SOURCE: Vantage Drilling International

Vantage Drilling International

August 11, 2016 07:00 ET

Vantage Drilling International Reports Second Quarter Results for 2016

HOUSTON, TX--(Marketwired - Aug 11, 2016) -  Vantage Drilling International ("Vantage" or the "Company") reported a net loss of approximately $35.7 million or ($7.15) per share for the three months ended June 30, 2016 as compared to the Predecessor reporting net income of approximately $27.9 million for the three months ended June 30, 2015. The weighted-average shares outstanding for the three months ended June 30, 2016 was 5,000,053 whereas in the prior year, as a wholly-owned subsidiary, the Predecessor did not have a comparable outstanding ordinary shares.

Upon emergence from Chapter 11 bankruptcy on February 10, 2016, Vantage adopted fresh-start accounting, which resulted in the Company becoming a new entity for financial reporting purposes. References to "Successor" relate to the financial position and results of operations of the reorganized Vantage as of and subsequent to February 10, 2016. References to "Predecessor" refer to the financial position of Vantage as of and prior to February 10, 2016 and the results of operations prior to February 10, 2016. As a result of the application of fresh-start accounting and the effects of the implementation of our Plan of Reorganization, the financial statements on or after February 10, 2016 are not comparable with the financial statements prior to that date.

For the period from February 10, 2016 to June 30, 2016, Vantage reported a net loss of approximately $64.8 million or ($12.95) per share and the Predecessor for the period January 1, 2016 to February 10, 2016 reported a net loss of approximately $471.0 million. For the six months ended June 30, 2015, the Predecessor reported net income of approximately $50.6 million.

Douglas Smith, Chief Financial Officer, commented, "While market conditions continue to pressure contract utilization during the second quarter, we continued our very strong operating performance with 99% up-time across our operating fleet." 

As of June 30, 2016, Vantage had approximately $240.5 million of available cash as compared to $249.2 million as of March 31, 2016. Mr. Smith continued, "We remain focused on maintaining a strong balance sheet and reducing our cash outflow. During the quarter, we incurred expenses associated with preparing the rigs for warm stacking and cost associated with the headcount reductions. We believe the cash on hand provides us adequate liquidity to ultimately put our rigs back to work."

Vantage, a Cayman Islands exempted company, is an offshore drilling contractor, with a fleet of three ultra-deepwater drillships and four 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 International  
Consolidated Statement of Operations  
(In thousands, except per share amounts)  
(Unaudited)  
             
    Successor     Predecessor  
    Three Months Ended June 30, 2016     Period from February 10, 2016 to June 30, 2016     Period from January 1, 2016 to February 10, 2016     Three Months Ended June 30, 2015     Six Months Ended June 30, 2015  
Revenue                                        
  Contract drilling services   $ 40,901     $ 64,960     $ 20,891       202,888       410,869  
  Management fees     1,712       2,671       752       1,902       3,783  
  Reimbursables     5,898       10,666       1,897       9,593       20,252  
    Total revenue     48,511       78,297       23,540       214,383       434,904  
Operating costs and expenses                                        
  Operating costs     34,965       62,404       25,213       94,709       190,059  
  General and administrative     8,695       17,863       2,558       6,701       12,691  
  Depreciation     18,381       30,457       10,696       31,781       63,404  
    Total operating costs and expenses     62,041       110,724       38,467       133,191       266,154  
Income (loss) from operations     (13,530 )     (32,427 )     (14,927 )     81,192       168,750  
Other income (expense)                                        
  Interest income     9       15       3       13       25  
  Interest expense and other financing charges (contractual interest of $23,219 for the period from January 1, 2016 to February 10, 2016)     (18,772 )     (29,422 )     (1,728 )     (45,908 )     (92,027 )
  Gain (loss) on debt extinguishment     --       --       --       (2 )     10,823  
  Other, net     (1,516 )     318       (69 )     1,971       1,820  
  Reorganization items     (487 )     (641 )     (452,923 )     --       --  
    Total other income (expense)     (20,766 )     (29,730 )     (454,717 )     (43,926 )     (79,359 )
Income (loss) before income taxes     (34,296 )     (62,157 )     (469,644 )     37,266       89,391  
Income tax provision     1,438       2,605       2,371       8,862       38,151  
Net income (loss)     (35,734 )     (64,762 )     (472,015 )     28,404       51,240  
Net income (loss) attributable to noncontrolling interests     --       --       (969 )     477       667  
Net income (loss) attributable to VDI   $ (35,734 )   $ (64,762 )   $ (471,046 )   $ 27,927     $ 50,573  
  Net loss per share, basic and diluted   $ (7.15 )   $ (12.95 )     N/A       N/A       N/A  
  Weighted average successor shares outstanding, basic and diluted     5,000       5,000       N/A       N/A       N/A  
                                         
   
Vantage Drilling International  
Supplemental Operating Data  
(Unaudited, in thousands, except percentages)  
                               
    Successor     Predecessor  
    Three Months Ended June 30, 2016     Period from February 10, 2016 to June 30, 2016     Period from January 1, 2016 to February 10, 2016     Three Months Ended June 30, 2015     Six Months Ended June 30, 2015  
Operating costs and expenses                                        
Jackups   $ 12,441     $ 20,719     $ 5,975     $ 20,748     $ 45,011  
Deepwater     15,372       28,518       15,550       60,805       116,898  
Operations support     2,596       4,811       2,219       6,966       15,688  
Reimbursables     4,556       8,356       1,469       6,190       12,462  
    $ 34,965     $ 62,404     $ 25,213     $ 94,709     $ 190,059  
                                         
Utilization                                        
Jackups     52.2 %     55.0 %     53.6 %     75.0 %     85.5 %
Deepwater     33.3 %     33.3 %     33.3 %     98.2 %     95.9 %
                                         
   
Vantage Drilling International  
Consolidated Balance Sheet  
(In thousands, except share and par value information)  
(Unaudited)  
             
    Successor     Predecessor  
    June 30,
2016
    December 31,
2015
 
ASSETS                
Current assets                
  Cash and cash equivalents   $ 240,502     $ 203,420  
  Restricted cash     1,000       -  
  Trade receivables     28,150       70,722  
  Inventory     46,371       64,495  
  Prepaid expenses and other current assets     17,127       22,106  
    Total current assets     333,150       360,743  
Property and equipment                
  Property and equipment     898,316       3,481,006  
  Accumulated depreciation     (30,278 )     (532,619 )
    Property and equipment, net     868,038       2,948,387  
Other assets     10,815       23,050  
Total assets   $ 1,212,003     $ 3,332,180  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities                
  Accounts payable   $ 34,639     $ 49,437  
  Accrued liabilities     15,619       21,702  
  Current maturities of long-term debt     1,430       --  
  VDC note payable     --       61,477  
    Total current liabilities     51,688       132,616  
Long-term debt, net of discount of $127,974 and $0     839,831       --  
Other long-term liabilities     11,269       33,097  
Liabilities subject to compromise     --       2,694,456  
Commitments and contingencies                
Shareholders' equity                
  Predecessor ordinary shares, $0.001 par value, 50 million shares authorized; one thousand shares issued and outstanding     --       --  
  Predecessor additional paid-in capital     --       595,119  
  Successor ordinary shares, $0.001 par value, 50 million shares authorized; 5,000,053 shares issued and outstanding     5       --  
  Successor additional paid-in capital     373,972       --  
  Accumulated deficit     (64,762 )     (138,363 )
    Total VDI shareholders' equity     309,215       456,756  
Noncontrolling interests     --       15,255  
  Total equity     309,215       472,011  
Total liabilities and equity   $ 1,212,003     $ 3,332,180  
   
   
Vantage Drilling International  
Consolidated Statement of Cash Flows  
(In thousands)  
(Unaudited)  
                   
    Successor     Predecessor  
    Period from February 10, 2016 to June 30, 2016     Period from January 1, 2016 to February 10, 2016     Six Months Ended June 30, 2015  
CASH FLOWS FROM OPERATING ACTIVITIES                        
Net income (loss)   $ (64,762 )   $ (472,015 )   $ 51,240  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                        
  Depreciation expense     30,457       10,696       63,404  
  Amortization of debt financing costs     193       --       4,238  
  Amortization of debt discount     18,945       --       1,205  
  Reorganization items     --       430,210       --  
  Non-cash gain on debt extinguishment     --       --       (10,814 )
  Deferred income tax benefit     (1,741 )     --       (534 )
  Loss on disposal of assets     624       --       158  
Changes in operating assets and liabilities:                        
  Restricted cash     --       (1,000 )     --  
  Trade receivables     46,147       (3,575 )     8,561  
  Inventory     (2,129 )     223       (340 )
  Prepaid expenses and other current assets     (1,914 )     6,893       8,794  
  Other assets     569       941       4,101  
  Accounts payable     92       (14,890 )     (86,701 )
  Accrued liabilities and other long-term liabilities     (26,277 )     21,152       (18,653 )
    Net cash provided by (used in) operating activities     204       (21,365 )     24,659  
CASH FLOWS FROM INVESTING ACTIVITIES                        
  Additions to property and equipment     (7,982 )     116       (17,017 )
    Net cash provided by (used in) investing activities     (7,982 )     116       (17,017 )
CASH FLOWS FROM FINANCING ACTIVITIES                        
  Repayment of long-term debt     (715 )     (7,000 )     (54,605 )
  Proceeds from issuance of 10% Second Lien Notes     -       76,125       -  
  Debt issuance costs     (51 )     (2,250 )     --  
    Net cash provided by (used in) financing activities     (766 )     66,875       (54,605 )
    Net increase (decrease) in cash and cash equivalents     (8,544 )     45,626       (46,963 )
  Cash and cash equivalents--beginning of period     249,046       203,420       75,801  
  Cash and cash equivalents--end of period   $ 240,502     $ 249,046     $ 28,838