Vantage Drilling Company Reports Third Quarter 2013 Results

Marketwired

HOUSTON, TX--(Marketwired - Nov 7, 2013) - Vantage Drilling Company ("Vantage" or the "Company") (NYSE MKT: VTG) reports a net income for the three months ended September 30, 2013 of $6.8 million or $0.02 per diluted share as compared to a net loss of $538,000 or $0.00 per diluted share for the three months ended September 30, 2012. The results for the three months ended September 30, 2013 includes a charge of approximately $5.0 million for deferred mobilization costs associated with re-contracting the Sapphire Driller and approximately $1.6 million reduction of estimated taxes.

For the nine months ended September 30, 2013, Vantage reports a net loss of $13.8 million or ($0.05) per diluted share excluding approximately $98.3 million of charges for the early retirement of debt as compared to a net loss of $11.7 million or ($0.04) per diluted share for the nine months ended September 30, 2012. Including the charges for the early retirement of debt, the company reported a loss of $112.1 million or ($0.37) per diluted share for the nine months ended September 30, 2013.

Paul Bragg, Chairman and Chief Executive Officer, commented, "The third quarter marked another important milestone for Vantage as we successfully commenced operations on our third drillship, Tungsten Explorer, in Southeast Asia. With the Sapphire Driller commencing its new eighteen month contract in Gabon this week, we now have contribution from seven rigs for the first time."

Vantage, a Cayman Islands exempted company, is an offshore drilling contractor, with an owned fleet of three ultra-deepwater drillships, the Platinum Explorer, the Titanium Explorer and the Tungsten Explorer, as well as an additional ultra-deepwater drillship, the Cobalt Explorer, now under construction, and four Baker Marine Pacific Class 375 ultra-premium jackup drilling rigs. Vantage's primary business is to contract drilling units, related equipment and work crews primarily on a dayrate basis to drill oil and natural gas wells. Vantage also provides construction supervision services for, and will operate and manage, drilling units owned by others. Through its fleet of seven owned drilling units, Vantage is a provider of offshore contract drilling services globally to major, national and large independent oil and natural gas companies.

The information above includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements are subject to certain risks, uncertainties and assumptions identified above or as disclosed from time to time in the company's filings with the Securities and Exchange Commission. As a result of these factors, actual results may differ materially from those indicated or implied by such forward-looking statements.

   
   
Vantage Drilling Company  
Consolidated Statement of Operations  
(In thousands, except per share amounts)  
(Unaudited)  
                         
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2013     2012     2013     2012  
Revenues                                
  Contract drilling services   $ 158,887     $ 105,521     $ 449,354     $ 310,202  
  Management fees     3,903       966       9,511       4,644  
  Reimbursables     13,095       5,047       34,658       33,662  
    Total revenues     175,885       111,534       493,523       348,508  
Operating costs and expenses                                
  Operating costs     84,132       52,004       236,566       171,358  
  General and administrative     8,891       6,622       23,372       18,586  
  Depreciation     24,886       16,575       74,727       49,519  
    Total operating costs and expenses     117,909       75,201       334,665       239,463  
Income from operations     57,976       36,333       158,858       109,045  
Other income (expense)                                
  Interest income     26       15       195       48  
  Interest expense and other financing charges     (47,379 )     (31,583 )     (158,296 )     (104,518 )
  Loss on debt extinguishment     -       (2,528 )     (98,327 )     (2,528 )
  Other, net     305       (61 )     2,195       800  
    Total other income (expense)     (47,048 )     (34,157 )     (254,233 )     (106,198 )
Income (loss) before income taxes     10,928       2,176       (95,375 )     2,847  
Income tax provision     4,084       2,714       16,766       14,541  
Net income (loss)   $ 6,844     $ (538 )   $ (112,141 )   $ (11,694 )
                                 
Earnings (loss) per share                                
  Basic   $ 0.02     $ 0.00     $ (0.37 )   $ (0.04 )
  Diluted   $ 0.02     $ 0.00     $ (0.37 )   $ (0.04 )
                                   
                                   
   
   
Vantage Drilling Company  
Consolidated Balance Sheet  
(In thousands, except par value information)  
             
    September 30,     December 31,  
    2013     2012  
    (Unaudited)        
ASSETS                
Current assets                
  Cash and cash equivalents   $ 67,729     $ 502,726  
  Restricted cash     3,353       3,515  
  Trade receivables     144,915       119,452  
  Inventory     53,090       37,944  
  Prepaid expenses and other current assets     12,828       25,208  
    Total current assets     281,915       688,845  
Property and equipment                
  Property and equipment     3,457,772       2,893,837  
  Accumulated depreciation     (250,571 )     (176,331 )
    Property and equipment, net     3,207,201       2,717,506  
Other assets                
  Investment in joint venture     32,650       31,320  
  Other assets     96,010       92,536  
    Total other assets     128,660       123,856  
Total assets   $ 3,617,776     $ 3,530,207  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities                
  Accounts payable   $ 56,624     $ 50,909  
  Accrued liabilities     120,090       123,484  
  Revolving credit agreement     10,000       -  
  Current maturities of long-term debt     53,500       31,250  
    Total current liabilities     240,214       205,643  
Long-term debt, net of discount of $42,243 and $11,940     2,862,507       2,710,559  
Other long-term liabilities     41,548       45,520  
Commitments and contingencies                
Shareholders' equity                
  Preferred shares, $0.001 par value, 10,000 shares authorized; none issued or outstanding     -       -  
  Ordinary shares, $0.001 par value, 500,000 shares authorized; 303,644 and 299,647 shares issued and outstanding     303       299  
  Additional paid-in capital     895,296       878,137  
  Accumulated deficit     (422,092 )     (309,951 )
    Total shareholders' equity     473,507       568,485  
Total liabilities and shareholders' equity   $ 3,617,776     $ 3,530,207  
                 
                 
   
   
Vantage Drilling Company  
Consolidated Statement of Cash Flows  
(In thousands)  
(Unaudited)  
   
    Nine Months Ended September 30,  
    2013     2012  
CASH FLOWS FROM OPERATING ACTIVITIES                
Net loss   $ (112,141 )   $ (11,694 )
Adjustments to reconcile net loss to net cash used in operating activities:                
  Depreciation expense     74,727       49,519  
  Amortization of debt financing costs     9,425       12,617  
  Amortization of debt discount (premium)     4,605       (3,473 )
  Non-cash loss on debt extinguishment     6,070       2,528  
  Share-based compensation expense     5,431       5,808  
  Deferred income tax expense     858       2,978  
  Equity in loss of joint venture     345       -  
  Loss on disposal of assets     114       502  
Changes in operating assets and liabilities:                
  Restricted cash     162       1,150  
  Trade receivables     (25,463 )     (9,382 )
  Inventory     (15,146 )     (9,948 )
  Prepaid expenses and other current assets     11,709       1,509  
  Other assets     (6,866 )     2,074  
  Accounts payable     5,715       14,090  
  Accrued liabilities and other long-term liabilities     (25,146 )     (105,126 )
    Net cash used in operating activities     (65,601 )     (46,848 )
CASH FLOWS FROM INVESTING ACTIVITIES                
  Additions to property and equipment     (548,621 )     (848,939 )
  Proceeds from sale of property and equipment     2       -  
    Net cash used in investing activities     (548,619 )     (848,939 )
CASH FLOWS FROM FINANCING ACTIVITIES                
  Proceeds from issuance of senior secured notes, net     775,000       837,000  
  Proceeds from issuance of term loan, net     344,750       -  
  Proceeds from issuance of senior convertible notes     100,000       50,000  
  Repayment of long-term debt     (1,020,499 )     -  
  Proceeds from revolving credit agreement, net     10,000       -  
  Debt issuance costs     (30,028 )     (38,768 )
    Net cash provided by financing activities     179,223       848,232  
    Net decrease in cash and cash equivalents     (434,997 )     (47,555 )
  Cash and cash equivalents--beginning of period     502,726       110,031  
  Cash and cash equivalents--end of period   $ 67,729     $ 62,476  
                   
                   
Contact:
Public & Investor Relations
Paul A. Bragg
Chairman & Chief Executive Officer
Vantage Drilling Company
(281) 404-4700

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