Vantage Drilling CO - FORM 8-K - EX-99 - PRESS RELEASE DATED AUGUST 5, 2014. - August 5, 2014

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Vantage Drilling Company Reports Second Quarter 2014 Results

HOUSTON, TX--(MARKET WIRE)-August 5, 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.

Public & Investor Relations Contact:

Paul A. Bragg

Chairman & Chief Executive Officer

Vantage Drilling Company

(281) 404-4700

 

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,
2014

December 31,
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

 

 

Vantage Drilling CO Reports