Vantage Drilling International Reports Second Quarter Results for 2017

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| Source: Vantage Drilling International

HOUSTON, TX--(Marketwired - Aug 1, 2017) -  Vantage Drilling International ("Vantage" or the "Company") reported a net loss of approximately $36.6 million or $7.32 per share for the three months ended June 30, 2017 as compared to a net loss of $35.7 million or $7.15 per share for the three months ended June 30, 2016.

Vantage continued to deliver solid operating results with rig uptime of 98% and revenue efficiency of 99%. We added the recently acquired Vantage 260 to our fleet during the quarter and the related drilling service contract was amended to provide that the Sapphire Driller is subject to the contract. Both rigs operated concurrently during the quarter and plan to operate until the removal of the Vantage 260 later this year.

As of June 30, 2017, Vantage had approximately $200.9 million of available cash. Uses of cash during the quarter included, among other things, the funding of the aforementioned acquisition, debt service costs, and the re-activation of two rigs. The startup of operations for new customers and the corresponding higher level of receivables impacted the quarter end cash balance. Vantage had $12.5 million available for issuance of letters of credit under its revolving letter of credit facility at the end of the quarter.

Ihab Toma, CEO, commented. "We are happy to report another impressive operational quarter maximizing uptime for our customers. During the second quarter we completed the acquisition of the Vantage 260, and successfully reactivated and deployed both the Sapphire Driller and the Topaz Driller on time and under budget. Additionally, with the recently announced letter of award for the Platinum Explorer and a new six month contract for the Topaz Driller, we continue to build backlog and put our fleet to work."

Vantage, a Cayman Islands exempted company, is an offshore drilling contractor, with a fleet of three ultra-deepwater drillships, four premium jackup drilling rigs, and one standard jackup drilling rig. 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 globally for major, national and large independent oil and natural gas companies. Vantage also provides construction supervision services for, and will operate and manage, drilling units owned by others.

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 disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise.

   
 Vantage Drilling International  
Consolidated Statement of Operations  
(In thousands, except per share data)  
(Unaudited)  
   
    Successor     Predecessor  
    Three Months Ended June 30,     Six Months Ended June 30, 2017     Period from February 10, 2016 to June 30, 2016     Period from January 1, 2016 to February 10, 2016  
    2017     2016    
Revenue                              
  Contract drilling services   $ 47,785     $ 40,901     $ 85,841     $ 64,960     $ 20,891  
  Management fees     405       1,712       806       2,671       752  
  Reimbursables     5,073       5,898       8,665       10,666       1,897  
    Total revenue     53,263       48,511       95,312       78,297       23,540  
Operating costs and expenses                                        
  Operating costs     40,184       34,965       69,182       62,404       25,213  
  General and administrative     11,501       8,695       22,980       17,863       2,558  
  Depreciation     18,554       18,381       36,993       30,457       10,696  
    Total operating costs and expenses     70,239       62,041       129,155       110,724       38,467  
Loss from operations     (16,976 )     (13,530 )     (33,843 )     (32,427 )     (14,927 )
Other income (expense)                                        
  Interest income     215       9       356       15       3  
  Interest expense and other financing charges (contractual interest of $23,219 for the period from January 1, 2016 to February 10, 2016)     (19,023 )     (18,772 )     (37,922 )     (29,422 )     (1,728 )
  Other, net     663       (1,516 )     1,215       318       (69 )
  Reorganization items     -       (487 )     -       (641 )     (452,919 )
  Bargain purchase gain     1,910       -       1,910       -       -  
    Total other expense     (16,235 )     (20,766 )     (34,441 )     (29,730 )     (454,713 )
Loss before income taxes     (33,211 )     (34,296 )     (68,284 )     (62,157 )     (469,640 )
Income tax provision     3,381       1,438       4,807       2,605       2,371  
Net loss     (36,592 )     (35,734 )     (73,091 )     (64,762 )     (472,011 )
Net loss attributable to noncontrolling interests     -       -       -       -       (969 )
Net loss attributable to VDI   $ (36,592 )   $ (35,734 )   $ (73,091 )   $ (64,762 )   $ (471,042 )
  Net loss per share, basic and diluted   $ (7.32 )   $ (7.15 )   $ (14.62 )   $ (12.95 )     N/A  
  Weighted average successor ordinary shares outstanding, basic and diluted     5,000       5,000       5,000       5,000       N/A  
                                         
                               
Vantage Drilling International        
Supplemental Operating Data        
(Unaudited, in thousands, except percentages)        
         
    Successor     Predecessor  
    Three Months Ended June 30,     Six Months Ended June 30, 2017     Period from February 10, 2016 to June 30, 2016     Period from January 1, 2016 to February 10, 2016  
    2017     2016    
Operating costs and expenses                                        
Jackups   $ 20,034     $ 12,441     $ 32,896     $ 20,719     $ 5,975  
Deepwater     13,908       15,372       24,964       28,518       15,550  
Operations support     3,314       2,596       6,283       4,811       2,219  
Reimbursables     2,928       4,556       5,039       8,356       1,469  
    $ 40,184     $ 34,965     $ 69,182     $ 62,404     $ 25,213  
                                         
Utilization                                        
Jackups     80.4%       52.2%       66.9%       55.0%       53.6%  
Deepwater     32.8%       33.3%       33.1%       33.3%       33.3%  
   
   
Vantage Drilling International  
Consolidated Balance Sheet  
(In thousands, except share and par value information)  
(Unaudited)  
             
             
    June 30,
2017
    December 31,
2016
 
ASSETS            
Current assets            
  Cash and cash equivalents   $ 200,940     $ 231,727  
  Trade receivables     33,464       20,850  
  Inventory     44,391       45,206  
  Prepaid expenses and other current assets     14,895       12,423  
    Total current assets     293,690       310,206  
Property and equipment                
  Property and equipment     903,924       902,241  
  Accumulated depreciation     (104,677 )     (67,713 )
    Property and equipment, net     799,247       834,528  
Other assets     24,325       15,694  
Total assets   $ 1,117,262     $ 1,160,428  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities                
  Accounts payable   $ 39,418     $ 35,283  
  Accrued liabilities     19,277       18,448  
  Current maturities of long-term debt     4,430       1,430  
    Total current liabilities     63,125       55,161  
Long-term debt, net of discount and financing costs of $80,932 and $105,568     892,073       867,372  
Other long-term liabilities     8,595       11,335  
Commitments and contingencies                
Shareholders' equity                
  Ordinary shares, $0.001 par value, 50 million shares authorized; 5,000,053 shares issued and outstanding     5       5  
  Additional paid-in capital     373,972       373,972  
  Accumulated deficit     (220,508 )     (147,417 )
    Total shareholders' equity     153,469       226,560  
Total liabilities and shareholders' equity   $ 1,117,262     $ 1,160,428  
   
   
Vantage Drilling International  
Consolidated Statement of Cash Flows  
(In thousands)  
(Unaudited)  
                   
    Successor     Predecessor  
    Six Months Ended June 30, 2017     Period from February 10, 2016 to June 30, 2016     Period from January 1, 2016 to February 10, 2016  
CASH FLOWS FROM OPERATING ACTIVITIES                  
Net loss   $ (73,091 )   $ (64,762 )   $ (472,011 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                        
  Depreciation expense     36,993       30,457       10,696  
  Amortization of debt financing costs     234       193       -  
  Amortization of debt discount     24,401       18,945       -  
  Amortization of contract value     1,504       -       -  
  PIK interest on the Convertible Notes     3,780       2,932       -  
  Reorganization items     -       -       430,210  
  Share-based compensation expense     1,727       -       -  
  Gain on bargain purchase     (1,910 )     -       -  
  Deferred income tax benefit     (3,315 )     (1,741 )     -  
  Loss on disposal of assets     191       624       -  
Changes in operating assets and liabilities:                        
  Restricted cash     -       -       (1,000 )
  Trade receivables     (12,614 )     46,147       (3,575 )
  Inventory     815       (2,129 )     223  
  Prepaid expenses and other current assets     (422 )     (1,914 )     6,893  
  Other assets     5,471       569       941  
  Accounts payable     4,135       92       (14,890 )
  Accrued liabilities and other long-term liabilities     (3,768 )     (29,209 )     21,148  
    Net cash (used in) provided by operating activities     (15,869 )     204       (21,365 )
CASH FLOWS FROM INVESTING ACTIVITIES                        
  Additions to property and equipment     (1,203 )     (7,982 )     116  
  Cash paid for Vantage 260 acquisition     (13,000 )     -       -  
    Net cash (used in) provided by investing activities     (14,203 )     (7,982 )     116  
CASH FLOWS FROM FINANCING ACTIVITIES                        
  Repayment of long-term debt     (715 )     (715 )     (7,000 )
  Proceeds from issuance of 10% Second Lien Notes     -       -       75,000  
  Debt issuance costs     -       (51 )     (1,125 )
    Net cash (used in) provided by financing activities     (715 )     (766 )     66,875  
    Net (decrease) increase in cash and cash equivalents     (30,787 )     (8,544 )     45,626  
  Cash and cash equivalents - beginning of period     231,727       249,046       203,420  
  Cash and cash equivalents - end of period   $ 200,940     $ 240,502     $ 249,046