Vantage Drilling Company Reports Second Quarter Results for 2015

HOUSTON, TX--(Marketwired - Aug 4, 2015) - Vantage Drilling Company ("Vantage" or the "Company") (NYSE MKT: VTG) reports net income for the three months ended June 30, 2015 of $25.0 million or $.07 per diluted share as compared to earnings of $10.2 million or $.03 per diluted share for the three months ended June 30, 2014. 

The three months ended June 30, 2015 includes approximately $5.6 million of gains on the early retirement of debt as compared to a loss on the early retirement of debt of $1.4 million in the prior year. The strong operating results for the second quarter also required us to re-evaluate our effective tax rate for the year and combined with tax impact of the early retirement of debt resulted in a $2.7 million favorable adjustment to our tax provision as compared to a $3.5 million unfavorable adjustment in the second quarter 2014. Adjusting for these items, pro forma net income for the three months ended June 30, 2015 was approximately $16.6 million or $.05 per diluted share as compared to $15.1 million or $.05 per diluted share for the three months ended June 30, 2014.

The total debt retirement for the first half of 2015, including scheduled maturities and open market purchase of debt, totaled approximately $140.0 million at face value. Following the end of the quarter, we continued to acquire debt in the open market and have retired approximately $150.0 million of debt year to date with an annualized interest savings of approximately $9.7 million.

Paul Bragg, Chairman and Chief Executive Officer, commented, "During the 2^nd quarter, we continued our strong operating performance and maintained our focus on strengthening the balance sheet. In just over six quarters, we have now retired approximately $350 million of outstanding debt and greatly reduced our current debt, improving our 2015 and 2016 liquidity." 

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,
			2015				2014				2015				2014
Revenue
	Contract drilling services		$	202,888			$	198,279			$	410,869			$	413,211
	Management fees			1,902				5,969				3,783				10,551
	Reimbursables			7,471				15,470				15,258				28,421
		Total revenue		212,261				219,718				429,910				452,183
Operating costs and expenses
	Operating costs			95,249				98,002				191,357				199,724
	General and administrative			8,066				8,366				16,931				16,481
	Depreciation			31,781				31,630				63,404				63,255
		Total operating costs and expenses		135,096				137,998				271,692				279,460
Income from operations				77,165				81,720				158,218				172,723
Other income (expense)
	Interest income			5				11				11				24
	Interest expense and other financing charges			(48,641	)			(54,286	)			(99,195	)			(108,773	)
	Gain (loss) on debt extinguishment			5,616				(1,407	)			26,222				(1,513	)
	Other, net			1,962				(539	)			1,624				240
		Total other income (expense)		(41,058	)			(56,221	)			(71,338	)			(110,022	)
Income before income taxes				36,107				25,499				86,880				62,701
Income tax provision				11,143				15,321				40,486				27,699
Net income			$	24,964			$	10,178			$	46,394			$	35,002
Earnings per share
	Basic		$	0.08			$	0.03			$	0.15			$	0.11
	Diluted		$	0.07			$	0.03			$	0.15			$	0.11
Vantage Drilling Company
Supplemental Operating Data
(Unaudited, in thousands, except percentages)
			Three Months Ended June 30,								Six Months Ended June 30,
			2015				2014				2014				2013
Operating costs and expenses
Jackups			$	20,749			$	22,401			$	45,012			$	46,161
Deepwater				60,861				51,233				116,944				107,043
Operations support				7,440				10,342				16,764				21,102
Reimbursables				6,199				14,026				12,637				25,418
			$	95,249			$	98,002			$	191,357			$	199,724
Utilization
Jackups				75.0	%			99.2	%			85.5	%			99.6	%
Deepwater				98.2	%			83.1	%			95.9	%			89.8	%

Vantage Drilling Company
Consolidated Balance Sheet
(In thousands, except par value information)
			June 30, 2015				December 31, 2014
			(Unaudited)
ASSETS
Current assets
	Cash and cash equivalents		$	30,556			$	82,812
	Trade receivables			141,932				153,428
	Inventory			67,037				65,892
	Prepaid expenses and other current assets			20,188				28,618
		Total current assets		259,713				330,750
Property and equipment
	Property and equipment			3,553,789				3,524,566
	Accumulated depreciation			(469,361	)			(406,674	)
		Property and equipment, net		3,084,428				3,117,892
Other assets
	Investment in joint venture			1,106				1,318
	Other assets			68,603				79,897
		Total other assets		69,709				81,215
Total assets			$	3,413,850			$	3,529,857
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
	Accounts payable		$	46,540			$	59,139
	Accrued liabilities			97,088				101,537
	Current maturities of long-term debt, net of discount of $42 and $1,181			65,314				95,378
		Total current liabilities		208,942				256,054
Long-term debt, net of discount of $18,903 and $25,875 and current maturities				2,531,003				2,632,802
Other long-term liabilities				69,363				85,327
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; 311,024 and 307,808 shares issued and outstanding			311				308
	Additional paid-in capital			907,607				905,136
	Accumulated deficit			(303,376	)			(349,770	)
		Total shareholders' equity		604,542				555,674
Total liabilities and shareholders' equity			$	3,413,850			$	3,529,857

Vantage Drilling Company
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
			Six Months Ended June 30,
			2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income			$	46,394			$	35,002
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation expense			63,404				63,255
	Amortization of debt financing costs			5,139				5,834
	Amortization of debt discount			5,392				5,676
	Non-cash (gain) loss on debt extinguishment			(26,213	)			1,513
	Share-based compensation expense			3,370				4,284
	Deferred income tax benefit			(534	)			(343	)
	Equity in loss of joint venture			212				235
	Loss on disposal of assets			158				663
Changes in operating assets and liabilities:
	Restricted cash			-				2,125
	Trade receivables			11,496				13,988
	Inventory			(1,145	)			(5,068	)
	Prepaid expenses and other current assets			8,905				5,054
	Other assets			4,613				10,521
	Accounts payable			(12,599	)			(7,453	)
	Accrued liabilities and other long-term liabilities			(23,546	)			4,527
		Net cash provided by operating activities		85,046				139,813
CASH FLOWS FROM INVESTING ACTIVITIES
	Additions to property and equipment			(26,878	)			(19,262	)
		Net cash used in investing activities		(26,878	)			(19,262	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Repayment of long-term debt			(110,424	)			(76,261	)
	Repayment of revolving credit agreement, net			-				(10,000	)
		Net cash used in financing activities		(110,424	)			(86,261	)
		Net increase (decrease) in cash and cash equivalents		(52,256	)			34,290
	Cash and cash equivalents--beginning of period			82,812				54,686
	Cash and cash equivalents--end of period		$	30,556			$	88,976