November 9, 2015 - 6:35 PM EST
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Vantage Drilling Company Reports Third Quarter Results for 2015

HOUSTON, TX--(Marketwired - Nov 9, 2015) - Vantage Drilling Company ("Vantage" or the "Company") (OTC PINK: VTGDF) reports a net loss for the three months ended September 30, 2015 of $52.4 million or ($.17) per diluted share as compared to a net loss of $5.6 million or ($.02) per diluted share for the three months ended September 30, 2014. 

Our results for the three months ended September 30, 2015 include several significant items that had a material impact on our financial results. Each of these items and the future outlook for our Company are more fully discussed in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (SEC) and is available on our website and the SEC website. The significant items included in the net loss for the three months ended September 30, 2015 and 2014, include -

Titanium Explorer. Our customer for the Titanium Explorer operating in the United States Gulf of Mexico sent us a notice of termination of the Agreement for the Provision of Services Contract for the Titanium Explorer on August 31, 2015 effective upon completion of operation on the current well. We completed the well in early September and demobilized the rig. We believe the termination of the contract was wrongful and commenced arbitration proceedings on August 31, 2015 to recover damages, including loss of future revenues and expenses, in connection with the wrongful termination of the contract. In connection with the cancellation of the contract, we recognized $21.5 million of deferred mobilization revenue.

Cobalt Explorer. On August 13, 2015, we terminated the contract for the construction of the Cobalt Explorer with the shipyard pursuant to the terms of the contract. In connection with the termination of this contract, we expensed approximately $31.2 million of development costs and interest previously capitalized to the Cobalt Explorer. During the three months ended September 30, 2015, we capitalized $792,000 of interest prior to the cancellation of the project. During the three months ended September 30, 2014 we capitalized $1.3 million to the Cobalt Explorer.

Gain on Retirement of Debt. During the three month periods ended September 30, 2015 and 2014, we recognized gains on the early retirement of debt of approximately $12.7 million and $1.1 million, respectively.

Restructuring Costs. In response to current market conditions, we reduced operating costs and capital expenditures for our rig fleet. During the three months ended September 30, 2015, we recognized a restructuring charge of approximately $2.5 million consisting primarily of severance costs associated with our reduction in support personnel.

Income Tax Provision. Our income taxes are generally dependent upon the results of our operations and when we generate significant revenues in jurisdictions where the income tax liability is based on gross revenues or asset values, there is no correlation to the operating results and the income tax expense. Furthermore, we are required to report our income tax provision based on our estimated annual effective tax rate applied to the year to date period. Any adjustment to our estimated annual effective tax rate will result in a catch-up adjustment for the earlier reported interim periods. Due to the cancellation of the Titanium Explorer contract, we have significantly reduced our forecasted operating results for the remainder of 2015 which has significantly impacted our estimated annual effective tax rate. This resulted in an adjustment to our income tax provision of approximately $52.4 million recognized during the three months ended September 30, 2015.

We will not be holding a conference call to discuss our results for the three month period ended September 30, 2015.

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 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,  
    2015     2014     2015     2014  
Revenue                                
  Contract drilling services   $ 197,133     $ 189,648     $ 608,002     $ 602,859  
  Management fees     1,923       1,923       5,706       12,474  
  Reimbursables     9,435       15,947       24,693       44,368  
    Total revenue     208,491       207,518       638,401       659,701  
Operating costs and expenses                                
  Operating costs     94,420       111,271       285,777       310,995  
  General and administrative     10,682       9,980       27,613       26,461  
  Depreciation     31,764       31,639       95,168       94,894  
  Construction contract cancellation costs     31,189       -       31,189       -  
  Restructuring costs     2,504       -       2,504       -  
    Total operating costs and expenses     170,559       152,890       442,251       432,350  
Income from operations     37,932       54,628       196,150       227,351  
Other income (expense)                                
  Interest income     22       14       33       38  
  Interest expense and other financing charges     (48,334 )     (53,376 )     (147,529 )     (162,149 )
  Gain (loss) on debt extinguishment     12,732       1,051       38,954       (462 )
  Other, net     339       376       1,963       616  
    Total other income (expense)     (35,241 )     (51,935 )     (106,579 )     (161,957 )
Income before income taxes     2,691       2,693       89,571       65,394  
Income tax provision     55,139       8,309       95,625       36,008  
Net income (loss)   $ (52,448 )   $ (5,616 )   $ (6,054 )   $ 29,386  
                                 
Earnings (loss) per share                                
  Basic   $ (0.17 )   $ (0.02 )   $ (0.02 )   $ 0.10  
  Diluted   $ (0.17 )   $ (0.02 )   $ (0.02 )   $ 0.10  
                                 
                                 
                         
Vantage Drilling Company  
Supplemental Operating Data  
(Unaudited, in thousands, except percentages)  
                         
    Three Months Ended September 30,     Nine Months Ended September 30,  
    2015     2014     2015     2014  
Operating costs and expenses                                
Jackups   $ 19,991     $ 24,400     $ 65,003     $ 70,561  
Deepwater     60,229       63,413       177,174       170,456  
Operations support     6,418       9,937       23,181       31,039  
Reimbursables     7,782       13,521       20,419       38,939  
    $ 94,420     $ 111,271     $ 285,777     $ 310,995  
                                 
Utilization                                
Jackups     72.0 %     99.2 %     81.0 %     98.9 %
Deepwater     86.8 %     75.2 %     92.8 %     84.6 %
                                 
                                 
   
Vantage Drilling Company  
Consolidated Balance Sheet  
(In thousands, except par value information)  
             
             
    September 30,
2015
    December 31,
2014
 
    (Unaudited)        
ASSETS                
Current assets                
  Cash and cash equivalents   $ 223,984     $ 82,812  
  Trade receivables     102,057       153,428  
  Inventory     66,014       65,892  
  Prepaid expenses and other current assets     23,128       28,618  
    Total current assets     415,183       330,750  
Property and equipment                
  Property and equipment     3,475,579       3,524,566  
  Accumulated depreciation     (500,696 )     (406,674 )
    Property and equipment, net     2,974,883       3,117,892  
Other assets                
  Investment in joint venture     981       1,318  
  Other assets     116,325       79,897  
    Total other assets     117,306       81,215  
Total assets   $ 3,507,372     $ 3,529,857  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities                
  Accounts payable   $ 48,148     $ 59,139  
  Accrued liabilities     173,534       101,537  
  Current maturities of long-term debt, net of discount of $738 and $1,181     77,754       95,378  
    Total current liabilities     299,436       256,054  
Long-term debt, net of discount of $15,104 and $25,875 and current maturities     2,614,126       2,632,802  
Other long-term liabilities     40,579       85,327  
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; 311,837 and 307,808 shares issued and outstanding     312       308  
  Additional paid-in capital     908,743       905,136  
  Accumulated deficit     (355,824 )     (349,770 )
    Total shareholders' equity     553,231       555,674  
Total liabilities and shareholders' equity   $ 3,507,372     $ 3,529,857  
                 
                 
   
Vantage Drilling Company  
Consolidated Statement of Cash Flows  
(In thousands)  
(Unaudited)  
   
    Nine Months Ended September 30,  
    2015     2014  
CASH FLOWS FROM OPERATING ACTIVITIES                
Net income (loss)   $ (6,054 )   $ 29,386  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
  Depreciation expense     95,168       94,894  
  Amortization of debt financing costs     7,356       8,713  
  Construction contract cancellation costs     31,189       -  
  Accelerated deferred mobilization income     (21,508 )     -  
  Amortization of debt discount     7,309       8,496  
  Non-cash (gain) loss on debt extinguishment     (38,944 )     462  
  Share-based compensation expense     5,020       6,540  
  Deferred income tax benefit     (997 )     (184 )
  Equity in loss of joint venture     337       317  
  Loss on disposal of assets     370       558  
Changes in operating assets and liabilities:                
  Restricted cash     -       2,125  
  Trade receivables     51,371       (55,917 )
  Inventory     (122 )     (8,681 )
  Prepaid expenses and other current assets     8,503       7,686  
  Other assets     13,917       6,660  
  Restructuring costs     2,504       -  
  Accounts payable     (10,991 )     (7,267 )
  Accrued liabilities and other long-term liabilities     42,344       81,194  
    Net cash provided by operating activities     186,772       174,982  
CASH FLOWS FROM INVESTING ACTIVITIES                
  Additions to property and equipment     (41,409 )     (34,137 )
  Return of investment in joint venture     -       23,250  
  Net cash used in investing activities     (41,409 )     (10,887 )
CASH FLOWS FROM FINANCING ACTIVITIES                
  Repayment of long-term debt     (154,191 )     (127,466 )
  Proceeds from (repayment of) revolving credit agreement, net     150,000       (10,000 )
    Net cash used in financing activities     (4,191 )     (137,466 )
    Net increase in cash and cash equivalents     141,172       26,629  
  Cash and cash equivalents-beginning of period     82,812       54,686  
  Cash and cash equivalents-end of period   $ 223,984     $ 81,315  
                 

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


Source: Marketwired (Canada) (November 9, 2015 - 6:35 PM EST)

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