Pareto Securities’ 2 nd Offshore Drilling Conference April 18, 2012 New York, New York Vantage Drilling Company Exhibit 99.1 |
Some of the statements in this presentation constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward looking statements contained in this presentation involve risks and uncertainties as well as statements as to: • our limited operating history; • availability of investment opportunities; • general volatility of the market price of our securities; • changes in our business strategy; • our ability to consummate an appropriate investment opportunity within given time constraints; • availability of qualified personnel; • changes in our industry, interest rates, the debt securities markets or the general economy; • changes in governmental, tax and environmental regulations and similar matters; • changes in generally accepted accounting principles by standard-setting bodies; and • the degree and nature of our competition. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward- looking statements. Forward-Looking Statements 2 |
Symbol: VTG (NYSE AMEX) Location: HQ – Houston; Operations – Singapore; Marketing – Dubai Market Cap: $430 million Book Value: $700 million Enterprise Value: $1.6 billion Employees: > 1,000 Contract Backlog: $2.8 billion Owned Fleet: 4 Ultra-Premium Jackups 1 Ultra-Deepwater Drillship 1 Ultra-Deepwater Drillship preparing for transit to US GOM 1 Ultra-Deepwater Drillship under construction Managed Fleet: 1 Ultra-Deepwater Drillship under construction Corporate Overview 3 |
Acquisition of 100% of Titanium Explorer (formerly known as Dragonquest) announced on March 20, 2012; deal will close simultaneously with the delivery of the Titanium Explorer in April 2012. April 2, 2012, closed a $775.0 million 11.5% Senior Notes “Tack-on” financing at on offer price of 108%, resulting in net proceeds to Vantage of approximately $820.0 million to complete the financing of the Titanium Explorer acquisition and working capital. Expanded deepwater fleet with order of newbuild drillship Tungsten Explorer for Q2 2013 delivery Ultra-deepwater rates moving up rapidly, providing excellent contracting opportunity for newbuild Tungsten Explorer Q4 2010 - Took delivery of Platinum Explorer – on-time, on budget, commenced operations with ONGC, and achieved impressive utilization – First 12 months of operation – 92.4% utilization Completed 1 st Quarter 2012 @ 97.0% utilization High-specification jackup market experiencing upward momentum in rates with continued high utilization Commenced high-profile jackup contract for ultra-HPHT work in Malaysia @ $187,000 per day (inclusive of reimbursed upgrades); 14-21 month duration Recent Developments 4 |
Premium high-specification drilling units, including four jackup rigs and three drillships Premium Fleet Successful track record of managing, constructing, marketing and operating offshore drilling units In-house team of engineers and construction personnel overseeing complex construction projects All newbuilds delivered on budget and on time Jackup fleet has experienced approx. 99% of productive time for Vantage’s first 38 months in operation Proven Operational Track Record Significant cash flow visibility Contract backlog of approximately $2.8 billion with industry leading E&P Companies. Prior work experience includes a strong customer mix including: Significant Contract Coverage with High Quality Counterparties (1) PVEP Phu Quy Petroleum Operating Co. Ltd. is a joint venture interest between PetroVietnam Exploration Production Corp. and Total E&P Vietnam. Company Highlights 5 Total, ENI, Petrobras, ONGC, Petronas Cargali, PTT Thailand, Pearl Energy, Bowleven, Foxtrot International, Phu Quy (1) , and Salamander. Level of efficiency is exceptional for newly-constructed jackup rigs upon commencement of operations Total costs of owned fleet of four jackups, the Platinum Explorer drillship and the Titanium Explorer of approximately $2.5 billion Vantage’s modern rigs are capable of drilling to deeper depths and possess enhanced operational efficiency and technical capabilities, resulting in higher utilization, dayrates and margins |
Construction management arrangements for ultra-deepwater drillships, Dragonquest, and Dalian Developer on-going (Dragonquest construction contract will terminate upon the completion of the acquisition in April 2012). Completed significant newbuild projects including Aker drillships and SeaDragon semisubmersibles. Provided Vantage with significant engineering expertise and experience in Korean, Chinese and Singaporean shipyards. Management team with extensive experience; average of 29 years in the drilling industry Includes international and domestic public company experience with industry-leading peers involving numerous acquisitions and debt and equity financings. Experienced operating personnel. Construction Supervision and Management Arrangements Experienced Management and Operational Team Company Highlights (Cont’d) 6 |
Owned Assets • Delivered On-Time, On- Budget - December 2008 • Hired by Financial Institution to provide shipyard oversight following bid process • Largest drillship in the world currently under construction • Vessel will include oil storage and multi-purpose capabilities • Delivery Q1 2013 • Company owned newbuild project • Leverages shipyard experience • Favorable costs and delivery schedule • Delivery Q2 2013 Tungsten Explorer Premium Owned Fleet with a Proven Operational Track Record • Project 99% complete • 2 Successful newbuild at DSME • Delivery April 2012 Construction Management Projects Dalian Developer Newbuild Ultra-Premium Marine Pacific Class 375 Jackups Emerald Driller Sapphire Driller Aquamarine Driller Topaz Driller Platinum Explorer Ultra-Deepwater 12,000 ft Drillships • Delivered On-Time, On- Budget - November 2010 • Delivered On-Time, On- Budget - July 2009 • Delivered On-Time, On- Budget - December 2009 • Delivered On-Time, On- Budget - September 2009 Titanium Explorer Ultra-Deepwater Drillship 7 nd |
Business Strategy • Customer demand for new high-specification units supported by: Need for rigs well-suited for drilling through deep and complex formations and drilling horizontally Enhanced efficiency providing faster drilling and moving times Improved safety features and lower downtime for maintenance • Technological developments have made ultra-deepwater exploration more feasible and cost-effective in recent years • Water-depth capability and equipping of Vantage's ultra-deepwater drilling units is attractive for customers Will provide significant advantages in obtaining long-term ultra-deepwater drilling contracts in the future • Long-term drillship contracts for Platinum Explorer (5 years) and Titanium Explorer (8 years) • Jackups operating on contracts with average 14-month terms (average 12 months remaining backlog) • $2.8 billion in contract backlog mitigates cyclical oil and gas industry risk • Focused on expanding relationships with national oil companies, major oil companies, large independents and super-regionals • Will lead to longer-term contracts to build backlog • Strong existing relationships have contributed to large existing backlog and repeat business with customers • Growth through acquisitions of assets and other offshore drilling companies • Current construction management contracts provide potential acquisition targets 8 Capitalize on Customer Demand for High- Specification Units Focus on Long-term Contracts Expand Deepwater Exposure Expand Key Industry Relationships Pursue Acquisition Opportunities |
Strong Customer Relationships Key Customers 9 |
Vantage Offices Owned Rigs Managed Rigs Contract: Petrobras DragonQuest U.S. GOM Contract: ONGC Platinum Explorer India Houston Singapore Dubai Contract: PTT Emerald Driller Thailand Aquamarine Driller Contract: Petronas Carigaili Malaysia Topaz Driller Contract: Total Malaysia Country of Operation Sapphire Driller Contract: Foxtrot Ivory Coast Worldwide Operations 10 |
• Faster drilling times • Faster moving times • Increased volumes of consumable liquids and drilling fluids • Reduced boat runs and non-productive time • Improved pipe handling and offline capability • Fast preloading time for all tanks • 75’ x 30’ cantilever reach substantially greater than the industry average • Pipe decks allow increased storage capacity • Premium drilling package: • 3 x 2200HP mud pumps • Integrated diverter system • 18-¾’’ BOP system and 4 rams • High-capacity, high efficiency – 5 x CAT 3516 B Diesel engines Quarterly Financial Performance Ultra-Premium Jackup Fleet World class assets achieving world class performance Fleet productive time approximately 99% since inception Emerald Driller Sapphire Driller Aquamarine Driller Topaz Driller Increased Operational Efficiency and Improved Technical Capability: 11 $0 $20 $40 $60 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Revenue EBITDA |
• Capable of operating in water depths up to 12,000 ft • Total vertical drilling depth of 40,000 ft • Variable deck load of 20,000 tons • Hull measurement of 781 ft long by 137 ft wide • DP3 dynamic positioning system • 1250 short ton hook load, including 9000 hp drawworks • Offline pipe handling • Trip saver system • Accommodations for 200 personnel • Delivery Q2 2012 Titanium Explorer – Preparing for Transit to U.S. GOM 12 |
• Capable of operating in water depths up to 12,000 ft • Total vertical drilling depth of 40,000 ft • Variable deck load of 20,000 tons • Hull measurement of 781 ft long by 137 ft wide • DP3 dynamic positioning system • 1250 short ton hook load, including 9000 hp drawworks • Offline pipe handling • Trip saver system • Accommodations for 200 personnel • Delivery Q2 2013 Tungsten Explorer – Under Construction 13 |
(1) Average drilling revenue per day is based on the total estimated revenue divided by the minimum number of days committed in a contract. Unless otherwise noted, the total revenue includes any mobilization and demobilization fees and other contractual revenues associated with the drilling services. (2) The drilling revenue per day includes the achievement of the 12.5% bonus opportunity, but excludes mobilization revenues and revenue escalations included in the contract. Fleet Status – Average Drilling Revenue/Day (1) 14 Ownershi 2011 2012 2013 Rig % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jackups Emerald Driller 100% $171 $137K $132K $130K $130K Sapphire Driller 100% $120K $120K $120K (net of taxes) Aquamarine Driller 100% $120K $124K $137K $132K (mutually agreed rates) Topaz Driller 100% $107K $187K (includes upgrades and mobilization) $135K Drillships Platinum Explorer 100% $590.5K (5 years) Dragonquest 100% $551K (8 years) (2) Tungsten Explorer 100% Dalian Developer Managed Contracted Option Commissioning / Construction Construction Contract Mobilization / Management Shipyard Contract p |
• Premium jackups (350’ + IC rigs) and ultra-deepwater floater have historically maintained significantly higher utilization levels, particularly during downturns in the energy industry – A higher utilization level in the international drilling market continues to reflect a more stable rig supply and demand environment than the Gulf of Mexico – Operators are willing to pay a substantial dayrate premium for high-specification rigs Global Jackup Utilization International vs. GOM Jackup Utilization Source: Riglogix; ODS-PetroData. Historical Floater Dayrates ($Thousands) Historical Floater Utilization Premium Asset Advantage 15 Operators demand newer, higher specification rigs due to superior operating performance, resulting in lower maintenance downtimes, improved safety and higher efficiency |
• Capabilities and age – The current worldwide fleet is comprised mostly of older, inefficient rigs • Setting up cyclical recovery – Reduction in the overall fleet should result in pricing power and high utilization levels early on during the recovery • Age is a factor – Demand is increasing for high-specification jackups. Many customers are implementing age restrictions and new high-specification characteristics Source: ODS-Petrodata Global Jackup Fleet Distribution Profile of Global Jackup Fleet 16 – 22% of today’s jackups are mat-supported and/or have less than 200ft of water depth capability – 68% of today’s jackups are 25 years or older – As of March 2012 a total of 85 rigs were either ready stacked, cold stacked, or in an accommodation mode without contract – How many will not return to service? Age Rigs % % 300+ 200-299 < 200 25 years or older 325 68% 58% 152 119 54 5 to 24 years 64 13% 11% 59 1 4 0 to 4 years 90 19% 16% 80 6 4 479 100% 291 126 62 2012 Deliveries 26 5% 24 2 0 2013 Deliveries 38 7% 37 1 0 2014 Deliveries 15 3% 13 2 0 558 100% 365 131 62 Age of Jackup Fleet Water Depth (feet) |
Ultra-Deepwater Rig Supply is Increasing Significantly Deepwater Exploration is a Young, Rapidly Growing Market Demand is Likely to Exceed Rig Supply Despite Newbuilds Source: ODS-Petrodata, DnB NOR Global Deepwater Market 17 Recent fixtures >$550,000 per day |
Balance Sheet ($Millions) Financial Overview 18 December 31, December 31, 2010 2011 Cash and cash equivalents 120.4 $ 110.0 $ Restricted cash 29.0 7.0 Trade receivables 50.2 100.9 Inventory 19.8 24.4 Prepaid expenses and other current assets 11.5 16.9 230.9 259.3 Property and equipment, net 1,718.1 1,805.1 Investment in joint venture - - Other assets 54.2 58.2 2,003.2 $ 2,122.5 $ Accounts payable and accrued liabilities 107.5 $ 148.1 $ Short-term debt 8.6 - Current maturities of long-term debt - - 116.1 148.1 Long–term debt 1,103.5 1,246.4 Other long term liabilities 13.5 29.8 Shareholders' Equity Paid-in capital 854.8 860.8 Retained Earnings (84.7) (162.6) Accumulated other comprehensive loss - - Total shareholders’ equity 770.2 698.2 2,003.2 $ 2,122.5 $ Outstanding shares 289.7 291.2 Book value per share 2.66 $ 2.40 $ |
• No near-term maturities provides flexibility • Excess cash flow offers opportunity; alternatively we can buy bonds in the market with excess cash • First call option February 2013 Debt Repayment 19 - 500 1,000 1,500 2,000 2012 2013 2014 2015 2016 2017 Maturities and Debt Repayment Excess cash flow offer Maturity |
EBITDA Low 6.5x Today’s Peer Avg. 7.8x Historical Peer Avg. 11.6x $250 million $1.72 $2.84 $6.11 $300 million $2.84 $4.17 $8.10 $350 million $3.96 $6.35 $10.10 Implied Values – EV/EBITDA Source: Jefferies Price to Book Value Key Drivers Near Term – • Achieve high productive time on Platinum Explorer • Improving dayrate contract fixtures on jackups • Completion of the Titanium Explorer acquisition • Contract for the Tungsten Explorer 20 Significant Upside Valuation Potential |
Historical Financial Information ($ Millions) Financial Overview 21 $14.3 $22.2 $36.4 $38.6 $58.3 $68.4 $66.9 $84.9 $124.6 $120.9 $118.5 $121.3 $6.4 $9.5 $14.2 $5.0 $25.3 $24.6 $21.3 $16.9 $42.8 $49.7 $44.8 $47.3 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 3/31/2009 6/30/2009 9/30/2009 12/31/2009 3/31/2010 6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011 Quarter Ended Revenue Adjusted EBITDA |
Reconciliation of Net Income (Loss) to Adjusted EBITDA ($Millions) Appendix 22 Fiscal Quarter Ended, 6/30/2009 9/30/2009 12/31/2009 3/31/2010 6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011 9/30/2011 12/31/2011 Net income (loss) 4.0 $ 6.8 $ (4.3) $ 6.0 $ (7.0) $ (33.6) $ (13.0) $ (18.7) $ (40.1) $ (11.9) $ (7.3) $ Interest expense, net 1.3 1.9 4.2 8.0 13.3 13.9 14.1 41.5 39.3 37.1 37.5 Income tax provision (benefit) 0.9 1.1 (0.6) 2.3 8.4 2.8 5.5 2.9 7.8 2.0 (1.2) Depreciation 2.1 3.2 4.3 7.5 8.4 8.8 8.8 16.1 16.0 16.0 16.4 Loss on debt extinguishment - - - - - 24.0 - - 25.2 - - Loss on acquisition of subsidiary - - - - - 3.8 - - - - - EBITDA 8.3 $ 13.0 $ 3.6 $ 23.8 $ 23.1 $ 19.7 $ 15.4 $ 41.9 $ 48.2 $ 43.2 $ 45.4 $ Share-based compensation expense 1.2 1.2 1.4 1.5 1.5 1.6 1.5 0.9 1.5 1.6 1.9 Adjusted EBITDA 9.5 $ 14.2 $ 5.0 $ 25.3 $ 24.6 $ 21.3 $ 16.9 $ 42.8 $ 49.7 $ 44.8 $ 47.3 $ |