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| 8-K - FORM 8-K - Vantage Drilling CO | d406643d8k.htm |
 Vantage Drilling Company
Barclays CEO Energy Conference
New York, New York
September 5, 2012
Exhibit 99.1 |
 Some of the statements in this presentation constitute forward-looking
statements. Forward-looking statements relate to
expectations,
beliefs,
projections,
future
plans
and
strategies,
anticipated
events
or
trends
and
similar
expressions
concerning matters that are not historical facts. The forward looking
statements contained in this presentation involve risks and uncertainties as
well as statements as to: •
our limited operating history;
•
availability of investment opportunities;
•
general volatility of the market price of our securities;
•
changes in our business strategy;
•
our ability to consummate an appropriate investment opportunity within given time
constraints; •
availability of qualified personnel;
•
changes in our industry, interest rates, the debt securities markets or the
general economy; •
changes in governmental, tax and environmental regulations and similar
matters; •
changes in generally accepted accounting principles by standard-setting
bodies; and •
the degree and nature of our competition.
The forward-looking statements are based on our beliefs, assumptions and
expectations of our future performance, taking into account all information
currently available to us. These beliefs, assumptions and expectations can change as a result
of many possible events or factors, not all of which are known to us or are within
our control. If a change occurs, our business, financial condition,
liquidity and results of operations may vary materially from those expressed in our forward-
looking statements.
Forward-Looking Statements
2 |
 Symbol:
VTG (NYSE AMEX)
Location:
HQ
–
Houston;
Operations
–
Singapore;
Marketing
–
Dubai
Market Cap:
<
$450 million ($1.54 per share)
Book Value:
<
$700 million ($2.40 per share)
Enterprise Value:
<
$2.5 billion
Employees:
> 1,000
Contract Backlog:
$2.8 billion
Owned Fleet:
4 Ultra-Premium Jackups (operating in SE Asia & West Africa)
1 Ultra-Deepwater Drillship (operating offshore India)
1 Ultra-Deepwater Drillship (undergoing final acceptance testing in GOM)
1
Ultra-Deepwater
Drillship
(under
construction
–
May
2013
delivery)
Managed Fleet:
1
Ultra-Deepwater
Drillship
(under
construction
–
Q1/Q2
2013
delivery)
Corporate Overview
3 |
 •
Aquamarine Driller
contract extended for an additional year at $153,400 per day, adding approximately
$56 million of backlog (prior contract at $132,000).
•
Sapphire Driller
awarded additional contracts at $165,000 per day net of taxes through the middle
of 2013, adding approximately $34.5 million to backlog (prior contract at
$120,000). •
Acquisition of Titanium Explorer
in April 2012. Undergoing customer acceptance testing with expected contract
commencement end of September 2012.
•
Ultra-deepwater
rates
rising,
providing
excellent
contracting
opportunity
for
Tungsten
Explorer
(2
Quarter 2013
delivery).
•
Platinum Explorer
has achieved impressive utilization –
–
First
12
months
of
operation
–
92.4%
utilization
–
Completed
1
Quarter
2012
@ 99.0%
utilization
–
Completed 2
Quarter 2012 @ 99.0% utilization
Recent Developments
4
nd
st
nd |
 •
Premium high-specification drilling units, including four jackup rigs and three drillships
•
Vantage’s modern rigs are capable of drilling to deeper depths and possess enhanced operational
efficiency and technical capabilities, resulting in higher utilization, dayrates and
margins •
Total
costs
of
owned
fleet
of
four
jackups,
the
Platinum
Explorer
drillship
and
the
Titanium
Explorer
of
approximately
$2.6
billion
(<
$3.2
billion
upon
delivery/completion
of
Tungsten
Explorer)
•
Highly successful track record of managing, constructing, marketing and operating offshore drilling
units •
Deep in-house technical team of engineers and construction personnel overseeing complex
construction projects
•
All newbuilds delivered on budget and on time
•
Jackup fleet has experienced approx. 99% of productive time for Vantage’s first 42 months in
operation •
Significant long-term cash flow visibility
•
Contract backlog of approximately $2.7 billion with industry leading E&P Companies.
•
Work experience includes a strong customer mix including:
(1)
PVEP Phu Quy Petroleum Operating Co. Ltd. is a joint venture interest between PetroVietnam Exploration
Production Corp. and Total E&P Vietnam. Company Highlights
5
Premium Fleet
Proven Operational
Track
Record
Significant
Contract Coverage
with
High Quality
Counterparties
–
Level of efficiency is “best in class”
–
Total, ENI, Petrobras, ONGC, Petronas Cargali, PTT Thailand, Pearl Energy, Bowleven,
Foxtrot (1)
International, Phu Quy
, and Salamander. |
 •
Successful construction management arrangements for ultra-deepwater
drillships, including completed
Aker
drillships
and
SeaDragon
semisubmersible
projects
and
ongoing
Dalian Developer
project.
•
Provided Vantage with significant engineering expertise and experience in Korean,
Chinese and Singaporean shipyards.
•
Management team with extensive experience; average of 29 years in the drilling
industry •
Includes international and domestic public company experience with
industry-leading peers involving numerous acquisitions and debt and
equity financings. •
Experienced
operating
and
technical
personnel
with
highest
level
of expertise.
Company Highlights (Cont’d)
6
Experienced
Construction
Supervision and
Management and
Operational Team
Arrangements
Management |
 Owned Assets
•
Delivered On-Time, On-
Budget -
December 2008
•
Hired by Financial Institution to provide shipyard oversight
following bid process
•
Largest drillship in the world currently under construction
•
Vessel will include oil storage and multi-purpose
capabilities
•
Delivery Q2 2013
•
3
newbuild project at DSME
•
Leverages shipyard experience
•
Favorable costs and delivery
schedule
•
Delivery Q2 2013
Tungsten Explorer
Premium Owned Fleet with a Proven Operational
Track Record
7
•
2 Successful newbuild at
DSME
•
Delivery April 2012
•
On Contract by Q4 2012
Construction Management Projects
Dalian Developer
Newbuild Ultra-Premium Marine Pacific Class 375 Jackups
Emerald Driller
Sapphire Driller
Aquamarine Driller
Topaz Driller
Platinum Explorer
Ultra-Deepwater 12,000 ft Drillships
•
Delivered On-Time, On-
Budget -
November 2010
•
Delivered On-Time, On-
Budget -
July 2009
•
Delivered On-Time, On-
Budget -
December 2009
•
Delivered On-Time, On-
Budget -
September 2009
Titanium Explorer
Ultra-Deepwater Drillship
nd
rd |
 Business Strategy
8
•
Customer demand for new high-specification units supported by:
–
Need for rigs well-suited for drilling through deep and complex formations and
drilling horizontally –
Enhanced efficiency providing faster drilling and moving times
–
Improved safety features and lower downtime for maintenance
•
Long-term
drillship
contracts
for
Platinum
Explorer
(5
years)
and
Titanium
Explorer
(8 years)
•
Marketing
Tungsten
Explorer
with
focus
on
project
term
of
3-5
years
•
Jackups operating on contracts with multi-year term
•
Negotiating multi-year extension for Emerald Driller
•
$2.7 billion in contract backlog mitigates cyclical oil and gas industry
risk •
Focused on expanding relationships with national oil companies, major oil
companies, large independents and super-regionals (generally longer
contract duration) •
Strong
existing
relationships
have
contributed
to
large
existing
backlog
and
repeat business
with
customers
•
Organic growth through attractive shipyard orders
•
Growth through acquisitions of assets and other offshore drilling companies
•
Both deepwater and jackups attractive; however current conditions favor
ultra-deepwater Capitalize on Customer
Demand for High-
Specification Units
Focus on Long-term
Contracts
Expand Key Industry
Relationships
Pursue Expansion
Opportunities |
 Vantage Offices
Managed Rigs
Country of Operation
Worldwide Operations
9
Houston
Dubai
Singapore
Contract: Petrobras
Titanium Explorer
U.S. GOM
Sapphire Driller
Contract: Foxtrot
Ivory Coast
Contract: ONGC
Platinum Explorer
India
Contract: PTT
Emerald Driller
Thailand
Aquamarine Driller
Contract: Petronas
Carigaili
Malaysia
Topaz Driller
Contract: Total
Malaysia
Owned Rigs |
 Strong Customer Relationships
10
Key Customers |
 •
Faster drilling times
•
Faster moving times
•
Increased volumes of consumable liquids and
drilling fluids
•
Reduced boat runs and non-productive time
•
Improved pipe handling and offline capability
•
Fast preloading time for all tanks
•
75’
x 30’
cantilever reach substantially greater
than the industry average
•
Pipe decks allow increased storage capacity
•
Premium drilling package:
•
3 x 2200HP mud pumps
•
Integrated diverter system
•
18-¾’’
BOP system and 4 rams
•
High-capacity, high efficiency –
5 x CAT 3516 B
Diesel engines
Ultra-Premium Jackup Fleet
11
Emerald
Driller
Sapphire
Driller
Topaz
Driller
Aquamarine
Driller
World
class
assets
achieving
world
class
performance
Fleet
productive
time
approximately
99%
since
inception
Quarterly Financial Performance
Increased Operational Efficiency and
Improved Technical Capability: |
 (1)
Average
drilling
revenue
per
day
is
based
on
the
total
estimated
revenue
divided
by
the
minimum
number
of
days
committed
in
a
contract.
Unless
otherwise
noted,
the
total
revenue
includes
any
mobilization
and
demobilization
fees
and
other
contractual
revenues
associated
with
the
drilling
services.
(2)
The drilling revenue per day includes the achievement of the 12.5% bonus
opportunity, but excludes mobilization revenues and revenue escalations included in the contract.
Fleet Status –
Average Drilling Revenue/Day
12
Ownership
2012
2013
2014
Rig
%
Q1
Q2
Q3
Q4
Q1
Q2
Q4
Q1
Q2
Q3
Q4
Jackups
Emerald Driller
100%
$130K
Sapphire Driller
100%
$120K (net of taxes)
$165K (net)
$165K (net)
$175 (net)
Aquamarine Driller
100%
$132K
$153K
Topaz Driller
100%
$187K (includes upgrades and mobilization)
$135K
Drillships
Platinum Explorer
100%
$590.5K (5 years)
Titanium Explorer
100%
$572K (8 years)
(2)
Tungsten Explorer
100%
Contracted
Option
Commisioning /
Construction
Contract
Mobilization /
(1)
Q3
Contract extension being negotiated for Emerald
(up to 3 years) |
 •
Premium jackups (350’
+ IC rigs)
and ultra-deepwater floater have
historically maintained
significantly higher utilization
levels
Source: Riglogix; ODS-PetroData.
Premium Asset Advantage
13
Recent leading edge
dayrates have reached
$170K for jackups and
$650K for ultra-deepwater
floaters
Global Jackup Utilization
International vs. GOM Jackup Utilization
Historical Floater Dayrates ($Thousands)
Historical Floater Utilization
GOM
Midwater
Deepwater
Ultradeepwater
Midwater
Deepwater
Ultra-Deepwater
<300 ft.
300 to 349 ft. IC
350+ ft IC
Rest of World |
 •
Capabilities and age –
The current worldwide fleet is comprised mostly of older, inefficient rigs
Source: ODS-Petrodata
Global Jackup Fleet Distribution
Profile of Global Jackup Fleet
14
Age
Rigs
%
%
300+
200-299
<200
25 years or older
325
68%
58%
152
119
54
5 to 24 years
64
13%
11%
59
1
4
0 to 4 years
90
19%
16%
80
6
4
479
100%
291
126
62
2012 Deliveries
26
5%
24
2
0
2013 Deliveries
38
7%
37
1
0
2014 Deliveries
15
3%
13
2
0
558
100%
365
131
62
Age of Jackup Fleet
Water Depth (feet)
Despite 126 newbuild deliveries since 2003, majority of worldwide
jackup fleet remains older than 25 years
–
22% of today’s jackups are mat-supported and/or have less than 200ft of
water depth capability –
68% of today’s jackups are 25 years or older
–
As of March 2012 a total of 85 rigs were either stacked, cold stacked, or in an
accommodation mode without drilling contract –
How many will not return to service?
•
Age is a factor –
Demand is increasing for high-specification jackups. Many customers are
implementing age restrictions and new high-specification
requirements. MS
18
300'+ IC
151
MC
40
300'+ IC
9
250' IC
57
<300' IS
15
<250' IC
65
300' IC
131 |
 Ultra-Deepwater Rig Supply is Increasing Significantly
Deepwater Exploration is a Young, Rapidly Growing Market
Demand is Likely to Exceed Rig Supply Despite Newbuilds
Source: ODS-Petrodata, DnB NOR
Global Deepwater Market
15
Recent fixtures
>$650,000 per day |
 Balance Sheet
($Millions)
Financial Overview
16
Long-term
Debt matures
in 2015
First Call
option
February
2013
December 31,
December 31,
June 30,
2010
2011
2012
Cash and cash equivalents
120.4
$
110.0
$
123.7
$
Restricted cash
29.0
7.0
5.9
Trade receivables
50.2
100.9
78.2
Inventory
19.8
24.4
33.6
Prepaid expenses and other current assets
11.5
16.9
13.0
230.9
259.3
254.5
Property and equipment, net
1,718.1
1,805.1
2,648.2
Investment in joint venture
-
-
-
Other assets
54.2
58.2
86.4
2,003.2
$
2,122.5
$
2,989.1
$
Accounts payable and accrued liabilities
107.5
$
148.1
$
197.0
$
Short-term debt
8.6
-
-
Current maturities of long-term debt
-
-
-
116.1
148.1
197.0
Long–term debt
1,103.5
1,246.4
2,082.7
Other long term liabilities
13.5
29.8
20.1
Shareholders' Equity
Paid-in capital
854.8
860.8
865.2
Retained Earnings
(84.7)
(162.6)
(175.8)
Accumulated other comprehensive loss
-
-
-
Total shareholders’
equity
770.2
698.2
689.4
2,003.2
$
2,122.5
$
2,989.1
$
Outstanding shares
289.7
291.2
292.4
Book value per share
2.66
$
2.40
$
2.36
$
|
 EBITDA
Low
6.5x
Today’s
Peer Avg.
8.8x
Historical
Peer Avg.
11.6x
$400 million
$2.04
$4.91
$8.42
$450 million
$3.04
$6.29
$10.23
$500 million
$4.06
$7.66
$12.05
$550 million
$5.08
$9.04
$13.87
Implied
Values
–
EV/EBITDA
Source: Jefferies
Price to Book Value
Key Drivers Near Term –
•
Achieve high productive time on Platinum
Explorer •
Improving dayrate contract fixtures on jackups
•
Commencement of operations in US GOM for Titanium
Explorer •
Contract for the Tungsten Explorer
•
Refinance $2 billion debt in 2013
17
Significant Upside Valuation Potential
Peer Group (current)
Peer Group (2009-2010)
Peer Group (2005-2009)
VTG
140%
190%
300%
64% |
 Historical Financial
Information ($ Millions)
Financial Overview
18
Achieved record Revenue and
Adjusted EBITDA in 1 Quarter 2012
Quarter Ended
Revenue
Adjusted EBITDA
$140.0
$120.0
$100.0
$80.0
$60.0
$40.0
$20.0
$0.0
$14.3
$6.4
$22.2
$9.5
$36.4
$14.2
$38.6
$58.3
$5.0
$25.3
$68.4
$24.6
$66.9
$21.3
$84.9
$16.9
$124.6
$42.8
$120.9
$49.7
$118.5
$44.8
$121.3
$47.3
$131.8
$60.3
$105.1
$50.9
3/31/2009
6/30/2009
9/30/2009
12/31/2009
3/31/2010
6/30/2010
9/30/2010
12/31/2010
3/31/2011
6/30/2011
9/30/2011
12/31/2011
3/31/2012
6/30/2012
st |
 Reconciliation of Net Income (Loss) to Adjusted EBITDA
($Millions)
Appendix
19
3/31/2010
6/30/2010
9/30/2010
12/31/2010
3/31/2011
6/30/2011
9/30/2011
12/31/2011
3/31/2012
6/30/2012
Net income (loss)
6.0
$
(7.0)
$
(33.6)
$
(13.0)
$
(18.7)
$
(40.1)
$
(11.9)
$
(7.3)
$
(1.2)
$
(10.0)
$
Interest expense, net
8.0
13.3
13.9
14.1
41.5
39.3
37.1
37.5
36.8
36.2
Income tax provision (benefit)
2.3
8.4
2.8
5.5
2.9
7.8
2.0
(1.2)
5.8
6.1
Depreciation
7.5
8.4
8.8
8.8
16.1
16.0
16.0
16.4
16.6
16.4
Loss on debt extinguishment
-
-
24.0
-
-
25.2
-
-
-
-
Loss on acquisition of subsidiary
-
-
3.8
-
-
-
-
-
-
-
EBITDA
23.8
$
23.1
$
19.7
$
15.4
$
41.9
$
48.2
$
43.2
$
45.4
$
58.0
$
48.7
$
Share-based compensation expense
1.5
1.5
1.6
1.5
0.9
1.5
1.6
1.9
2.3
2.2
Adjusted EBITDA
25.3
$
24.6
$
21.3
$
16.9
$
42.8
$
49.7
$
44.8
$
47.3
$
60.3
$
50.9
$ |