SOURCE: Vantage Drilling Company

November 09, 2012 08:00 ET

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  

Contact Information

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