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| 8-K - FORM 8-K - Vantage Drilling CO | d336900d8k.htm |
 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
$ |