Vantage Drilling International Reports Second Quarter Results for 2017

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
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 

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