SOURCE: Vantage Drilling Company

March 16, 2011 06:00 ET

Vantage Drilling Company Reports Fourth Quarter 2010 Results

HOUSTON, TX--(Marketwire - March 16, 2011) - Vantage Drilling Company ("Vantage") (NYSE Amex: VTG.U) (NYSE Amex: VTG) (NYSE Amex: VTG.WS) reports a net loss of ($13.0) million or ($0.05) per diluted share for the three months ended December 31, 2010 as compared to net loss of ($4.3) million or ($0.02) per diluted share for the three months ended December 31, 2009.

Net loss for the fiscal year ended December 31, 2010 was ($19.8) million or ($0.08) per share, excluding $3.8 million ($.01 per share) of charges associated with the acquisition of the Platinum Explorer and $24.0 million ($.09 per share) of charges associated with refinancing of debt in July 2011. Including the acquisition charges and refinancing charges, the Company reported a net loss of ($47.6) million or ($0.19) per diluted share for the three year ended December 31, 2010 as compared to a net income of $8.8 million or $0.07 per share for the year ended December 31, 2009.

Paul Bragg, Chairman and Chief Executive Officer, commented, "During 2010, we completed construction and deployment of the final unit of our initial five-rig owned fleet. All of the units were delivered on time and within budget and each was contracted prior to completion. Since the start up of initial rig operations almost 26 months ago, we have experienced operational excellence across the fleet, providing safe and efficient drilling services to our customers. Today, Vantage rigs are employed on some of the industry's most challenging projects."

On July 30, 2010, Vantage acquired the 55% interest in Mandarin Drilling Corporation ("Mandarin"), from F3 Capital for $139.7 million. The sole asset of Mandarin was the ultra-deepwater drillship Platinum Explorer which was then still under construction. F3 Capital was wholly owned by Hsin-Chi Su, one of the Company's directors and a significant shareholder of the Company.

In connection with the acquisition of Mandarin, Vantage issued $1.0 billion of 11.5% Senior Secured First Lien Notes due 2015. The notes have a maturity of five years from the date of issuance and are fully and unconditionally guaranteed by Vantage and certain of its subsidiaries. In addition to using the proceeds to fund the Mandarin acquisition, Vantage also retired certain of its outstanding credit facilities and its 13.5% Senior Secured Notes.

The construction of the Platinum Explorer was completed and the Company took delivery of the drillship on November 15, 2010. The Platinum Explorer mobilized to India and commenced its five year drilling contract with Oil & Natural Gas Company on December 29, 2010.

Vantage, a Cayman Islands exempted company, is an offshore drilling contractor, with four Baker Marine Pacific Class 375 ultra-premium jackup drilling rigs operating, and an ultra deepwater drillship, the Platinum Explorer. Vantage is also providing management services for four other ultra-deepwater drillships.

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
                                                         December 31,
                                                  ------------------------
                                                      2010         2009
                                                  -----------  -----------
Revenues
  Contract drilling services                      $    45,881  $    22,982
  Management fees                                       4,717        3,701
  Reimbursables                                        34,294       11,875
                                                  -----------  -----------
     Total revenues                                    84,892       38,558
                                                  -----------  -----------
Operating  costs and expenses
  Operating costs, excluding impairment and
   termination costs                                   63,441       30,678
  General and administrative                            6,016        4,550
  Depreciation                                          8,773        4,295
                                                  -----------  -----------
     Total operating expenses                          78,230       39,523
                                                  -----------  -----------
Income (loss) from operations                           6,662         (965)
Other income (expense)
  Interest income                                         166           10
  Interest expense                                    (14,219)      (4,174)
  Other income                                            (58)         293
                                                  -----------  -----------
     Total other income (expense)                     (14,111)      (3,871)
                                                  -----------  -----------
Income before income taxes                             (7,449)      (4,836)

Income tax provision (benefit)                          5,516         (562)
                                                  -----------  -----------
Net income (loss)                                 $   (12,965) $    (4,274)
                                                  ===========  ===========

Earnings per share
  Basic                                           $     (0.05) $     (0.02)
  Diluted                                         $     (0.05) $     (0.02)




                         Vantage Drilling Company
                   Consolidated Statement of Operations
                 (In thousands, except per share amounts)


                                                Year Ended December 31,
                                           -------------------------------
                                             2010       2009       2008
                                           ---------  ---------  ---------
Revenues
  Contract drilling services               $ 178,514  $  69,919  $       -
  Management fees                             18,107     18,830        825
  Reimbursables                               81,782     22,744         88
                                           ---------  ---------  ---------
     Total revenues                          278,403    111,493        913
                                           ---------  ---------  ---------
Operating  costs and expenses
  Operating costs, excluding impairment
   and termination costs                     176,387     66,228      5,365
  General and administrative                  21,719     15,690      9,334
  Depreciation                                33,384     11,218        101
  Impairment and termination costs                 -          -     38,286
                                           ---------  ---------  ---------
     Total operating expenses                231,490     93,136     53,086
                                           ---------  ---------  ---------
Income (loss) from operations                 46,913     18,357    (52,173)
Other income (expense)
  Interest income                                562         23      4,095
  Interest expense                           (49,827)    (8,178)       (56)
  Loss on debt extinguishment                (24,006)         -          -
  Loss on acquisition of subsidiary           (3,780)         -          -
  Other income                                 1,510        609         86
                                           ---------  ---------  ---------
     Total other income (expense)            (75,541)    (7,546)     4,125
                                           ---------  ---------  ---------
Income (loss) before income taxes            (28,628)    10,811    (48,048)
Income tax provision (benefit)                18,951      1,972       (670)
                                           ---------  ---------  ---------
Net income (loss)                          $ (47,579) $   8,839  $ (47,378)
                                           =========  =========  =========

Earnings (loss) per share
  Basic                                    $   (0.19) $    0.07  $   (0.78)
  Diluted                                  $   (0.19) $    0.07  $   (0.78)




                         Vantage Drilling Company
                        Consolidated Balance Sheet
               (In thousands, except par value information)

                                                        December 31,
                                                  ------------------------
                                                      2010         2009
                                                  -----------  -----------
                    ASSETS
Current assets
  Cash and cash equivalents                       $   120,443  $    15,992
  Restricted cash                                      29,004       28,863
  Trade receivables                                    50,190       17,536
  Inventory                                            19,760       10,789
  Prepaid expenses and other current assets            11,472        8,040
                                                  -----------  -----------
     Total current assets                             230,869       81,220
                                                  -----------  -----------
Property and Equipment
  Property and equipment                            1,762,844      899,541
  Accumulated depreciation                            (44,712)     (11,329)
                                                  -----------  -----------
     Property and equipment, net                    1,718,132      888,212
                                                  -----------  -----------
Other Assets
  Investment in joint venture                               -      120,306
  Other assets                                         54,193       29,441
                                                  -----------  -----------
     Total other assets                                54,193      149,747
                                                  -----------  -----------
Total assets                                      $ 2,003,194  $ 1,119,179
                                                  ===========  ===========

       LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable                                $    32,332  $    15,931
  Accrued liabilities                                  75,159       14,285
  Short-term debt                                       8,574       17,827
  Current maturities of long-term debt                      -       16,000
                                                  -----------  -----------
     Total current liabilities                        116,065       64,043
                                                  -----------  -----------
Long-term debt, net of discount of $63,654 and
 $4,021                                             1,103,480      378,078
Other long-term liabilities                            13,498            -
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, 400,000
   shares authorized; 289,713 and 187,277 shares
   issued and outstanding                                 290          187
  Additional paid-in capital                          854,557      714,486
  Accumulated deficit                                 (84,696)     (37,117)
  Accumulated other comprehensive loss                      -         (498)
                                                  -----------  -----------
     Total shareholders' equity                       770,151      677,058
                                                  -----------  -----------
Total liabilities and shareholders' equity        $ 2,003,194  $ 1,119,179
                                                  ===========  ===========




                         Vantage Drilling Company
                   Consolidated Statement of Cash Flows
                              (In thousands)

                                               Year Ended December 31,
                                           -------------------------------
                                             2010       2009       2008
                                           ---------  ---------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                          $ (47,579) $   8,839  $ (47,378)
Adjustments to reconcile net income to net
 cash provided by (used in) operating
 activities:
  Depreciation expense                        33,384     11,218        101
  Amortization of debt financing costs         5,389      1,486        513
  Non-cash loss on debt extinguishment        12,280          -          -
  Non-cash loss on acquisition of
   subsidiary                                  3,780          -          -
  Share-based compensation expense             6,141      5,030      2,420
  Accretion of long-term debt                  5,495      1,638          -
  Amortization of debt discount                5,592         29          -
  Deferred income tax expense (benefit)        1,492        746     (2,059)
  Write-off of asset value, net                    -          -     28,286

Changes in operating assets and
 liabilities:
  Restricted cash                               (142)   (27,163)    (1,700)
  Trade receivables                          (40,791)   (14,350)    (3,277)
  Inventory                                   (8,971)   (10,789)         -
  Prepaid expenses and other current
   assets                                     (3,433)    (5,963)    (1,618)
  Other assets                               (11,945)      (406)         -
  Accounts payable                            16,402     12,104      3,765
  Accrued liabilities                         27,744    (14,792)     9,935
  Short-term debt                             10,899      4,942      1,240
                                           ---------  ---------  ---------
     Net cash provided by (used in)
      operating activities                    15,737    (27,431)    (9,772)
                                           ---------  ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of assets                      (79,777)         -   (213,397)
  Additions to property and equipment       (565,759)  (313,631)  (166,833)
  Investment in joint venture                      -   (157,404)         -
  Deferred acquisition costs                       -          -          -
  Restricted cash held in trust account            -          -    273,109
                                           ---------  ---------  ---------
     Net cash used in investing activities  (645,536)  (471,035)  (107,121)
                                           ---------  ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of senior secured
   notes, net of original issue discount
   of $36,390                                963,610          -          -
  Proceeds from borrowings under credit
   agreements                                      -    141,821    139,000
  Proceeds from the issuance of senior
   secured notes, net of discount of
   $4,021                                          -    130,950          -
  Repayment of long-term debt               (293,129)   (19,360)         -
  Proceeds from issuance of ordinary
   shares in public offerings, net           101,889     80,291          -
  Proceeds from issuance of ordinary
   shares in private placement, net                -     24,953          -
  Proceeds from warrant exercise in
   connection with joint venture                   -    150,000          -
  Proceeds from short-term notes
   payable-shareholders                            -      4,000          -
  Repayment of short-term debt                (6,152)    (2,354)         -
  Debt issuance costs                        (31,968)   (12,400)    (8,533)
  Advances from OGIL stockholders                  -          -      3,300
  Repayments of advances from OGIL
   stockholders                                    -          -     (3,300)
  Repayment of deferred underwriters fee           -          -     (8,280)
  Proceeds from notes payable -
   shareholders                                    -          -     10,000
                                           ---------  ---------  ---------
     Net cash provided by financing
      activities                             734,250    497,901    132,187
                                           ---------  ---------  ---------
     Net increase (decrease) in cash and
      cash equivalents                       104,451       (565)    15,294
  Cash and cash equivalents--beginning of
   period                                     15,992     16,557      1,263
                                           ---------  ---------  ---------
  Cash and cash equivalents--end of period $ 120,443  $  15,992  $  16,557
                                           =========  =========  =========

Contact Information

  • Contact:
    Public & Investor Relations Contact:
    Paul A. Bragg
    Chairman & Chief Executive Officer
    Vantage Drilling Company
    (281) 404-4700