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