SOURCE: Vantage Drilling Company

November 09, 2010 05:00 ET

Vantage Drilling Company Reports Third Quarter 2010 Results

HOUSTON, TX--(Marketwire - November 9, 2010) - Vantage Drilling Company ("Vantage") (NYSE Amex: VTG.U) (NYSE Amex: VTG) (NYSE Amex: VTG.WS) reports a net loss of $5.8 million or ($.02) 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. Including the acquisition charges and refinancing charges, the Company reported a net loss of $33.6 million or $(0.12) per diluted share for the three months ended September 30, 2010. This compares to net income of $6.8 million or $0.05 per diluted share during the same period in 2009.

For the nine months ended September 30, 2010, Vantage reports a net loss of $34.6 million or $(0.14) per share as compared to net income of $13.1 million or $0.13 per share for the nine months ended September 30, 2009.

On July 30, 2010, Vantage acquired the 55% interest in Mandarin Drilling Corporation ("Mandarin"), a Marshall Islands corporation, from F3 Capital an exempted company incorporated under the laws of the Cayman Islands for $139.8 million. The sole asset of Mandarin is the construction contract for the ultra-deepwater drillship Platinum Explorer. F3 Capital is wholly owned by Hsin-Chi Su one of the Company's directors and a significant shareholder of the Company. The purchase price was funded by a $60.0 million contingent convertible note and $79.8 million of cash of which $64.2 million was paid directly to the shipyard.

In connection with the acquisition of Mandarin, Vantage issued $1.0 billion of 11.5% Senior Secured First Lien Notes due 2015 (the, "Notes"). The Notes have a maturity of five years from the date of issuance and were issued at a price equal to 96.361% of their face value. The notes are fully and unconditionally guaranteed on a senior secured basis by Vantage and certain of its existing and future 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.

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 two other ultra-deepwater drillships and two ultra-deepwater semi-submersibles.

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    Nine Months Ended
                                    September 30,         September 30,
                                  2010       2009       2010       2009
                                ---------  ---------  ---------  ---------
Revenues
  Contract drilling services    $  44,864  $  21,644  $ 132,632  $  46,937
  Management fees                   4,516      5,688     13,391     15,129
  Reimbursables                    17,527      9,114     47,488     10,869
                                ---------  ---------  ---------  ---------
    Total revenues                 66,907     36,446    193,511     72,935
                                ---------  ---------  ---------  ---------
Operating  costs and expenses
  Operating costs                  41,582     19,967    112,946     35,550
  General and administrative        6,294      3,650     15,703     11,140
  Depreciation                      8,768      3,165     24,611      6,923
                                ---------  ---------  ---------  ---------
    Total operating expenses       56,644     26,782    153,260     53,613
                                ---------  ---------  ---------  ---------
Income (loss) from operations      10,263      9,664     40,251     19,322
Other income (expense)
  Interest income                     381          4        396         13

  Interest expense                (14,292)    (1,945)   (35,608)    (4,004)
  Loss on debt extinguishment     (24,006)         -    (24,006)         -
  Loss on acquisition of
   subsidiary                      (3,780)         -     (3,780)         -
  Other income                        618        143      1,568        316
                                ---------  ---------  ---------  ---------
    Total other income
     (expense)                    (41,079)    (1,798)   (61,430)    (3,675)
                                ---------  ---------  ---------  ---------
Income (loss) before income
 taxes                            (30,816)     7,866    (21,179)    15,647
Income tax provision (benefit)      2,765      1,063     13,435      2,534
                                ---------  ---------  ---------  ---------
Net income (loss)               $ (33,581) $   6,803  $ (34,614) $  13,113
                                =========  =========  =========  =========

Earnings (loss) per share

  Basic                         $   (0.12) $    0.05  $   (0.14) $    0.13

  Diluted                       $   (0.12) $    0.05  $   (0.14) $    0.13






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



                                               September 30,  December 31,
                                                    2010          2009
                                                ------------  ------------
                    ASSETS                       (Unaudited)
Current assets
  Cash and cash equivalents                     $    116,544  $     15,992
  Restricted cash                                    537,835        28,863
  Trade receivables                                   47,732        17,536
   Inventory                                          18,902        10,789
  Prepaid expenses and other current assets            2,317         8,040
                                                ------------  ------------
     Total current assets                            723,330        81,220
                                                ------------  ------------
Property and equipment
  Property and equipment                           1,207,114       899,541
  Accumulated depreciation                           (35,940)      (11,329)
                                                ------------  ------------
     Property and equipment, net                   1,171,174       888,212
                                                ------------  ------------
Other assets
  Investment in joint venture                              -       120,306
  Other assets                                        55,881        29,441
                                                ------------  ------------
     Total other assets                               55,881       149,747
                                                ------------  ------------
Total assets                                    $  1,950,385  $  1,119,179
                                                ============  ============

     LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable                              $     30,996  $     15,931
  Accrued liabilities                                 37,037        14,285
  Short-term debt                                      1,028        17,827
  Current maturities of long-term debt                     -        16,000
                                                ------------  ------------
     Total current liabilities                        69,061        64,043
                                                ------------  ------------
Long-term debt, net of discount of $66,565 and
 $4,021                                            1,099,039       378,078
Other long term liabilities                              716             -
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; 289,117 and 187,277
   shares issued and outstanding                         289           187
  Additional paid-in capital                         853,011       714,486
  Accumulated deficit                                (71,731)      (37,117)
  Accumulated other comprehensive loss                     -          (498)
                                                ------------  ------------
     Total shareholders' equity                      781,569       677,058
                                                ------------  ------------
Total liabilities and shareholders' equity      $  1,950,385  $  1,119,179
                                                ============  ============





                         Vantage Drilling Company
                   Consolidated Statement of Cash Flows
                              (In thousands)
                                (Unaudited)
                                                     Nine Months Ended
                                                        September 30,
                                                  ------------------------
                                                      2010         2009
                                                  -----------  -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                 $   (34,614) $    13,113
Adjustments to reconcile net income to net cash
 provided by (used in) operating activities:
  Depreciation expense                                 24,611        6,923
  Amortization of debt financing costs                  3,515          872
  Non-cash loss on debt extinguishment                 12,280            -
  Non-cash loss recognized related to acquisition
   of subsidiary                                        3,780            -
  Share-based compensation expense                      4,594        3,636
  Accretion of long-term debt                           3,965          373
  Amortization of note discounts                        2,682            -
  Deferred income tax expense                           1,650           83
Changes in operating assets and liabilities:
  Restricted cash                                       1,944      (23,216)
  Trade receivables                                   (38,333)     (17,791)
  Inventory                                            (8,113)     (12,190)
  Prepaid expenses and other current assets             5,723         (147)
  Other assets                                        (12,084)        (412)
  Accounts payable                                     15,065        9,520
  Accrued liabilities                                  24,039       12,384
  Short-term debt                                       1,467          760
                                                  -----------  -----------
     Net cash provided by (used in) operating
      activities                                       12,171       (6,092)
                                                  -----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of assets                               (79,777)           -
  Additions to property and equipment                 (57,253)    (200,102)
  Escrowed funds for acquisition                     (510,916)           -
  Investment in joint venture                               -     (104,001)
                                                  -----------  -----------
     Net cash used in investing activities           (647,946)    (304,103)
                                                  -----------  -----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from borrowings under credit
   agreements                                               -      141,821
  Proceeds from the issuance of senior secured
   notes, net of original issue discount of
   $36,390                                            963,610            -
  Repayment of long-term debt                        (293,129)     (13,605)
  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                                       -      104,100
  Proceeds from short-term notes
   payable-shareholders                                     -        4,000
  Repayment of short-term debt                         (4,267)      (1,848)
  Debt issuance costs                                 (31,776)      (5,404)
                                                  -----------  -----------
     Net cash provided by financing activities        736,327      334,308
                                                  -----------  -----------
     Net increase (decrease) in cash and cash
      equivalents                                     100,552       24,113
  Cash and cash equivalents--beginning of period       15,992       16,557
                                                  -----------  -----------
  Cash and cash equivalents--end of period        $   116,544  $    40,670
                                                  ===========  ===========

Contact Information

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