SOURCE: Vantage Drilling Company

August 05, 2014 06:00 ET

Vantage Drilling Company Reports Second Quarter 2014 Results

HOUSTON, TX--(Marketwired - Aug 5, 2014) - Vantage Drilling Company ("Vantage" or the "Company") (NYSE MKT: VTG) reports net income for the three months ended June 30, 2014 of $15.1 million or $0.05 per diluted share, excluding charges for the early retirement of debt and a revision to the tax provision, as compared to earnings of $4.2 million or $0.01 per diluted share for the three months ended June 30, 2013. Including approximately $1.4 million charge for the early retirement of debt and a $3.5 million revision to the tax provision for the three months ended June 30, 2014, the Company reported earnings of $10.2 million or $0.03 per diluted share.

The $1.4 million charge for the early retirement of debt consists of the writing off a portion of deferred financing costs and original debt issuance discount associated with the discretionary prepayment of $42 million on our 2017 Term Loan. The total debt paydown for the quarter, including scheduled maturities and open market purchases of our Senior Notes, totaled $56.9 million.

During the second quarter, our customer for the Titanium Explorer revised their upcoming drilling location for the rig, which coupled with revised financial estimates, had a significant impact on our estimated annual effective tax rate. We are required to calculate the effective tax rate on an annual basis and apply it to the financial statements on a year-to-date basis. The change in estimates resulted in the recognition of an additional $3.5 million tax provision for the second quarter.

Paul Bragg, Chairman and Chief Executive Officer, commented, "We are pleased to achieve another quarter of strong operating results. The highlight of the quarter was our debt paydown of nearly $57 million. We remain on track to reach our 2014 debt reduction goal, given our contracted backlog and continued high operating efficiency across the fleet." 

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 June 30,   Six Months Ended June 30,  
  2014   2013   2014   2013  
Revenue                        
  Contract drilling services $ 198,279   $ 155,803     413,211     290,467  
  Management fees   5,969     2,410     10,551     5,608  
  Reimbursables   15,470     12,424     28,421     21,563  
    Total revenue   219,718     170,637     452,183     317,638  
Operating costs and expenses                        
  Operating costs   98,002     77,117     199,724     152,434  
  General and administrative   8,366     7,054     16,481     14,481  
  Depreciation   31,630     24,980     63,255     49,841  
    Total operating costs and expenses   137,998     109,151     279,460     216,756  
Income from operations   81,720     61,486     172,723     100,882  
Other income (expense)                        
  Interest income   11     74     24     170  
  Interest expense and other financing charges   (54,286 )   (51,255 )   (108,773 )   (110,917 )
  Loss on debt extinguishment   (1,407 )   -     (1,513 )   (98,327 )
  Other, net   (539 )   988     240     1,889  
    Total other income (expense)   (56,221 )   (50,193 )   (110,022 )   (207,185 )
Income (loss) before income taxes   25,499     11,293     62,701     (106,303 )
Income tax provision   15,321     7,077     27,699     12,682  
Net income (loss) $ 10,178   $ 4,216   $ 35,002   $ (118,985 )
                         
Earnings (loss) per share                        
  Basic $ 0.03   $ 0.01   $ 0.11   $ (0.39 )
  Diluted $ 0.03   $ 0.01   $ 0.11   $ (0.39 )
                         
                         
Vantage Drilling Company  
Supplemental Operating Data  
(Unaudited, in thousands, except percentages)  
                 
  Three Months Ended June 30,   Six Months Ended June 30,  
  2014   2013   2014   2013  
Operating costs and expenses                        
Jackups $ 22,401   $ 22,507   $ 46,161   $ 44,351  
Deepwater   51,233     33,287     107,043     70,010  
Operations support   10,342     8,792     21,102     16,776  
Reimbursables   14,026     12,531     25,418     21,297  
  $ 98,002   $ 77,117   $ 199,724   $ 152,434  
                         
Utilization                        
Jackups   99.2 %   89.5 %   99.6 %   93.9 %
Deepwater   83.1 %   97.3 %   89.8 %   92.9 %
                         
                         
                         
Vantage Drilling Company  
Consolidated Balance Sheet  
(In thousands, except par value information)  
           
           
  June 30,
2014
    December 31,
2013
 
  (Unaudited)        
ASSETS              
Current assets              
  Cash and cash equivalents $ 88,976     $ 54,686  
  Restricted cash   -       2,125  
  Trade receivables   154,667       168,654  
  Inventory   60,872       55,804  
  Prepaid expenses and other current assets   18,890       23,717  
    Total current assets   323,405       304,986  
Property and equipment              
  Property and equipment   3,493,052       3,472,407  
  Accumulated depreciation   (344,640 )     (281,759 )
    Property and equipment, net   3,148,412       3,190,648  
Other assets              
  Investment in joint venture   32,247       32,482  
  Other assets   82,718       100,027  
    Total other assets   114,965       132,509  
Total assets $ 3,586,782     $ 3,628,143  
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
Current liabilities              
  Accounts payable $ 57,662     $ 65,115  
  Accrued liabilities   101,222       96,382  
  Current maturities of long-term debt and revolving credit agreement   53,500       63,500  
    Total current liabilities   212,384       224,997  
Long-term debt, net of discount of $33,074 and $39,325   2,782,024       2,852,050  
Other long-term liabilities   47,632       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; 306,161 and 304,101 shares issued and outstanding   306       304  
  Additional paid-in capital   901,210       896,928  
  Accumulated deficit   (356,774 )     (391,776 )
    Total shareholders' equity   544,742       505,456  
Total liabilities and shareholders' equity $ 3,586,782     $ 3,628,143  
   
   
   
Vantage Drilling Company  
Consolidated Statement of Cash Flows  
(In thousands)  
   
  Six Months Ended June 30,  
  2014     2013  
CASH FLOWS FROM OPERATING ACTIVITIES              
Net income (loss) $ 35,002     $ (118,985 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:              
  Depreciation expense   63,255       49,841  
  Amortization of debt financing costs   5,918       6,588  
  Amortization of debt discount   5,676       1,835  
  Non-cash loss on debt extinguishment   1,513       6,070  
  Share-based compensation expense   4,284       3,652  
  Deferred income tax expense (benefit)   (343 )     764  
  Equity in loss of joint venture   235       256  
  Loss on disposal of assets   663       14  
Changes in operating assets and liabilities:              
  Restricted cash   2,125       162  
  Trade receivables   13,988       11,576  
  Inventory   (5,068 )     (7,814 )
  Prepaid expenses and other current assets   5,054       5,308  
  Other assets   10,521       (4,646 )
  Accounts payable   (7,453 )     7,218  
  Accrued liabilities and other long-term liabilities   4,527       (58,946 )
    Net cash provided by (used in) operating activities   139,897       (97,107 )
CASH FLOWS FROM INVESTING ACTIVITIES              
  Additions to property and equipment   (19,262 )     (45,130 )
  Proceeds from sale of property and equipment   -       2  
    Net cash used in investing activities   (19,262 )     (45,128 )
CASH FLOWS FROM FINANCING ACTIVITIES              
  Proceeds from issuance of senior secured notes, net   -       775,000  
  Proceeds from issuance of term loan, net   -       344,750  
  Repayment of long-term debt   (76,261 )     (1,013,374 )
  Repayment of revolving credit agreement, net   (10,000 )     -  
  Debt issuance costs   (84 )     (26,462 )
    Net cash provided by (used in) financing activities   (86,345 )     79,914  
    Net increase (decrease) in cash and cash equivalents   34,290       (62,321 )
  Cash and cash equivalents--beginning of period   54,686       502,726  
  Cash and cash equivalents--end of period $ 88,976     $ 440,405  
               

Contact Information

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