Vantage Drilling Company (VTG)
Q4 2012 Earnings Call
February 15, 2013 11:00 am ET
Mark Howell – Legal Director and Associate General Counsel
Paul A. Bragg – Chief Executive Officer
Douglas G. Smith – Chief Financial Officer
Eduardo Royes – Jefferies & Company, Inc.
Ryan Fitzgibbon – Global Hunter Securities
Shawn Schniven – Oppenheimer
Mona Yee – Schroder Investment Management
» Vantage Drilling Management Discusses Q2 2012 Results - Earnings Call Transcript
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At this time, I would like to turn the conference to Mark Howell, Associate General Counsel. Please go ahead, sir.
Thank you. Good morning, everyone. Welcome to the Vantage Drilling Company’s fourth quarter 2012 conference call. We appreciate you joining us. I am Mark Howell, Legal Director and Associate General Counsel for Vantage. With us today on the call we have, Paul Bragg, our Chairman and Chief Executive Officer, and Douglas Smith, our Chief Financial Officer.
I’ll open with a few brief remarks. This morning, we released our earnings announcement for the period ended December 31, 2012. This afternoon we intend to file our 10-K. The earnings release is available on our website at www.vantagedrilling.com.
Please note that any comments we make today about our expectations of future events and projections are forward-looking statements pursuant to the Private Securities Litigation Reform Act. Forward-looking statements made in today’s call are subject to a number of risks and uncertainties, many of which are beyond our control and could cause actual results to differ materially from the projections made in today’s conference call. We refer you to our earnings release and SEC filings available on our website.
Vantage does not undertake the updating of any such statement or risk factor that could cause actual results to differ materially from our expectations. At the end of our prepared remarks, we will entertain some questions.
With that, I would like to turn things over to Mr. Paul Bragg.
Paul A. Bragg
Thanks Mark. The year 2012 was a coming of age here for Vantage. In December, we put our sixth newly constructed rig, the Titanium Explorer into service, and in about four more months from now, our seventh rig, Tungsten Explorer will be completed and joining the fleet.
In 2012, we had another year of operational excellence, and we did so within a culture of safety, health, and environmental protection. For the year, we had zero, not even one last time entity. In Q4 2012, we refinanced half of our expensive debt, thereby cutting significantly our ongoing interest cost, and we also just financed the remaining CapEx on Tungsten Explorer.
Recently, we announced the order of another drillship Platinum Explorer through our 42% investment in Sigma. And we’ve been awarded a two plus two-year contract for Tungsten Explorer as well.
Now filtering out the refinancing charges, our Q4 results were a loss of $0.04 per share versus a break-even in the prior quarter. EBITDA was $57 million in Q4, up about 7% from the previous quarter. Doug Smith will review the financial results in detail in just a few moments.
As I mentioned, the year-end impact Q4 was another solid operational quarter for Vantage, our jackups once again work at productive level of 99% during Q4. Platinum Explorer now in almost 9,400 feet of water achieved productivity of essentially 100% during the quarter.
The Titanium Explorer commenced operations in December and has been drilling its first well in the U.S. Gulf of Mexico in about 8,800 feet of water. The ship has generally functioned well with a few teething problems here and there that have already been addressed.
However, the customers will have presented some technical challenges down hole. We currently expect that some of our work in Q1 of 2013 will be less than full dayrate, probably less than 70% drilling efficiency with little or no bonus earned during the first quarter. We are encouraged that the current ongoing performance of Titanium is good, and we see no reason that we cannot be back to the target efficiency in Q2 and beyond.
Just to address construction projects, our third ultra deepwater drillship Tungsten Explorer is progressing on schedule. Naming ceremony will occur in Korea on the 11 of April and delivery remains May 31 of 2013. The managed unit volume developer is progressing at the COSCO facility in China with the delivery planned later this year and additionally our team is providing construction oversight for three jackup rigs under construction in Singapore, our fourth unit recently completed and is in transit for arrival in Mexico next week.
With that, I will turn it back over to Doug Smith.
Douglas G. Smith
Thank you, Paul. Our fourth quarter revenues were approximately $123 million as compared to $111.5 million in the prior quarter and $121.5 million in the fourth quarter of 2011. Revenue from the contract drilling business for the fourth quarter was a record $113.7 million, as compared to contract drilling revenue of $105.5 million in the prior quarter and $92.2 million in the prior year, representing a sequential increase 7.8% and year-over-year increase of 23.3%.
The sequential increase in revenue due to the Titanium Explorer commencing operations on December 7, partially offset by the Topaz Driller, mobilizing from Malaysia to Indonesia, resulting in 43 days of contract; income from operations for the fourth quarter was $37.6 million, as compared to $36.3 million in the prior quarter and $26.9 million achieved in the fourth quarter of the prior year.