HOUSTON, Aug. 14, 2019 (GLOBE NEWSWIRE) -- Vantage Drilling International ("Vantage" or the “Company”) reported net income attributable to controlling interest of approximately $590.7 million or $116.96 per share for the three months ended June 30, 2019 compared to a net loss attributable to controlling interest of $31.1 million or $6.22 per share for the three months ended June 30, 2018.

The net income stems from the recent payments by Petrobras Venezuela Investments & Services, BV, (“PVIS”), a subsidiary of Petroleo Brasileiro S.A. (“Petrobras”), of approximately $690.8 million to Vantage Deepwater Company, one of our subsidiaries (“VDEEP”), and by Petrobras America, Inc., a subsidiary of Petrobras (“PAI”), of approximately $10.1 million to Vantage Deepwater Drilling, Inc., also one of our subsidiaries (“VDDI”).  The payments were made pursuant to an agreement between the parties and in satisfaction of the previously rendered arbitration award and related U.S. judgment confirming the award. 

The dispute arose following the Petrobras’s parties’ termination of the Agreement for the Provision of Drilling Services for the Titanium Explorer dated February 4, 2009 (the “Drilling Contract”) between PVIS and VDEEP and which had been novated to PAI and VDDI. The Petrobras parties claimed the Vantage parties had breached their obligations under the Drilling Contract.  The Vantage parties immediately filed the international arbitration claim against PAI, PVIS, and Petrobras, claiming wrongful termination of the Drilling Contract.

In July 2018, the international arbitration panel ruled in favor of the Vantage entities, rendering an arbitration award of $622 million plus interest against PVIS, PAI and Petrobras.  In May 2019, the U.S. District Court for the Southern District of Texas confirmed the arbitration award and denied the Petrobras parties’ petition to vacate the award.

As previously announced, the Petrobras parties filed their notice of appeal to the U.S. Court of Appeals for the Fifth Circuit seeking the reversal of the U.S. judgment.  The Vantage parties believe there is no basis for reversal and intend to vigorously contest the appeal.

The three months ended June 30, 2019 includes Drilling Contract termination revenue of approximately $594.0 million and interest income of approximately $106.9 million associated with the payments, together with related legal contingency fee and income taxes. Adjusting for these items, pro-forma net loss for the three months ended June 30, 2019 was approximately $37.4 million or $7.41 per share.

As of June 30, 2019, Vantage had approximately $896.8 million in cash, including $10.4 million of restricted cash, compared to $239.4 million in cash, including $14.4 million of restricted cash at December 31, 2018.   

Ihab Toma, CEO, commented. “I am very pleased about our agreement with the Petrobras parties and their payments’ to us in aggregate of approximately $701 million.  Separately, I am pleased to report that we continue to achieve operational and safety excellence, recording 99% revenue efficiency for the quarter and over two years without a lost time incident. We remain focused on providing the best service to our customers.”

Vantage, a Cayman Islands exempted company, is an offshore drilling contractor, with a fleet of three ultra-deepwater drillships and five 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 globally for major, national and independent oil and natural gas companies. Vantage also provides construction supervision services and preservation management 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.

Public & Investor Relations Contact:

     Thomas J. Cimino
     Chief Financial Officer
     Vantage Drilling International
     (281) 404-4700


Vantage Drilling International
Consolidated Statement of Operations
(In thousands, except per share data)
(Unaudited)
  Three Months Ended June 30, Six Months Ended June 30, 
   2019   2018   2019   2018  
Revenue         
Contract drilling services $  35,765  $  55,183  $  65,745  $  106,778  
Contract termination revenue    594,029     —     594,029     —  
Reimbursables and other    6,589     5,278     11,164     11,346  
Total revenue    636,383     60,461     670,938     118,124  
Operating costs and expenses         
Operating costs    38,081     44,650     76,623     85,635  
General and administrative    70,702     6,278     79,370     13,632  
Depreciation    18,499     17,711     37,032     35,579  
Total operating costs and expenses    127,282     68,639     193,025     134,846  
Income (loss) from operations    509,101     (8,178)    477,913     (16,722) 
Other income (expense)         
Interest income    108,305     220     109,369     441  
Interest expense and other financing charges    (10,435)    (19,412)    (26,250)    (38,683) 
Other, net    (58)    (514)    124     (1,084) 
Total other expense    97,812     (19,706)    83,243     (39,326) 
Income (loss) before income taxes    606,913     (27,884)    561,156     (56,048) 
Income tax provision    16,454     3,210     18,601     7,183  
Net income (loss)    590,459     (31,094)    542,555     (63,231) 
Net loss attributable to noncontrolling interests    (270)    —     (284)    —  
Net income (loss) attributable to shareholders $  590,729  $  (31,094) $  542,839  $  (63,231) 
Earnings (loss) per share         
Basic $  116.96  $  (6.22) $  107.60  $  (12.65) 
Diluted $  116.86  $  (6.22) $  107.38  $  (12.65) 
Vantage Drilling International 
Supplemental Operating Data 
(Unaudited, in thousands, except percentages) 
  
Three Months Ended June 30,
 Six Months Ended June 30, 
   2019   2018   2019   2018  
Operating costs and expenses         
Jackups $  14,108  $  16,523  $  31,853  $  30,985  
Deepwater    16,492     21,699     32,307     41,511  
Operations support    3,361     3,367     6,460     6,494  
Reimbursables    4,120     3,061     6,003     6,645  
  $  38,081  $  44,650  $  76,623  $  85,635  
          
Utilization         
Jackups  93.7%  88.5%  96.0%  87.3% 
Deepwater  49.2%  63.2%  40.9%  58.7% 

 

Vantage Drilling International
Consolidated Balance Sheet
(In thousands, except share and par value information)
(Unaudited)
     
  June 30, 2019 December 31,
2018
     
ASSETS    
Current assets    
Cash and cash equivalents $  886,343  $  224,967 
Restricted cash    5,640     10,362 
Trade receivables    31,478     28,431 
Inventory    45,461     45,195 
Prepaid expenses and other current assets    19,552     17,278 
Total current assets    988,474     326,233 
Property and equipment    
Property and equipment    1,002,161     996,139 
Accumulated depreciation    (245,393)    (208,836)
Property and equipment, net    756,768     787,303 
Operating lease right-of-use assets    7,682     - 
Other assets    13,483     16,026 
Total assets $  1,766,407  $  1,129,562 
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current liabilities    
Accounts payable $  107,899  $  44,372 
Accrued liabilities    33,653     17,983 
Total current liabilities    141,552     62,355 
Long–term debt, net of discount and financing costs of $7,240 and $12,914    1,118,552     1,109,011 
Other long-term liabilities    27,260     22,889 
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 earnings (deficit )    104,169     (438,670)
Controlling interest shareholders' equity    478,146     (64,693)
Noncontrolling interests    897     - 
Total equity    479,043     (64,693)
Total liabilities and shareholders’ equity $  1,766,407  $  1,129,562 
     

 

Vantage Drilling International
Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
  Six Months Ended June 30, 
   2019   2018  
CASH FLOWS FROM OPERATING ACTIVITIES     
Net income (loss) $  542,555  $  (63,231) 
          
Adjustments to reconcile net income (loss) to net cash provided by operating activities:     
Depreciation expense    37,032     35,579  
Amortization of debt financing costs    807     234  
Amortization of debt discount    5,354     24,647  
Amortization of contract value    1,643     3,130  
PIK interest on the Convertible Notes    3,845     3,823  
Share-based compensation expense    2,064     3,772  
Deferred income tax expense    497     592  
Loss (gain) on disposal of assets    109     (2,524) 
Changes in operating assets and liabilities:     
Trade receivables    (3,047)    4,289  
Inventory    (266)    63  
Prepaid expenses and other current assets    (2,274)    (3,833) 
Other assets    2,641     865  
Accounts payable    63,527     3,366  
Accrued liabilities and other long-term liabilities    8,799     (2,441) 
Net cash provided by operating activities    663,286     8,331  
CASH FLOWS FROM INVESTING ACTIVITIES     
Additions to property and equipment    (6,606)    (771) 
Down payment on Soehanah acquisition    —     (15,000) 
Proceeds from sale of Vantage 260    —     4,660  
Net cash used in investing activities    (6,606)    (11,111) 
CASH FLOWS FROM FINANCING ACTIVITIES     
Repayment of long-term debt    —     (5,815) 
Contributions from holders of noncontrolling interest    1,181     —  
Debt issuance costs    (487)    —  
Net cash provided by (used in) financing activities    694     (5,815) 
Net increase (decrease) in cash and cash equivalents    657,374     (8,595) 
Unrestricted and restricted cash and cash equivalents—beginning of period    239,387     195,455  
Unrestricted and restricted cash and cash equivalents—end of period $  896,761  $  186,860  
      

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