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Vantage Drilling Company Reports Fourth Quarter and Record Annual Results for 2014

2015-03-06 06:00 ET - News Release

HOUSTON, TX -- (Marketwired) -- 03/06/15

Vantage Drilling Company ("Vantage" or the "Company") (NYSE MKT: VTG) reports net income for the three months ended December 31, 2014 of $12.6 million or $0.04 per diluted share as compared to earnings of $30.3 million or $.09 per diluted share for the three months ended December 31, 2013. The three months ended December 31, 2014 includes a gain on the early retirement of debt of approximately $4.2 million.

The $4.2 million gain on the early retirement of debt represents the discount to the face value of debt that we purchased in the open market, net of writing off deferred financing costs. The total debt retirement for the quarter, including scheduled maturities and open market purchase of debt, totaled approximately $60.6 million at face value.

For the twelve months ended December 31, 2014, Vantage reports record net income of approximately $38.3 million or $.12 per diluted share, excluding net gains from the early retirement of debt of approximately $3.8 million as compared to net income of approximately $16.5 million or $.05 per diluted share, excluding approximately $98.3 million of charges for the early retirement of debt. Including the gains and losses associated with the early retirement of debt, for the twelve months ended December 31, 2014, Vantage reports net income of $42.0 million or $.14 per diluted as compared to a net loss of $81.8 million or ($.27) per diluted share for the same period in 2013.

During 2014, the total debt retirement, including scheduled maturities, discretionary Term Loan payments and open market purchases, was approximately $199.7 million at face value. In connection with our discretionary Term Loan payments and open market purchases, we recognized a net gain on the early retirement of debt of approximately $3.8 million.

Paul Bragg, Chairman and Chief Executive Officer, commented, "We are pleased to announce Vantage completed 2014 with record revenues, EBITDA and net income for the year. With strong cash flows, we were able to exceed our targeted debt retirement goal and strengthen the balance sheet."

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.


                          Vantage Drilling Company
                    Consolidated Statement of Operations
                  (In thousands, except per share amounts)

                            Three Months Ended
                               December 31,         Year Ended December 31,
                         ------------------------  ------------------------
                             2014         2013         2014         2013
                         -----------  -----------  -----------  -----------
                         (Unaudited)  (Unaudited)
Revenues
  Contract drilling
   services              $   204,305  $   216,775  $   807,164  $   666,129
  Management fees              1,922        5,111       14,396       14,622
  Reimbursables                9,633       16,651       54,001       51,309
                         -----------  -----------  -----------  -----------
    Total revenues           215,860      238,537      875,561      732,060
                         -----------  -----------  -----------  -----------
  Operating costs and
   expenses
  Operating costs            110,510       99,349      421,505      335,915
  General and
   administrative              7,645        9,240       34,106       32,612
  Depreciation                31,716       31,882      126,610      106,609
                         -----------  -----------  -----------  -----------
    Total operating
     costs and expenses      149,871      140,471      582,221      475,136
                         -----------  -----------  -----------  -----------
Income from operations        65,989       98,066      293,340      256,924
Other income (expense)
  Interest income                  7           26           45          221
  Interest expense and
   other financing
   charges                   (51,775)     (55,853)    (213,924)    (214,149)
  Gain (loss) on debt
   extinguishment              4,214            -        3,752      (98,327)
  Other, net                  (1,795)        (574)      (1,179)       1,621
                         -----------  -----------  -----------  -----------
    Total other income
     (expense)               (49,349)     (56,401)    (211,306)    (310,634)
                         -----------  -----------  -----------  -----------
Income (loss) before
 income taxes                 16,640       41,665       82,034      (53,710)
Income tax provision           4,020       11,349       40,028       28,115
                         -----------  -----------  -----------  -----------
Net income (loss)        $    12,620  $    30,316  $    42,006  $   (81,825)
                         ===========  ===========  ===========  ===========

Earnings (loss) per
 share
  Basic                  $      0.04  $      0.10  $      0.14  $     (0.27)
  Diluted                $      0.04  $      0.09  $      0.14  $     (0.27)



                          Vantage Drilling Company
                        Supplemental Operating Data
               (Unaudited, in thousands, except percentages)

                            Three Months Ended
                               December 31,         Year Ended December 31,
                         ------------------------  ------------------------
                             2014         2013         2014         2013
                         -----------  -----------  -----------  -----------
Operating costs and
 expenses
  Jackups                $    24,192  $    21,288  $    94,754  $    89,253
  Deepwater                   64,887       56,092      235,343      164,775
  Operations support           9,464        8,108       40,502       33,267
  Reimbursables               11,967       13,861       50,906       48,620
                         -----------  -----------  -----------  -----------
                         $   110,510  $    99,349  $   421,505  $   335,915
                         -----------  -----------  -----------  -----------

Utilization
  Jackups                      100.0%        89.4%        99.2%        87.1%
  Deepwater                     86.5%        90.3%        85.1%        93.3%



                          Vantage Drilling Company
                         Consolidated Balance Sheet
                (In thousands, except par value information)

                                                 December 31,  December 31,
                                                     2014          2013
                                                 ------------  ------------
                     ASSETS
Current assets
  Cash and cash equivalents                      $     82,812  $     54,686
  Restricted cash                                           -         2,125
  Trade receivables                                   153,428       168,654
  Inventory                                            65,892        55,804
  Prepaid expenses and other current assets            28,618        23,717
                                                 ------------  ------------
    Total current assets                              330,750       304,986
                                                 ------------  ------------
Property and equipment
  Property and equipment                            3,524,566     3,472,407
  Accumulated depreciation                           (406,674)     (281,759)
                                                 ------------  ------------
    Property and equipment, net                     3,117,892     3,190,648
                                                 ------------  ------------
Other assets
  Investment in joint venture                           1,318        32,482
  Other assets                                         79,897       100,027
                                                 ------------  ------------
    Total other assets                                 81,215       132,509
                                                 ------------  ------------
Total assets                                     $  3,529,857  $  3,628,143
                                                 ============  ============

      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable                               $     59,139  $     65,115
  Accrued liabilities                                 101,537        96,382
  Current maturities of long-term debt and
   revolving credit agreement, net of discount
   of $1,181                                           95,378        63,500
                                                 ------------  ------------
    Total current liabilities                         256,054       224,997
                                                 ------------  ------------
Long-term debt, net of discount of $25,875 and
 $39,325                                            2,632,802     2,852,050
Other long-term liabilities                            85,327        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; 307,808 and 304,101 shares
   issued and outstanding                                 308           304
  Additional paid-in capital                          905,136       896,928
  Accumulated deficit                                (349,770)     (391,776)
                                                 ------------  ------------
    Total shareholders' equity                        555,674       505,456
                                                 ------------  ------------
Total liabilities and shareholders' equity       $  3,529,857  $  3,628,143
                                                 ============  ============



                          Vantage Drilling Company
                    Consolidated Statement of Cash Flows
                               (In thousands)
                                                   Year Ended December 31,
                                                 --------------------------
                                                     2014          2013
                                                 ------------  ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                $     42,006  $    (81,825)
Adjustments to reconcile net income (loss) to
 net cash provided by (used in) operating
 activities:
  Depreciation expense                                126,610       106,609
  Amortization of debt financing costs                 11,535        12,356
  Amortization of debt discount                        11,266         7,523
  Non-cash (gain) loss on debt extinguishment          (3,752)        6,070
  Share-based compensation expense                      8,212         7,064
  Deferred income tax expense (benefit)                  (305)          997
  Equity in loss of joint venture                         570           513
  Loss on disposal of assets                            3,008         1,603
Changes in operating assets and liabilities:
  Restricted cash                                       2,125         1,390
  Trade receivables                                    15,226       (49,202)
  Inventory                                           (10,088)      (17,860)
  Prepaid expenses and other current assets            (4,914)        1,169
  Other assets                                          6,307       (12,654)
  Accounts payable                                     (5,976)       14,206
  Accrued liabilities and other long-term
   liabilities                                         45,794       (46,390)
                                                 ------------  ------------
    Net cash provided by (used in) operating
     activities                                       247,624       (48,431)
                                                 ------------  ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Additions to property and equipment                 (51,746)     (564,319)
  Return of investment in joint venture                23,250             -
  Proceeds from sale of property and equipment              -            22
                                                 ------------  ------------
    Net cash used in investing activities             (28,496)     (564,297)
                                                 ------------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of senior secured
   notes, net                                               -       775,000
  Proceeds from the issuance of term loan, net              -       344,750
  Proceeds from the issuance of senior
   convertible notes                                        -       100,000
  Repayment of long-term debt                        (181,002)   (1,033,874)
  Proceeds from (repayment of) revolving credit
   agreement, net                                     (10,000)       10,000
  Debt issuance costs                                       -       (31,188)
                                                 ------------  ------------
  Net cash provided by (used in) financing
   activities                                        (191,002)      164,688
                                                 ------------  ------------
    Net increase (decrease) in cash and cash
     equivalents                                       28,126      (448,040)
  Cash and cash equivalents -- beginning of year       54,686       502,726
                                                 ------------  ------------
  Cash and cash equivalents -- end of year       $     82,812  $     54,686
                                                 ============  ============


Public & Investor Relations Contact:
Paul A. Bragg
Chairman & Chief Executive Officer
Vantage Drilling Company
(281) 404-4700

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