/EINPresswire.com/ -- HOUSTON, TX -- (Marketwired) -- 11/09/15 -- Vantage Drilling Company ("Vantage" or the "Company") (OTC PINK: VTGDF) reports a net loss for the three months ended September 30, 2015 of $52.4 million or ($.17) per diluted share as compared to a net loss of $5.6 million or ($.02) per diluted share for the three months ended September 30, 2014.

Our results for the three months ended September 30, 2015 include several significant items that had a material impact on our financial results. Each of these items and the future outlook for our Company are more fully discussed in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (SEC) and is available on our website and the SEC website. The significant items included in the net loss for the three months ended September 30, 2015 and 2014, include -

Titanium Explorer. Our customer for the Titanium Explorer operating in the United States Gulf of Mexico sent us a notice of termination of the Agreement for the Provision of Services Contract for the Titanium Explorer on August 31, 2015 effective upon completion of operation on the current well. We completed the well in early September and demobilized the rig. We believe the termination of the contract was wrongful and commenced arbitration proceedings on August 31, 2015 to recover damages, including loss of future revenues and expenses, in connection with the wrongful termination of the contract. In connection with the cancellation of the contract, we recognized $21.5 million of deferred mobilization revenue.

Cobalt Explorer. On August 13, 2015, we terminated the contract for the construction of the Cobalt Explorer with the shipyard pursuant to the terms of the contract. In connection with the termination of this contract, we expensed approximately $31.2 million of development costs and interest previously capitalized to the Cobalt Explorer. During the three months ended September 30, 2015, we capitalized $792,000 of interest prior to the cancellation of the project. During the three months ended September 30, 2014 we capitalized $1.3 million to the Cobalt Explorer.

Gain on Retirement of Debt. During the three month periods ended September 30, 2015 and 2014, we recognized gains on the early retirement of debt of approximately $12.7 million and $1.1 million, respectively.

Restructuring Costs. In response to current market conditions, we reduced operating costs and capital expenditures for our rig fleet. During the three months ended September 30, 2015, we recognized a restructuring charge of approximately $2.5 million consisting primarily of severance costs associated with our reduction in support personnel.

Income Tax Provision. Our income taxes are generally dependent upon the results of our operations and when we generate significant revenues in jurisdictions where the income tax liability is based on gross revenues or asset values, there is no correlation to the operating results and the income tax expense. Furthermore, we are required to report our income tax provision based on our estimated annual effective tax rate applied to the year to date period. Any adjustment to our estimated annual effective tax rate will result in a catch-up adjustment for the earlier reported interim periods. Due to the cancellation of the Titanium Explorer contract, we have significantly reduced our forecasted operating results for the remainder of 2015 which has significantly impacted our estimated annual effective tax rate. This resulted in an adjustment to our income tax provision of approximately $52.4 million recognized during the three months ended September 30, 2015.

We will not be holding a conference call to discuss our results for the three month period ended September 30, 2015.

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 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)
                                (Unaudited)

                                  Three Months Ended     Nine Months Ended
                                     September 30,         September 30,
                                 --------------------  --------------------
                                    2015       2014       2015       2014
                                 ---------  ---------  ---------  ---------
Revenue
  Contract drilling services     $ 197,133  $ 189,648  $ 608,002  $ 602,859
  Management fees                    1,923      1,923      5,706     12,474
  Reimbursables                      9,435     15,947     24,693     44,368
                                 ---------  ---------  ---------  ---------
    Total revenue                  208,491    207,518    638,401    659,701
                                 ---------  ---------  ---------  ---------
Operating costs and expenses
  Operating costs                   94,420    111,271    285,777    310,995
  General and administrative        10,682      9,980     27,613     26,461
  Depreciation                      31,764     31,639     95,168     94,894
  Construction contract
   cancellation costs               31,189          -     31,189          -
  Restructuring costs                2,504          -      2,504          -
                                 ---------  ---------  ---------  ---------
    Total operating costs and
     expenses                      170,559    152,890    442,251    432,350
                                 ---------  ---------  ---------  ---------
Income from operations              37,932     54,628    196,150    227,351
Other income (expense)
  Interest income                       22         14         33         38
  Interest expense and other
   financing charges               (48,334)   (53,376)  (147,529)  (162,149)
  Gain (loss) on debt
   extinguishment                   12,732      1,051     38,954       (462)
  Other, net                           339        376      1,963        616
                                 ---------  ---------  ---------  ---------
    Total other income (expense)   (35,241)   (51,935)  (106,579)  (161,957)
                                 ---------  ---------  ---------  ---------
Income before income taxes           2,691      2,693     89,571     65,394
Income tax provision                55,139      8,309     95,625     36,008
                                 ---------  ---------  ---------  ---------
Net income (loss)                $ (52,448) $  (5,616) $  (6,054) $  29,386
                                 =========  =========  =========  =========

Earnings (loss) per share
  Basic                          $   (0.17) $   (0.02) $   (0.02) $    0.10
  Diluted                        $   (0.17) $   (0.02) $   (0.02) $    0.10



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

                                     Three Months Ended   Nine Months Ended
                                        September 30,       September 30,
                                     ------------------  ------------------
                                       2015      2014      2015      2014
                                     --------  --------  --------  --------
Operating costs and expenses
Jackups                              $ 19,991  $ 24,400  $ 65,003  $ 70,561
Deepwater                              60,229    63,413   177,174   170,456
Operations support                      6,418     9,937    23,181    31,039
Reimbursables                           7,782    13,521    20,419    38,939
                                     --------  --------  --------  --------
                                     $ 94,420  $111,271  $285,777  $310,995
                                     --------  --------  --------  --------

Utilization
Jackups                                  72.0%     99.2%     81.0%     98.9%
Deepwater                                86.8%     75.2%     92.8%     84.6%



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


                                               September 30,   December 31,
                                                    2015           2014
                                               -------------  -------------
                                                (Unaudited)
                    ASSETS
Current assets
  Cash and cash equivalents                    $     223,984  $      82,812
  Trade receivables                                  102,057        153,428
  Inventory                                           66,014         65,892
  Prepaid expenses and other current assets           23,128         28,618
                                               -------------  -------------
    Total current assets                             415,183        330,750
                                               -------------  -------------
Property and equipment
  Property and equipment                           3,475,579      3,524,566
  Accumulated depreciation                          (500,696)      (406,674)
                                               -------------  -------------
    Property and equipment, net                    2,974,883      3,117,892
                                               -------------  -------------
Other assets
  Investment in joint venture                            981          1,318
  Other assets                                       116,325         79,897
                                               -------------  -------------
    Total other assets                               117,306         81,215
                                               -------------  -------------
Total assets                                   $   3,507,372  $   3,529,857
                                               =============  =============

     LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable                             $      48,148  $      59,139
  Accrued liabilities                                173,534        101,537
  Current maturities of long-term debt, net of
   discount of $738 and $1,181                        77,754         95,378
                                               -------------  -------------
    Total current liabilities                        299,436        256,054
                                               -------------  -------------
Long-term debt, net of discount of $15,104 and
 $25,875 and current maturities                    2,614,126      2,632,802
Other long-term liabilities                           40,579         85,327
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; 311,837 and 307,808
   shares issued and outstanding                         312            308
  Additional paid-in capital                         908,743        905,136
  Accumulated deficit                               (355,824)      (349,770)
                                               -------------  -------------
    Total shareholders' equity                       553,231        555,674
                                               -------------  -------------
Total liabilities and shareholders' equity     $   3,507,372  $   3,529,857
                                               =============  =============



                          Vantage Drilling Company
                    Consolidated Statement of Cash Flows
                               (In thousands)
                                (Unaudited)

                                                         Nine Months Ended
                                                           September 30,
                                                       --------------------
                                                          2015       2014
                                                       ---------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                      $  (6,054) $  29,386
Adjustments to reconcile net income (loss) to net cash
 provided by operating activities:
  Depreciation expense                                    95,168     94,894
  Amortization of debt financing costs                     7,356      8,713
  Construction contract cancellation costs                31,189          -
  Accelerated deferred mobilization income               (21,508)         -
  Amortization of debt discount                            7,309      8,496
  Non-cash (gain) loss on debt extinguishment            (38,944)       462
  Share-based compensation expense                         5,020      6,540
  Deferred income tax benefit                               (997)      (184)
  Equity in loss of joint venture                            337        317
  Loss on disposal of assets                                 370        558
Changes in operating assets and liabilities:
  Restricted cash                                              -      2,125
  Trade receivables                                       51,371    (55,917)
  Inventory                                                 (122)    (8,681)
  Prepaid expenses and other current assets                8,503      7,686
  Other assets                                            13,917      6,660
  Restructuring costs                                      2,504          -
  Accounts payable                                       (10,991)    (7,267)
  Accrued liabilities and other long-term liabilities     42,344     81,194
                                                       ---------  ---------
    Net cash provided by operating activities            186,772    174,982
                                                       ---------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Additions to property and equipment                    (41,409)   (34,137)
  Return of investment in joint venture                        -     23,250
                                                       ---------  ---------
  Net cash used in investing activities                  (41,409)   (10,887)
                                                       ---------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Repayment of long-term debt                           (154,191)  (127,466)
  Proceeds from (repayment of) revolving credit
   agreement, net                                        150,000    (10,000)
                                                       ---------  ---------
    Net cash used in financing activities                 (4,191)  (137,466)
                                                       ---------  ---------
    Net increase in cash and cash equivalents            141,172     26,629
  Cash and cash equivalents-beginning of period           82,812     54,686
                                                       ---------  ---------
  Cash and cash equivalents-end of period              $ 223,984  $  81,315
                                                       =========  =========

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

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