Vantage Drilling Company Reports Third Quarter 2012 Results and Provides Fleet Update

HOUSTON, TX--(Marketwire - Nov 9, 2012) - Vantage Drilling Company ("Vantage") (NYSE MKT: VTG) reports a net income for the three months ended September 30, 2012 of $2.0 million or $0.01 per diluted share, excluding approximately $2.5 million of charges for the early retirement of debt, as compared to a net loss of $11.9 million or ($0.04) per diluted share for the three months ended September 30, 2011. Including the charges for the early retirement of debt, Vantage reported a loss of $538,000 or $0.00 per diluted share for the three months ended September 30, 2012.

For the nine months ended September 30, 2012, Vantage reports a net loss of $9.2 million or ($0.03) per diluted shares, excluding approximately $2.5 million of charges for the early retirement of debt as compared to a net loss of $45.4 million or ($0.16) per diluted shares, excluding approximately $25.2 million of charges for the early retirement of debt for the nine months ended September 30, 2011. Including the charges for early retirement of debt, the company reported net losses of $11.7 million or ($0.04) per diluted share and $70.6 million or ($.24) per diluted share respectively for the nine months ended September 30, 2012 and 2011.

Paul Bragg, Chairman and Chief Executive Officer, commented, "We are pleased to announce another strong quarter from operations, with the fleet including the jackups and the Platinum Explorer achieving utilization in excess of 98%."

Titanium Explorer Update

The Titanium Explorer, which was acquired in April 2012, mobilized to the United States Gulf of Mexico, to commence an eight year contract. Acceptance testing with our customer was interrupted during the third quarter by Hurricane Isaac, which necessitated our sailing out of harm's way and further disrupted the supply chain and vendor access to the Titanium Explorer for more than a week. Most of the testing protocol has now been completed successfully, including third party certification of the BOP. The functional tests of the BOP in deepwater were unfortunately interrupted by operational issues of the customer-supplied ROV. The ROV cameras and robotics are essential to complete the seafloor testing of the equipment. We lost approximately ten days of testing associated with the ROV issues. During the testing delays, we noted an engine issue aboard the Titanium Explorer. After consultation with the engine manufacturer, we decided that it would be prudent to not only repair the problem, but to undertake a preventative upgrade recommended by the manufacturer to all six primary engines onboard. The repair and upgrade is being conducted currently and is expected to be completed in the third week of November. Following this, we will return to deepwater to recommence acceptance testing. We expect to commence operations under the drilling contract in December. "We are clearly disappointed by the disruptions and delays we have encountered commencing operations for the Titanium Explorer, but we believe we are very close to a successful commencement of our contract. The crew and support team has done an outstanding job preparing the Titanium Explorer and dealing with the adversities encountered," commented Mr. Bragg.

Jackup Fleet Update

Vantage, together with our customer for the Topaz Driller in Malaysia, has agreed to modify the terms of their contract in order for the Topaz Driller to perform a one-year drilling program in Indonesia. The original contract was for two wells in Malaysia plus a one well option. Under the modified terms, Vantage and the customer's Indonesian affiliate have entered into a new one-year contract for a drilling program in Indonesia at an increased rate. Additionally, the Indonesian affiliate will be granted three options for six months each. Upon completion of the Indonesian contract, the customer is anticipated to generate revenue of approximately $57 million.

The Emerald Driller has received a letter of award for a two year contract from its customer in Thailand. The contract will commence in continuity with the Emerald Driller's current contract, which we estimate will be completed in June 2013. Estimated revenues to be generated over the initial two year term of the contract are approximately $114 million.

Vantage, a Cayman Islands exempted company, is an offshore drilling contractor, with an owned fleet of four Baker Marine Pacific Class 375 ultra-premium jackup drilling rigs and two ultra-deepwater drillships, the Platinum Explorer and the Titanium Explorer, as well as an additional ultra-deepwater drillship, the Tungsten Explorer, now under construction. 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 September 30,								Nine Months Ended September 30,
				2012				2011				2012				2011
Revenues
	Contract drilling services			$	105,521			$	89,916			$	310,202			$	274,646
	Management fees				966				3,285				4,644				10,499
	Reimbursables				5,047				25,367				33,662				79,148
		Total revenues			111,534				118,568				348,508				364,293
Operating costs and expenses
	Operating costs				52,004				69,644				171,358				212,468
	General and administrative				6,622				6,219				18,586				20,469
	Depreciation				16,575				15,988				49,519				48,126
		Total operating costs and expenses			75,201				91,851				239,463				281,063
Income from operations					36,333				26,717				109,045				83,230
Other income (expense)
	Interest income				15				7				48				68
	Interest expense and other financing charges				(31,583	)			(37,074	)			(104,518	)			(117,966	)
	Loss on debt extinguishment				(2,528	)			-				(2,528	)			(25,196	)
	Other, net				(61	)			455				800				1,913
		Total other income (expense)			(34,157	)			(36,612	)			(106,198	)			(141,181	)
Income (loss) before income taxes					2,176				(9,895	)			2,847				(57,951	)
Income tax provision					2,714				1,986				14,541				12,654
Net loss				$	(538	)		$	(11,881	)		$	(11,694	)		$	(70,605	)
Loss per share
	Basic			$	0.00			$	(0.04	)		$	(0.04	)		$	(0.24	)
	Diluted			$	0.00			$	(0.04	)		$	(0.04	)		$	(0.24	)

Vantage Drilling Company
Consolidated Balance Sheet
(In thousands, except par value information)
				September 30,				December 31,
				2012				2011
				(Unaudited)
ASSETS
Current assets
	Cash and cash equivalents			$	62,476			$	110,031
	Restricted cash				5,878				7,028
	Trade receivables				76,627				100,908
	Inventory				34,323				24,376
	Prepaid expenses and other current assets				12,374				16,909
		Total current assets			191,678				259,252
Property and equipment
	Property and equipment				2,850,707				1,913,596
	Accumulated depreciation				(157,318	)			(108,521	)
		Property and equipment, net			2,693,389				1,805,075
Other assets
	Other assets				82,297				58,173
Total assets				$	2,967,364			$	2,122,500
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
	Accounts payable			$	60,452			$	46,362
	Accrued liabilities				69,419				103,809
		Total current liabilities			129,871				150,171
Long-term debt, net of premium (discount) of $19,563 and ($38,572)					2,129,563				1,246,428
Other long-term liabilities					14,750				29,755
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; 294,130 and 291,241 shares issued and outstanding				294				291
	Additional paid-in capital				869,227				860,502
	Accumulated deficit				(176,341	)			(164,647	)
		Total shareholders' equity			693,180				696,146
Total liabilities and shareholders' equity				$	2,967,364			$	2,122,500

Vantage Drilling Company
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
				Nine Months Ended September 30,
				2012				2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss				$	(11,694	)		$	(70,605	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation expense				49,519				48,126
	Amortization of debt financing costs				12,617				6,269
	Non-cash loss on debt extinguishment				2,528				3,532
	Share-based compensation expense				5,808				4,044
	Accretion of long-term debt				-				2,582
	Amortization of debt discount (premium)				(3,473	)			7,374
	Deferred income tax expense				2,978				123
	(Gain) / loss on disposal of assets				502				(86	)
Changes in operating assets and liabilities:
	Restricted cash				1,150				22,243
	Trade receivables				(9,382	)			(68,633	)
	Inventory				(9,948	)			(2,566	)
	Prepaid expenses and other current assets				1,509				6,393
	Other assets				2,074				(456	)
	Accounts payable				14,090				4,772
	Accrued liabilities				(105,126	)			(38,080	)
		Net cash used in operating activities			(46,848	)			(74,968	)
CASH FLOWS FROM INVESTING ACTIVITIES
	Additions to property and equipment				(848,939	)			(126,695	)
	Proceeds from sale of property and equipment				-				301
		Net cash used in investing activities			(848,939	)			(126,394	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from issuance of senior secured notes, including issue premiums of $62,000 and $15,750				837,000				240,750
	Proceeds from the issuance of senior convertible notes				50,000				-
	Repayment of long-term debt				-				(109,716	)
	Debt issuance costs				(38,768	)			(12,927	)
		Net cash provided by financing activities			848,232				118,107
		Net decrease in cash and cash equivalents			(47,555	)			(83,255	)
	Cash and cash equivalents-beginning of period				110,031				120,443
	Cash and cash equivalents-end of period			$	62,476			$	37,188