in all arguments on appeal, as the EAT determined that the statutory entitlement to annual leave under the WTD can be discharged through normal field break arrangements for offshore workers. As a consequence of the EAT decision, an equal on/off time offshore rotation has been deemed to be fully compliant with the WTD.

The employee group (led by a trade union) appealed the EAT decision to the highest court in Scotland (the Court of Session). A hearing on the appeal is expected within the next twelve to eighteen months.

       We also received inquiries from and responded to the Danish and Dutch authorities regarding applicability of the WTD as adopted by Denmark and The Netherlands to employees on our rigs operating in the Danish and Dutch sectors of the North Sea.June 2010.

       Based on information currently available, we do not expect the ultimate resolution of these matters to have a material adverse effect on our financial position, operating results or cash flows.

20

    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.

22

Note 10 - Segment Information

       Our business consists of four operating segments: (1) Deepwater, (2) Asia Pacific, (3) Europe and Africa and (4) North and South America. Each of our four operating segments provides one service, contract drilling. Segment information for the three-monthquarters ended March 31, 2010 and nine-month periods ended September 30, 2009 and 2008 is presented below. General and administrative expense and depreciation expense incurred by our corporate office areis not allocated to our operating segments for purposes of measuring segment operating income and wereis included in "Reconciling Items." Assets not allocated to our operating segments consisted primarily of cash and cash equivalents and goodwill and wereare also included in "Reconciling Items."

Three Months Ended September 30,March 31, 2010
(in millions)

Three Months Ended March 31, 2009
(in millions)