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Vantage Drilling Company Reports Fourth Quarter and Record Annual Results for 2014

HOUSTON, TX--(Marketwired - Mar 6, 2015) - Vantage Drilling Company ("Vantage" or the "Company") (NYSE MKT: VTG) reports net income for the three months ended December 31, 2014 of $12.6 million or $0.04 per diluted share as compared to earnings of $30.3 million or $.09 per diluted share for the three months ended December 31, 2013. The three months ended December 31, 2014 includes a gain on the early retirement of debt of approximately $4.2 million.

The $4.2 million gain on the early retirement of debt represents the discount to the face value of debt that we purchased in the open market, net of writing off deferred financing costs. The total debt retirement for the quarter, including scheduled maturities and open market purchase of debt, totaled approximately $60.6 million at face value.

For the twelve months ended December 31, 2014, Vantage reports record net income of approximately $38.3 million or $.12 per diluted share, excluding net gains from the early retirement of debt of approximately $3.8 million as compared to net income of approximately $16.5 million or $.05 per diluted share, excluding approximately $98.3 million of charges for the early retirement of debt. Including the gains and losses associated with the early retirement of debt, for the twelve months ended December 31, 2014, Vantage reports net income of $42.0 million or $.14 per diluted as compared to a net loss of $81.8 million or ($.27) per diluted share for the same period in 2013.

During 2014, the total debt retirement, including scheduled maturities, discretionary Term Loan payments and open market purchases, was approximately $199.7 million at face value. In connection with our discretionary Term Loan payments and open market purchases, we recognized a net gain on the early retirement of debt of approximately $3.8 million.

Paul Bragg, Chairman and Chief Executive Officer, commented, "We are pleased to announce Vantage completed 2014 with record revenues, EBITDA and net income for the year. With strong cash flows, we were able to exceed our targeted debt retirement goal and strengthen the balance sheet."

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)

Three Months Ended December 31,

Year Ended December 31,

2014

2013

2014

2013

(Unaudited)

(Unaudited)

Revenues

Contract drilling services

$

204,305

$

216,775

$

807,164

$

666,129

Management fees

1,922

5,111

14,396

14,622

Reimbursables

9,633

16,651

54,001

51,309

Total revenues

215,860

238,537

875,561

732,060

Operating costs and expenses

Operating costs

110,510

99,349

421,505

335,915

General and administrative

7,645

9,240

34,106

32,612

Depreciation

31,716

31,882

126,610

106,609

Total operating costs and expenses

149,871

140,471

582,221

475,136

Income from operations

65,989

98,066

293,340

256,924

Other income (expense)

Interest income

7

26

45

221

Interest expense and other financing charges

(51,775

)

(55,853

)

(213,924

)

(214,149

)

Gain (loss) on debt extinguishment

4,214

-

3,752

(98,327

)

Other, net

(1,795

)

(574

)

(1,179

)

1,621

Total other income (expense)

(49,349

)

(56,401

)

(211,306

)

(310,634

)

Income (loss) before income taxes

16,640

41,665

82,034

(53,710

)

Income tax provision

4,020

11,349

40,028

28,115

Net income (loss)

$

12,620

$

30,316

$

42,006

$

(81,825

)

Earnings (loss) per share

Basic

$

0.04

$

0.10

$

0.14

$

(0.27

)

Diluted

$

0.04

$

0.09

$

0.14

$

(0.27

)

Vantage Drilling Company

Supplemental Operating Data

(Unaudited, in thousands, except percentages)

Three Months Ended December 31,

Year Ended December 31,

2014

2013

2014

2013

Operating costs and expenses

Jackups

$

24,192

$

21,288

$

94,754

$

89,253

Deepwater

64,887

56,092

235,343

164,775

Operations support

9,464

8,108

40,502

33,267

Reimbursables

11,967

13,861

50,906

48,620

$

110,510

$

99,349

$

421,505

$

335,915

Utilization

Jackups

100.0

%

89.4

%

99.2

%

87.1

%

Deepwater

86.5

%

90.3

%

85.1

%

93.3

%

Vantage Drilling Company

Consolidated Balance Sheet

(In thousands, except par value information)

December 31,

December 31,

2014

2013

ASSETS

Current assets

Cash and cash equivalents

$

82,812

$

54,686

Restricted cash

-

2,125

Trade receivables

153,428

168,654

Inventory

65,892

55,804

Prepaid expenses and other current assets

28,618

23,717

Total current assets

330,750

304,986

Property and equipment

Property and equipment

3,524,566

3,472,407

Accumulated depreciation

(406,674

)

(281,759

)

Property and equipment, net

3,117,892

3,190,648

Other assets

Investment in joint venture

1,318

32,482

Other assets

79,897

100,027

Total other assets

81,215

132,509

Total assets

$

3,529,857

$

3,628,143

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable

$

59,139

$

65,115

Accrued liabilities

101,537

96,382

Current maturities of long-term debt and revolving credit agreement, net of discount of $1,181

95,378

63,500

Total current liabilities

256,054

224,997

Long-term debt, net of discount of $25,875 and $39,325

2,632,802

2,852,050

Other long-term liabilities

85,327

45,640

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; 307,808 and 304,101 shares issued and outstanding

308

304

Additional paid-in capital

905,136

896,928

Accumulated deficit

(349,770

)

(391,776

)

Total shareholders' equity

555,674

505,456

Total liabilities and shareholders' equity

$

3,529,857

$

3,628,143

Vantage Drilling Company

Consolidated Statement of Cash Flows

(In thousands)

Year Ended December 31,

2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES

Net income (loss)

$

42,006

$

(81,825

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation expense

126,610

106,609

Amortization of debt financing costs

11,535

12,356

Amortization of debt discount

11,266

7,523

Non-cash (gain) loss on debt extinguishment

(3,752

)

6,070

Share-based compensation expense

8,212

7,064

Deferred income tax expense (benefit)

(305

)

997

Equity in loss of joint venture

570

513

Loss on disposal of assets

3,008

1,603

Changes in operating assets and liabilities:

Restricted cash

2,125

1,390

Trade receivables

15,226

(49,202

)

Inventory

(10,088

)

(17,860

)

Prepaid expenses and other current assets

(4,914

)

1,169

Other assets

6,307

(12,654

)

Accounts payable

(5,976

)

14,206

Accrued liabilities and other long-term liabilities

45,794

(46,390

)

Net cash provided by (used in) operating activities

247,624

(48,431

)

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property and equipment

(51,746

)

(564,319

)

Return of investment in joint venture

23,250

-

Proceeds from sale of property and equipment

-

22

Net cash used in investing activities

(28,496

)

(564,297

)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of senior secured notes, net

-

775,000

Proceeds from the issuance of term loan, net

-

344,750

Proceeds from the issuance of senior convertible notes

-

100,000

Repayment of long-term debt

(181,002

)

(1,033,874

)

Proceeds from (repayment of) revolving credit agreement, net

(10,000

)

10,000

Debt issuance costs

-

(31,188

)

Net cash provided by (used in) financing activities

(191,002

)

164,688

Net increase (decrease) in cash and cash equivalents

28,126

(448,040

)

Cash and cash equivalents -- beginning of year

54,686

502,726

Cash and cash equivalents -- end of year

$

82,812

$

54,686