Exhibit 99.1
Vantage Drilling International Reports Second Quarter Results for 2019
HOUSTON, August 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 99.9% 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 | |
