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Vantage Drilling Company Reports Third Quarter 2012 Results and Provides Fleet Update

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HOUSTON, TX -- (Marketwire) -- 11/09/12 -- Vantage Drilling Company ("Vantage") (NYSE MKT: VTG) reports a net income for the three months ended September 30, 2012 of $2.0 million or $0.01 per diluted share, excluding approximately $2.5 million of charges for the early retirement of debt, as compared to a net loss of $11.9 million or ($0.04) per diluted share for the three months ended September 30, 2011. Including the charges for the early retirement of debt, Vantage reported a loss of $538,000 or $0.00 per diluted share for the three months ended September 30, 2012.

For the nine months ended September 30, 2012, Vantage reports a net loss of $9.2 million or ($0.03) per diluted shares, excluding approximately $2.5 million of charges for the early retirement of debt as compared to a net loss of $45.4 million or ($0.16) per diluted shares, excluding approximately $25.2 million of charges for the early retirement of debt for the nine months ended September 30, 2011. Including the charges for early retirement of debt, the company reported net losses of $11.7 million or ($0.04) per diluted share and $70.6 million or ($.24) per diluted share respectively for the nine months ended September 30, 2012 and 2011.

Paul Bragg, Chairman and Chief Executive Officer, commented, "We are pleased to announce another strong quarter from operations, with the fleet including the jackups and the Platinum Explorer achieving utilization in excess of 98%."

Titanium Explorer Update

The Titanium Explorer, which was acquired in April 2012, mobilized to the United States Gulf of Mexico, to commence an eight year contract. Acceptance testing with our customer was interrupted during the third quarter by Hurricane Isaac, which necessitated our sailing out of harm's way and further disrupted the supply chain and vendor access to the Titanium Explorer for more than a week. Most of the testing protocol has now been completed successfully, including third party certification of the BOP. The functional tests of the BOP in deepwater were unfortunately interrupted by operational issues of the customer-supplied ROV. The ROV cameras and robotics are essential to complete the seafloor testing of the equipment. We lost approximately ten days of testing associated with the ROV issues. During the testing delays, we noted an engine issue aboard the Titanium Explorer. After consultation with the engine manufacturer, we decided that it would be prudent to not only repair the problem, but to undertake a preventative upgrade recommended by the manufacturer to all six primary engines onboard. The repair and upgrade is being conducted currently and is expected to be completed in the third week of November. Following this, we will return to deepwater to recommence acceptance testing. We expect to commence operations under the drilling contract in December. "We are clearly disappointed by the disruptions and delays we have encountered commencing operations for the Titanium Explorer, but we believe we are very close to a successful commencement of our contract. The crew and support team has done an outstanding job preparing the Titanium Explorer and dealing with the adversities encountered," commented Mr. Bragg.

Jackup Fleet Update

Vantage, together with our customer for the Topaz Driller in Malaysia, has agreed to modify the terms of their contract in order for the Topaz Driller to perform a one-year drilling program in Indonesia. The original contract was for two wells in Malaysia plus a one well option. Under the modified terms, Vantage and the customer's Indonesian affiliate have entered into a new one-year contract for a drilling program in Indonesia at an increased rate. Additionally, the Indonesian affiliate will be granted three options for six months each. Upon completion of the Indonesian contract, the customer is anticipated to generate revenue of approximately $57 million.

The Emerald Driller has received a letter of award for a two year contract from its customer in Thailand. The contract will commence in continuity with the Emerald Driller's current contract, which we estimate will be completed in June 2013. Estimated revenues to be generated over the initial two year term of the contract are approximately $114 million.

Vantage, a Cayman Islands exempted company, is an offshore drilling contractor, with an owned fleet of four Baker Marine Pacific Class 375 ultra-premium jackup drilling rigs and two ultra-deepwater drillships, the Platinum Explorer and the Titanium Explorer, as well as an additional ultra-deepwater drillship, the Tungsten Explorer, now under construction. 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, -------------------- -------------------- 2012 2011 2012 2011 --------- --------- --------- ---------Revenues Contract drilling services $ 105,521 $ 89,916 $ 310,202 $ 274,646 Management fees 966 3,285 4,644 10,499 Reimbursables 5,047 25,367 33,662 79,148 --------- --------- --------- --------- Total revenues 111,534 118,568 348,508 364,293 --------- --------- --------- ---------Operating costs and expenses Operating costs 52,004 69,644 171,358 212,468 General and administrative 6,622 6,219 18,586 20,469 Depreciation 16,575 15,988 49,519 48,126 --------- --------- --------- --------- Total operating costs and expenses 75,201 91,851 239,463 281,063 --------- --------- --------- ---------Income from operations 36,333 26,717 109,045 83,230Other income (expense) Interest income 15 7 48 68 Interest expense and other financing charges (31,583) (37,074) (104,518) (117,966) Loss on debt extinguishment (2,528) - (2,528) (25,196) Other, net (61) 455 800 1,913 --------- --------- --------- --------- Total other income (expense) (34,157) (36,612) (106,198) (141,181) --------- --------- --------- ---------Income (loss) before income taxes 2,176 (9,895) 2,847 (57,951)Income tax provision 2,714 1,986 14,541 12,654 --------- --------- --------- ---------Net loss $ (538) $ (11,881) $ (11,694) $ (70,605) ========= ========= ========= =========Loss per share Basic $ 0.00 $ (0.04) $ (0.04) $ (0.24) Diluted $ 0.00 $ (0.04) $ (0.04) $ (0.24) Vantage Drilling Company Consolidated Balance Sheet (In thousands, except par value information) September 30, December 31, 2012 2011 ------------- ------------- (Unaudited) ASSETSCurrent assets Cash and cash equivalents $ 62,476 $ 110,031 Restricted cash 5,878 7,028 Trade receivables 76,627 100,908 Inventory 34,323 24,376 Prepaid expenses and other current assets 12,374 16,909 ------------- ------------- Total current assets 191,678 259,252 ------------- -------------Property and equipment Property and equipment 2,850,707 1,913,596 Accumulated depreciation (157,318) (108,521) ------------- ------------- Property and equipment, net 2,693,389 1,805,075 ------------- -------------Other assets Other assets 82,297 58,173 ------------- -------------Total assets $ 2,967,364 $ 2,122,500 ============= =============LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities Accounts payable $ 60,452 $ 46,362 Accrued liabilities 69,419 103,809 ------------- ------------- Total current liabilities 129,871 150,171 ------------- -------------Long-term debt, net of premium (discount) of $19,563 and ($38,572) 2,129,563 1,246,428Other long-term liabilities 14,750 29,755Commitments 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; 294,130 and 291,241 shares issued and outstanding 294 291 Additional paid-in capital 869,227 860,502 Accumulated deficit (176,341) (164,647) ------------- ------------- Total shareholders' equity 693,180 696,146 ------------- -------------Total liabilities and shareholders' equity $ 2,967,364 $ 2,122,500 ============= ============= Vantage Drilling Company Consolidated Statement of Cash Flows (In thousands) (Unaudited) Nine Months Ended September 30, -------------------------------- 2012 2011 --------------- ---------------CASH FLOWS FROM OPERATING ACTIVITIESNet loss $ (11,694) $ (70,605)Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 49,519 48,126 Amortization of debt financing costs 12,617 6,269 Non-cash loss on debt extinguishment 2,528 3,532 Share-based compensation expense 5,808 4,044 Accretion of long-term debt - 2,582 Amortization of debt discount (premium) (3,473) 7,374 Deferred income tax expense 2,978 123 (Gain) / loss on disposal of assets 502 (86)Changes in operating assets and liabilities: Restricted cash 1,150 22,243 Trade receivables (9,382) (68,633) Inventory (9,948) (2,566) Prepaid expenses and other current assets 1,509 6,393 Other assets 2,074 (456) Accounts payable 14,090 4,772 Accrued liabilities (105,126) (38,080) --------------- --------------- Net cash used in operating activities (46,848) (74,968) --------------- ---------------CASH FLOWS FROM INVESTING ACTIVITIES Additions to property and equipment (848,939) (126,695) Proceeds from sale of property and equipment - 301 --------------- --------------- Net cash used in investing activities (848,939) (126,394) --------------- ---------------CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of senior secured notes, including issue premiums of $62,000 and $15,750 837,000 240,750 Proceeds from the issuance of senior convertible notes 50,000 - Repayment of long-term debt - (109,716) Debt issuance costs (38,768) (12,927) --------------- --------------- Net cash provided by financing activities 848,232 118,107 --------------- --------------- Net decrease in cash and cash equivalents (47,555) (83,255) Cash and cash equivalents-beginning of period 110,031 120,443 --------------- --------------- Cash and cash equivalents-end of period $ 62,476 $ 37,188 =============== ===============





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