Vantage Drilling misses $59.5 million shipyard payment on drillship

By Caroline Salls

Pittsburgh, Aug. 4 – Vantage Drilling Co. did not make the $59.5 million second milestone shipyard payment due July 15 on the Cobalt Explorer drillship, according to a 10-Q filed Tuesday with the Securities and Exchange Commission.

The company said it made the initial $59.5 million milestone shipyard payment on the Cobalt Explorer in July 2013 and agreed with the shipyard to defer the second payment until July 15, 2015.

Vantage said it is discussing with the shipyard both a further delay of this payment and possible extensions for the delivery of the Cobalt Explorer beyond the current scheduled delivery in the first half of 2016.

If the company fails to reach an agreement with the shipyard within 30 days of the due date for the second milestone payment, the shipyard may terminate its construction contract.

If the contract is terminated, all supplies delivered would become the property of the shipyard, and the shipyard would be entitled to retain all milestone and other payments made by Vantage to date.

In addition, the company said the shipyard could elect to sell the Cobalt Explorer and may claim any deficiency in proceeds against Vantage.

Vantage said it currently forecasts spending $5.5 million for the remainder of 2015 on capital expenditures related to the construction and outfitting of the Cobalt Explorer, not including any capitalized interest related to the construction project. In 2016, the company expects to spend about $8 million on capital expenditures related to the Cobalt Explorer, excluding any capitalized interest.

The company said it continues to evaluate financing alternatives for the remaining shipyard funding commitments for the Cobalt Explorer, but the majority of the financing alternatives for the Cobalt Explorer are dependent upon obtaining a drilling service contract satisfactory to the parties providing the necessary financing.

Since current market conditions do not support obtaining a satisfactory drilling services contract, Vantage said it is discussing a potential delay in the delivery of the Cobalt Explorer to allow market conditions to improve.

According to the 10-Q, the final payment due to the shipyard at delivery is roughly $476 million. The current book value of Vantage’s investment in the Cobalt Explorer is $95.2 million.

Vantage Drilling is a Houston-based offshore drilling contractor.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.