Vantage Drilling International Reports Second Quarter Results for 2022

Vantage Drilling International

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	)