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8-K - FORM 8-K - Vantage Drilling CO | d8k.htm |
New Orleans, Louisiana
Johnson
Rice
&
Co
2
nd
Annual
Energy
Conference
October 4-7, 2010
Exhibit 99.1 |
Forward-Looking Statements
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. |
Recent Developments
Acquired the 55% of Mandarin Drilling Company not previously owned,
bringing total ownership of Platinum Explorer drillship to 100%
Raised $1.0 Billion 11.5% Senior Secured Notes to fund the purchase of
Platinum Explorer and refinance existing debt; no debt matures prior to
2014
Signed Construction Management Agreement and Marketing Agreement
for Dalian Developer
High-specification jackup
market experiencing significant upward
momentum in rates with continued high utilization |
Corporate Overview
Symbol:
VTG (NYSE AMEX)
Location:
HQ
Houston;
Operations
Singapore;
Marketing
-
Dubai
Market Cap:
$463 million
Book Value:
$741 million
Enterprise Value:
$1.6 billion*
Employees:
> 700
Contract Backlog:
$3.8 billion
Owned Fleet:
4 Ultra-Premium Jackups
1 Ultra-Deepwater Drillship
Managed Fleet:
2 Ultra-Deepwater Semisubmersibles
2 Ultra-Deepwater Drillships
* Upon final shipyard payment of Platinum Explorer |
Premium
high-specification
drilling
units,
including
four
jackup
rigs,
three
drillships
and
two
semisubmersibles
Vantages modern rigs are capable of drilling to deeper depths and possess
enhanced operational efficiency
and
technical
capabilities,
resulting
in
higher
utilization,
dayrates
and
margins
Total
costs
of
owned
fleet
of
four
jackups
and
the
Platinum
Explorer
drillship
of
approximately
$1.7 billion
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 jackups
delivered on budget and on time
Jackup
fleet has experienced approx. 99% of productive time for Vantages first 18
months in operation Level
of
efficiency
is
exceptional
for
newly-constructed
jackup
rigs
upon
commencement
of
operations
Proven Operational
Track
Record
Significant cash flow visibility
Owned fleet contract backlog of approximately $1.3 billion and managed fleet
contract backlog of approximately $2.5 billion as of March 31, 2010
Owned fleet counterparties include Pearl Energy, VAALCO Energy, Foxtrot
International, Nido Petroleum,
Phu
Quy
(1)
and
ONGC
Managed deepwater rigs counterparties include PEMEX and Petrobras
Significant
Contract Coverage
with
High Quality
Counterparties
Company Highlights
(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 (Contd)
Four
construction
management
arrangements
for
two
ultra-deepwater
drillships,
DragonQuest
and
Dalian
Developer,
as
well
as
two
6th
generation
semisubmersibles
Approximately $5.0 million of annual cash flow per contract during the
construction phase Management of drillship and semisubmersible operations
once in service Approximately $12.0 to $15.0 million per year per contract
for the duration of each contract Management team with extensive experience;
average of 28 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 already hired and crew member training ongoing for
Platinum
Explorer
Construction
Supervision and
Management
Arrangements
Experienced
Management and
Operational Team |
Fleet
Overview Owned Assets
Emerald Driller
Sapphire Driller
Aquamarine Driller
Topaz Driller
Platinum Explorer
Significant asset value of owned fleet
Managed Assets
SeaDragon
I
SeaDragon
II
Dalian Developer
DragonQuest |
Premium Newbuild
Fleet
Owned Fleet:
Four newbuild
ultra-premium high-specification Baker Marine Pacific Class 375
jackups Platinum Explorer
ultra-deepwater 12,000 ft. drillship (equipped for 10,000 ft.)
The drillship is currently being constructed by Daewoo Shipbuilding & Marine
Engineering Co. Ltd. (DSME) Managed Fleet:
One ultra-deepwater 12,000 ft. drillship (under construction at DSME
Shipyard) One
multiservice
drillship
(under
construction
at
COSCO
(Dalian)
Shipyard)
Two
Moss
Maritime
CS50
MkII
6th
generation
10,000
ft.
semisubmersibles
(under
construction
at
Jurong
Shipyard)
Fleet Construction Cost ~ $4.5 Billion
Drillships
One Owned, Two Managed
Semisubmersibles
Two
Managed
Jackups
Four Owned |
Worldwide Operations
Vantage Offices
Owned Rigs
Managed Rigs
Contract: PEMEX
Semi I
Mexico GOM
Contract: Petrobras
DragonQuest
U.S. GOM
Contract: ONGC
Platinum Explorer
India
Houston
Singapore
Dubai
Contract: Pearl
Emerald Driller
Thailand
Contract: Foxtrot
Sapphire Driller
Ivory Coast
Contract: VAALCO
Sapphire Driller
Gabon
Contract: Nido
Aquamarine Driller
Philippines
Contract: Phu Quy
(1)
Topaz Driller
Vietnam
Country of Operation
(1)
PVEP Phu Quy Petroleum Operating Co. Ltd. is a joint venture interest between
PetroVietnam Exploration Production Corp. and Total E&P Vietnam. |
Advantages of Ultra-Premium Jackups
The Baker Marine Pacific Class jackup is capable of drilling in up to 375 feet of
water and has a maximum drilling depth of 30,000 feet
Dimensions
236
x 224
x 28
208
x 178
x 23
Water Depth (Max/Min)
375
300
Drilling Depth -
Ft
30,000
25,000
Cantilever Reach
75
45
Leg Length
506
418
Spudcan Diameter
55.5
48
Variable Deck Load (Operating)
7,497 kips
4,000 kips
Accommodations (Persons)
120
66
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 handling system and 4 rams
High-capacity,
high
efficiency
5
x
CAT
3516 B Diesel engines
Baker Marine Pacific Class 375
Standard 300
Comparison of Vantage Ultra-Premium Jackup
to Standard Jackup
Increased Operational Efficiency and Improved Technical Capability
|
Platinum
Explorer
Construction
Status
Platinum
Explorer
as
of
July
2010
Overall Construction Progress (July 2010)
Source: DSME. |
Platinum
Explorer
Path
Forward
Milestone Dates
September 2
Naming Ceremony
September
28
to
October
23
Sea
Trials
(on
going)
November 10
Rig Delivery
November 20-25
Arrive Singapore and load riser
December 15
Arrive East coast of India
December 31
On Contract with ONGC |
Semisubmersibles
Two 6th generation semisubmersibles
Moss Maritime CS50 MkII
Drilling depth of 40,000 feet
Operate in up to 10,000 feet of water
Construction ongoing at Jurong
Shipyard Pte
Ltd, Singapore
Semi
I:
Delivery
Q4
2010
(PEMEX
/
five
years)
Semi
II:
Delivery
Q3
2011
(Currently
marketing)
Construction
Management
Contracts:
Approximately
$5.0
million
of
annual
cash
flow per contract during the construction phase
Operating Management Contracts:
Approximately
$12.0
$15.0
million
of
annual
cash
flow
per
rig
Structured as a combination of a fixed daily fee and a variable fee based on
dayrate
and annual cash flow |
Ownership
2010
2011
2012
Rig
%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Jackups
Emerald Driller
100%
2 yrs. at $171K
Sapphire Driller
100%
10 mos. at $115.5K
8 mos. at $120K
Aquamarine Driller
100%
5 mos. at $154.2K
2 yrs. at $120K
(2)
Repriced to Leading Market Rate
Topaz Driller
100%
10 mos. at $107.2K
Drillships
Platinum Explorer
100%
5 yrs. at $590.5K
DragonQuest
Managed
8 yrs. at $551.3K
(3)
Dalian Developer
Managed
Semisubmersibles
Semi I
Managed
5 yrs. at $503K
Semi II
Managed
Construction
Commissioning/
Working
Operating
Option
Extended
Management
Mobilization
(Owned Rigs)
(Management
Contract
Well Test
Contract
Contract)
Option
Fleet Status
Average Drilling Revenue /
Day
(1)
(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
contract
is
for
drilling
two
wells
plus
extended
well
tests.
Estimated
drilling
time
is
one
month
per
well
and
extended
well
tests
could
range
from
a
few
months
to
up
to
one
year
per
well.
The
first
extended
well tests period has been contracted through April 2011.
(3)
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. |
Contract Overview and Customer Credit
Profile
Vessel Name
Owned/
Managed
Contract Party
Contract Party
Credit Rating
(S&P/Moodys)
Contract Length
Average Drilling
Revenue Per
Day
(1)
Contract Value
(Gross)
Operating
Management Fee
Emerald Driller
Owned
AA / Aa3
2 Years
$171,000
$126.5 million
N/A
Sapphire Driller
Owned
N/A
A-
/ BBB+
(2)
1) 5 months
2) 8 months
1) $115,500
2) $120,000
1) $17.2 million
2) $28.4 million
N/A
Aquamarine Driller
Owned
N/A
2 years
(3)
$120,000
$86.4 million
(3)
N/A
Topaz Driller
Owned
Phu
Quy
(4)
N/A
7 months
$107,200
$22.5 million
N/A
Platinum Explorer
Owned
N/A / A2
5 years
$590,500
$1.1 billion
N/A
DragonQuest
Managed
BBB-
/ A3
8 years
$551,300
$1.6 billion
$14.0-15.0
million annually
Semi I
Managed
BBB / Baa1
5 years
$503,000
$0.9 billion
$13.0-15.0
million annually
Semi II
Managed
N/A
Dalian Developer
Managed
N/A
(1)
Average
drilling
revenue
per
day
is
based
on
the
total
estimated
revenue
divided
by
the
minimum
number
of
days
committed
in
a
contract.
Unless
otherwise
noted,
the
total
revenue
includes
any
mobilization and demobilization fees and other contractual revenues associated with
the drilling services. (2)
Foxtrot
International
is
owned
by
Bouygues
Group,
which
has
an
A-
rating
from
S&P
and
BBB+
rating
per
Fitch.
(3)
The
contract
is
for
drilling
two
wells
plus
extended
well
tests.
Estimated
drilling
time
is
one
month
per
well
and
extended
well
tests
could
range
from
a
few
months
to
up
to
one
year
per
well.
The
first
extended
well tests period has been contracted through April 2011.
(4)
PVEP Phu
Quy
Petroleum Operating Co. Ltd. is a joint venture interest between PetroVietnam
Exploration Production Corp. and Total E&P Vietnam.
|
Premium Asset Advantage
Premium jackups
(350
+ IC rigs)
and ultra-deepwater floater
have historically maintained
significantly higher utilization
levels, particularly during
downturns in the energy industry
Operators demand newer, higher
specification rigs due to superior
operating performance, resulting in
lower maintenance downtimes,
improved safety and higher efficiency
A higher utilization level in the
international drilling market
continues to reflect a more
stable rig supply and demand
environment than the Gulf of
Mexico
Operators are willing to pay a
substantial dayrate
premium for
high-specification rigs
Global Jackup
Utilization
International vs. GOM Jackup
Utilization
Source: Riglogix; ODS-PetroData.
Historical Floater Dayrates
($Thousands)
Historical Floater Utilization |
Profile of Global Jackup Fleet
Capabilities and age
The current worldwide fleet is comprised mostly of older, inefficient rigs
27% of todays jackups are mat-supported and/or have less than 200ft of
water depth capability
71% of todays jackups are 25 years or older
As of July 2010 a total of 127 rigs were either ready stacked, cold stacked, or in
an accommodation mode without contract
How many will not return to service?
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: Riglogix.
Global Jackup Fleet Distribution
300'+ IC
117
300' IC
124
<250' IC
52
250' IC
65
300'+ IS
8
MC
44
<300' IS
17
MS
21
Heavy Weather
19
Age of Jackup Fleet
Water Depth (feet)
Age
Rigs
%
%
300+
200-299
<200
25 years or older
333
71%
64%
146
132
55
5 to 24 years
54
12%
10%
49
2
3
0 to 4 years
80
17%
15%
74
4
2
467
100%
269
138
60
2010 Deliveries
20
4%
14
4
2
2011 Deliveries
16
3%
16
0
0
2012 Deliveries
17
3%
16
1
0
520
100%
315
143
62 |
Profile of Global Ultra-Deepwater Fleet
The ultra-deepwater rig market maintains the most favorable long-term
outlook driven by recent discoveries in Brazil, West Africa, and the U.S.
Gulf of Mexico
Ultra-deepwater rigs are capable of working in any water depth where operators
are currently likely to drill
Can compete for any available work, while lower water depth drilling rigs have a
more limited market
Projections
indicate
a
shortage
of
rigs
designed
for
the
4,000
6,000
water
depth
range
which
will
likely
be filled by ultra-deepwater units
Floater Rig Supply By Type (# of Rigs)
Ultra-Deepwater Floaters By Operator
(1)
Source: Riglogix.
(1)
Ultra-Deepwater (>7,500 ft) drillships
and semisubmersibles currently in operation.
(2)
Other operators with 1 rig each include: Det
Norske Oljeselskap, Murphy, Taylor, Woodside, PEMEX, Tullow, ExxonMobil, Husky,
Repsol, Cairn Energy and ONGC for a total of 11 rigs.
(3)
Other operators with 2 rigs each include: BHP Billiton, Noble Energy, Marathon,
Nexen, ENI and Devon Energy for a total of 12 rigs. |
Financial Overview
Pro Forma Capitalization
($Millions)
Actual
As Adjusted
Unrestricted Cash
18.4
$
118.2
$
Restricted Cash
27.2
545.3
Accounts receivable
59.2
59.2
Inventory
14.4
14.4
Other current assets
3.9
3.9
123.1
741.0
Property and equipment, net
888.7
1,159.8
Investment in affiliate
129.1
(0.0)
Other assets
27.6
44.0
1,168.5
$
1,944.8
$
Accounts payable & accrued
45.1
$
45.1
$
Short-term debt
2.6
2.6
Current maturities long-term debt
16.0
-
63.7
47.7
Long-term debt
364.2
1,127.8
Deferred income taxes
0.1
0.1
Shareholders Equity:
Paid in capital
779.4
833.7
Retained earnings
(38.2)
(63.8)
Other comprehensive loss
(0.7)
(0.7)
Total equity
740.5
769.2
1,168.5
$
1,944.8
$
Outstanding shares
236.8
289.1
Book value per share
3.13
$
2.66
$
As of June 30, 2010 |
Bond
Summary 20
Summary of Terms
Senior Secured First Lien Notes
Issuer:
Offshore Group Investment Limited (the Issuer), a subsidiary of
Vantage Drilling Company (the Parent).
Issue:
$1,000.0 million Senior Secured First Lien Notes (the Notes).
Issue Price:
96.361% [Original Issue Discount 3.639%]
Coupon:
11.5%
Use of Proceeds:
Together with the net proceeds from the concurrent equity offering, to acquire
from F3 Capital the remaining interest in Mandarin, to fund the remaining
construction payments for the Platinum
Explorer,
to
refinance
certain
indebtedness
and
for
general
corporate
purposes.
Term (Maturity):
5 years (2015).
Optional Redemption:
Non-callable for 2.5 years.
Guarantees:
Guaranteed on a senior secured basis by each of the Issuers existing and
future subsidiaries, and by certain of parents other existing
subsidiaries, other than P2020 Rig Co. and certain other
subsidiaries. Security Interest:
First priority security interest in substantially all assets of the Issuer,
including the Emerald
Driller,
the
Sapphire
Driller,
the
Topaz
Driller
and,
upon
its
delivery,
the
Platinum
Explorer.
Special Mandatory Redemption:
Upon the occurrence of certain events the Issuer will be required to redeem notes
equal to the amount
of
the
construction
payments
for
the
Platinum
Explorer
at
100%
of
principal.
Excess Cash Flow Offer:
If the Issuer is above 2.5x leverage, the Issuer must make an offer with the
greater of (i) 75% of excess cash flow and (ii) $30.0 million, for each
semi-annual period ending June 30 and December 31, commencing June 30,
2011, at 101% of the principal. Alternatively, if the Issuer
is below 2.5x leverage, the offer is reduced to 50% of excess cash flow.
Change of Control:
101%.
Covenants:
Standard high yield covenants.
Placement Type:
144A with registration rights.
Bookrunners:
Jefferies & Company, Deutsche Bank Securities. |
Debt
Repayment
No near-term maturities provides
flexibility
Excess cash flow offers
opportunity; alternatively we can
buy bonds in the market with
excess cash
Aquamarine term loan facility
matures 2014; can be refinanced
beginning September 2011 |
Financial Overview
Run-Rate Financial Potential of Vantage Owned Assets
($Millions, except dayrates)
(1)
Calculations of rig-level EBITDA incorporate management's assumption of 90%
utilization/efficiency of jackups, which reflects industry standard productive
times on high-specification jackups. Utilization/efficiency of drillship
assumed to be 97%, which management believes is a reasonable assumption for a
newbuild
vessel in its first full year of operations. Rig-level EBITDA attributable to
jackups reflects operating expense assumption based on Vantages
jackups
that operated for the full first quarter of 2010.
Illustrative Range of Run-Rate Financial Potential
Strong cash flow backlog to cover
debt service
Leveraged to upturn in high-
specification jackup
market |
Significant Upside Valuation Potential
EBITDA
Todays
Peer Avg.
5.5x
6.5x
Historical
Peer Avg.
11.6x
$275 million
$1.43
$2.40
$7.26
$300 million
$1.91
$2.95
$8.26
$350 million
$3.11
$4.08
$10.28
Implied Values
EV/EBITDA
Source: Credit Suisse
Price to Book Value
Commencement of Platinum Explorer
expected to be a catalyst event to unlock value. |
Financial Overview
Historical Financial Information
($ Millions) |
Appendix
Reconciliation of Net Income (Loss) to Adjusted EBITDA
($Millions)
3/31/2009
6/30/2009
9/30/2009
12/31/2009
3/31/2010
6/30/2010
Net Income (Loss)
2.4
$
4.0
$
6.8
$
(4.3)
$
6.0
$
(7.0)
$
Interest Expense, Net
0.7
1.3
1.9
4.2
8.0
13.3
Income Tax Provision (Benefit)
0.6
0.9
1.1
(0.6)
2.3
8.4
Depreciation
1.7
2.1
3.2
4.3
7.5
8.4
EBITDA
5.4
$
8.3
$
13.0
$
3.6
$
23.8
$
23.1
$
Share-Based Compensation Expense
1.1
1.2
1.2
1.4
1.5
1.5
Adjusted EBITDA
6.5
$
9.5
$
14.2
$
5.0
$
25.3
$
24.6
$
Fiscal Quarter Ended, |