HOUSTON, TX--(Marketwired - August 05, 2014) - Vantage Drilling Company ("Vantage" or the "Company") (NYSE MKT: VTG) reports net income for the three months ended June 30, 2014 of $15.1 million or $0.05 per diluted share, excluding charges for the early retirement of debt and a revision to the tax provision, as compared to earnings of $4.2 million or $0.01 per diluted share for the three months ended June 30, 2013. Including approximately $1.4 million charge for the early retirement of debt and a $3.5 million revision to the tax provision for the three months ended June 30, 2014, the Company reported earnings of $10.2 million or $0.03 per diluted share.
The $1.4 million charge for the early retirement of debt consists of the writing off a portion of deferred financing costs and original debt issuance discount associated with the discretionary prepayment of $42 million on our 2017 Term Loan. The total debt paydown for the quarter, including scheduled maturities and open market purchases of our Senior Notes, totaled $56.9 million.
During the second quarter, our customer for the Titanium Explorer revised their upcoming drilling location for the rig, which coupled with revised financial estimates, had a significant impact on our estimated annual effective tax rate. We are required to calculate the effective tax rate on an annual basis and apply it to the financial statements on a year-to-date basis. The change in estimates resulted in the recognition of an additional $3.5 million tax provision for the second quarter.
Paul Bragg, Chairman and Chief Executive Officer, commented, "We are pleased to achieve another quarter of strong operating results. The highlight of the quarter was our debt paydown of nearly $57 million. We remain on track to reach our 2014 debt reduction goal, given our contracted backlog and continued high operating efficiency across the fleet."
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 June 30, Six Months Ended June 30,
--------------------------- ---------------------------
2014 2013 2014 2013
------------- ------------- ------------- -------------
Revenue
Contract drilling
services $ 198,279 $ 155,803 413,211 290,467
Management fees 5,969 2,410 10,551 5,608
Reimbursables 15,470 12,424 28,421 21,563
------------- ------------- ------------- -------------
Total revenue 219,718 170,637 452,183 317,638
------------- ------------- ------------- -------------
Operating costs and
expenses
Operating costs 98,002 77,117 199,724 152,434
General and
administrative 8,366 7,054 16,481 14,481
Depreciation 31,630 24,980 63,255 49,841
------------- ------------- ------------- -------------
Total operating
costs and
expenses 137,998 109,151 279,460 216,756
------------- ------------- ------------- -------------
Income from
operations 81,720 61,486 172,723 100,882
Other income
(expense)
Interest income 11 74 24 170
Interest expense
and other
financing charges (54,286) (51,255) (108,773) (110,917)
Loss on debt
extinguishment (1,407) - (1,513) (98,327)
Other, net (539) 988 240 1,889
------------- ------------- ------------- -------------
Total other
income
(expense) (56,221) (50,193) (110,022) (207,185)
------------- ------------- ------------- -------------
Income (loss) before
income taxes 25,499 11,293 62,701 (106,303)
Income tax provision 15,321 7,077 27,699 12,682
------------- ------------- ------------- -------------
Net income (loss) $ 10,178 $ 4,216 $ 35,002 $ (118,985)
============= ============= ============= =============
Earnings (loss) per
share
Basic $ 0.03 $ 0.01 $ 0.11 $ (0.39)
Diluted $ 0.03 $ 0.01 $ 0.11 $ (0.39)
Vantage Drilling Company
Supplemental Operating Data
(Unaudited, in thousands, except percentages)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- ---------------------------
2014 2013 2014 2013
------------- ------------- ------------- -------------
Operating costs and
expenses
Jackups $ 22,401 $ 22,507 $ 46,161 $ 44,351
Deepwater 51,233 33,287 107,043 70,010
Operations support 10,342 8,792 21,102 16,776
Reimbursables 14,026 12,531 25,418 21,297
------------- ------------- ------------- -------------
$ 98,002 $ 77,117 $ 199,724 $ 152,434
------------- ------------- ------------- -------------
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)
June 30, December 31,
2014 2013
----------- ------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 88,976 $ 54,686
Restricted cash - 2,125
Trade receivables 154,667 168,654
Inventory 60,872 55,804
Prepaid expenses and other current assets 18,890 23,717
----------- ------------
Total current assets 323,405 304,986
----------- ------------
Property and equipment
Property and equipment 3,493,052 3,472,407
Accumulated depreciation (344,640) (281,759)
----------- ------------
Property and equipment, net 3,148,412 3,190,648
----------- ------------
Other assets
Investment in joint venture 32,247 32,482
Other assets 82,718 100,027
----------- ------------
Total other assets 114,965 132,509
----------- ------------
Total assets $ 3,586,782 $ 3,628,143
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 57,662 $ 65,115
Accrued liabilities 101,222 96,382
Current maturities of long-term debt and
revolving credit agreement 53,500 63,500
----------- ------------
Total current liabilities 212,384 224,997
----------- ------------
Long-term debt, net of discount of $33,074 and
$39,325 2,782,024 2,852,050
Other long-term liabilities 47,632 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; 306,161 and 304,101 shares
issued and outstanding 306 304
Additional paid-in capital 901,210 896,928
Accumulated deficit (356,774) (391,776)
Total shareholders' equity 544,742 505,456
----------- ------------
Total liabilities and shareholders' equity $ 3,586,782 $ 3,628,143
=========== ============
Vantage Drilling Company
Consolidated Statement of Cash Flows
(In thousands)
Six Months Ended June 30,
--------------------------
2014 2013
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 35,002 $ (118,985)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation expense 63,255 49,841
Amortization of debt financing costs 5,918 6,588
Amortization of debt discount 5,676 1,835
Non-cash loss on debt extinguishment 1,513 6,070
Share-based compensation expense 4,284 3,652
Deferred income tax expense (benefit) (343) 764
Equity in loss of joint venture 235 256
Loss on disposal of assets 663 14
Changes in operating assets and liabilities:
Restricted cash 2,125 162
Trade receivables 13,988 11,576
Inventory (5,068) (7,814)
Prepaid expenses and other current assets 5,054 5,308
Other assets 10,521 (4,646)
Accounts payable (7,453) 7,218
Accrued liabilities and other long-term
liabilities 4,527 (58,946)
------------ ------------
Net cash provided by (used in) operating
activities 139,897 (97,107)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (19,262) (45,130)
Proceeds from sale of property and equipment - 2
------------ ------------
Net cash used in investing activities (19,262) (45,128)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of senior secured notes,
net - 775,000
Proceeds from issuance of term loan, net - 344,750
Repayment of long-term debt (76,261) (1,013,374)
Repayment of revolving credit agreement, net (10,000) -
Debt issuance costs (84) (26,462)
------------ ------------
Net cash provided by (used in) financing
activities (86,345) 79,914
------------ ------------
Net increase (decrease) in cash and cash
equivalents 34,290 (62,321)
Cash and cash equivalents--beginning of period 54,686 502,726
------------ ------------
Cash and cash equivalents--end of period $ 88,976 $ 440,405
============ ============
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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