HOUSTON, TX--(Marketwired - October 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 Nine Months Ended
September 30, 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 Nine Months Ended
September 30, 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, December 31,
2014 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
=========== ===========
FOR FURTHER INFORMATION PLEASE CONTACT:
Public & Investor Relations Contact:
Paul A. Bragg
Chairman & Chief Executive Officer
Vantage Drilling Company
(281) 404-4700
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