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Vantage Drilling (VTG)
Q1 2013 Earnings Call
May 10, 2013 11:00 am ET
Paul A. Bragg - Chairman, Chief Executive Officer and Member of Executive Committee
Douglas G. Smith - Chief Financial Officer, Principal Accounting Officer and Treasurer
Zachary Sadow - Barclays Capital, Research Division
Ryan Fitzgibbon - Global Hunter Securities, LLC, Research Division
Megan Repine - FBR Capital Markets & Co., Research Division
Eduardo Royes - Jefferies & Company, Inc., Research Division
Previous Statements by VTG
» Vantage Drilling Company's CEO Discusses Q4 2012 Results - Earnings Call Transcript
» Vantage Drilling Company's CEO Discusses Q3 2012 Results - Earnings Call Transcript
» Vantage Drilling Management Discusses Q2 2012 Results - Earnings Call Transcript
And at this time, I will turn the conference over to Mr. Mark Howell, Associate General Counsel. Please go ahead, sir
Thank you. Good morning, everyone. Welcome to the Vantage Drilling Company first quarter 2013 conference call. We appreciate you joining us. I'm 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 March 31, 2013. This afternoon we intend to file our 10-Q. 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. Today, I have a number of positive developments to discuss with you. I'm pleased to report that this week, we've received a letter of intent for Tungsten Explorer to commence upon delivery of the rig from the shipyard. Likewise, the Tungsten's previously-announced award in West Africa for the Moho Nord development has been formally executed by contract.
We have reached a favorable settlement on a contract termination for the Sapphire Driller, our jackup in West Africa. And we've returned to full operating day rate on Titanium Explorer, our drillship in the Gulf of Mexico.
In March, we completed the refinancing process that we started last October, and we've now retired all of our older 11 1/2% notes. We sold new notes, 10-year notes at 7 1/8%, as well as term loans at LIBOR plus 4.50%. Coupled with our October financing, we have reduced our interest cost to just below 7%. We've saved almost 500 basis points on $2 billion plus worth of borrowings, about $90 million a year.
Our first quarter results were much as expected. That was negatively impacted by the reduced day rate on Titanium Explorer. We've been operating at a 70% day rate as we explained on our last call. This situation was ongoing for much of the quarter. However, this week, the rig returned to the full operating rate.
Filtering out the refinancing charges, Q1 results were a loss of $0.08 per share versus about a $0.04 loss in Q4 2012.
EBITDA was $64.3 million in Q1; that was up about 13% from the previous quarter. And Doug Smith will go into some detail on the financial results in just a few moments.
Q1 was a solid operational quarter for Vantage. Our jackups, once again, worked at approximately 99% utilization during Q1. The deepwater utilization was right around 90% in Q1, with Platinum Explorer at 99% and Titanium Explorer at just under 80% in what was its first full quarter of operation.
Titanium Explorer commenced operations in December and is now drilling in the U.S. Gulf of Mexico in about 8,800 feet of water. The ship has generally functioned well with mechanical uptime well above the industry norm, we believe. Last week, there was no downtime lost at all and that's continuing now.
With that, Doug will go through some of the details of the quarter's results.
Douglas G. Smith
Thank you, Paul. Our first quarter revenues were approximately $147 million as compared to $123 million in the prior quarter and $131.8 million in the first quarter of 2012.
Revenue from contract drilling business for the first quarter was a record $134.7 million as compared to contract drilling revenue of $113.7 million in the prior quarter and $105 million in the prior year, representing a sequential increase of 18.5% and a year-over-year increase to 28.3%. The sequential increase in revenue is due to the Titanium Explorer, which commenced operations on December 7, having a full quarter of activity, and the Topaz Driller, which had 43 days of mobilization from Malaysia to Indonesia during the fourth quarter, also having a full quarter of activity.
Income from operations for the first quarter was $39.4 million as compared to $37.6 million in the prior quarter, and $40.7 million achieved in the first quarter of the prior year.