Vantage Drilling International Reports Second Quarter Results for 2022

Houston, Texas, UNITED STATES


HOUSTON, Aug. 11, 2022 (GLOBE NEWSWIRE) -- Vantage Drilling International ("Vantage" or the “Company”) reported net income attributable to controlling interest of approximately $48.1 million, or  $3.61 per diluted share, for the three months ended June 30, 2022, based on the weighted average shares outstanding, as compared to a net loss attributable to controlling interest of $29.0 million, or $2.21 per diluted share, for the three months ended June 30, 2021.

The net income is a result of the sale of the Emerald Driller Company (“EDC”) and its three jackup rigs, the Emerald Driller, the Aquamarine Driller, and the Sapphire Driller, which closed on May 27, 2022.  The Company received $170.0 million as purchase price consideration and $30.0 million in certain contract preparation expense reimbursements, and as a result, a net gain of $60.8 million was recognized during the three months ended June 30, 2022.  The gain is subject to potential adjustments contemplated by the relevant share purchase agreement, any such adjustments to be finalized by September 24, 2022. 

As of June 30, 2022, Vantage had approximately $246.3 million in cash, including $18.9 million of restricted cash, compared to $90.6 million in cash, including $17.3 million of restricted cash, at December 31, 2021. The Company used $32.0 million in cash from operations during the second quarter of 2022 compared to $25.6 million used during the same period of 2021. 

Ihab Toma, CEO, commented: “As previously announced, we are very pleased to have closed the sale of EDC to ADES Arabia and to support their operations in Qatar.  The sale meaningfully improved the Company’s liquidity.”

Mr. Toma continued: “With regard to the rigs we own and manage, we continue to see a constructive environment as rig activity levels remain strong.  Our focus remains on taking advantage of the recovery that is underway to secure higher dayrates and continuing to provide safe, efficient and reliable operations for our clients.”

Vantage, a Cayman Islands exempted company, is an offshore drilling contractor, with a fleet of two ultra-deepwater drillships, and two 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 gas companies. Vantage also markets, operates and provides management services in respect of, third party-owned drilling units. www.vantagedrilling.com. 

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.

Non-GAAP Measures

We report our financial results in accordance with generally accepted accounting principles (GAAP) in the United States.  However, in our earnings release and during our earnings calls we may reference company information that does not conform to GAAP.  Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP.  Management believes that an analysis of this data is meaningful to investors because it provides insight with respect to ongoing operating results of the Company and allows investors to better evaluate the financial results of the Company.  However, these measures should not be viewed as an alternative to or substitute for GAAP measures of performance, and these non-GAAP measures may not be consistent with previously published Company reports on Forms 10-K, 10-Q and 8-K.  Non-GAAP measures we may reference have been reconciled to the nearest GAAP measure in the tables entitled Reconciliation of GAAP to Non-GAAP Financial Measures below.

Public & Investor Relations Contact:
Douglas E. Stewart
Chief Financial Officer and General Counsel
Vantage Drilling International
C/O Vantage Energy Services, Inc.
777 Post Oak Blvd., Suite 440
Houston, Texas 77056
(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, 
  2022  2021  2022  2021 
Revenue            
Contract drilling services $42,744  $31,655  $87,657  $49,380 
Management fees  2,840   497   3,943   595 
Reimbursables and other  27,654   3,449   39,969   5,792 
Total revenue  73,238   35,601   131,569   55,767 
Operating costs and expenses            
Operating costs  59,405   36,056   103,338   61,413 
General and administrative  6,910   4,967   13,492   10,462 
Depreciation  11,087   14,161   22,382   28,286 
Gain on EDC Sale  (60,781)     (60,781)   
Total operating costs and expenses  16,621   55,184   78,431   100,161 
Income (loss) from operations  56,617   (19,583)  53,138   (44,394)
Other (expense) income            
Interest income  7   10   11   110 
Interest expense and other financing charges  (8,503)  (8,511)  (17,007)  (17,021)
Other, net  (1,011)  (179)  (1,786)  (793)
Total other expense  (9,507)  (8,680)  (18,782)  (17,704)
Income (loss) before income taxes  47,110   (28,263)  34,356   (62,098)
Income tax (benefit) provision  (1,221)  720   217   2,882 
Net income (loss)  48,331   (28,983)  34,139   (64,980)
Net income (loss) attributable to noncontrolling interests  232   (18)  938   (31)
Net income (loss) attributable to shareholders $48,099  $(28,965) $33,201  $(64,949)
             
EBITDA (1) $66,461  $(5,583) $72,796  $(16,870)
             
Earnings (loss) per share            
Basic $3.67  $(2.21) $2.53  $(4.95)
Diluted $3.61  $(2.21) $2.49  $(4.95)
Weighted average ordinary shares outstanding,            
Basic  13,115   13,115   13,115   13,115 
Diluted  13,332   13,115   13,330   13,115 
             
(1) EBITDA represents net income (loss) before (i) interest income (expense), (ii) provision for income taxes and (iii) depreciation and amortization expense.  EBITDA is not a financial measure under GAAP as defined under the rules of the SEC, and is intended as a supplemental measure of our performance.  We believe this measure is commonly used by analysts and investors to analyze and compare companies on the basis of operating performance. 
             
Vantage Drilling International 
Supplemental Operating Data 
(Unaudited, in thousands, except percentages) 
             
  Three Months Ended June 30,  Six Months Ended June 30, 
  2022  2021  2022  2021 
Operating costs and expenses            
Jackups $10,249  $22,170  $18,674  $36,319 
Deepwater  15,934   8,820   30,477   16,064 
Managed Rigs  7
   756   1
   756 
Held for Sale (2)  3,891      10,712    
Operations support  2,930   2,317   5,867   4,529 
Reimbursables  26,394
   1,993   37,607
   3,745 
Total operating costs and expenses $59,405  $36,056  $103,338  $61,413 
Utilization            
Jackups  98.8%  39.9%  79.6%  35.3%
Deepwater  99.7%  49.7%  99.2%  49.4%
Held for Sale (2)  47.0% N/A   62.3% N/A 
             
(2) Included in the sale of EDC, which owns the Emerald Driller, Sapphire Driller and Aquamarine Driller.  Each of these rigs were classified as held for sale on our Consolidated Balance Sheets up to the closing date, which was on May 27, 2022, during the current period and at December 31, 2021. 


Vantage Drilling International 
Consolidated Balance Sheets 
(In thousands, except share and par value information) 
(Unaudited) 
       
  June 30, 2022  December 31, 2021 
       
ASSETS      
Current assets      
Cash and cash equivalents $227,328  $73,343 
Restricted cash  3,323   1,621 
Trade receivables, net of allowance for doubtful accounts of $5.0 million, each period  79,399   37,527 
Materials and supplies  38,906   37,580 
Assets held for sale     117,117 
Prepaid expenses and other current assets  13,191   18,309 
Total current assets  362,147   285,497 
Property and equipment      
Property and equipment  645,304   645,622 
Accumulated depreciation  (287,314)  (266,018)
Property and equipment, net  357,990   379,604 
Operating lease ROU assets  1,610   2,450 
Other assets  32,549   31,843 
Total assets $754,296  $699,394 
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current liabilities      
Accounts payable $42,870  $31,420 
Other current liabilities  53,819   31,533 
Liabilities held for sale     6,720 
Total current liabilities  96,689   69,673 
Long–term debt, net of discount and financing costs of $2,322 and $3,142, respectively  347,678   346,858 
Other long-term liabilities  9,958   17,012 
Commitments and contingencies      
Shareholders' equity      
Ordinary shares, $0.001 par value, 50 million shares authorized; 13,115,026 shares issued and outstanding, each period  13   13 
Additional paid-in capital  633,828   633,847 
Accumulated deficit  (336,591)  (369,792)
Controlling interest shareholders' equity  297,250   264,068 
Noncontrolling interests  2,721   1,783 
Total equity  299,971   265,851 
Total liabilities and shareholders' equity $754,296  $699,394 


Vantage Drilling International 
Consolidated Statement of Cash Flows 
(In thousands) 
(Unaudited) 
  Six Months Ended June 30, 
  2022  2021 
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income (loss) $34,139  $(64,980)
Adjustments to reconcile net income (loss) to net cash used in operating activities      
Depreciation expense  22,382   28,286 
Amortization of debt financing costs  820   819 
Share-based compensation expense  44   337 
Deferred income tax expense  410   236 
Gain on disposal of assets  (1,630)  (2,715)
Gain on EDC Sale  (60,781)   
Changes in operating assets and liabilities:      
Trade receivables, net  (58,864)  (6,888)
Materials and supplies  (1,811)  (1,481)
Prepaid expenses and other current assets  2,918   (1,440)
Other assets  (25,043)  (1,821)
Accounts payable  29,564   2,798 
Other current liabilities and other long-term liabilities  17,696   5,905 
Net cash used in operating activities  (40,156)  (40,944)
CASH FLOWS FROM INVESTING ACTIVITIES      
Additions to property and equipment  (7,285)  (2,711)
Net proceeds from EDC Sale  200,000    
Net proceeds from sale of assets  3,100    
Net proceeds from sale of Titanium Explorer     13,557 
Net cash provided by investing activities  195,815   10,846 
CASH FLOWS FROM FINANCING ACTIVITIES      
Net cash provided by financing activities      
Net increase (decrease) in unrestricted and restricted cash and cash equivalents  155,659   (30,098)
Unrestricted and restricted cash and cash equivalents—beginning of period  90,608   154,487 
Unrestricted and restricted cash and cash equivalents—end of period $246,267  $124,389 


Vantage Drilling International 
Non-GAAP Measures 
(In thousands) 
(Unaudited) 
             
  Three Months Ended June 30,  Six Months Ended June 30, 
Reconciliation of EBITDA 2022  2021  2022  2021 
Net income (loss) attributable to shareholders $48,099  $(28,965) $33,201  $(64,949)
Depreciation  11,087   14,161   22,382   28,286 
Interest income  (7)  (10)  (11)  (110)
Interest expense and other financing costs  8,503   8,511   17,007   17,021 
Income tax (benefit) provision  (1,221)  720   217   2,882 
EBITDA $66,461  $(5,583) $72,796  $(16,870)