SOURCE: Vantage Drilling Company

October 31, 2014 06:00 ET

Vantage Drilling Company Reports Third Quarter 2014 Results

HOUSTON, TX--(Marketwired - Oct 31, 2014) - Vantage Drilling Company ("Vantage" or the "Company") (NYSE MKT: VTG) reports net income for the three months ended September 30, 2014 of $751,000 or $0.00 per diluted share, excluding gains for the early retirement of debt and an upward revision to the tax provision, as compared to earnings of $6.8 million or $0.02 per diluted share for the three months ended September 30, 2013. Including approximately $1.1 million gain on the early retirement of debt and a $7.4 million revision to the tax provision for the three months ended September 30, 2014, the Company reported a net loss of $5.6 million or ($0.02) per diluted share.

The $1.1 million gain on the early retirement of debt represents discount to the face value of debt that we purchased in the open market, net of writing off related deferred financing costs. The total debt paydown for the quarter, including scheduled maturities and open market purchases of our Senior Notes, totaled $52.9 million.

During the third quarter, we revised our estimated annual effective tax rate based on changes to the timing of drilling programs and planned rig moves. The duration of our drilling activities has been extended in certain higher tax countries. These revisions resulted in the recognition of an additional $7.4 million tax provision for the third quarter.

Paul Bragg, Chairman and Chief Executive Officer, commented, "The highlight of the quarter was our debt paydown of nearly $53 million. We remain on track to reach our 2014 debt reduction goal, given our high level of contracted backlog." 

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
September 30,
    Nine Months Ended
September 30,
 
    2014     2013     2014     2013  
Revenue                                
  Contract drilling services   $ 189,648     $ 158,887       602,859       449,354  
  Management fees     1,923       3,903       12,474       9,511  
  Reimbursables     15,947       13,095       44,368       34,658  
    Total revenue     207,518       175,885       659,701       493,523  
Operating costs and expenses                                
  Operating costs     111,271       84,132       310,995       236,566  
  General and administrative     9,980       8,891       26,461       23,372  
  Depreciation     31,639       24,886       94,894       74,727  
    Total operating costs and expenses     152,890       117,909       432,350       334,665  
Income from operations     54,628       57,976       227,351       158,858  
Other income (expense)                                
  Interest income     14       26       38       195  
  Interest expense and other financing charges     (53,376 )     (47,379 )     (162,149 )     (158,296 )
  Gain (loss) on debt extinguishment     1,051       -       (462 )     (98,327 )
  Other, net     376       305       616       2,195  
    Total other income (expense)     (51,935 )     (47,048 )     (161,957 )     (254,233 )
Income (loss) before income taxes     2,693       10,928       65,394       (95,375 )
Income tax provision     8,309       4,084       36,008       16,766  
Net income (loss)   $ (5,616 )   $ 6,844     $ 29,386     $ (112,141 )
                                 
Earnings (loss) per share                                
  Basic   $ (0.02 )   $ 0.02     $ 0.10     $ (0.37 )
  Diluted   $ (0.02 )   $ 0.02     $ 0.10     $ (0.37 )
                                 
   
Vantage Drilling Company  
Supplemental Operating Data  
(Unaudited, in thousands, except percentages)  
                         
    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2014     2013     2014     2013  
Operating costs and expenses                                
Jackups   $ 24,400     $ 23,614     $ 70,561     $ 67,966  
Deepwater     63,413       38,673       170,456       108,683  
Operations support     9,937       8,383       31,039       25,159  
Reimbursables     13,521       13,462       38,939       34,758  
    $ 111,271     $ 84,132     $ 310,995     $ 236,566  
                                 
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)  
   
    September 30,
2014
    December 31,
2013
 
    (Unaudited)        
ASSETS            
Current assets                
  Cash and cash equivalents   $ 81,315     $ 54,686  
  Restricted cash     -       2,125  
  Trade receivables     224,572       168,654  
  Inventory     64,485       55,804  
  Prepaid expenses and other current assets     15,821       23,717  
    Total current assets     386,193       304,986  
Property and equipment                
  Property and equipment     3,509,267       3,472,407  
  Accumulated depreciation     (376,280 )     (281,759 )
    Property and equipment, net     3,132,987       3,190,648  
Other assets                
  Investment in joint venture     1,571       32,482  
  Other assets     83,083       100,027  
    Total other assets     84,654       132,509  
Total assets   $ 3,603,834     $ 3,628,143  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities                
  Accounts payable   $ 57,848     $ 65,115  
  Accrued liabilities     131,168       96,382  
  Current maturities of long-term debt and revolving credit agreement     53,500       63,500  
    Total current liabilities     242,516       224,997  
Long-term debt, net of discount of $30,253 and $39,325     2,731,970       2,852,050  
Other long-term liabilities     87,966       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; 307,732 and 304,101 shares issued and outstanding     308       304  
  Additional paid-in capital     903,464       896,928  
  Accumulated deficit     (362,390 )     (391,776 )
    Total shareholders' equity     541,382       505,456  
Total liabilities and shareholders' equity   $ 3,603,834     $ 3,628,143  
                 
   
Vantage Drilling Company  
Consolidated Statement of Cash Flows  
(In thousands)  
(Unaudited)  
   
    Nine Months Ended September 30,  
    2014     2013  
CASH FLOWS FROM OPERATING ACTIVITIES                
Net income (loss)   $ 29,386     $ (112,141 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                
  Depreciation expense     94,894       74,727  
  Amortization of debt financing costs     8,713       9,425  
  Amortization of debt discount     8,496       4,605  
  Non-cash loss on debt extinguishment     462       6,070  
  Share-based compensation expense     6,540       5,431  
  Deferred income tax expense (benefit)     (184 )     858  
  Equity in loss of joint venture     317       345  
  Loss on disposal of assets     558       114  
Changes in operating assets and liabilities:                
  Restricted cash     2,125       162  
  Trade receivables     (55,917 )     (25,463 )
  Inventory     (8,681 )     (15,146 )
  Prepaid expenses and other current assets     7,686       11,709  
  Other assets     6,660       (6,866 )
  Accounts payable     (7,267 )     5,715  
  Accrued liabilities and other long-term liabilities     81,194       (25,146 )
    Net cash provided by (used in) operating activities     174,982       (65,601 )
CASH FLOWS FROM INVESTING ACTIVITIES                
  Additions to property and equipment     (34,137 )     (548,621 )
  Return of investment in joint venture     23,250       -  
  Proceeds from sale of property and equipment     -       2  
    Net cash used in investing activities     (10,887 )     (548,619 )
CASH FLOWS FROM FINANCING ACTIVITIES                
  Proceeds from issuance of senior secured notes, net     -       775,000  
  Proceeds from issuance of term loan, net     -       344,750  
  Proceeds from the issuance of senior convertible notes     -       100,000  
  Repayment of long-term debt     (127,466 )     (1,020,499 )
  Proceeds from (repayment of) revolving credit agreement, net     (10,000 )     10,000  
  Debt issuance costs     -       (30,028 )
    Net cash provided by (used in) financing activities     (137,466 )     179,223  
    Net increase (decrease) in cash and cash equivalents     26,629       (434,997 )
  Cash and cash equivalents-beginning of period     54,686       502,726  
  Cash and cash equivalents-end of period   $ 81,315     $ 67,729  
                 

Contact Information

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