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Vantage Drilling International

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Vantage Drilling International Reports Second Quarter Results for 2016

HOUSTON, TX--(Marketwired - Aug 11, 2016) - Vantage Drilling International ("Vantage" or the "Company") reported a net loss of approximately $35.7 million or ($7.15) per share for the three months ended June 30, 2016 as compared to the Predecessor reporting net income of approximately $27.9 million for the three months ended June 30, 2015. The weighted-average shares outstanding for the three months ended June 30, 2016 was 5,000,053 whereas in the prior year, as a wholly-owned subsidiary, the Predecessor did not have a comparable outstanding ordinary shares.

Upon emergence from Chapter 11 bankruptcy on February 10, 2016, Vantage adopted fresh-start accounting, which resulted in the Company becoming a new entity for financial reporting purposes. References to "Successor" relate to the financial position and results of operations of the reorganized Vantage as of and subsequent to February 10, 2016. References to "Predecessor" refer to the financial position of Vantage as of and prior to February 10, 2016 and the results of operations prior to February 10, 2016. As a result of the application of fresh-start accounting and the effects of the implementation of our Plan of Reorganization, the financial statements on or after February 10, 2016 are not comparable with the financial statements prior to that date.

For the period from February 10, 2016 to June 30, 2016, Vantage reported a net loss of approximately $64.8 million or ($12.95) per share and the Predecessor for the period January 1, 2016 to February 10, 2016 reported a net loss of approximately $471.0 million. For the six months ended June 30, 2015, the Predecessor reported net income of approximately $50.6 million.

Douglas Smith, Chief Financial Officer, commented, "While market conditions continue to pressure contract utilization during the second quarter, we continued our very strong operating performance with 99% up-time across our operating fleet."

As of June 30, 2016, Vantage had approximately $240.5 million of available cash as compared to $249.2 million as of March 31, 2016. Mr. Smith continued, "We remain focused on maintaining a strong balance sheet and reducing our cash outflow. During the quarter, we incurred expenses associated with preparing the rigs for warm stacking and cost associated with the headcount reductions. We believe the cash on hand provides us adequate liquidity to ultimately put our rigs back to work."

Vantage, a Cayman Islands exempted company, is an offshore drilling contractor, with a fleet of three ultra-deepwater drillships and four 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 International
Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited)
Successor Predecessor
Three Months Ended June 30, 2016 Period from February 10, 2016 to June 30, 2016 Period from January 1, 2016 to February 10, 2016 Three Months Ended June 30, 2015 Six Months Ended June 30, 2015
Revenue
Contract drilling services $ 40,901 $ 64,960 $ 20,891 202,888 410,869
Management fees 1,712 2,671 752 1,902 3,783
Reimbursables 5,898 10,666 1,897 9,593 20,252
Total revenue 48,511 78,297 23,540 214,383 434,904
Operating costs and expenses
Operating costs 34,965 62,404 25,213 94,709 190,059
General and administrative 8,695 17,863 2,558 6,701 12,691
Depreciation 18,381 30,457 10,696 31,781 63,404
Total operating costs and expenses 62,041 110,724 38,467 133,191 266,154
Income (loss) from operations (13,530 ) (32,427 ) (14,927 ) 81,192 168,750
Other income (expense)
Interest income 9 15 3 13 25
Interest expense and other financing charges (contractual interest of $23,219 for the period from January 1, 2016 to February 10, 2016) (18,772 ) (29,422 ) (1,728 ) (45,908 ) (92,027 )
Gain (loss) on debt extinguishment -- -- -- (2 ) 10,823
Other, net (1,516 ) 318 (69 ) 1,971 1,820
Reorganization items (487 ) (641 ) (452,923 ) -- --
Total other income (expense) (20,766 ) (29,730 ) (454,717 ) (43,926 ) (79,359 )
Income (loss) before income taxes (34,296 ) (62,157 ) (469,644 ) 37,266 89,391
Income tax provision 1,438 2,605 2,371 8,862 38,151
Net income (loss) (35,734 ) (64,762 ) (472,015 ) 28,404 51,240
Net income (loss) attributable to noncontrolling interests -- -- (969 ) 477 667
Net income (loss) attributable to VDI $ (35,734 ) $ (64,762 ) $ (471,046 ) $ 27,927 $ 50,573
Net loss per share, basic and diluted $ (7.15 ) $ (12.95 ) N/A N/A N/A
Weighted average successor shares outstanding, basic and diluted 5,000 5,000 N/A N/A N/A
Vantage Drilling International
Supplemental Operating Data
(Unaudited, in thousands, except percentages)
Successor Predecessor
Three Months Ended June 30, 2016 Period from February 10, 2016 to June 30, 2016 Period from January 1, 2016 to February 10, 2016 Three Months Ended June 30, 2015 Six Months Ended June 30, 2015
Operating costs and expenses
Jackups $ 12,441 $ 20,719 $ 5,975 $ 20,748 $ 45,011
Deepwater 15,372 28,518 15,550 60,805 116,898
Operations support 2,596 4,811 2,219 6,966 15,688
Reimbursables 4,556 8,356 1,469 6,190 12,462
$ 34,965 $ 62,404 $ 25,213 $ 94,709 $ 190,059
Utilization
Jackups 52.2 % 55.0 % 53.6 % 75.0 % 85.5 %
Deepwater 33.3 % 33.3 % 33.3 % 98.2 % 95.9 %
Vantage Drilling International
Consolidated Balance Sheet
(In thousands, except share and par value information)
(Unaudited)
Successor Predecessor
June 30,
2016
December 31,
2015
ASSETS
Current assets
Cash and cash equivalents $ 240,502 $ 203,420
Restricted cash 1,000 -
Trade receivables 28,150 70,722
Inventory 46,371 64,495
Prepaid expenses and other current assets 17,127 22,106
Total current assets 333,150 360,743
Property and equipment
Property and equipment 898,316 3,481,006
Accumulated depreciation (30,278 ) (532,619 )
Property and equipment, net 868,038 2,948,387
Other assets 10,815 23,050
Total assets $ 1,212,003 $ 3,332,180
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 34,639 $ 49,437
Accrued liabilities 15,619 21,702
Current maturities of long-term debt 1,430 --
VDC note payable -- 61,477
Total current liabilities 51,688 132,616
Long-term debt, net of discount of $127,974 and $0 839,831 --
Other long-term liabilities 11,269 33,097
Liabilities subject to compromise -- 2,694,456
Commitments and contingencies
Shareholders' equity
Predecessor ordinary shares, $0.001 par value, 50 million shares authorized; one thousand shares issued and outstanding -- --
Predecessor additional paid-in capital -- 595,119
Successor ordinary shares, $0.001 par value, 50 million shares authorized; 5,000,053 shares issued and outstanding 5 --
Successor additional paid-in capital 373,972 --
Accumulated deficit (64,762 ) (138,363 )
Total VDI shareholders' equity 309,215 456,756
Noncontrolling interests -- 15,255
Total equity 309,215 472,011
Total liabilities and equity $ 1,212,003 $ 3,332,180
Vantage Drilling International
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
Successor Predecessor
Period from February 10, 2016 to June 30, 2016 Period from January 1, 2016 to February 10, 2016 Six Months Ended June 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (64,762 ) $ (472,015 ) $ 51,240
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense 30,457 10,696 63,404
Amortization of debt financing costs 193 -- 4,238
Amortization of debt discount 18,945 -- 1,205
Reorganization items -- 430,210 --
Non-cash gain on debt extinguishment -- -- (10,814 )
Deferred income tax benefit (1,741 ) -- (534 )
Loss on disposal of assets 624 -- 158
Changes in operating assets and liabilities:
Restricted cash -- (1,000 ) --
Trade receivables 46,147 (3,575 ) 8,561
Inventory (2,129 ) 223 (340 )
Prepaid expenses and other current assets (1,914 ) 6,893 8,794
Other assets 569 941 4,101
Accounts payable 92 (14,890 ) (86,701 )
Accrued liabilities and other long-term liabilities (26,277 ) 21,152 (18,653 )
Net cash provided by (used in) operating activities 204 (21,365 ) 24,659
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (7,982 ) 116 (17,017 )
Net cash provided by (used in) investing activities (7,982 ) 116 (17,017 )
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of long-term debt (715 ) (7,000 ) (54,605 )
Proceeds from issuance of 10% Second Lien Notes - 76,125 -
Debt issuance costs (51 ) (2,250 ) --
Net cash provided by (used in) financing activities (766 ) 66,875 (54,605 )
Net increase (decrease) in cash and cash equivalents (8,544 ) 45,626 (46,963 )
Cash and cash equivalents--beginning of period 249,046 203,420 75,801
Cash and cash equivalents--end of period $ 240,502 $ 249,046 $ 28,838

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