QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the ~~Registrant~~registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange ~~Act). (Check one):~~Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of Vantage Drilling International ~~ordinary shares~~Ordinary Shares outstanding as of ~~October 20, 2017~~April 26, 2021 is ~~5,000,053~~13,115,026 shares.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act ~~of 1933, as amended,~~ and Section 21E of the ~~Securities~~ Exchange ~~Act of 1934, as amended.~~Act. These forward-looking statements are included throughout this Quarterly Report, including under ~~“Item~~“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations” When used, statements which are not historical in nature, including those containing words such as “anticipate,” “assume,” “believe,” “budget,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “would,” “will,” “future” and similar expressions are intended to identify forward-looking statements in this Quarterly Report.

These forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements.

Many of these factors are beyond our ability to control or predict. Any, or a combination of these factors, could materially affect our future financial condition or results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially from those projected in the forward-looking statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels.

In addition, each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements. We may not update these forward-looking statements, even if our situation changes in the future. All forward-looking statements attributable to us are expressly qualified by these cautionary statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in filings we may make with the ~~Securities and Exchange Commission (the “SEC”),~~SEC, which may be obtained by contacting us or the SEC. These filings are also available through our website at www.vantagedrilling.com or through the SEC’s Electronic Data Gathering and Analysis Retrieval system (EDGAR) at www.sec.gov. The contents of our website are not part of this Quarterly Report.

Unless the context indicates otherwise, all references to the “Company,” “Vantage~~” “VDI,~~ Drilling International,” “we,” “our” or “us” refer to Vantage Drilling International and its consolidated subsidiaries. References to “VDI” refer to Vantage Drilling International, a Cayman Islands exempted company and the group parent company.

The following terms used in this Quarterly Report have the following meanings, unless specified elsewhere in this Quarterly Report:


							March 31, 2021			December 31, 2020
	September 30, 2017			December 31, 2016
ASSETS
Current assets
Cash and cash equivalents	$	198,637		$	231,727		$	140,381		$	141,945
Trade receivables		36,103			20,850
Inventory		43,675			45,206
Restricted cash								7,798			7,996
Trade receivables, net of allowance for doubtful accounts of $5.0 million, respectively								25,147			24,717
Materials and supplies								49,456			49,861
Prepaid expenses and other current assets		16,158			12,423			20,538			29,151
Total current assets		294,573			310,206			243,320			253,670
Property and equipment
Property and equipment		904,327			902,241			795,349			794,944
Accumulated depreciation		(123,215	)		(67,713	)		(292,684	)		(278,562	)
Property and equipment, net		781,112			834,528			502,665			516,382
Operating lease ROU assets								3,583			3,997
Other assets		22,384			15,694			14,230			12,126
Total assets	$	1,098,069		$	1,160,428		$	763,798		$	786,175

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	46,182		$	35,283		$	24,588		$	25,466
Accrued liabilities		20,073			18,448
Current maturities of long-term debt		4,430			1,430
Other current liabilities								39,994			24,734
Total current liabilities		70,685			55,161			64,582			50,200
Long–term debt, net of discount and financing costs of $68,564 and $105,568		904,084			867,372
Long–term debt, net of discount and financing costs of $4,371 and $4,781, respectively								345,629			345,219
Other long-term liabilities		9,899			11,335			14,293			15,011
Commitments and contingencies (Note 8)
Commitments and contingencies (see Note 8)
Shareholders' equity
Ordinary shares, $0.001 par value, 50 million shares authorized; 5,000,053 shares issued and outstanding		5			5
Ordinary shares, $0.001 par value, 50 million shares authorized; 13,115,026 shares issued and outstanding, respectively								13			13
Additional paid-in capital		373,972			373,972			633,727			634,181
Accumulated deficit		(260,576	)		(147,417	)		(295,639	)		(259,655	)
Total shareholders' equity		113,401			226,560
Total liabilities and shareholders’ equity	$	1,098,069		$	1,160,428
Controlling interest shareholders' equity								338,101			374,539
Noncontrolling interests								1,193			1,206
Total equity								339,294			375,745
Total liabilities and shareholders' equity							$	763,798		$	786,175

The accompanying notes are an integral part of these unaudited consolidated financial statements.

	Successor												Predecessor
	Three Months Ended September 30,						Nine Months Ended September 30, 2017			Period from February 10, 2016 to September 30, 2016			Period from January 1, 2016 to February 10, 2016			Three Months Ended March 31,
	2017			2016			Nine Months Ended September 30, 2017			Period from February 10, 2016 to September 30, 2016			Period from January 1, 2016 to February 10, 2016			2021			2020
Revenue
Contract drilling services	$	51,831		$	34,755		$	137,672		$	99,715		$	20,891		$	17,725		$	44,319
Management fees		342			993			1,148			3,664			752
Reimbursables		5,523			4,194			14,188			14,860			1,897
Reimbursables and other																	2,441			7,137
Total revenue		57,696			39,942			153,008			118,239			23,540			20,166			51,456
Operating costs and expenses
Operating costs		49,848			30,983			119,030			93,387			25,213			25,357			48,555
General and administrative		6,949			10,128			29,929			27,991			2,558			5,495			7,170
Depreciation		18,538			18,977			55,531			49,434			10,696			14,125			18,016
Total operating costs and expenses		75,335			60,088			204,490			170,812			38,467			44,977			73,741
Loss from operations		(17,639	)		(20,146	)		(51,482	)		(52,573	)		(14,927	)		(24,811	)		(22,285	)
Other income (expense)
Other (expense) income
Interest income		231			11			587			26			3			100			701
Interest expense and other financing charges (contractual interest of $23,219 for the period from January 1, 2016 to February 10, 2016)		(19,258	)		(18,722	)		(57,180	)		(48,144	)		(1,728	)
Interest expense and other financing charges																	(8,510	)		(8,420	)
Other, net		858			669			2,073			987			(69	)		(614	)		2,355
Reorganization items		—			35			—			(606	)		(452,919	)
Bargain purchase gain		—			—			1,910			—			—
Total other expense		(18,169	)		(18,007	)		(52,610	)		(47,737	)		(454,713	)		(9,024	)		(5,364	)
Loss before income taxes		(35,808	)		(38,153	)		(104,092	)		(100,310	)		(469,640	)		(33,835	)		(27,649	)
Income tax provision		4,260			3,373			9,067			5,978			2,371			2,162			2,921
Net loss		(40,068	)		(41,526	)		(113,159	)		(106,288	)		(472,011	)		(35,997	)		(30,570	)
Net loss attributable to noncontrolling interests		—			—			—			—			(969	)
Net loss attributable to VDI	$	(40,068	)	$	(41,526	)	$	(113,159	)	$	(106,288	)	$	(471,042	)
Net loss per share, basic and diluted	$	(8.01	)	$	(8.31	)	$	(22.63	)	$	(21.26	)	N/A
Weighted average successor ordinary shares outstanding, basic and diluted		5,000			5,000			5,000			5,000		N/A
Net (loss) income attributable to noncontrolling interests																	(13	)		2
Net loss attributable to shareholders																$	(35,984	)	$	(30,572	)
Loss per share
Basic and Diluted																$	(2.74	)	$	(2.33	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

Successor

Predecessor

Nine Months Ended September 30, 2017

Period from February 10, 2016 to September 30, 2016

Period from January 1, 2016 to February 10, 2016

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$
(113,159
)

$
(106,288
)

$
(472,011
)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation expense

55,531

49,434

10,696

Amortization of debt financing costs

351

310

—

Amortization of debt discount

36,653

31,075

—

Amortization of contract value

3,095

—

—

PIK interest on the Convertible Notes

5,692

4,822

—

Reorganization items

—

—

430,210

Share-based compensation expense

2,882

76

—

Gain on bargain purchase

(1,910
)

—

—

Deferred income tax benefit

(3,489
)

(2,660
)

—

Loss on disposal of assets

191

634

—

Changes in operating assets and liabilities, net of businesses acquired:

Restricted cash

—

1,000

(1,000
)

Trade receivables

(15,253
)

53,405

(3,575
)

Inventory

1,531

(1,856
)

223

Prepaid expenses and other current assets

(1,685
)

(47
)

6,893

Other assets

5,947

(1,823
)

941

Accounts payable

10,899

2,136

(14,890
)

Accrued liabilities and other long-term liabilities

(4,688
)

(26,935
)

21,148

Net cash (used in) provided by operating activities

(17,412
)

3,283

(21,365
)

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property and equipment

(1,606
)

(10,107
)

116

Cash paid for Vantage 260 acquisition

(13,000
)

—

—

Net cash (used in) provided by investing activities

(14,606
)

(10,107
)

116

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of long-term debt

(1,072
)

(1,072
)

(7,000
)

Proceeds from issuance of 10% Second Lien Notes

—

—

75,000

Debt issuance costs

—

(51
)

(1,125
)

Net cash (used in) provided by financing activities

(1,072
)

(1,123
)

66,875

Net (decrease) increase in cash and cash equivalents

(33,090
)

(7,947
)

45,626

Cash and cash equivalents—beginning of period

231,727

249,046

203,420

Cash and cash equivalents—end of period

$
198,637

$
241,099

$
249,046

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for:

Interest

$
12,575

$
10,134

$
1,568

Income taxes (net of refunds)

13,253

15,445

(1,864
)

Non-cash investing and financing transactions:

Payment of interest in kind on the Convertible Notes

$
3,780

$
2,911

$
—

Additional notes issued for backstop premium

—

—

1,125

The accompanying notes are an integral part of these unaudited consolidated financial statements.

On December 3, 2015 (the “Petition Date”), the Company, certain of its subsidiaries and certain VDC subsidiaries who were guarantors of the Company’s pre-bankruptcy secured debt, filed the Reorganization Plan in the United States Bankruptcy Court for the District of Delaware (~~In re Vantage Drilling International (F/K/A Offshore Group Investment Limited), et al., Case No. 15-12422). On January 15, 2016, the District Court of Delaware confirmed the Company’s pre-packaged Reorganization Plan and the Company emerged from bankruptcy on the Effective Date.~~

Pursuant to the terms of the Reorganization Plan, the pre-bankruptcy term loans and senior notes were retired on the Effective Date by issuing to the debtholders 4,344,959 units in the reorganized Company (the “Units”). Each Unit of securities originally consisted of one New Share and $172.61 of principal of the Company’s 1%/12% Step-Up Senior Secured Third Lien Convertible Notes due 2030 (the “Convertible Notes”), subject to adjustment upon the payment of interest in kind (“PIK interest”) and certain cases of redemption or conversion of the Convertible Notes, as well as share splits, share dividends, consolidation or reclassification of the New Shares~~. The New Shares and the Convertible Notes are subject to the terms of an agreement that prohibits the New Shares and Convertible Notes from being traded separately.~~

The Convertible Notes are convertible into New Shares in certain circumstances, at a conversion price (subject to adjustment in accordance with the terms of the Indenture for the Convertible Notes) which was $95.60 as of the issue date. The Indenture for the Convertible Notes includes customary covenants that restrict, among other things, the granting of liens and customary events of default, including among other things, failure to issue securities upon conversion of the Convertible Notes. As of September 30, 2017, taking into account the payment of PIK interest on the Convertible Notes to such date, each such Unit consisted of one New Share and $175.02 of principal of Convertible Notes.

~~Other significant elements of the Reorganization Plan included:~~

~~Second Amended and Restated Credit Agreement~~. The Company’s pre-petition credit agreement was amended to (i) replace the $32.0 million revolving letter of credit commitment under its pre-petition facility with a new $32.0 million revolving letter of credit facility and (ii) repay the $150 million of outstanding borrowings with (a) $7.0 million of cash and (b) the issuance of $143.0 million initial term loans (the “2016 Term Loan Facility”).

~~10% Senior Secured Second Lien Notes~~. Holders of the Company’s pre-petition term loans and senior notes claims were eligible to participate in a rights offering conducted by the Company for $75.0 million of the Company’s new 10% Senior Secured Second Lien Notes due 2020 (the “10% Second Lien Notes”). In connection with this rights offering, certain creditors entered into a

“backstop” agreement to purchase 10% Second Lien Notes if the offer was not fully subscribed. The premium paid to such creditors under the backstop agreement was approximately $2.2 million, which was paid $1.1 million in cash and $1.1 million in additional 10% Second Lien Notes, resulting in a total issued amount of $76.1 million of 10% Second Lien Notes and net cash proceeds to the Company of $73.9 million, after deducting the cash portion of the backstop premium.

The Reorganization Plan allowed the Company to continue business operations during the court proceedings and maintain all operating assets and agreements. The Company had adequate liquidity prior to the filing and did not have to seek any debtor-in-possession financing. All trade payables, credits, wages and other related obligations were unimpaired by the Reorganization Plan.

~~Other Events:~~ ~~In July 2015, we became aware that Hamylton Padilha, the Brazilian agent VDC used in the contracting of the~~ ~~Titanium Explorer~~ drillship to Petroleo Brasileiro S.A. (“Petrobras”), had entered into a plea arrangement with the Brazilian authorities in connection with his role in facilitating the payment of bribes to former Petrobras executives. Among other things, Mr. Padilha provided information to the Brazilian authorities of an alleged bribery scheme between former Petrobras executives and Mr. Hsin-Chi Su, who was, at the time of the alleged bribery scheme, a member of the Board of Directors and a significant shareholder of our former parent company, VDC. When we learned of Mr. Padilha’s plea agreement and the allegations, we voluntarily contacted the U.S. Department of Justice (“DOJ”) and the ~~Securities and Exchange Commission (the “SEC”)~~ to advise them of these developments, as well as the fact that we had engaged outside counsel to conduct an internal investigation of the allegations. Since disclosing this matter to the DOJ and SEC, we have cooperated fully in their investigation of these allegations. In connection with such cooperation, we advised both agencies that in early 2010, we engaged outside counsel to investigate a report of alleged improper payments to customs and immigration officials in Asia. That investigation was concluded in 2011, and we determined at that time that no disclosure was warranted; however, in an abundance of caution, we provided the results of this investigation to the DOJ and SEC in light of the allegations in the Petrobras matter. In August 2017, we received a letter from the DOJ acknowledging our full cooperation in the DOJ’s investigation into the Company concerning the possible violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) in the Petrobras matter and indicating that the DOJ has closed such investigation without any action. Although the DOJ’s investigation into this matter has closed, we cannot predict the outcome of the SEC’s investigation, which remains open, and if the SEC determines that violations of the FCPA have occurred, the Company could be subject to civil and criminal sanctions, including monetary penalties, as well as additional requirements or changes to our business practices and compliance programs, any or all of which could have a material adverse effect on our business and financial condition. Additionally, if we become subject to any judgment, decree, order, governmental penalty or fine, this may constitute an event of default under the terms of our secured debt agreements and, following notice from the requisite lenders and/or noteholders, as applicable, result in our outstanding debt under the 2016 Term Loan Facility and 10% Second Lien Notes becoming immediately due and payable at par, and our outstanding debt under Convertible Notes becoming immediately due and payable at the make-whole amount specified in the indenture governing the Convertible Notes.

2. Basis of Presentation and Significant Accounting Policies

Basis of Consolidation: The accompanying interim consolidated financial information as of ~~September 30, 2017, for the three~~March 31, 2021 and ~~nine months ended September 30, 2017,~~ for the three months ended ~~September 30, 2016, for the period from February 10, 2016 to September 30, 2016~~March 31, 2021 and ~~for the period from January 1, 2016 to February 10, 2016~~2020 has been prepared without audit, pursuant to the rules and regulations of the SEC, and includes our accounts and those of our majority owned subsidiaries and ~~variable interest entities (“VIEs”)~~VIEs (as discussed ~~below.~~below). All significant intercompany transactions and accounts have been eliminated. They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the interim periods, on a basis consistent with the annual audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with ~~generally accepted accounting principles in the United States of America (“~~U.S. ~~GAAP”)~~GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC, although we believe that the disclosures made are adequate to provide for fair presentation. The ~~consolidated~~ balance sheet at December 31, ~~2016~~2020 is derived from our December 31, ~~2016~~2020 audited financial statements. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020, which was filed with the SEC on March 18, 2021. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods. Certain previously reported amounts have been reclassified to conform to the current period presentation.

~~In connection with our bankruptcy filing, we were subject to the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 852~~ ~~Reorganizations~~ (“ASC 852”). All expenses, realized gains and losses and provisions for losses directly associated with the bankruptcy proceedings were classified as “reorganization items” in the consolidated statements of operations. Certain pre-petition liabilities subject to Chapter 11 proceedings were considered as Liabilities Subject To Compromise (“LSTC”) on the Petition Date and just prior to our emergence from bankruptcy on the Effective Date. The LSTC classification distinguished such liabilities from the liabilities that were not expected to be compromised and liabilities incurred post-petition.

ASC 852 requires that subsequent to the Petition Date, expenses, realized gains and losses and provisions for losses that can be directly associated with the reorganization of the business be reported separately as reorganization items in the consolidated statements of operations. We were required to distinguish pre-petition liabilities subject to compromise from those that were not and

post-petition liabilities in our balance sheet. Liabilities that were subject to compromise were reported at the amounts expected to be allowed by the Bankruptcy Court, even if they were settled for lesser amounts as a result of the Reorganization Plan.

Upon emergence from bankruptcy on the Effective Date, we adopted fresh-start accounting in accordance with ASC 852, which resulted in the Company becoming a new entity for financial reporting purposes. Upon adoption of fresh-start accounting, our assets and liabilities were recorded at their fair values as of the Effective Date. The Effective Date fair values of our assets and liabilities differed materially from the recorded values of our assets and liabilities as reflected in our historical consolidated balance sheets. The effects of the Reorganization Plan and the application of fresh-start accounting were reflected in our consolidated financial statements as of February 10, 2016 and the related adjustments thereto were recorded in our consolidated statements of operations as reorganization items for the period January 1, 2016 to February 10, 2016.

As a result, our consolidated balance sheets and consolidated statement of operations subsequent to the Effective Date will not be comparable to our consolidated balance sheets and statements of operations prior to the Effective Date. Our consolidated financial statements and related notes are presented with a black line division which delineates the lack of comparability between amounts presented on or after February 10, 2016 and dates prior. Our financial results for future periods following the application of fresh-start accounting will be different from historical trends and the differences may be material.

References to “Successor” relate to the Company on and subsequent to the Effective Date. References to “Predecessor” refer to the Company prior to the Effective Date. The consolidated financial statements of the Successor have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business.

In addition to the consolidation of our majority owned subsidiaries, we also consolidate VIEs when we are determined to be the primary beneficiary of a VIE. Determination of the primary beneficiary of a VIE is based on whether an entity has (1) the power to direct activities that most significantly impact the economic performance of the VIE and (2) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Our determination of the primary beneficiary of a VIE considers all relationships between us and the VIE. ~~Certain subsidiaries~~

ADVantage is a joint venture company formed to operate deepwater drilling rigs in Egypt. We determined that ADVantage met the criteria of ~~VDC, who were guarantors~~a VIE for accounting purposes because its equity at risk was insufficient to permit it to carry on its activities without additional subordinated financial support from us. We also determined that we are the primary beneficiary for accounting purposes since we are entitled to use ADVantage for deepwater drilling contract opportunities rejected by ADES International Holding Ltd., a London-listed offshore and onshore provider of ~~our pre-petition debt~~oil and ~~part~~gas drilling and production services in the Middle East and Africa (“ADES”), and have the (a) power to direct the operating activities associated with the deepwater drilling rigs, which are the activities that most significantly impact the entity’s economic performance, and (b) obligation to absorb losses or the right to receive a majority of the ~~Reorganization Plan, became our subsidiaries upon emergence from bankruptcy on~~benefits that could be potentially significant to the ~~Effective Date. We consolidated these entities~~VIE. As a result, we consolidate ADVantage in our ~~Predecessor~~ consolidated financial statements, ~~because~~ we ~~determined~~eliminate intercompany transactions and we present the interests that ~~they were VIEs~~are not owned by us as “Noncontrolling interests” in our Consolidated Balance Sheet. The carrying amount associated with ADVantage was as follows:


	March 31, 2021		December 31, 2020
(unaudited, in thousands)
Current assets	$	4,173	$	7,072
Non-current assets		90		84
Current liabilities		910		3,979
Non-current liabilities		945		741
Net carrying amount	$	2,408	$	2,436

As ADVantage is a majority owned subsidiary of the Company, it serves as a guarantor under the First Lien Indenture. The 9.25% First Lien Notes are secured by a first priority lien on all of the assets of ADVantage, subject to certain exceptions. Creditors’ recourse against ADVantage for liabilities of ADVantage is limited to the assets of ADVantage.

See “Note 9. Supplemental Financial Information” of these “Notes to Unaudited Consolidated Financial Statements” for additional details regarding related party transactions associated with this joint venture.

Use of Estimates: The preparation of financial statements in accordance with U.S. GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities

at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we ~~were the primary beneficiary. The following table summarizes the net effect of consolidating~~evaluate our estimates, including those related to property and equipment, income taxes, insurance, employee benefits and contingent liabilities. Actual results could differ from these ~~entities on our Predecessor consolidated statement of operations.~~ estimates.

Predecessor

Period from January 1, 2016 to February 10, 2016

(unaudited, in thousands)

Revenue

$
1,219

Operating costs and expenses

1,240

Income before taxes

22

Income tax provision

991

Net income (loss) attributable to noncontrolling interests

(969
)

Cash and Cash Equivalents: Includes deposits with financial institutions as well as short-term money market instruments with maturities of three months or less when purchased.

~~Inventory:~~Materials and Supplies: Consists of materials, ~~consumables,~~ spare parts, consumables and related supplies for our drilling ~~rigs~~rigs. We record these materials and ~~is carried~~supplies at ~~the lower of~~their average ~~cost or market.~~cost.

Property and Equipment: Consists ~~of the costs~~ of our drilling rigs, furniture and fixtures, computer equipment and capitalized costs for computer software. Drilling rigs are depreciated on a component basis over estimated useful lives ranging from five to ~~thirty-five~~35 years on a straight-line basis as of the date placed in service. Other assets are depreciated upon placement in service over estimated useful lives ranging from three to seven years on a straight-line basis. When assets are sold, retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the ~~accounts~~balance sheet and athe resulting gain or loss is ~~recognized.~~included in “Operating costs” or “General and administrative” expenses on the Consolidated Statement of Operations, depending on the nature of the asset. In the three months ended March 31, 2021, we recognized a net gain of approximately $2.7 million related to the sale or retirement of assets. For the three months ended March 31, 2020, the gain/loss related to the sale or retirement of assets was immaterial.

We evaluate the realization of property and equipment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss on our property and equipment exists when estimated undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Any impairment loss recognized would ~~represent~~be computed as the excess of the asset’s carrying value over the estimated fair value. ~~In connection~~Estimates of future cash flows require us to make long-term forecasts of our future revenues and operating costs with regard to the assets subject to review. Our business, including the utilization rates and dayrates we receive for our ~~adoption~~drilling rigs, depends on the level of ~~fresh-start accounting upon~~ our ~~emergence from bankruptcy on February 10, 2016, an adjustment~~customers’ expenditures for oil and gas exploration, development and production expenditures. Oil and gas prices and customers’ expectations of ~~$2.0 billion was recorded~~potential changes in these prices, the general outlook for worldwide economic growth, political and social stability in the major oil and gas producing basins of the world, availability of credit and changes in governmental laws and regulations, among many other factors, significantly affect our customers’ levels of expenditures. Sustained declines in or persistent depressed levels of oil and gas prices, worldwide rig counts and utilization, reduced access to ~~decrease~~credit markets, reduced or depressed sale prices of comparably equipped jackups and drillships and any other significant adverse economic news could require us to evaluate the ~~net book value~~realization of our drilling ~~rigs to estimated fair value. As~~rigs. The projections and assumptions used during the fourth quarter of ~~September 30, 2017,~~2020 have not changed significantly as of March 31, 2021; accordingly, no triggering event has occurred to indicate that the ~~current~~ carrying value of our drilling rigs may not be recoverable.

Interest costs and the amortization of debt financing costs related to the financings of our drilling rigs are capitalized as part of the cost while they are under construction and prior to the commencement of each vessel’s first contract. We did ~~not~~0t capitalize any interest for the reported periods.

~~Intangible assets:~~ ~~In connection with our acquisition of the~~ ~~Vantage 260~~ and related multi-year drilling contract, the Company recorded an identifiable intangible asset of $12.6 million for the fair value of the acquired favorable drilling contract. The resulting intangible asset is being amortized on a straight-line basis over the term of the drilling contract. We recognized approximately $1.5 million and $3.1 million of amortization expense for intangible assets for the three and nine months ended September 30, 2017, respectively.

~~Expected future intangible asset amortization as of September 30, 2017 is as follows:~~

(in thousands)

Fiscal year:

Remaining 2017
$
1,591

2018

6,311

2019

1,643

Thereafter

-

Total
$
9,545

Debt Financing Costs: Costs incurred with financing debt ~~financings~~ are deferred and amortized over the term of the related financing facility on a straight-line basis, which approximates the interest method. Debt issuance costs related to a recognized debt liability are presented in the ~~consolidated balance sheet~~Consolidated Balance Sheet as a direct deduction from the carrying amount of that debt liability.

~~Revenue:~~ ~~Revenue is recognized as services are performed based on contracted dayrates and the number of operating days during the period.~~

In connection with a customer contract, we may receive lump-sum fees for the mobilization of equipment and personnel or the demobilization of equipment and personnel upon completion. Mobilization fees received and costs incurred to mobilize a rig from one geographic market to another are deferred and recognized on a straight-line basis over the term of such contract, excluding any option periods. Costs incurred to mobilize a rig without a contract are expensed as incurred. Fees or lump-sum payments received for capital improvements to rigs are deferred and amortized to income over the term of the related drilling contract. The costs of such capital improvements are capitalized and depreciated over the useful lives of the assets. Upon completion of drilling contracts, any demobilization fees received are recorded as revenue. We record reimbursements from customers for rebillable costs and expenses as revenue and the related direct costs as operating expenses.

Rig and Equipment Certifications: We are required to obtain regulatory certifications to operate our drilling rigs and certain specified equipment, and must maintain such certifications through periodic inspections and surveys. The costs associated with these certifications, including drydock costs, are deferred and amortized over the corresponding certification periods.

Revenue Recognition: See “Note 3. Revenue from Contracts with Customers” of these “Notes to Unaudited Consolidated Financial Statements” for further information.

Income Taxes: Income taxes are provided for based upon the tax laws and rates in effect in the countries in which our operations are conducted and income is earned. Deferred income tax assets and liabilities are computed for differences between the financial statement basis and tax basis of assets and liabilities that will result in future taxable or tax deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. We do not establish deferred tax liabilities for certain of our foreign earnings that we intend to indefinitely reinvest to finance foreign activities. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized. We recognize interest and penalties related to income taxes as a component of income tax expense.

Concentrations of Credit Risk: Financial instruments that potentially subject us to a significant concentration of credit risk consist primarily of cash and cash equivalents, restricted cash and accounts receivable. We maintain deposits in federally insured financial institutions in excess of federally insured limits. We monitor the credit ratings and our concentration of risk with these financial institutions on a continuing basis to safeguard our cash deposits. We have a limited number of key customers, who are primarily large international oil and gas operators, national oil companies and other international oil and gas companies. Our contracts provide for monthly billings as services are performed and we monitor compliance with contract payment terms on an ongoing basis. Payment terms

on customer invoices typically range from 30 to 45 days. Outstanding receivables beyond payment terms are promptly investigated and discussed with the specific customer.

Credit Losses – Accounts Receivable: The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. Current estimates of expected credit losses consider factors such as the historical experience and credit quality of our customers. The Company considers historical loss information as the most reasonable basis on which to determine expected credit losses unless current or forecasted future conditions for customers (or customer groups) indicate that risk characteristics have changed. We ~~do not have an~~also considered the impact of the COVID-19 pandemic and the associated oil price and market share volatility on our allowance for doubtful accounts (see “Ongoing Impact of COVID-19 and Declines in the Demand for Oil and Gas” set forth above in “Note 1. Organization and Recent Events” of these “Notes to Unaudited Consolidated Financial Statements”) The allowance for doubtful accounts on our trade receivables was $5.0 million as of ~~September 30, 2017 or~~each of March 31, 2021 and December 31, ~~2016.~~2020, respectively.This amount represents a customer’s decision not to pay us for days impacted by what we believe were force majeure and other similar events for which we would still be entitled to receive payment under the applicable contract. We disagree with the customer's decision and are currently evaluating our remedies, if any, under the applicable contract.

~~Use of Estimates:~~ ~~The preparation of financial statements~~Earnings (loss) per Share: We compute basic and diluted EPS in accordance with ~~U.S. GAAP requires management~~the two-class method. We include restricted stock units granted to ~~make estimates~~employees that contain non-forfeitable rights to dividends as such grants are considered participating securities. Basic earnings (loss) per share are based on the weighted average number of Ordinary Shares outstanding during the applicable period. Diluted EPS are computed based on the weighted average number of Ordinary Shares and ~~assumptions that affect~~ordinary share equivalents outstanding in the ~~reported amounts of assets and liabilities and~~applicable period, as if all potentially dilutive securities were converted into Ordinary Shares (using the ~~disclosure of contingent assets and liabilities at the date~~treasury stock method).

The following is a reconciliation of the ~~financial statements~~number of shares used for the basic and diluted EPS computations


	Three Months Ended March 31,
	2021		2020
	(In thousands)
Weighted average Ordinary Shares outstanding for basic EPS		13,115		13,115
Restricted share equity awards		0		0
Adjusted weighted average Ordinary Shares outstanding for diluted EPS		13,115		13,115

The following sets forth the ~~reported amounts~~number of shares excluded from diluted EPS computations:


	Three Months Ended March 31,
	2021		2020
	(In thousands)
Restricted share equity awards		218		194
Future potentially dilutive Ordinary Shares excluded from diluted EPS		218		194

Functional Currency: We consider USD to be the functional currency for all of our operations since the majority of our revenues and ~~expenses during~~expenditures are denominated in USD, which limits our exposure to currency exchange rate fluctuations. We recognize currency exchange rate gains and losses in “Other, net” in our Consolidated Statement of Operations. For the ~~reporting period. On an ongoing basis,~~three months ended March 31, 2021 and 2020, we ~~evaluate our estimates, including those~~recognized a net loss of approximately $0.6 million and a net gain of approximately $0.1 million, respectively, related to ~~property and equipment, income taxes, insurance, employee benefits and contingent liabilities. Actual results could differ from these estimates.~~currency exchange rates.

Fair Value of Financial Instruments: The fair value of our short-term financial assets and liabilities approximates the carrying amounts represented in the ~~consolidated~~ balance sheet principally due to the short-term nature or floating rate nature of these

instruments. ~~At September 30, 2017,~~As of March 31, 2021, the fair value of the ~~2016 Term Loan Facility, the 10% Second~~9.25% First Lien ~~Notes and the Convertible~~ Notes was approximately ~~$142.3~~$293.6 million ~~$73.1 million and $808.2 million, respectively,~~ based on quoted market prices in a less active market, a Level 2 measurement.

Share-based Compensation:TBGs granted under the 2016 Amended MIP vest annually, ratably over four years; however, accelerated vesting is provided for in the event of a QLE. Otherwise, the settlement of any vested TBGs occurs upon the seventh anniversary of the Effective Date. PBGs granted under the 2016 Amended MIP contain vesting eligibility provisions tied to the earlier of a QLE or seven years from the Effective Date. Upon the occurrence of a vesting eligibility event, the number of PBGs that actually vest will be dependent on the achievement of pre-determined TEV targets specified in the grants.

~~Recent~~Both the TBGs and PBGs were classified as liabilities consistent with the classification of the underlying securities prior to the Conversion. Following the Conversion, outstanding TBGs and PBGs were subject to modification accounting and were re-classified as equity awards. Under the provisions of ASC 718 Compensation – Stock Compensation share-based compensation expense is recognized over the requisite service period from the grant date to the fourth year vest date for TBGs. For PBGs, expense will be recognized when it is probable that the TEV targets will be met. Once it is probable the performance condition will be met, compensation expense based on the fair value of the PBGs at the conversion date of the Convertible Notes will be recognized for the service period completed to the seventh anniversary of the Effective Date for PBGs.

Noncontrolling Interest:

Noncontrolling interests represent the equity investments of the minority owner in ADVantage, a joint venture with ADES that we consolidate in our financial statements.

Recently Adopted Accounting Standards:

In ~~May 2014,~~December 2019, the FASB issued ASU No. ~~2014-09,~~ 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and also simplifies and improves consistent application of GAAP for other areas of Topic 740 by clarifying and amending existing guidance. We adopted this standard on January 1, 2021, and such adoption did not have a material impact on our consolidated financial statements.

Recently Issued Accounting Standards:

There have been no new accounting pronouncements not yet effective that have significance, or potential significance, with respect to our consolidated financial statements.

3. Revenue from Contracts with Customers~~. ASU No. 2014-09 supersedes most of~~

The activities that primarily drive the ~~existing~~ revenue ~~recognition requirements~~earned in ~~U.S. GAAP, including industry-specific guidance.~~ The ASU is based on the principle that revenue is recognized when an entity transfers promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires significant additional disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ASU No. 2014-09 is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years, using either a full or a modified retrospective application approach. We plan to adopt ASU 2014-09 effective January 1, 2018 using the modified retrospective approach whereby we will record the cumulative effect of applying the new standard to all outstanding contracts as of January 1, 2018 as an adjustment to opening retained earnings.

~~When applying the new standard, we currently plan to account for the integrated services provided within~~ our drilling contracts aswith customers include (i) providing our drilling rig, work crews, related equipment and services necessary to operate the rig, (ii) delivering the drilling rig by mobilizing to and demobilizing from the drill site, and (iii) performing pre-operating activities, including rig preparation activities and/or equipment modifications required for the contract.

The integrated drilling services that we perform under each drilling contract represent a single performance obligation ~~composed~~satisfied over time and comprised of a series of distinct time increments, or service periods.

Dayrate Drilling Revenue. Our drilling contracts generally provide for payment on a dayrate basis, with higher rates for periods when the drilling unit is operating and lower rates or zero rates for periods when drilling operations are interrupted or restricted. The dayrate billed to the customer is determined based on varying rates applicable to the specific activities performed on an hourly basis. Such dayrate consideration is allocated to the distinct hourly increment it relates to within the contract term and therefore, recognized as we perform the daily drilling services.

Amortizable Revenue. In connection with certain contracts, we receive lump-sum fees or similar compensation for (i) the mobilization of equipment and personnel prior to the commencement of drilling services, (ii) the demobilization of equipment and personnel upon contract completion and (iii) postponement fees in consideration for the postponement of a contract until a later date. These activities are not considered to be distinct within the context of the contract and therefore, the associated revenue is allocated to the overall single performance obligation.

Mobilization fees received prior to commencement of drilling operations are recorded as a contract liability and amortized on a straight‑line basis over the initial contract period. Demobilization fees expected to be received upon contract completion are estimated at contract inception and recognized on a straight-line basis over the initial contract term with an offset to an accretive contract asset. In many contracts, demobilization fees are contingent upon the occurrence or non-occurrence of a future event and the estimate for such revenue may therefore be constrained. Postponement fees received that are contingent upon the occurrence (or non-occurrence) of a future event are recognized on a straight-line basis over the contract term.Fees received for the mobilization or demobilization of equipment and personnel are included in “Contract drilling services” in our Consolidated Statement of Operations.

Capital Upgrade/Contract Preparation Revenue. In connection with certain contracts, we receive lump-sum fees or similar compensation for requested capital upgrades to our drilling rigs or for other contract preparation work. These activities are not considered to be distinct within the context of the contract and therefore, fees received are recorded as a contract liability and amortized to contract drilling revenues on a straight-line basis over the initial contract term.

Revenues Related to Reimbursable Expenses. We generally receive reimbursements from our customers for the purchase of supplies, equipment, personnel services and other services provided at their request in accordance with a drilling contract or other agreement. We are generally considered a principal in such transactions and therefore, recognize reimbursable revenues and the corresponding costs as we provide the customer‑requested goods and services.

We have elected to exclude from the transaction price measurement all taxes assessed by a governmental authority.

Disaggregation of Revenue

The following tables present our revenue disaggregated by revenue source for the periods indicated:


	Three Months Ended March 31, 2021								Three Months Ended March 31, 2020
	Jackups		Deepwater		Management		Consolidated		Jackups		Deepwater		Management		Consolidated
(unaudited, in thousands)
Dayrate revenue	$	8,898	$	8,827	$	98	$	17,823	$	23,986	$	19,731	$	546	$	44,263
Charter lease revenue		0		0		0		0		476		0		0		476
Amortized revenue		0		0		0		0		96		506		0		602
Reimbursable revenue		2,322		21		0		2,343		3,225		2,555		335		6,115
Total revenue	$	11,220	$	8,848	$	98	$	20,166	$	27,783	$	22,792	$	881	$	51,456

Dayrate revenue and amortized revenue for Jackups and Deepwater are included within “Contract drilling services” in our Consolidated Statement of Operations. All other revenue, excluding “Contract termination revenue”, are included within “Reimbursables and other” in our Consolidated Statement of Operations.

Accounts Receivable, Contract Liabilities and Contract Costs

Accounts receivable are recognized when the right to consideration becomes unconditional based upon contractual billing schedules. Payment terms on customer invoices typically range from 30 to 45 days.

We recognize contract liabilities, recorded in other “Other current liabilities” and “Other long-term liabilities”, for prepayments received from customers and for deferred revenue received for mobilization, contract preparation and capital upgrades.

Certain direct and incremental costs incurred for contract preparation, initial mobilization and modifications of contracted rigs represent contract fulfillment costs as they relate directly to a contract, enhance resources that will be used to satisfy our performance obligations in the future and are expected to be recovered. These costs are deferred as a current or noncurrent asset depending on the length of the initial contract term and are amortized on a straight-line basis to operating costs as services are rendered over the initial term of the related drilling contract. Costs incurred for capital upgrades are capitalized and depreciated over the useful life of the asset.

Costs incurred for the demobilization of rigs at contract completion are recognized as incurred during the demobilization process. Costs incurred to mobilize a rig without a contract are expensed as incurred.

The following table provides information about contract cost assets and contract revenue liabilities from contracts with customers:


	March 31, 2021		December 31, 2020
(unaudited, in thousands)
Current contract cost assets	$	4,965	$	2,905
Current contract revenue liabilities		10,759		5,100

Significant changes in contract cost assets and contract revenue liabilities during the three months ended March 31, 2021 are as follows:


	Contract Costs		Contract Revenues
(unaudited, in thousands)
Balance as of December 31, 2020	$	2,905	$	5,100
Increase (decrease) due to contractual changes		2,060		5,659
Balance as of March 31, 2021 (1)	$	4,965	$	10,759

(1)

We expect to recognize contract revenues of approximately $6.9 million during the remaining nine months of 2021 and $3.9 million thereafter related to unsatisfied performance obligations existing as of March 31, 2021.

We have elected to utilize an optional exemption that permits us to exclude disclosure of the estimated transaction price related to the variable portion of unsatisfied performance obligations at the end of the reporting period, as our transaction price is based on a single performance obligation consisting of a series of distinct hourly increments, the variability of which will be ~~satisfied~~resolved at the time of the future services.

4. Leases

We have operating leases expiring at various dates, principally for office space, onshore storage yards and certain operating equipment. Additionally, we sublease certain office space to third parties. We determine if an arrangement is a lease at inception. Operating leases with an initial term greater than 12 months are included in “Operating lease ROU assets”, “Other current liabilities”, and “Other long-term liabilities” on our Consolidated Balance Sheet. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments over ~~time.~~the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made prior to or at the commencement date and is reduced by lease incentives received and initial direct costs incurred. Our lease terms may include options

to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. We ~~will determine~~have lease agreements with lease and non-lease components, which are generally not accounted for separately. Certain of our leases include provisions for variable payments. These variable payments are not included in the ~~total transaction price~~calculation of lease liability and ROU assets.

The components of lease expense were as follows:


		Three Months Ended March 31,
(unaudited, in thousands)	Classification in the Consolidated Statement of Operations	2021			2020
Operating lease cost(1)	Operating costs	$	902		$	966
Operating lease cost(1)	General and administrative		152			152
Sublease income	Operating costs		(121	)		(121	)
Sublease income	General and administrative		(62	)		(62	)
Total operating lease cost		$	871		$	935

(1) Short-term lease costs were approximately$0.1 million during the three months ended March 31, 2021 and 2020, respectively. Operating cash flows used for ~~each individual~~operating leases approximates lease expense.


(unaudited, in thousands)	Classification in the Consolidated Balance Sheet	March 31, 2021		December 31, 2020
Assets:
Operating lease assets	Operating lease ROU assets	$	3,583	$	3,997
Total leased assets		$	3,583	$	3,997
Liabilities:
Current operating	Other current liabilities	$	1,979	$	2,038
Noncurrent operating	Other long-term liabilities		2,028		2,371
Total lease liabilities		$	4,007	$	4,409

As of March 31, 2021, maturities of lease liabilities were as follows:


(unaudited, in thousands)	Operating Leases
Remaining nine months of 2021	$	1,746
2022		1,705
2023		949
2024		0
2025		0
Total future lease payments	$	4,400
Less imputed interest		(393	)
Present value of lease obligations	$	4,007

As of March 31, 2021, the weighted average discount rate and the weighted average remaining lease term for operating leases was 9.25% and 2.12 years, respectively. ROU assets and lease liabilities recorded for leases commencing during the three months ended March 31, 2021 was $0.6 million.

The bareboat charter contract ~~by estimating both fixed~~on the Soehanah jackup rig was accounted for as an operating lease with charter revenue included in “Reimbursables and ~~variable consideration expected~~other” in the Consolidated Statement of Operation for the three months ended March 31, 2020. In May 2019, the parties to ~~be earned over~~the bareboat charter terminated the charterer’s right to acquire the rig at the end of the term of the ~~contract. Consideration that does not relate~~bareboat charter, which was originally intended to ~~a distinct good or service, such as mobilization and demobilization revenue, will be allocated across~~end on December 31, 2019. However, under the ~~single performance obligation and recognized ratably each period over the term~~terms of the ~~contract. All other components of consideration within a contract, including~~bareboat charter, the ~~dayrate revenue, will continue to be recognized in~~lease term continued until the period when the services are performed. We expect our revenue recognition under ASU 2014-09 to differ from our current revenue recognition pattern only as it relates to demobilization revenue. Demobilization revenue, which is currently recognized upon completion of a drilling contract, will be estimated at contract commencement and recognized over the term of the contract under the new guidance. Additionally, we currently expect that the cumulative effect adjustment to opening retained earnings required by the modified retrospective adoption approach will not be significant as it will primarily consist of the impact of the timing difference related to recognition of demobilization revenue for affected contracts. Not all drilling contracts include a demobilization provision. Our adoption of ASU No, 2014-09, ~~and the ultimate effect on our consolidated financial statements,~~ ~~is subject to potential change as we continue to evaluate application of the accounting standard.~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842): Amendments~~rig was redelivered to the ~~FASB Accounting Standards Codification, to increase transparency and comparability among organizations by recognizing lease assets and liabilities~~Company, which occurred on the balance sheet and disclosing key information about leasing arrangements. ASU No. 2016-02 is effective for financial statements issued for fiscal years beginning after December 15, 2018, and early adoption is permitted. A modified retrospective approach is required. We expect to adopt ASU 2016-02 on January 1, 2019. Under the updated accounting standards, we have concluded that our drilling contracts contain a lease component, and our adoption, therefore, will require that we separately recognize revenues associated with the lease of our drilling rigs and the provision of contract drilling services. Our adoption of ASU No. 2016-02, and the ultimate effect on our consolidated financial statements, will be based on an evaluation of the contract-specific facts and circumstances, and such effect could result in differences in the timing of our revenue recognition relative to current accounting standards. With respect to leases whereby we are the lessee we expect to recognize lease liabilities and corresponding “right of use” assets. We are continuing to evaluate the requirements with regard to arrangements under which we are either the lessor or lessee, to determine the effect such requirements may have on our consolidated statements of financial position, operations and cash flows and on the disclosures contained in our notes to consolidated financial statements.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments,~~ ~~which addresses the classification and presentation of eight specific cash flow issues that currently result in diverse practice.~~ ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017 utilizing a retrospective transition approach. Early adoption is permitted, provided that all amendments are adopted in the same period. We are currently evaluating the provisions of ASU 2016-15 but do not expect the standard update to have a significant impact on the presentation of cash receipts and cash payments within our consolidated statements of cash flows.

~~In October 2016, the FASB issued ASU No. 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~, which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transaction occurs as opposed to deferring tax consequences and amortizing them into future periods. This update is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. A modified retrospective approach with a cumulative-effect adjustment directly to retained earnings at the beginning of the period of adoption is required. We have not completed an evaluation of ASU No. 2016-16 and have not yet determined the impact, if any, on our financial statements and related disclosures.

~~In January 2017, the FASB issued ASU No. 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU No. 2017-01 is effective for financial

~~statements issued for fiscal years beginning after December 15, 2017 utilizing a prospective basis on or after the effective date. Early adoption is permitted. We~~ ~~are currently evaluating the provisions~~ ~~of ASU~~ ~~No.~~ ~~2017-01 but do not expect the standard update to have a significant impact, if any, on our financial statements and related disclosures.~~

~~3. Acquisitions~~

On April 5, 2017, pursuant to a purchase and sale agreement with a third party, we completed the purchase of a class 154-44C jackup rig and related multi-year drilling contract for $13.0 million. A down payment of $1.3 million was made in February ~~2017 upon execution of the agreement and the remaining $11.7 million was paid at closing. The rig has been renamed the~~ ~~Vantage 260. In August 2017 we substituted the~~ ~~Sapphire Driller, a Baker Marine Pacific Class 375 jack-up rig to fulfill the contract. The~~ ~~Vantage 260~~ is currently classified as held for sale. We accounted for the acquisition as a business combination in accordance with accounting guidance which requires, among other things, that we allocate the purchase price to the assets acquired and liabilities assumed based on their fair values as of the acquisition date. The following table provides the estimated fair values of the assets acquired and liabilities assumed. 3, 2020.

Under accounting guidance, a bargain purchase gain results from an acquisition if the fair value of the purchase consideration paid in connection with such acquisition is less than the net fair value of the assets acquired and liabilities assumed. We recorded a bargain purchase gain of approximately $1.9 million related to the acquisition in the nine months ending September 30, 2017. We believe that we were able to negotiate a bargain purchase price as a result of our operational presence in West Africa and the seller’s liquidation.

~~Pro forma results of operations related to the acquisition have not been presented because they are not material to our consolidated statement of operations.~~

~~Reorganization items represent amounts incurred subsequent to the Petition Date as a direct result of the filing of the Reorganization Plan and are comprised of the following:~~

For the nine months ended September 30, 2017, and for the periods from February 10, 2016 to September 30, 2016 and from January 1, 2016 to February 10, 2016, cash payments for reorganization items totaled $208,000, $15.9 million and $7.3 million, respectively.

9.25% First Lien Notes. On November 30, 2018, the Company’s pre-petition credit facility were converted. The lenders under the Company’s pre-petition credit facility also received $7.0 million of cash under the Reorganization Plan. The obligations under the 2016 Term Loan Facility are guaranteed by substantially all of the Company’s subsidiaries, subject to limited exceptions, and secured on a first priority basis by substantially all of the Company’s and the guarantors’ assets, including ship mortgages on all vessels, assignments of related earnings and insurance and pledges of the capital stock of all guarantors, in each case, subject to certain exceptions. We haveCompany issued ~~$19.3~~$350.0 million in ~~letters of credit as of September 30, 2017.~~

~~The maturity date of the term loans and commitments established under the 2016 Term Loan Facility is December 31, 2019. Interest is payable on the unpaid~~aggregate principal amount of each term loan under the 2016 Term Loan Facility at LIBOR plus 6.5%, with a LIBOR floor of 0.5%. The term loans are currently bearing interest at 7.7%. The 2016 Term Loan Facility has quarterly scheduled debt maturities of $357,500 which commenced in March 2016.

~~Fees are payable on the outstanding face amount of letters of credit at a rate per annum equal to 5.5% pursuant to the terms of the 2016 Term Loan Facility.~~

The 2016 Term Loan Facility includes customary representations and warranties, mandatory prepayments, affirmative and negative covenants and events of default, including covenants that, among other things, restrict the granting of liens, the incurrence of indebtedness, the making of investments and capital expenditures, the sale or other conveyance of assets, including vessels, transactions with affiliates, prepayments of certain debt and the operation of vessels. The 2016 Term Loan Facility also requires that the Company maintain $75.0 million of available cash (defined to include unrestricted cash and cash equivalents plus undrawn commitments).

~~10% Senior Secured Second~~9.25% First Lien ~~Notes.~~ ~~The Company engaged~~Notes in a rights offering for $75.0 million of new 10% Second Lien Notes for certain holders of its secured debt claims. In connection with this rights offering, certain creditors entered into a “backstop” agreement to purchase 10% Second Lien Notes if the offer was not fully subscribed.private placement. The premium paid to such creditors under the backstop agreement was approximately $2.2 million, which was paid $1.1 million in cash and $1.1 million in additional 10% Second Lien Notes, resulting in a total issued amount of $76.1 million of 10% Second Lien Notes, and in net cash proceeds of approximately $73.9 million after deducting the cash portion of the backstop premium.

~~The 10% Second~~9.25% First Lien Notes were issued at par and are fully ~~and unconditionally~~ guaranteed ~~(except for customary release provisions),~~ on a senior secured basis by the Company’s direct and indirect subsidiaries and are secured by a first priority lien on substantially all of the ~~subsidiaries~~assets of the ~~Company.~~Company and its subsidiaries, in each case subject to certain exceptions. The ~~10% Second~~9.25% First Lien Notes are subject to first payment priority in favor of holders of up to $50.0 million of future super-priority debt and are subject to both mandatory and optional redemption provisions.

The 9.25% First Lien Notes mature on ~~December 31, 2020,~~November 15, 2023 and bear interest from the date of their issuance at the rate of ~~10%~~9.25% per year. ~~Interest on outstanding 10% Second Lien Notes is payable semi-annually in arrears, which commenced on June 30, 2016.~~ Interest is computed on the basis of a 360-day year comprised of twelve 30-day ~~months.~~ months and is payable semi-annually in arrears, commencing on May 15, 2019.

The ~~10% Second~~First Lien ~~Notes rank behind the 2016 Term Loan Facility as to collateral.~~

~~The~~ Indenture ~~for the 10% Second Lien Notes~~ includes customary covenants and events of default, including covenants that, among other things, restrict the granting of liens, restrict the making of investments, restrict the incurrence of indebtedness and the conveyance of vessels, limit transactions with affiliates, and require that the Company provide periodic financial reports.

~~1%/12% Step-Up Senior Secured Third Lien Convertible Notes.~~ The Company issued 4,344,959 New Shares and $750.0 million of the Convertible Notes to certain creditors holding approximately $2.5 billion of pre-petition secured debt claims. The New Shares issued to the creditors and the Convertible Notes may only be traded together and not separately. The Convertible Notes mature on December 31, 2030 and are convertible into New Shares, in certain circumstances, at a conversion price (subject to adjustment in accordance with the terms of the Indenture for the Convertible Notes) which was $95.60 as of the issue date. The Indenture for the Convertible Notes includes customary covenants that restrict, among other things, the granting of liens and customary events of default, including among other things, failure to issue securities upon conversion of the Convertible Notes. As of September 30, 2017, taking into account the payment of PIK interest on the Convertible Notes to such date, each such unit of securities was comprised of one New Share and $175.02 of principal of Convertible Notes. As of September 30, 2017, we would be required to issue approximately 8.0 million New Shares if the Convertible Notes were converted.

In connection with the adoption of fresh-start accounting, the Convertible Notes were recorded at an estimated fair value of approximately $603.1 million. The difference between face value and the fair value at date of issuance of the Convertible Notes was recorded as a debt discount and is being amortized to interest expense over the expected life of the Convertible Notes using the effective interest rate method.

Interest on the Convertible Notes is payable semi-annually in arrears commencing June 30, 2016 as a payment in kind, either through an increase in the outstanding principal amount of the Convertible Notes or, if the Company is unable to increase such principal amount, bynet proceeds from the issuance ~~of additional Convertible Notes. Interest is computed on the basis of a 360-day year comprised of twelve 30-day months at a rate of 1% per annum for the first four years and then increasing~~were used (i) to ~~12% per annum until maturity.~~

The Company’s obligations under the Convertible Notes are fully and unconditionally guaranteed (except for customary release provisions), on a senior secured basis, by all of the subsidiaries of the Company, and the obligations of the Company and guarantors are secured by liens on substantially all of their respective assets. The guarantees by the Company’s subsidiaries of the Convertible Notes are joint and several. The Company has no independent assets or operations apart from the assets and operations of its wholly-owned subsidiaries. In addition, there are no significant restrictions on the Company’s or any subsidiary guarantor’s ability to obtain funds from its subsidiaries by dividend or loan. The Indenture for the Convertible Notes includes customary covenants that restrict the granting of liens and customary events of default, including, among other things, failure to issue securities upon conversion of the Convertible Notes. In addition, the Indenture, and the applicable Collateral Agreements, provide that any capital stock and other securities of any of the guarantors will be excluded from the collateral to the extent the pledge of such capital stock or other securities to secure the Convertible Notes would cause such guarantor to be required to file separate financial statements with the SEC pursuant to Rule 3-16 of Regulation S-X (as in effect from time to time).

The Convertible Notes will convert only (a) prior to the third anniversary of the issue date (February 10, 2016), (i) upon the instruction of holders of a majority in principal amount of the Convertible Notes or (ii) upon the full and final resolution of all potential Investigation Claims (as defined below), as determined in good faith by the board of directors of the Company (the “Board”) (which determination shall require the affirmative vote of a supermajority of the non-management directors), and (b) from and after February 10, 2019 through their maturity date of December 31, 2030, upon the approval of the Board (which approval shall require the affirmative vote of a supermajority of the non-management directors). For these purposes, (i) “supermajority of the non-management directors” means five affirmative votes of non-management directors assuming six non-management directors eligible to vote and, in all other circumstances, the affirmative vote of at least 75% of the non-management directors eligible to vote and (ii) “Investigation Claim” means any claim held by a United States or Brazilian governmental unit and arising from or related to the procurement of that certain Agreement for the Provision of Drilling Services, dated as of February 4, 2009, by and between Petrobras Venezuela Investments & Services B.V. and Vantage Deepwater Company, as amended, modified, supplemented, or novated from time to time.

In the event of a change in control, the holders of our Convertible Notes have the right to require us to repurchase all or any part of the Convertible Notes at a price equal to 101% of their principal amount. We assessed the prepayment requirements and concluded that this feature met the criteria to be considered an embedded derivative and must be bifurcated and separately valued at fair value due to the discount on the Convertible Notes at issuance. We considered the probabilities of a change of control occurring and determined that the derivative had a de minimis value at February 10, 2016 and December 31, 2016, respectively.

Upon the occurrence of specified change of control events or certain losses of our vessels in the agreements governing our 10% Second Lien Notes, Convertible Notes or 2016 Term Loan Facility, we will be required to offer to repurchase or repay all (or in the case of events of losses of vessels, an amount up to the amount of proceeds received from such event of loss) of such outstanding debt under such debt agreements at the prices and upon the terms set forth in the applicable agreements. In addition, in connection with certain asset sales, we will be required to offer to repurchase or repay such outstanding debt as set forth in the applicable debt agreements. In addition, in connection with their investigation, if the SEC determines that violations of the FCPA have occurred, the Company could be subject to civil and criminal sanctions, including monetary penalties, and if we become subject to any judgment, decree, order, governmental penalty or fine, this may constitute an event of default under the terms of our secured debt agreements and, following notice from the requisite lenders and/or noteholders, as applicable, result in our outstanding debtobligations under the 2016 Term Loan Facility and to terminate the credit agreement governing such facility, (ii) to redeem all outstanding 10% Second Lien Notes, ~~becoming immediately due~~(iii) to fund the remaining amounts to be paid in connection with the purchase of the Soehanah jackup rig, (iv) to pay fees and ~~payable at par,~~expenses related to the foregoing and ~~our~~to the offering of the 9.25% First Lien Notes and (v) for general corporate purposes.

Concurrently with the issuance of the 9.25% First Lien Notes, we entered into a letter of credit facility to replace the letter of credit facility existing under the 2016 Term Loan Facility. The facility has a capacity of $50.0 million, with all outstanding ~~debt~~letters of credit being cash collateralized. We have issued $11.0 million in letters of credit under ~~Convertible Notes becoming immediately due and payable at the make-whole amount specified in the indenture governing the Convertible Notes.~~ this facility as of March 31, 2021.

VDI has 50,000,000 authorized ~~ordinary shares, par value $0.001 per share.~~Ordinary Shares. Upon emergence from bankruptcy weon the Effective Date, VDI issued 5,000,053 ~~ordinary shares~~Ordinary Shares in connection with the settlement of ~~LSTC~~Liabilities Subject to Compromise in accordance with the Reorganization Plan and theVDC Note. On December 4, 2019, VDI issued an additional 8,114,977 Ordinary Shares to convert all of the outstanding Convertible Notes. As of ~~September 30, 2017, 5,000,053 ordinary shares~~March 31, 2021, 13,115,026 Ordinary Shares were issued and outstanding.

On August 9, 2016, the Company adopted the 2016 Amended ~~and Restated 2016 Management Incentive Plan (the “2016 Amended MIP”)~~MIP to align the interests of participants with those of the shareholders by providing incentive compensation opportunities tied to the performance of the Company’s equity securities. Pursuant to the 2016 Amended MIP, the Compensation Committee may grant to employees, directors and consultants stock options, restricted stock, restricted stock units or other awards.

~~During the nine months ended September 30, 2017, we~~NaN awards were granted to employees ~~29,008 time-based restricted stock units (“TBGs”)~~or directors during the three months ended March 31, 2021 and ~~67,685 performance-based restricted stock units (“PBGs”) under our 2016 Amended MIP. In~~2020. During the three months ended March ~~2017, four directors were~~31, 2021, 18,224 of previously granted ~~415~~ TBGs each, or a total of 1,660 TBGs. The TBGs vest annually, ratably over four years; however, accelerated vesting is provided for in the event of a qualified liquidity event as defined in the 2016 Amended MIP (a “QLE”). Otherwise, the settlement of any vested TBGs occurs upon the seventh anniversary of the Effective Date. The PBGs contain vesting eligibility provisions tied to the earlier of a QLE or seven years from the Effective Date. Upon the occurrence of a vesting eligibility event, the number of PBGs that actually vest will be dependent on the achievement of pre-determined Total Enterprise Value (“TEV”) targets specified in the grants. vested.

Both the TBGs and PBGs are classified as ~~liabilities consistent with the classification of the underlying securities and under the provisions of ASC 718~~ ~~Compensation – Stock Compensation~~ are remeasured at each reporting period until settled. Share based compensation expense is recognized over the requisite service period until settled. We recognized approximately $1.2 million and $76,000 of share-based compensation expense forequity awards. For the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016, respectively. For the nine months ended September 30, 2017 and for the period from February 10, 2016 to September 30, 2016,~~2020, we recognized ~~$2.9~~share-based compensation expense related to the TBGs of approximately $0.3 million and ~~$76,000, respectively~~$0.7 million, respectively. As of ~~share-based compensation expense. In the nine months ended September 30, 2017, 11,237 of previously granted TBGs vested.~~

Share based compensation expense for PBGs will be recognized when it is probable that the TEV targets will be met. Once it is probable the performance condition will be met, compensation expense based on the fair value of the PBGs at the balance sheet date will be recognized for the service period completed. For the quarter ended September 30, 2017,March 31, 2021, we concluded that it was not probable that the TEV performance condition would be met and therefore, no0 share based compensation expense was recognized for PBGs.

Pursuant to the 2016 Amended MIP and the terms of the applicable unit awards, participants holding restricted stock units are contractually entitled to receive all dividends or other distributions that are paid to VDI’s stockholders, provided that any such dividends will be subject to the same vesting requirements of the underlying units. Dividend payments accrue to outstanding awards (both vested and unvested) in the form of “Dividend Equivalents” equal to the dividend per share underlying the applicable award under the 2016 Amended MIP. As a result of a special cash distribution paid to shareholders of record on December 17, 2019, $8.8 million has been recorded in “Other long-term liabilities” in our Consolidated Balance Sheet at March 31, 2021 to be paid upon settlement of the TBGs.

8. Commitments and Contingencies

We are subject to litigation, claims and disputes in the ordinary course of business, some of which may not be covered by insurance. There is an inherent risk in any litigation or dispute and no assurance can be given as to the outcome of any claims.

~~In July 2015, we became aware~~Brazil Improbity Action

On April 27, 2018, the Company was added as an additional defendant in a legal proceeding (the “Improbity Action”), initiated by the Brazilian Federal Prosecutor against certain individuals, including an executive of ~~media reports that~~Petrobras and two political lobbyists, in connection with the contracting of the Titanium Explorer drillship to Petrobras under the Drilling Contract, with the Brazilian Government and Petrobras as plaintiffs. Vantage is alleged to have been involved in and benefitted from the purported bribery scheme at Petrobras through Hamylton Padilha, the Brazilian agent our former parent company, VDC, used in the contracting of the Titanium Explorer drillship to Petrobras, ~~had entered into~~and Mr. Hsin-Chi Su, a ~~plea arrangement with the Brazilian authorities in connection with his role in facilitating the payment of bribes to~~ former Petrobras executives. Among other things, Mr. Padilha provided information to the Brazilian authorities of an alleged bribery scheme between former Petrobras executives and Nobu Su, who was, at the time of the alleged bribery scheme, a member of ~~the Board~~VDC’s board of ~~Directors~~directors and a significant shareholder of VDC. We first became aware of the legal proceeding on July 19, 2018 as it was previously under seal. On March 22, 2019, we were formally served in the United States, and we filed our ~~former parent company, VDC. When~~preliminary statement of defense with the 11th Federal court of the Judicial Branch of Curitiba, State of Parana, Brazil (the “Brazilian Federal Court”) on April 12, 2019 in response. On August 20, 2020, the Brazilian Federal Court dismissed our preliminary statement of defense. On October 5, 2020, we ~~learned~~subsequently filed a motion to clarify with the Brazilian Federal Court requesting the reconsideration of ~~Mr. Padilha’s plea agreement~~certain aspects of the decision dismissing our preliminary statement of defense. Our motion to clarify was denied on December 14, 2020, and on February 10, 2021 we filed an appeal to the 4th Federal Court of Appeals seeking to reverse the Brazilian Federal Court’s denial of our preliminary defense. On April 15, 2021, the Brazilian authorities served us indirectly through the U.S. Department of Justice agreeing to formally send us documents related to the Improbity Action. We will be obligated to file a statement of defense in the matter as soon as the case docket demonstrates that all of the defendants have been served again in this legal proceeding. The Company understands that the Improbity Action, is a civil action and is part of the Brazilian Federal Prosecutor’s larger “Car Wash” investigation into money laundering and corruption allegations in Brazil.

The damages claimed in the proceeding are in the amount of BRL 102.8 million (approximately $18.3 million), together with a civil fine equal to three times that amount. The Company understands that the Brazilian Federal Court previously issued an order authorizing the seizure and freezing of the assets of the Company and the ~~allegations, we voluntarily contacted~~other three defendants in the ~~DOJ~~legal proceeding, as a precautionary measure, in the amount of approximately $73.4 million. The Company and the ~~SEC to advise them of these developments, as well~~other 3defendants are jointly and severally liable for this amount. The seizure order has not had an effect on the Company’s assets or operations, as the ~~fact~~Company does not own any assets in Brazil, and does not currently intend to relocate any assets to Brazil. On February 13, 2019, the Company learned that wethe Brazilian Federal Prosecutor had ~~engaged outside counsel~~previously requested mutual legal assistance from the U.S. DOJ pursuant to ~~conduct~~the United Nations Convention against Corruption of 2003 to obtain a freezing order against the Company’s U.S. assets in the approximate amount of $73.4

million. The Company believes this request is not supported by applicable law and intends to vigorously oppose and defend against any attempts to seize its assets.

On April 12, 2019, the Company filed an ~~internal investigation~~interlocutory appeal with the 4th Circuit of the ~~allegations. Since disclosing this matter~~Federal Court of Appeals in Porto Alegre, State of Rio Grande do Sul, Brazil (the “Brazilian Appellate Court”), the appellate court hearing appeals in the “Car Wash” cases, to stay the seizure and freezing order of the Brazilian Federal Court.

On May 20, 2019, the Company announced that the Brazilian Appellate Court ruled in favor of the Company’s appeal to stay the seizure and freezing order of the Brazilian Federal Court. The foregoing ruling is still subject to confirmation by a three-judge panel, and is subject to appeal, and the Company can offer no assurances that the stay will be confirmed or as to the outcome of any appeal thereof. The Company has communicated the Brazilian Appellate Court’s ruling to the DOJ, and ~~SEC, we have cooperated fully in their investigation of these allegations. In connection with such cooperation, we advised both agencies that in early 2010, we engaged outside counsel~~has asked the Brazilian Federal Court to investigate a report of alleged improper payments to customs and immigration officials in Asia. That investigation was concluded in 2011, and we determined at that time that no disclosure was warranted; however, in an abundance of caution, we provideddo the ~~results of this investigation to the DOJ and SEC in light of the allegations in the Petrobras matter.~~ ~~In August 2017, we received a letter from the DOJ acknowledging our full cooperation in the DOJ’s investigation into~~same. On July 18, 2019, the Company ~~concerning~~announced that the ~~possible violations of~~Brazilian Government made a filing with the ~~U.S. Foreign Corrupt Practices Act (“FCPA”) in the Petrobras matter and indicating~~Brazilian Federal Court reporting that the DOJ has ~~closed such investigation without any action. Although~~advised the Brazilian Ministry of Justice that it would not be possible for the DOJ to comply with the mutual assistance request in respect of the asset freeze order. The Company also announced that it learned from the Brazilian Ministry of Justice that the DOJ’s ~~investigation into this~~response to the request for mutual assistance stated that no legal grounds existed for implementing the requested asset freeze, and that the DOJ was returning the request without taking action and considers the matter ~~has closed, we cannot predict~~concluded.

The Company intends to vigorously defend against the ~~outcome of the SEC’s investigation, which remains open, and if the SEC determines that violations of the FCPA~~ have occurred, the Company could be subject to civil and criminal sanctions, including monetary penalties, as well as additional requirements or changes to our business practices and compliance programs, any or all of which could have a material adverse effect on our business and financial condition. Additionally, if we become subject to any judgment, decree, order, governmental penalty or fine, this may constitute an event of default under the terms of our secured debt agreements and, following notice from the requisite lenders and/or noteholders, as applicable, result in our outstanding debt under the 2016 Term Loan Facility and 10% Second Lien Notes becoming immediately due and payable at par, and our outstanding debt under Convertible Notes becoming immediately due and payable at the make-whole amount specifiedallegations made in the ~~indenture governing the Convertible Notes.~~

In connection with our bankruptcy cases, two appeals were filed relating to the confirmation of the Reorganization Plan. Specifically, on January 29, 2016, Hsin Chi Su and F3 Capital filed two appeals before the United States District Court for the District of Delaware seeking a reversal of (i) the Court’s determination that Hsin Chi Su and F3 Capital did not have standing to appear and be heard in the bankruptcy cases, which was made on the record at a hearing held on January 14, 2016, and (ii) the Court’s Findings of Fact, Conclusions of Law, and Order (I) Approving the Debtors’ (A) Disclosure Statement Pursuant to Sections 1125 and 1126(b) of the Bankruptcy Code, (B) Solicitation of Votes and Voting Procedures, and (C) Forms of Ballots, and (II) Confirming the Amended Joint Prepackaged Chapter 11 Plan of Offshore Group Investment Limited and its Affiliated Debtors [Docket No. 188], which was entered on January 15, 2016. The appeals were consolidated on June 14, 2016. We cannotImprobity Action. However, we can neither predict ~~with certainty~~ the ultimate outcome of this matter nor that there will not be further developments in the “Car Wash” investigation or in any ~~such appeals. An adverse outcome~~other ongoing investigation or related proceeding that could ~~negatively~~adversely affect ~~our business, results~~us. At this time, we are not yet able to determine the likelihood of ~~operations and financial condition.~~loss, if any, arising from this matter.

~~On August 31, 2015, VDC received notice from Petrobras America, Inc. (“PAI”) and Petrobras Venezuela Investments & Services B.V. (“PVIS”) stating that PAI and PVIS were terminating the~~Restructuring Agreement for the Provision of Drilling Services dated February 4, 2009 (the “Drilling Contract”). The Drilling Contract was initially entered into between PVIS and Vantage Deepwater Company, one of our wholly-owned indirect subsidiaries, and was later novated by PVIS to PAI and by Vantage Deepwater Company to Vantage Deepwater Drilling, Inc., another of our wholly-owned indirect subsidiaries. The notice stated that PAI and PVIS were terminating the Drilling Contract because Vantage had allegedly breached its obligations under the agreement. Under the terms of the Drilling Contract we initiated arbitration proceedings before the American Arbitration Association on August 31, 2015, challenging PVIS and PAI’s wrongful attempt to terminate the Drilling Contract. Vantage has maintained that it complied with all of its obligations under the Drilling Contract and that PVIS and PAI’s attempt to terminate the agreement is both improper and a breach of the Drilling Contract.

~~In the ongoing arbitration proceeding, the hearing on the merits has concluded~~ and the parties have exchanged post-hearing briefs. Vantage has asserted claims against PAI and PVIS for declaratory relief and monetary damages based on breach of contract. Vantage has also asserted a claim against Petroleo Brasileiro S.A. (“PBP”) to enforce a guaranty provided by PBP. The Petrobras entities (PVIS, PAI and PBP) have asserted that the Drilling Contract is void as illegally procured, that PVIS and PBP are not proper parties to the arbitration, and that PAI and PVIS properly terminated the contract. PAI has further counterclaimed for attorneys’ fees and costs alleging that Vantage failed to negotiate in good faith before commencing arbitration proceedings and is seeking disgorgement damages of approximately $102 million. We are vigorously pursuing our claims in the arbitration and deny that any of the claims or defenses asserted by the Petrobras entities have merit.Associated Settlement Agreement

Pursuant to the terms of the Restructuring Agreement among VDC and a majority of our secured creditors, the Company agreed to the Reorganization Plan and VDC agreed to commence official liquidation proceedings under the laws of the Cayman Islands. On December 2, 2015, pursuant to the Restructuring Agreement, the Company acquired two subsidiaries responsible for the management of the Company from VDC in exchange for the VDC Note. In connection with our separation from ~~our former parent company,~~VDC, we and the Joint Official Liquidators, appointed to oversee the liquidation of VDC, ~~are in~~entered into discussions regarding the settlement of certain intercompany receivables and payables as between the Company and its subsidiaries, on the one hand, and VDC and its subsidiaries, on the other. ~~While~~On March 4, 2020, we, ~~continue~~and our subsidiaries on the one hand, and VDC and their subsidiaries, on the other, entered into a settlement agreement pursuant to ~~believe that our position regarding~~which the parties to the settlement agreement agreed to release each other from certain claims in exchange for Vantage paying VDC $15.0 million, subject to the approval of ~~such amounts is correct, we cannot predict~~ the ~~ultimate outcome~~Court of ~~this matter should legal proceedings between~~Grand Cayman. On March 16, 2020, the ~~parties transpire.~~Court of Grand Cayman approved the settlement agreement. On March 25, 2020, the Company paid $15.0 million in accordance with the settlement agreement, fully resolving the matter.We recorded a gain of $2.3 million related to the settlement agreement included in “Other Income” in the Consolidated Statement of Operations during the three months ended March 31, 2020.

9. Supplemental Financial Information

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the ~~following:~~ following as of the dates indicated:


	September 30, 2017		December 31, 2016		March 31, 2021		December 31, 2020
(unaudited, in thousands)
Sales tax receivable					$	5,738	$	6,797
Assets held for sale (1)						0		10,113
Other receivables						1,232		1,517
Income tax receivable						853		826
Prepaid insurance	$	209	$	782		859		386
Sales tax receivable		7,269		7,129
Income tax receivable		1,267		1,025
Other receivables		135		74
Assets held for sale		2,050		—
Current deferred contract costs						4,965		2,905
Other		5,228		3,413		6,891		6,607
	$	16,158	$	12,423	$	20,538	$	29,151

(1) Includes the aggregate carrying amount of the Titanium Explorer, along with related assets, as of December 31, 2020. See “Note 1. Organization and Recent Events” of these “Notes to Unaudited Consolidated Financial Statements” for additional details regarding the Purchase and Sale Agreement to sell the Titanium Explorer.

Property and Equipment, net

Property and equipment, net, consisted of the ~~following:~~ following as of the dates indicated:


	September 30, 2017			December 31, 2016			March 31, 2021			December 31, 2020
(unaudited, in thousands)
Drilling equipment	$	882,897		$	880,267		$	774,848		$	774,813
Assets under construction		1,487			2,138			931			561
Office and technology equipment		18,778			18,764			18,405			18,405
Leasehold improvements		1,165			1,072			1,165			1,165
		904,327			902,241			795,349			794,944
Accumulated depreciation		(123,215	)		(67,713	)		(292,684	)		(278,562	)
Property and equipment, net	$	781,112		$	834,528		$	502,665		$	516,382

Other Assets

Other assets consisted of the ~~following:~~ following as of the dates indicated:


	March 31, 2021		December 31, 2020
(unaudited, in thousands)
Noncurrent restricted cash	$	4,058	$	4,546
Deferred certification costs		5,498		4,535
Deferred income taxes		2,033		1,923
Other noncurrent assets		2,641		1,122
	$	14,230	$	12,126

Other Current Liabilities

September 30, 2017

December 31, 2016

(unaudited, in thousands)

Contract value, net

$
9,545

$
—

Performance bond collateral

—

3,197

Deferred certification costs

4,004

4,885

Deferred mobilization costs

2,387

4,194

Deferred income taxes

5,329

2,237

Deposits

1,119

1,181

$
22,384

$
15,694

~~Accrued Liabilities~~

~~Accrued~~Other current liabilities consisted of the ~~following:~~ following as of the dates indicated:


Other current liabilities
	March 31, 2021		December 31, 2020
(unaudited, in thousands)
Interest	$	12,229	$	4,139
Compensation (1)		6,371		7,128
Income taxes payable		5,483		2,951
Current deferred revenue		10,759		5,100
Current portion of operating lease liabilities		1,979		2,038
Other		3,173		3,378
	$	39,994	$	24,734

(1) Includes $3.4 million as of March 31, 2021 and $2.1 million as of December 31, 2020 related to cash awards granted to certain key employees of the Company pursuant to underlying award agreements and issued under the 2016 Amended MIP.

Other Long-term Liabilities

September 30, 2017

December 31, 2016

(unaudited, in thousands)

Interest

$
3,925

$
104

Compensation

9,718

11,289

Income taxes payable

4,521

5,008

Other

1,909

2,047

$
20,073

$
18,448

Other Long-term liabilities consisted of the following as of the dates indicated:


	March 31, 2021		December 31, 2020
(unaudited, in thousands)
Deferred income taxes	$	929	$	970
2016 MIP - Dividend Equivalents (1)		8,766		8,006
Noncurrent operating lease liabilities		2,028		2,371
Other non-current liabilities		2,570		3,664
	$	14,293	$	15,011

(1) Dividend Equivalents on vested TBGs are payable on settlement of the applicable award.

Cash, Cash Equivalents and Restricted Cash

~~Transactions with Former Parent Company~~

The ~~Company's~~following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheet that sum to the total of the same amounts shown in the Consolidated Statement of ~~Operations included the following transactions with VDC for the periods indicated:~~

~~The following table summarizes the balances payable to VDC included in the Company's Consolidated Balance Sheet~~Cash Flows as of the ~~periods~~dates indicated:


	September 30, 2017		December 31, 2016		March 31, 2021		December 31, 2020
(unaudited, in thousands)
Accounts payable to related parties, net	$	17,278	$	17,278
	$	17,278	$	17,278
Cash and cash equivalents					$	140,381	$	141,945
Restricted cash						7,798		7,996
Restricted cash included within Other Assets						4,058		4,546
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows					$	152,237	$	154,487

Restricted cash represents cash held by banks as certificates of deposit collateralizing letters of credit.

Related Party Transactions

In association with the establishment of ADVantage, the Company and ADES contributed cash to ADVantage in excess of the issued capital of the joint venture, with the understanding that such amounts are to be considered shareholder loans. As of March 31, 2021, the total outstanding amount due to ADES for such excess cash contributions was approximately $711,000, which is included in “Other current liabilities” on the Consolidated Balance Sheet.

In conjunction with the establishment of ADVantage, the Company entered into a series of agreements with ADES, including: (i) a Secondment Agreement; (ii) a Manpower Agreement; and (iii) a Supply Services Agreement. Pursuant to these agreements, the Company, largely through its seconded employees, will provide various services to ADES and ADES will in turn provide various services to ADVantage. As of March 31, 2021, accounts payable to ADES totaled approximately $0.2 million, included in “Accounts payable,” on the Consolidated Balance Sheet. There were 0 outstanding accounts receivable from ADES as of March 31, 2021.

We did not have any related party transactions that were not conducted in the ordinary course of business as of March 31, 2021.

10. Business Segment and Significant Customer Information

We aggregate our contract drilling operations into ~~one reportable~~1reportable segment even though we provide contract drilling services with different types of rigs, including jackup rigs and drillships, and in different geographic regions. Our operations are dependent on the global oil and gas industry and our rigs are relocated based on demand for our services and customer requirements. Our customers consist primarily of large international oil and gas companies, national or government-controlled oil and gas companies, and other international exploration and production companies.The Soehanah jackup rig operated under a bareboat charter contract in place as of acquisition.

Additionally, for drilling units owned by others, we provide construction supervision services while under construction, ~~and~~ preservation management services when ~~stacked. In September 2013, we signed an agreement to supervise~~stacked and ~~manage the construction of two ultra-deepwater drillships~~operations and marketing services for ~~a third party. In January 2017, we signed an agreement to manage the preservation of two ultra-deepwater drillships for a third party.~~operating rigs. Our management business (excluding reimbursable revenue) represented ~~approximately 0.6%, 0.8%, 2.5%, 3.1% , 3.2%,~~less than 1% and 1% of our total revenue for the three ~~and nine~~ months ended ~~September 30, 2017, for~~March 31, 2021 and 2020, respectively.

For the three months ended ~~September 30, 2016,~~

~~for the period from February 10, 2016 to September 30, 2016~~March 31, 2021 and ~~for the period from January 1, 2016 to February 10, 2016, respectively.~~

~~For the three and nine months ended September 30, 2017 and 2016, all~~2020, a substantial amount of our revenue was derived from countries outside of the United States. Consequently, we are exposed to the risk of changes in economic, political and social conditions inherent in foreign operations. ~~Four~~NaN customers accounted for approximately ~~47%~~44%, ~~22%~~36% and 20% of consolidated revenue for the three months ended March 31, 2021. NaNcustomers accounted for approximately 19%, 15%, 14%, 13%, 12%, 11%, and 10% of consolidated revenue for the three months ended September 30, 2017. For the nine months ended September 30, 2017, four customers accounted for approximately 53%, 14%, 14% and 11% of consolidated revenue. For the three months ended September 30, 2016, two customers accounted for approximately 66% and 19% of consolidated revenue. Three customers accounted for approximately 56%, 19% and 15% of consolidated revenue for the period from February 10, 2016 to September 30, 2016. Three customers accounted for approximately 58%, 18% and 14% of consolidated revenue for the period from January 1, 2016 to February 10, 2016. March 31, 2020.

Our revenue by country was as ~~follows:~~ follows for the periods indicated (periods representing revenues of less than 10% are included in “Other countries”):

	Successor								Predecessor
	Three Months Ended September 30,				Nine Months Ended September 30, 2017		Period from February 10, 2016 to September 30, 2016		Period from January 1, 2016 to February 10, 2016		Three Months Ended March 31,
	2017		2016		Nine Months Ended September 30, 2017		Period from February 10, 2016 to September 30, 2016		Period from January 1, 2016 to February 10, 2016		2021		2020
(unaudited, in thousands)
India											$	8,855	$	9,681
Qatar												7,197		5,503
Indonesia												3,970		0
Congo	$	39,830	$	26,385	$	102,517	$	65,664	$	13,769		0		7,581
Gabon												0		7,414
Egypt												0		6,801
Lebanon												0		6,305
Malaysia		6,460		7,783		20,965		22,743		3,319		0		4,939
Indonesia		—		—		—		18,062		4,214
Qatar		5,882		—		17,574		—		—
Other countries (a)		5,524		5,774		11,952		11,770		2,238
Other countries (1)												144		3,232
Total revenues	$	57,696	$	39,942	$	153,008	$	118,239	$	23,540	$	20,166	$	51,456

(1) “Other countries” represent countries in which we operate that individually had operating revenues representing less than 10% of total revenues earned.

~~(a)~~

~~Other countries represent countries in which we operate that individually had operating revenues representing less than 10% of total revenues earned.~~

Our property and equipment, net by country, was as ~~follows:~~ follows as of the dates indicated (as of dates representing property and equipment of less than 10% are included in “Other countries”):

September 30, 2017

December 31, 2016

(unaudited, in thousands)

Congo

$
261,672

$
277,305

Malaysia

264,647

280,689

South Africa

183,634

196,473

Other countries (a)

71,159

80,061

Total property and equipment

$
781,112

$
834,528


	March 31, 2021		December 31, 2020
(unaudited, in thousands)
International waters	$	217,779		$	225,484
India		107,685			111,485
Indonesia		67,925			69,434
Other countries (1)		109,276			109,979
Total property and equipment	$	502,665		$	516,382

(1) “Other countries” represent countries in which we individually had property and equipment, net, representing less than 10% of total property and equipment, net.

~~(a)~~

~~Other countries represent countries in which we individually had property and equipment, net, representing less than 10% of total property and equipment, net.~~

A substantial portion of our assets are mobile drilling units. Asset locations at the end of the period are not necessarily indicative of the geographic distribution of the revenues generated by such assets during the periods.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to assist you in understanding our financial position ~~at September 30, 2017~~as of March 31, 2021 and our results of operations for the three ~~and nine~~ months ended ~~September 30, 2017, for the three months ended September 30, 2016~~March 31, 2021 and for the periods from February 10, 2016 to September 30, 2016 (the “Successor Period”) and from January 1, 2016 to February 10, 2016 (the “Predecessor Period”). The Successor Period and the Predecessor Period referred to in the results of operations are two distinct reporting periods as a result of our emergence from bankruptcy on February 10, 2016.2020. The discussion should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020, which was filed with the SEC on March 18, 2021. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods. ~~Certain previously reported amounts have been reclassified to conform to the current year presentation.~~

We are an international offshore drilling company focused on operating a fleet of modern, high specification drilling units. Our principal business is to contract drilling units, related equipment and work crews, primarily on a dayrate basis to drill oil and ~~natural~~ gas wells for our customers. Through our fleet of drilling units, we ~~are a provider of~~provide offshore contract drilling services to major, national and independent oil and ~~natural~~ gas companies, focused ~~primarily~~ on international markets. Additionally, for drilling units owned by others, we provide ~~construction supervision services while under construction, preservation management services when stacked and~~ operations and marketing services for operating ~~rigs.~~rigs, construction supervision services for rigs that are under construction and preservation management services for rigs that are stacked.

The following table sets forth certain current information concerning our offshore drilling fleet as of ~~October 20, 2017.~~ April 26, 2021.

(1) ~~The~~ ~~Vantage 260~~ ~~is designed for 250 feet water depths but is currently outfitted for 150 feet water depth.~~

~~On the Petition Date, we filed a reorganization plan~~Ongoing Impact of COVID-19 and Declines in the ~~United States~~Demand for Oil and Gas

The COVID-19 pandemic continues to spread worldwide and has exacerbated since the World Health Organization first classified the COVID-19 outbreak as a pandemic in March 2020. The global spread of COVID-19 has caused widespread illness and significant loss of life, leading governments across the world to impose severely stringent limitations on movement and human interaction, with certain countries being forced to implement multiple shelter-in-place and stay-at-home orders. While conditions have improved in certain portions of the world, other jurisdictions, including India, are experiencing record incident rates of COVID-19 as of the date of this Quarterly Report. In India, specifically, a second wave of COVID-19 began in early March 2021 and has quickly spread across the country. India has imposed a general and widespread lock-down in response to the substantial increase in cases related to COVID-19. Several states have imposed nightly curfews for all persons (with limited exceptions for essential services). Such governmental responses to the pandemic have contributed to reduced economic activity worldwide, impacting all industries, but with a significant adverse effect on the oil and gas industry. The short-term impact of these challenges has resulted in (i) reduced oil and gas activity leading to lower revenue than immediately prior to the widespread outbreak of COVID-19 and (ii) increased expenses due to higher labor and related costs. We cannot at this time determine with certainty how long these challenges will persist as well as the long-term impact that such challenges may have on our operations and growth on a go-forward basis, including in jurisdictions, such as India, where we have significant contractual backlog and derive material revenue; however, the Company is actively managing the business in an attempt to mitigate the impact of the foregoing matters. In order to decrease the Company’s overall operating expenses, in 2020 the Company undertook significant headcount and salary reductions, both onshore and offshore, as well as other cost reduction measures to reflect the lower operating activity. Headcount and salary levels have not recovered to pre-pandemic levels. For additional information regarding the spread of COVID-19 in India and the impact it may have on our business, see the Business Outlook section in this this Part I, Item 2

The reduced global economic activity resulting from the COVID-19 outbreak in 2020 caused demand for global oil and gas to significantly decline. The efforts to contain the COVID-19 outbreak will likely continue to depress global economic activity in the near-term, and the supply and demand imbalance of oil and gas will likely continue for the foreseeable future.

The potential for oil prices to decline in the future continues to put pressure on oil and gas activity levels, particularly in the deepwater segment. Notwithstanding the recovery in global oil prices in early 2021, oil and gas prices are expected to continue to be

volatile as a result of the ongoing COVID-19 outbreak, changes in oil and gas inventories and industry demand, and therefore, we cannot predict how long oil and gas prices remain stable or further improve, if at all, or whether they could reverse course and decline. While our management is actively monitoring the foregoing events and its associated financial impact on our business, it is uncertain at this time as to the full magnitude that volatile and uncertain oil and gas prices will have on our financial condition and future results of operations.

On February 9, 2021, Vantage Holdings International (“VHI”), a subsidiary of VDI, entered into a Framework Agreement and related Management and Marketing Agreements, as amended on March 16, 2021 (collectively, the “Operations, Management and Marketing Agreements”) with Seadrill Partners LLC (“Seadrill Partners”) pursuant to which certain subsidiaries of VHI (the “VHI Entities”) will provide operating, management and marketing services to Seadrill Partners and its subsidiaries (the “Seadrill Partner Entities”) in respect of four deepwater floaters owned by the Seadrill Partners Entities, which include two drillships, the West Polaris and the West Capella, and two semisubmersibles, the West Leo and the West Sirius. The Operations, Management and Marketing Agreementswere subject to the approval of, and were approved by, the U.S. Bankruptcy Court for the Southern District of ~~Delaware (~~Texas on March 18, 2021.

In reconnection with the entry into the Operations, Management and Marketing Agreements, VHI organized a new legal entity, Vantage ~~Drilling International (F/K/A Offshore Group Investment Limited)~~Financial Management Co. (“VFMC”), ~~et al.~~based in the Cayman Islands, to provide certain cash management services to the Seadrill Partners Entities in respect of the management of the vessels subject to the Operations, Management and Marketing Agreements. VFMC was organized as an unrestricted, indirectly owned subsidiary of the Company and is therefore not subject to the restrictions under the First Lien Indenture.

On December 31, 2020, we entered into a purchase and sale agreement with Best Oasis Limited (the “Buyer”) to sell the Titanium Explorer (the “Purchase and Sale Agreement”), ~~Case No. 15-12422). On January 15, 2016, the District Court~~for an aggregate purchase price of ~~Delaware confirmed the Company’s pre-packaged reorganization plan~~$13.8 million and we ~~emerged from bankruptcy effective~~classified the rig as held for sale on our Consolidated Balance Sheet. The transactions contemplated by the ~~Effective Date.~~

Purchase and Sale Agreement closed on March 10, 2021. Pursuant to the ~~terms of~~Purchase and Sale Agreement, the ~~Reorganization Plan, the pre-bankruptcy term loans and senior notes were retired on the Effective Date by issuing~~Buyer is required to, the debtholders 4,344,959 Units in the reorganized Company. Each Unit of securities originally consisted of one New Share and $172.61 of principal of the Convertible Notes, subject to adjustment upon the payment of PIK interest and certain cases of redemption or conversion of the Convertible Notes, as well as share splits, share dividends, consolidation or reclassification of the New Shares. ~~The New Shares and the Convertible Notes are subject to the terms of an agreement that prohibits the New Shares and Convertible Notes from being traded separately.~~

On February 3, 2021, our ultra-deepwater drillship, the Platinum Explorer, received a letter of award for a two-year contract from Oil and customary events of default, including among other things, failure to issue securities upon conversion of the Convertible Notes. As of September 30, 2017, taking into account the payment of PIK interest on the Convertible Notes to such date, each such Unit consisted of one New Share and $175.02 of principal of Convertible Notes.

~~Second Amended and Restated Credit Agreement~~Natural Gas Company (“ONGC”). The ~~Company’s pre-petition credit agreement was amended~~Platinum Explorer is currently performing under an existing three-year contract with ONGC, which is expected to ~~(i) replace the $32.0 million revolving letter of credit commitment under its pre-petition facility with a new $32.0 million revolving letter of credit~~

~~facility and (ii) repay the $150 million of outstanding borrowings under its pre-petition facility with (a) $7.0 million of cash and (b) the issuance of $143.0 million initial term loans.~~

~~10% Senior Secured Second Lien Notes.~~ Holders of the Company’s pre-petition secured debt claims were eligible to participate in a rights offering conducted by the Company for $75.0 million of the Company’s 10% Second Lien Notes. In connection with this rights offering, certain creditors entered into a “backstop” agreement to purchase 10% Second Lien Notes if the offer was not fully subscribed. The premium paid to such creditors under the backstop agreement was approximately $2.2 million, paid $1.1 million in cash and $1.1 million in additional 10% Second Lien Notes, resulting in a total issued amount of $76.1 million of 10% Second Lien Notes, and in net cash proceeds of $73.9 million, after deducting the cash portion of the backstop premium.

~~VDC Note.~~ ~~Effective with the Company’s emergence from bankruptcy, VDC’s former equity interest~~close in the ~~Company was cancelled. Immediately following that event,~~second quarter of 2021, and it will experience some brief out-of-service time for planned maintenance after the ~~VDC Note was converted into 655,094 New Shares in accordance~~existing contract concludes. The new contract with ~~the terms thereof, in satisfaction of the obligation thereunder, which, including accrued interest, totaled approximately $62.6 million as of such date.~~ONGC is expected to commence shortly thereafter.

The Reorganization Plan allowed the Company to maintain all operating assets and agreements. All trade payables, credits, wages and other related obligations were unimpaired by the Reorganization Plan.

Upon emergence from bankruptcy on the Effective Date, we adopted fresh-start accounting in accordance with ASC 852, which resulted in the Company becoming a new entity for financial reporting purposes. Upon adoption of fresh-start accounting, our assets and liabilities were recorded at their fair values as of the Effective Date. The Effective Date fair values of our assets and liabilities differed materially from the recorded values of our assets and liabilities as reflected in our historical consolidated balance sheets. The effects of the Reorganization Plan and the application of fresh-start accounting are reflected in our consolidated balance sheet as of December 31, 2016 and the related adjustments thereto were recorded in our consolidated statements of operations as reorganization items.

Expectations about future oil and ~~natural~~ gas prices have historically been a key driver of demand for our services. ~~The International Energy Agency (the “Agency”),~~Against the backdrop of already challenging industry conditions since 2015, the initial onset, and continued global spread of COVID-19 and the resulting collapse in ~~their October 2017 Oil Market Report, estimates that average~~global economic activity, coupled with the short-lived price war between Saudi Arabia and Russia, led to significant reductions and delays in oil and gas exploration and development plans on the part of operators during 2020, largely impeding and unwinding the recovery experienced by the industry in 2019. These reductions and delays led to a substantial drop in oil prices and demand ~~will increase by approximately 1.6 million barrels per day or 1.6%~~for offshore drilling services globally, including for our services, during, and subsequent to, the second quarter of 2020. Although OPEC, Russia and other major oil and gas producing nations reached an agreement to drastically cut oil production in ~~2017 from 96.6 million barrels per day~~2020, the efforts to 98.2 million barrels per day. The Agency forecasts a slightly lower growth in demand of 1.4 million barrels per day for 2018, when global demand is estimated to reach 99.6 million barrels per day. While this represents favorable growth in demand, it has not been enough to fully offset surplus production and high inventories remain, whichcontain COVID-19 continue to ~~depress oil prices. Continuing uncertainty around the viability and length of reductions in production agreed~~create significant challenges to, ~~by the Organization of Petroleum Exporting Countries (“OPEC”)~~ and the ~~incremental production capacity in non-OPEC countries, including growing production from~~hampering of, global economic activity and recovery, and consequently, the ~~U.S. shale activity,~~supply and demand imbalance of oil will likely continue ~~to contribute to an uncertain oil price environment.~~

into 2021 and beyond. As a result of this decline in demand, operators drastically cut their capital spending in the ~~persistence of reduced~~offshore space in 2020. While global oil prices ~~since 2014, exploration~~have experienced some recovery in the beginning of 2021 due to the (i) development, purported efficacy and ~~development companies have significantly reduced capital expenditures during this period~~availability of vaccines for COVID-19, (ii) perception of the reopening of global economies and ~~historically low levels~~(iii) injection of ~~spending are expected for 2017~~substantial government monetary and ~~2018. Recent analyst surveys of exploration~~fiscal stimulus, the volatility and production spending indicate that oil and gas companies continue to reduce capital expenditures and we expect that the offshore drilling programs of operators will remain curtailed until higher, sustainable crudeuncertainty surrounding global oil prices ~~are achieved. Accordingly, we anticipate that our industry will experience depressed market conditions through 2017~~largely remain. As a result of such volatility and ~~2018.~~uncertainty, it is difficult for operators to develop and set their capital budget programs for the near and long-term.

In addition to the ~~reduction in~~macroeconomic challenges, including those set forth above, which have led to reduced demand for drilling rigs, the additional supply of ~~newbuild~~new-build rigs ~~is further depressing~~continues to be an overhang on the market. ~~There~~According to industry reports, there are currently 9752 jackups and ~~31 deepwater~~23 deepwater/harsh environment floaters on order at ~~shipyards per Bassoe Offshore A.S. with scheduled deliveries extending out to April 2021. While 25 jackups and 12 deepwater floaters are scheduled for delivery through December 31, 2017, it~~shipyards. It is unclear when these drilling rigs will actually be delivered, if at all, as many rig deliveries have (i) already been deferred to later dates ~~and some rig orders have~~or (ii) been ~~canceled.~~ canceled entirely.

In response to ~~the~~an oversupply of drilling rigs, a number of our competitors ~~are~~began removing older, less ~~efficient~~competitive, rigs from their fleets by either cold stacking the drilling rigs or taking them permanently out of service.

~~Since June 2014, 101~~ According to industry reports, this trend has accelerated since the second quarter of 2020, as 61 rigs ~~with an average age~~(in the aggregate) were removed from the drilling fleet in 2020 and 2021, and a total of ~~approximately 36 years,~~320 rigs have been ~~announced for recycling according to Bassoe Offshore AS. Of these 101 rigs, 69 are semisubmersibles, 15 are drillships and 17 are jackups.~~removed from the drilling fleet since the oil price decline in 2014. We expect ~~drilling~~further rig ~~cold stacking, scrapping~~recycling to occur

with warm stacked rigs (and potentially recently operated rigs) joining cold-stacked rigs as candidates for recycling. While this emphasis on recycling of rigs is expected to narrow the gap somewhat between rig supply and ~~conversion to non-drilling use to continue during 2017 and 2018. While we believe this is an important element in bringing the supply of drilling rigs back into balance with~~ demand, we do not, however, anticipate that itthe reduction in the supply of offshore drilling rigs alone will be sufficient to materially improve, and ultimately offset the impact of, existing market conditions, especially with regard to the deepwater segment where significant marketed fleet reduction is needed before any material improvements can be observed.

In addition to the expected increase in ~~2017~~recycling, many offshore drillers with significant levels of debt on their balance sheets have recently completed, are currently contemplating and pursuing, or may elect to pursue in the near-term, debt restructurings. These debt restructurings may result in lower cost structures, and additional pressure and incentive to recycle rigs. As drillers emerge from these debt restructurings, it is likely that consolidation will occur, reducing the number of industry participants and potentially increasing the market share of certain of our competitors. The combination of recycling, restructuring and consolidation will be necessary for the industry to regain firmer footing. Any industry recovery will also depend significantly on improvements to global macroeconomic conditions.

Since 2015, in response to both market conditions and excessive levels of idle capacity in recent years, there has been intense downward pressure on operating dayrates, as most drilling contractors preferred to maintain rigs in an active state due to the fact that customers had generally favored operating rigs over reactivated cold-stacked rigs. Prior to the COVID-19 outbreak, this downward pressure on pricing was starting to reverse itself, as evidenced by increased demand for our services in 2019 and early 2020, and dayrates were showing signs of general improvement. However, beginning in the second quarter of 2020, with the initial onset, continued spread and resulting impact, of the COVID-19 outbreak, dayrates, rig activity and contract opportunities each came under significant pressure again.

With the initial distribution of vaccines in certain jurisdictions in an attempt to inoculate populations against COVID-19 along with significant governmental assistance directed at combatting the challenging economic environment caused by the COVID-19 outbreak, economic activity in certain portions of the world appears to have shown some signs of improvement in early 2021. This improvement has contributed to, among other things, an increase in the demand for oil and gas. Since dropping to multi-year lows in the second quarter of 2020, Brent crude oil prices have begun to trend upward, reaching healthier levels in early 2021. As a result, the jackup segment has experienced greater recovery as compared to the deepwater segment, where such recovery has been less apparent. This bifurcation may be partly due to the fact that a significant amount of time transpires between the date a final investment decision is taken with regard to a deepwater project and the date on which the program actually commences. However, if the improvement in global economic activity continues to improve or is, at a minimum, sustained at its current levels, operators could begin to sanction new activity, which could lead to rigs going back into service and potentially higher day rates.

Notwithstanding the foregoing, any recovery experienced could be short lived especially given the quickly changing and ever-evolving dynamics of the COVID-19 pandemic. For example, certain jurisdictions, including India, are experiencing record incident rates of COVID-19 as of the date of this Quarterly Report. In India, specifically, a second wave of COVID-19 began in early March 2021 and has quickly spread across the country. As of April 27, 2021, India had reportedly recorded more than 300,000 daily new cases of COVID-19 for the sixth day in a row, resulting in the Indian government imposing a general and widespread lock-down to contain the further spread of the COVID-19 outbreak. In addition to a general and widespread lock-down, several states have imposed nightly curfews for all persons (with limited exceptions for essential services). Notwithstanding the aforementioned measures, the speed with which cases have increased has begun to overwhelm the health care system in many places in India. The World Health Organization recently announced that it planned to deliver 4,000 oxygen concentrators and other essential supplies in support of the hospitals that are struggling to treat the huge surge in COVID-19 cases. With a further deterioration of the situation or in ~~2018.~~the absence of an improvement in India, the Company’s ability to transport personnel and equipment to and from our rig may be impacted, which could have a corresponding effect on our ability to operate there. Given our existing contract backlog and amount of revenue derived from India, to the extent the conditions in India continue or exacerbate, it could have a material and adverse effect on our financial condition and future results of operations.

The following table reflects a summary of our contract drilling backlog coverage of days contracted and related revenue as of ~~September 30, 2017 forward~~March 31, 2021 and thereafter (based on information available at that time).

~~In June 2017, our ultra-deepwater drillship,~~Includes contract(s) with operating day rates that may vary based on a variable oil price index rate mechanism calculated utilizing the ~~Platinum Explorer, received~~then applicable average price of Brent crude. For purposes of calculating the backlog with contracts that contain a ~~letter~~variable oil price indexed rate mechanism we utilize the applicable oil price as of ~~award for a three year contract from Oil and Natural Gas Company. The~~ ~~Platinum Explorer~~ ~~is currently mobilizing to India for planned commencement~~quarter end multiplied by the number of ~~operations~~days remaining in the ~~fourth quarter~~firm contract period. The average dayrate over the term of ~~2017.~~the contract could be lower or higher depending upon the average price of Brent crude for such measurable period and such adjustments are not estimated in the

backlog dayrate. As certain of our drilling contracts are denominated in currencies other than the USD, backlog could also vary due to movements in the applicable exchange rates.

Operating results for our contract drilling services are dependent on three primary metrics: available days, rig utilization and dayrates. The following table sets forth this selected operational information for the periods ~~indicated.~~ indicated:

Successor

Predecessor

Three Months Ended September 30,

Nine Months Ended September 30, 2017

Period from February 10, 2016 to September 30, 2016

Period from January 1, 2016 to February 10, 2016

2017

2016

Jackups

Rigs available (at end of period)

4

4

4

4

4

Available days (1)

439

368

1,250

936

160

Utilization (2)

93.8
%

25.6
%

76.4
%

43.4
%

53.6
%

Average daily revenues (3)

$
63,263

$
112,205

$
64,269

$
94,794

$
88,347

Deepwater

Rigs available

3

3

3

3

3

Available days (1)

276

276

819

702

120

Utilization (2)

33.3
%

33.1
%

33.2
%

33.2
%

33.3
%

Average daily revenues (3)

$
280,191

$
265,000

$
281,040

$
262,271

$
332,715

(1)

Available days are the total number of rig calendar days in the period. Rigs are excluded while under bareboat charter contracts and removed upon classification as held for sale and no longer eligible to earn revenue.

For the Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020

Net loss attributable to shareholders for the ~~three months ended September 30, 2017 (the “Current Quarter”)~~Current Quarter was ~~$40.1~~$36.0 million, or ~~$8.01~~$2.74 per basic ~~and diluted~~ share, on operating revenues of ~~$57.7~~$20.2 million, compared to net loss attributable to shareholders for the ~~three months ended September 30, 2016 (the “Comparable Quarter”)~~Comparable Quarter of ~~$41.5~~$30.6 million, or ~~$8.31~~$2.33 per basic ~~and diluted~~ share, on operating revenues of ~~$39.9~~$51.5 million.

The following table is an analysis of our operating results for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020:

Three Months Ended September 30,

Change

2017

2016

$

%
(unaudited, in thousands)

Revenues

Contract drilling services

$
51,831

$
34,755

$
17,076

49
%

Management fees

342

993

(651
)

-66
%

Reimbursables

5,523

4,194

1,329

32
%

Total revenues

57,696

39,942

17,754

44
%

Operating costs and expenses

Operating costs

49,848

30,983

18,865

61
%

General and administrative

6,949

10,128

(3,179
)

-31
%

Depreciation

18,538

18,977

(439
)

-2
%

Total operating costs and expenses

75,335

60,088

15,247

25
%

Loss from operations

(17,639
)

(20,146
)

2,507

-12
%

Other income (expense)

Interest income

231

11

220

**

Interest expense and financing charges

(19,258
)

(18,722
)

(536
)

3
%

Other, net

858

669

189

28
%

Reorganization items

-

35

(35
)

-100
%

Total other expense

(18,169
)

(18,007
)

(162
)

1
%

Loss before income taxes

(35,808
)

(38,153
)

2,345

-6
%

Income tax provision

4,260

3,373

887

26
%

Net loss

$
(40,068
)

$
(41,526
)

$
1,458

-4
%

Revenue: Total revenue ~~increased 44% and contract~~decreased $31.3 million due primarily to the decrease in operating activities in the Current Quarter.

Contract drilling revenue ~~increased 49%~~decreased 60% for the Current Quarter as compared to the Comparable Quarter. ~~The increase in contract drilling revenue in~~During the Current Quarter, ~~was primarily~~only three of our rigs were operational due to ~~improved utilization on~~the fact that: (i) three of our ~~jackup fleet, with an aggregate~~drilling contracts were terminated in the second quarter of ~~317 incremental revenue-earning days, including 71 additional days attributable to the addition~~2020 as a result of the ~~Vantage 260, contributing $5.5 million~~volatility in ~~increased revenue. Increased average dayrates~~oil prices and ~~revenue efficiencies on~~ the ~~Tungsten Explorer~~ ~~contributed an incremental $1.6 million~~challenges presented by the spread of COVID-19; (ii) another drilling contract ~~drilling revenue~~expired in the ~~Current Quarter.~~

~~Management fees~~second quarter of 2020 in accordance with its terms; and ~~reimbursable~~(iii) another drilling contract was amended to reduce the applicable dayrate. The decrease in our contract drilling revenue for the Current Quarter ~~were $0.3 million and $5.5 million, respectively,~~ as compared to ~~$1.0~~the Comparable Quarter was primarily a result of these contract changes.

Reimbursables and other revenue for the Current Quarter decreased $4.7 million ~~and $4.2~~as compared to the Comparable Quarter as a result of the changes in drilling contracts discussed immediately above as well as the termination of the bareboat charter lease on the Soehanah jackup rig, which was redelivered to the Company in February 2020.

Operating costs: Operating costs for the Current Quarter decreased $23.2 million ~~respectively, in~~as compared to the Comparable Quarter. The decrease in ~~management fees~~operating costs was primarily ~~due to~~ the ~~completion of the construction of a managed drillship in 2016. The increase in reimbursable revenue was primarily a~~ result of ~~the increases~~changes to our drilling contracts which resulted in ~~jackup utilization.~~

~~Operating costs:~~ ~~Operating costs for~~only three of our rigs operating in the Current Quarter, ~~increased 61%~~with lower costs incurred on warm stacked rigs, and a $1.2 million decrease in operational support costs in the Current Quarter as compared to the Comparable ~~Quarter. Jackup utilization changes resulted~~Quarter as a result of reductions in ~~an incremental $11.6 million, including $1.6 million for non-cash amortization~~personnel headcount and salaries paid to personnel. Decreases in Operating cost in the Current Quarter were further impacted by the sale of the ~~contract value acquired with~~Titanium Explorer on March 10, 2021 and the ~~Vantage 260. Deepwater operating costs increased $7.3~~recognition of a net $2.8 million ~~due primarily~~related to ~~incremental costs for~~ the ~~reactivation~~sale of the ~~Platinum Explorer~~ ~~for an upcoming contract in India.~~asset.

General and administrative expenses: Decreases in general and administrative expenses for the Current Quarter as compared to the Comparable Quarter were primarily due to ~~a $1.4 million decrease~~cost cutting initiatives to reflect the lower levels of operating activity in ~~legal~~the Current Quarter. General and administrative expenses ~~associated with our internal FCPA investigation~~for the Current Quarter and ~~the Petrobras arbitration. Additionally,~~for the Comparable Quarter included ~~accrued severance costs in connection with the resignations of former executives.~~approximately $0.2 million and approximately $0.5 million, respectively, for non-cash share-based compensation expense.

Depreciation expense: Depreciation expense for the Current Quarter ~~was consistent with~~decreased 22% as compared to the Comparable ~~Quarter.~~Quarter, due primarily to a $3.8 million decrease in depreciation expense on the Titanium Explorer, which was classified as held for sale on December 31, 2020.

Interest income: Interest income for the Current Quarter decreased $0.6 million as compared to the Comparable Quarter, due primarily to lower interest rates earned on lower cash investments during the Current Quarter.

Interest expense and ~~other~~ financing charges: Interest expense for the Current Quarter ~~was consistent with~~increased 1% as compared to the Comparable Quarter. Interest expense includes non-cash ~~discount accretion, payment-in-kind interest and~~ deferred financing costs totaling approximately ~~$14.3 million and $14.1~~$0.4 million for the Current Quarter and for the Comparable Quarter, respectively.

Other, net: We recorded a gain of $2.3 million during the Comparable Quarter related to the settlement agreement between the Company and its subsidiaries, on the one hand, and VDC and its subsidiaries, on the other. See “Note 8. Commitments and Contingencies” of the “Notes to Unaudited Consolidated Financial Statements” in Part I, Item 1 of this Quarterly Report for additional detail on the settlement agreement.

Our functional currency is ~~the U.S. dollar;~~USD; however, a portion of the revenues earned and expenses incurred by certain of our subsidiaries are denominated in currencies other than ~~the U.S. dollar.~~USD. These transactions are ~~remeasured~~re-measured in ~~U.S. dollars~~

USD based on a combination of both current and historical exchange rates. Net foreign currency exchange ~~gains~~loss of ~~$0.9~~approximately $0.6 million and ~~$0.7~~gain of approximately $0.1 million ~~were~~was included in ~~other,~~“other, net,” for the Current Quarter and ~~the~~ Comparable Quarter, respectively.

Income tax ~~expense:~~ ~~Income tax expense increased in the Current Quarter as compared to the Comparable Quarter due to an increase in revenue in the Current Quarter and the impact of the annualized effective tax rate.~~

~~For the Nine months ended September 30, 2017 and the Successor and Predecessor Periods~~

Net loss for the nine months ended September 30, 2017 (the “Current Period”) was $113.2 million, or $22.63 per basic and diluted share, on operating revenues of $153.0 million and net loss for the Successor Period was $106.3 million, or $21.26 per basic and diluted share, on operating revenues of $118.2 million. Net loss attributable to VDI for the Predecessor Period was $471.0 million, on operating revenues of $23.5 million.

~~The following table is an analysis of our operating results for the Current Period, the Successor Period and the Predecessor Period.~~

Successor

Predecessor

Nine Months Ended September 30, 2017

Period from February 10, 2016 to September 30, 2016

Period from January 1, 2016 to February 10, 2016

(unaudited, in thousands)

Revenues

Contract drilling services

$
137,672

$
99,715

$
20,891

Management fees

1,148

3,664

752

Reimbursables

14,188

14,860

1,897

Total revenues

153,008

118,239

23,540

Operating costs and expenses

Operating costs

119,030

93,387

25,213

General and administrative

29,929

27,991

2,558

Depreciation

55,531

49,434

10,696

Total operating costs and expenses

204,490

170,812

38,467

Loss from operations

(51,482
)

(52,573
)

(14,927
)

Other income (expense)

Interest income

587

26

3

Interest expense and financing charges

(57,180
)

(48,144
)

(1,728
)

Other, net

2,073

987

(69
)

Reorganization items

-

(606
)

(452,919
)

Bargain purchase gain

1,910

-

-

Total other expense

(52,610
)

(47,737
)

(454,713
)

Loss before income taxes

(104,092
)

(100,310
)

(469,640
)

Income tax provision

9,067

5,978

2,371

Net loss

(113,159
)

(106,288
)

(472,011
)

Net loss attributable to noncontrolling interests

-

-

(969
)

Net loss attributable to VDI

$
(113,159
)

$
(106,288
)

$
(471,042
)

~~Revenue:~~ ~~During the Current Period jackup utilization averaged 76% with both the~~ ~~Emerald Driller~~ ~~and the~~ ~~Aquamarine Driller~~ working throughout and the remaining three jackups working a combined additional 410 days generating a combined average daily revenue of $64,268 across the jackup fleet. During the Successor Period, only the ~~Aquamarine Driller~~ worked the entire period with the remaining three jackups working a combined additional 175 days at a combined average daily revenue of $94,794. In the Predecessor period of January 1, 2016 to February 10, 2016, our jackups had an aggregate 86 revenue earning days at average daily revenue of approximately $88,347.

~~Deepwater utilization for the Current Period, for the Successor Period and for the Predecessor Period averaged 33% as only the~~ ~~Tungsten Explorer~~ ~~worked throughout all periods. Neither of our other two ultra-deepwater drillships worked during the reported periods as the~~ ~~Platinum Explorer~~ ~~completed its initial 5-year contract during the fourth quarter of 2015 and the~~ ~~Titanium Explorer~~ ~~drilling contract was cancelled by the operator in August 2015.~~

Management fees for the Current Period, the Successor Period and the Predecessor Period averaged approximately $4,206 per day, $15,658 per day and $18,810 per day, respectively. Reimbursable revenue for the Current Period and the Successor Period was $14.2 million and $14.9 million, respectively, with six rigs working part of the Current Period and four working for part of the Successor Period.~~Reimbursable revenue for the Predecessor Period was $1.9 million when three rigs worked for the entire period.~~

~~Operating costs:~~ Operating costs for the Current Period were approximately $119.0 million, including $8.2 million of reimbursable costs. Operating costs for the Successor Period were approximately $93.4 million, including $11.9 million of reimbursable costs. ~~For the Predecessor Period, operating costs were $25.2 million, including $1.4 million of reimbursable costs. Operating costs in the respective periods were dependent on the operational status of the~~ ~~rigs.~~

~~General and administrative expenses:~~ General and administrative expenses for the Current Period and the Successor Period were $29.9 million and $28.0 million, respectively, including $10.9 million and $6.8 million, respectively, in legal expenses associated with our internal FCPA investigation and the Petrobras arbitration. Similar charges incurred in the Predecessor Period totaled $531,000.

~~Depreciation expense:~~ For the Predecessor Period, depreciation expense was based on the historical cost basis of our property and equipment. Upon our emergence from bankruptcy, we applied the provisions of fresh-start accounting and revalued our property and equipment to fair value which resulted in a significant decrease in those values. Depreciation expense for the Current Period and the Successor Period is based on the reduced asset values of property and equipment as a result of the adoption of fresh-start accounting.

~~Interest expense and other financing charges:~~ Interest expense for the Current Period and for the Successor Period is calculated on the debt that was issued in connection with our emergence from bankruptcy on February 10, 2016. Interest expense for the Predecessor Period was calculated on the old credit agreement as provided for in the Reorganization Plan and on the VDC Note issued in connection with the Reorganization Plan. Interest expense for the Current Period and for the Successor Period includes approximately $42.7 million and $36.2 million of non-cash payment in kind interest and deferred financing costs, respectively.

~~Reorganization items:~~ In the Predecessor Period, we incurred $22.7 million of post-petition professional fees associated with the bankruptcy cases. Additionally, we incurred non-cash charges of $2.06 billion in fresh-start accounting adjustments, offset by a $1.63 billion non-cash gain on settlement of LSTC. During the Successor Period we incurred $606,000 in professional fee expenses in connection with our bankruptcy cases.

~~Bargain purchase gain:~~ We recorded a bargain purchase gain of $1.9 million during the Current Period related to our Vantage 260 acquisition. The gain on bargain purchase resulted from the excess of the net fair value of the assets acquired and liabilities assumed in the acquisition over the purchase price. We believe that we were able to negotiate a bargain purchase price as a result of our operational presence in West Africa and the seller’s liquidation.

~~Other, net:~~ Net foreign currency exchange gains included in other, net for the Current Period and the Successor Period were $2.3 million and $1.0 million, respectively. Foreign currency exchange gains or losses included in other, net in the Predecessor Period were insignificant.

~~Income tax expense:~~ provision: Our ~~estimated~~ annualized effective tax rate for the Current ~~Period was~~Quarter is negative ~~8.8%~~6.0% based on estimated annualized loss before income taxes excluding income tax discrete items. ~~Our estimated annualized~~For the Comparable Quarter, we were not able to reliably forecast annual “ordinary” income and calculated the effective tax ~~rates~~rate based on year-to-date results, pursuant to ASC 70-270-30-18, as opposed to estimating an annual effective tax rate. The Company’s effective tax rate for the ~~Successor Period and~~Comparable Quarter was negative 10.56%, including the ~~Predecessor Period were negative 9.4% based on estimated annualized loss or profit before income taxes in the respective periods, excluding income tax~~impact of discrete items. ~~For all periods, we had a loss before income taxes resulting~~Due to the different methodologies utilized to calculate the interim tax provisions, it is not beneficial to numerically reconcile the change in ~~negative~~estimated tax ~~rates.~~ rate.

Our income taxes are generally dependent upon the results of our operations and the local income taxes in the jurisdictions in which we operate. In some jurisdictions, we do not pay taxes or receive benefits for certain income and expense items, including interest expense ~~loss~~and disposal gains or losses. In other jurisdictions, we recognize income taxes on ~~extinguishment of debt and reorganization expenses.~~a net income basis or a deemed profit basis.

The prolonged low price environment caused by the spread of COVID-19, the resulting decline in global economic activity and the oil price and market share volatility began to reduce our liquidity and capital resources in the second quarter of 2020, a trend which could extend into subsequent quarters in 2021 and beyond, depending on, among other factors, how long COVID-19 remains a significant public health crisis and global economic activity remains depressed. Such events have had significant adverse consequences for general financial, business and economic conditions, as well as for the financial, business and economic position of our business and the business of our customers and suppliers, and may adversely impact our ability to derive cash flows from our operations and access capital funding from third parties in the future.

We have experienced, and could experience further, delays in the collection of certain accounts receivables due to logistical obstacles, such as office closures resulting from the COVID-19 outbreak, as well as other impacts to our long-term liquidity. For example, in addition to a general and widespread lock-down in response to an increase in cases related to the COVID-19 outbreak in India, several states have imposed nightly curfews for all persons (with limited exceptions for essential services) (see the “Ongoing Impact of COVID-19 and Declines in the Demand for Oil and Gas” of this Part I, Item 2 for further information pertaining to the ongoing impact of COVID-19 on our operations and financial condition). These types of governmental measures could impact our ability to operate in locations where such restrictions are in place. With this uncertainty, we have sought, and continue to seek, measures to reduce our operating costs and preserve cash during these challenging times. The effects of the decline in global economic activity and other oil price and market share volatility may cause us to implement cost reduction measures in addition to those put in place in 2020 and alter our general financial strategy.

As of ~~September 30, 2017,~~March 31, 2021, we have adequate cash reserves and are continuously managing our actual cash flow and cash forecasts. As a result of these factors, management believes that we have adequate liquidity to fund our operations for the twelve months following the date our consolidated financial statements are issued and therefore, have been prepared under the going concern assumption.

As of March 31, 2021, we had working capital of approximately ~~$233.9~~$178.7 million, including approximately ~~$198.6~~ $140.4million of cash available for general corporate purposes. Scheduled ~~principal~~ debt ~~maturities and~~service consists of interest payments through December 31, ~~2018 are~~2021 of approximately ~~$31.1~~$32.4 million. We anticipate capital expenditures through December 31, ~~2018~~2021 to be between approximately $5.5 million and $6.7 million, for sustaining capital ~~expenditures on our rig fleet,~~and capital ~~spares, information technology and other general corporate projects to be approximately $3.1 million to $3.8 million.~~spares. As our rigs obtain new contracts, we could incur reactivation and mobilization costs for these rigs, as well as customer requested equipment upgrades. These costs could be significant and may not be fully recoverable from the customer. ~~Additionally, we anticipate expenditures for maintenance and repairs and equipment certifications~~Based on our ~~rigs in preparation for future contracts. Through~~expected levels of activity, incremental expenditures through December 31, ~~2018, we anticipate incremental expenditures~~2021 for ~~fleet reactivation,~~ special periodic surveys, ~~and~~ major repair and maintenance expenditures and equipment recertifications to be between approximately ~~$15.8~~$17.2 million ~~to $19.4~~and $21.0 million. As of ~~September 30, 2017~~March 31, 2021, we had ~~$12.7~~$39.0 million available for the issuance of letters of credit under our ~~revolving~~cash collateralized letter of credit facility.

~~In February 2017, we executed a purchase and sale agreement with a third party to acquire the~~ ~~Vantage 260~~ jackup rig and related multi-year drilling contract for $13.0 million. A down payment of $1.3 million was made upon execution of the agreement and the remaining $11.7 million was paid upon closing on April 5, 2017.

The following table ~~below~~ includes a summary of our cash flow information for the periods ~~indicated.~~indicated:

Changes in cash flows from operating activities are driven by changes in net income during the periods (see the discussion of changes in net income above in “Results of Operations” ~~above) during the periods. Changes in cash~~of this Part I, Item 2).

Cash flows ~~used in~~from investing activities ~~are dependent upon our level of capital expenditures, which varies based on the timing of projects. Cash used for the acquisition of the~~ ~~Vantage 260~~ ~~totaled $13.0 million~~ in the ~~nine months ended September 30, 2017. In the Predecessor Period from January 1, 2016 to February 10, 2016, we received~~Current Quarter include net proceeds of ~~$73.9 million, net of debt issuance costs of $2.3~~$13.6 million from the ~~issuance~~sale of the ~~10% Second Lien Notes. Additionally, we made a $7.0 million payment on our pre-petition credit agreement.~~Titanium Explorer.

The significant elements of ~~our post-petition debt~~the 9.25% First Lien Notes are described in “Note 5. ~~Debt”~~Debt” of the “Notes to ~~our consolidated financial statements included elsewhere~~Unaudited Consolidated Financial Statements” in Part I, Item 1 of this ~~report.~~Quarterly Report. The information discussed therein is incorporated by reference in its entirety into this Part I, Item 2.

We enter into operating leases in the normal course of business for office space, housing, vehicles and specified operating equipment. Some of these leases contain options that would cause our future cash payments to change if we exercised those options.

We are subject to litigation, claims and disputes in the ordinary course of business, some of which may not be covered by insurance. Information regarding our legal proceedings is set forth in “Note 8. Commitments and ~~Contingencies”~~Contingencies” of the “Notes to ~~our consolidated financial statements included elsewhere~~Unaudited Consolidated Financial Statements” in Part I, Item 1 of this ~~report.~~ Quarterly Report. The information discussed therein is incorporated by reference in its entirety into this Part I, Item 2.

There is an inherent risk in any litigation or dispute and no assurance can be given as to the outcome of any claims. We do not believe the ultimate resolution of any existing litigation, claims or disputes will have a material adverse effect on our financial position, results of operations or cash flows.

The preparation of unaudited financial statements and related disclosures in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Our significant accounting policies are included in “Note 2. Basis of Presentation and Significant Accounting Policies” of the “Notes to the

Unaudited Consolidated Financial Statements” in Part I, Item 1 of this Quarterly Report. These policies, along with our underlying judgments and assumptions made in their application, have a significant impact on our consolidated financial statements. While management believes current estimates are appropriate and reasonable, actual results could materially differ from those estimates. We have ~~identified~~discussed the development, selection and disclosure of such policies ~~below as critical to our business operations~~ and ~~the understanding of our financial operations.~~

~~Fresh-start Accounting:~~ ~~Effective with our bankruptcy filing on December 3, 2015, we were subject to the requirements of ASC 852. All expenses, realized gains and losses and provisions for losses directly associated~~estimates with the ~~bankruptcy proceedings were classified as “reorganization items” in the consolidated statements of operations.~~ Certain pre-petition liabilities subject to Chapter 11 proceedings were considered LSTC on the Petition Date and just prior to our emergence from bankruptcy on the Effective Date. The LSTC classification distinguished such liabilities from the liabilities that were not expected to be compromised and liabilities incurred post-petition.

Upon emergence from bankruptcy, we adopted fresh-start accounting, which resulted in the Company becoming a new entity for financial reporting purposes. Upon adoption of fresh-start accounting, our assets and liabilities were recorded at their fair values asaudit committee of the ~~Effective Date. The Effective Date fair values~~Board of our assets and liabilities differed materially from the recorded values of our assets and liabilities as reflected in our historical consolidated balance sheets. The effects of the Reorganization Plan and the application of fresh-startDirectors.

Our critical accounting policies are ~~reflected in our consolidated balance sheet as of December 31, 2016 and the~~those related ~~adjustments thereto were recorded in our consolidated statement of operations as reorganization items for the period January 1, 2016~~ to ~~February 10, 2016.~~

~~Property and Equipment:~~ Our long-lived assets, primarily consisting of the values of our drilling rigs, are the most significant amount of our total assets. We make judgments with regard to the carrying value of these assets, including amounts capitalized, componentization, depreciation and amortization methods, salvage values and estimated useful lives. Drilling rigs are depreciated on a component basis over estimated useful lives on a straight-line basis as of the date placed in service. Other assets are depreciated upon placement in service over estimated useful lives on a straight-line basis.

~~We evaluate the realization of~~ property and equipment, ~~whenever events or changes in circumstances indicate that the carrying amount~~impairment of ~~an asset may not be recoverable. An impairment loss on our property~~long-lived assets and ~~equipment exists when estimated undiscounted cash flows expected to result from the use~~income taxes. For a discussion of the ~~asset~~critical accounting policies and ~~its eventual disposition are less than its carrying amount. Any impairment loss recognized would be computed as~~estimates that we use in the ~~excess of the asset’s carrying value over the estimated fair value. Estimates of future cash flows require us to make long-term forecasts~~preparation of our ~~future revenues~~consolidated financial statements, see “Item 7. Management's Discussion and ~~operating costs~~Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates” in Part II of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with ~~regard~~the SEC on March 18, 2021. During the Current Quarter, there were no material changes to the ~~assets subject to review. Our business, including the utilization rates and dayrates we receive for~~judgments, assumptions or policies upon which our drilling rigs, depends on the level of our customers’ expenditures for oil and natural gas exploration, development and production expenditures. Oil and natural gas prices and customers’ expectations of potential changes in these prices, the general outlook for worldwide economic growth, political and social stability in the major oil and natural gas producing basins of the world, availability of credit and changes in governmental laws and regulations, among many other factors, significantly affect our customers’ levels of expenditures. Sustained declines in or persistent depressed levels of oil and natural gas prices, worldwide rig counts and utilization, reduced access to credit markets, reduced or depressed sale prices of comparably equipped jackups and drillships and any other significant adverse economic news could require us to evaluate the realization of our drilling rigs. In connection with our adoption of fresh-startcritical accounting upon our emergence from bankruptcy on February 10, 2016, an adjustment of $2.0 billion was recorded to decrease the net book value of our drilling rigs to estimated fair value. As of September 30, 2017, no triggering event has occurred to indicate that the current carrying value of our drilling rigs may not be recoverable.estimates are based.

~~Revenue:~~ ~~Revenue is recognized as services are performed based on contracted dayrates and the number of operating days during the period.~~

In connection with a customer contract, we may receive lump-sum fees for the mobilization of equipment and personnel. Mobilization fees and costs incurred to mobilize a rig from one geographic market to another are deferred and recognized on a straight-line basis over the term of such contract, excluding any option periods. Costs incurred to mobilize a rig without a contract are expensed as incurred. Fees or lump-sum payments received for capital improvements to rigs are deferred and amortized to income over the term of the related drilling contract. The costs of such capital improvements are capitalized and depreciated over the useful lives of the assets. We had no deferred revenues under drilling contracts at September 30, 2017 or December 31, 2016.

~~Rig and Equipment Certifications:~~ We are required to obtain regulatory certifications to operate our drilling rigs and certain specified equipment and must maintain such certifications through periodic inspections and surveys. The costs associated with these certifications, including drydock costs, are deferred and amortized over the corresponding certification periods.

~~Income Taxes:~~ Income taxes have been provided based upon the tax laws and rates in effect in the countries in which operations are conducted and income is earned. Deferred income tax assets and liabilities are computed for differences between the financial statement basis and tax basis of assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized. We recognize interest and penalties related to income taxes as a component of income tax expense.

Recent Accounting ~~Standards:~~ Pronouncements: See “Note 2. Basis of Presentation and Significant Accounting ~~Policies”~~Policies” of the “Notes to ~~our consolidated financial statements included elsewhere~~Unaudited Consolidated Financial Statements” in Part I, Item 1 of this ~~report.~~Quarterly Report for further information. The information discussed therein is incorporated by reference in its entirety into this Part I, Item 2.

Our rigs operate in various international locations and thus are sometimes subject to foreign exchange risk. We may from time to time also be exposed to certain commodity price risk, equity price risk and risks related to other market driven rates or prices. We do not enter into derivatives or other financial instruments for trading or speculative purposes. The significant decline in worldwide exploration and production spending as a result of reduced oil prices ~~has~~since 2014, the continual spread of COVID-19 and its designation as a pandemic, and the ongoing oil price and market share volatility have each negatively impacted the offshore contract drilling business at large, as discussed in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations”of this Quarterly Report.

Interest Rate Risk: As of ~~September 30, 2017,~~March 31, 2021, we had ~~approximately $140.5 million face amount of~~no variable rate debt outstanding under the 2016 Term Loan Facility. Under the 2016 Term Loan Facility, interest is payable on the unpaid principal amount of each term loan at LIBOR plus 6.5%, with a LIBOR floor of 0.5%. As of September 30, 2017, the 1-month LIBOR rate was 1.24% and the current interest rate on the 2016 Term Loan Facility is 7.74%. Increases in the LIBOR rate would impact the amount of interest that we are required to pay on these borrowings. For every 1% increase in LIBOR (above the LIBOR floor) we would be subject to an increase in interest expense of $1.4 million per annum based on September 30, 2017 outstanding principal amounts. We have not entered into any interest rate hedges or swaps with regard to the 2016 Term Loan Facility.outstanding.

Foreign Currency Exchange Rate ~~Risk.~~Risk: Our functional currency is the ~~U.S. Dollar,~~USD, which is consistent with the oil and gas industry. However, outside the ~~United States,~~U.S., a portion of our expenses are incurred in local currencies. Therefore, when the ~~U.S. Dollar~~USD weakens (strengthens) in relation to the currencies of the countries in which we operate, our expenses reported in ~~U.S. Dollars~~USD will increase (decrease). A substantial majority of our revenues are received in ~~U.S. dollars,~~USD, our functional currency; however, in certain countries in which we operate, local laws or contracts may require us to receive some payment in the local currency. We are exposed to foreign currency exchange risk to the extent the amount of our monetary assets denominated in the foreign currency differs

from our obligations in that foreign currency. In order to mitigate the effect of exchange rate risk, we attempt to limit foreign currency holdings to the extent they are needed to pay liabilities in the local currency. To further manage our exposure to fluctuations in currency exchange rates, foreign exchange derivative instruments, specifically foreign exchange forward contracts, or spot purchases, may be used. A foreign exchange forward contract obligates us to exchange predetermined amounts of specified foreign currencies at specified exchange rates on specified dates or to make an equivalent ~~U.S. dollar~~USD payment equal to the value of such exchange. We do not enter into derivative transactions for speculative purposes. As of ~~September 30, 2017,~~March 31, 2021, we did not have any open foreign exchange derivative contracts or material foreign currency exposure risk.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports we voluntarily file or submit to the SEC is recorded, processed, summarized, and reported within the time periods required by our debt agreements.

We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this ~~report.~~Quarterly Report. Based on that evaluation, such officers have concluded that the design and operation of these disclosure controls and procedures were effective as of ~~September 30, 2017~~March 31, 2021 to provide reasonable assurance that information required to be disclosed on our reports filed or submitted under the ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”)~~ was (1) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure and (2) recorded, summarized and reported within the time periods specified in the SEC’s rules and forms.

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

While the majority of our office and management personnel are working remotely due to the spread of COVID-19 and the resulting pandemic, we have not as of the date of this Quarterly Report experienced any material impact on our internal controls over financial reporting. Our management continues to monitor and assess the current situation as it relates to our internal controls over financial reporting in order to minimize the impact, if any, to their design and operating effectiveness.

Information regarding the Company’s legal proceedings is set forth in “Note 8. Commitments and Contingencies” ~~located in~~of the ~~Notes~~“Notes to Unaudited Consolidated Financial ~~Statements included~~Statements” in Part I, Item 1 of this Quarterly ~~Report on Form 10-Q and~~Report. The information discussed therein is incorporated ~~herein~~ by ~~reference.~~reference into this Part II, Item 1.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


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		Page
SAFE HARBOR STATEMENT		3
PART I—FINANCIAL INFORMATION
Item 1	Financial Statements		~~Financial~~ ~~Statements~~	56
	Consolidated Balance Sheet	56
	Consolidated Statement of Operations	7
	Consolidated Statement of ~~Operations~~Shareholders’ Equity	68
	Consolidated Statement of Cash Flows	79
	Notes to Unaudited Consolidated Financial Statements	810
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2123
Item 3	Quantitative and Qualitative Disclosures About Market Risk	2829
Item 4	Controls and Procedures		~~Controls and Procedures~~	29
PART II—OTHER INFORMATION
Item 1	Legal Proceedings	30
Item 6	~~Legal Proceedings~~Exhibits	2930
~~Item 6~~SIGNATURES			~~Exhibits~~	30
~~SIGNATURES~~		32


	Three Months Ended March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(35,997	)	$	(30,570	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation expense		14,125			18,016
Amortization of debt financing costs		410			410
Share-based compensation expense		306			698
Deferred income tax (benefit) expense		(150	)		102
Gain on disposal of assets		(2,733	)		0
Gain on settlement of restructuring agreement		0			(2,278	)
Changes in operating assets and liabilities:
Trade receivables, net		(430	)		(20,373	)
Materials and Supplies		9			514
Prepaid expenses and other current assets		(1,766	)		586
Other assets		(2,069	)		1,877
Accounts payable		(878	)		(6,288	)
Other current liabilities and other long-term liabilities		13,822			6,032
Net cash used in operating activities		(15,351	)		(31,274	)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment		(456	)		(1,196	)
Net proceeds from sale of Titanium Explorer		13,557			0
Net cash provided by (used in) investing activities		13,101			(1,196	)
CASH FLOWS FROM FINANCING ACTIVITIES
Contributions from holders of noncontrolling interests		0			0
Debt issuance costs		0			0
Net cash provided by financing activities		0			0
Net decrease in unrestricted and restricted cash and cash equivalents		(2,250	)		(32,470	)
Unrestricted and restricted cash and cash equivalents—beginning of period		154,487			242,945
Unrestricted and restricted cash and cash equivalents—end of period	$	152,237		$	210,475
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest	$	9		$	3
Income taxes (net of refunds)		785			1,465
Non-cash investing and financing transactions:
Reallocation of Soehanah jack up rig acquisition value from equipment to materials and supplies		0			1,019

(in thousands)
Total cash consideration	$	13,000

Purchase price allocation:
Drilling contract value		12,640
Rig equipment to be sold (net of disposal costs)		2,050
Drillpipe assets		700
Severance liabilities assumed		(480	)
Net assets acquired		14,910

Bargain purchase gain	$	1,910

	September 30, 2017		December 31, 2016
(unaudited, in thousands)
2016 Term Loan Facility	$	140,497	$	141,570
10% Second Lien Notes, net of financing costs of $1,522 and $1,873		74,604		74,252
Convertible Notes, net of discount of $67,042 and $103,695		693,413		652,980
		908,514		868,802
Less current maturities of long-term debt		4,430		1,430
Long-term debt, net	$	904,084	$	867,372


Title of each class	Trading Symbol	Name of each exchange on which registered
N/A	N/A	N/A


Abbreviation/Acronym		Definition
10% Second Lien Notes		The Company's 10% Senior Secured Second Lien Notes due 2020
2016 Amended MIP		The Company's Amended and Restated 2016 Management Incentive Plan
2016 Term Loan Facility		The Company's initial term loans in place in connection with the Reorganization Plan
9.25% First Lien Notes		The Company's 9.25% Senior Secured First Lien Notes due November 15, 2023
ADVantage		ADVantage Drilling Services SAE, a joint venture owned 51% by the Company and 49% by ADES
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
Bassoe		Bassoe Offshore A.S.
Board of Directors		The Company's board of directors
Comparable Quarter		The three months ended March 31, 2020
Conversion		The conversion of all of the Convertible Notes into Ordinary Shares
Convertible Notes		The Company's 1%/12% Step-Up Senior Secured Third Lien Convertible Notes due 2030
COVID-19		Coronavirus disease 2019, a new strain of coronavirus caused by SARS-CoV-2
Current Quarter		The three months ended March 31, 2021
DOJ		U.S. Department of Justice
Effective Date		February 10, 2016, the date the Company emerged from bankruptcy
EPS		Earnings per share
Exchange Act		Securities Exchange Act of 1934, as amended
FASB		Financial Accounting Standards Board
First Lien Indenture		First Lien Indenture, dated as of November 30, 2018, by and between Vantage Drilling International and U.S. Bank National Association
IRS		U.S. Internal Revenue Service
OPEC		The Organization of the Petroleum Exporting Countries
Ordinary Shares		The Company's ordinary shares, par value $0.001 per share
PBGs		Performance-based restricted stock units
QLE		A qualified liquidity event as defined in the 2016 Amended MIP
Reorganization Plan		The Company's pre-packaged plan of reorganization under Chapter 11 of Title 11 of the U.S. Bankruptcy Code
Restructuring Agreement		The restructuring support agreement among VDC and a majority of the Company's secured creditors
ROU		Right-of-use
SEC		Securities and Exchange Commission
Securities Act		Securities Act of 1933, as amended
Tax Election		Tax election filed with the IRS on January 22, 2020, to allow VDI to be treated as a partnership, rather than a corporation, for U.S. federal income tax purposes, with an effective date retroactive to December 9, 2019
TBGs		Time-based restricted stock units
TEV		Total enterprise value
U.S.		United States of America
U.S. GAAP		Accounting principles generally accepted in the United States of America
U.S. Holder		A beneficial owner of the Ordinary Shares that is, for U.S. federal income tax purposes, (i) a citizen or individual resident of the United States, (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that was organized under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate, the income of which is subject to U.S. federal income tax regardless of its source or (iv) a trust, if a U.S. court can exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or such trust has a valid election in effect under applicable treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes
USD or $		U.S. Dollar
VDC		Vantage Drilling Company, the Company's former parent company
VDC Note		A $61.5 million promissory note issued by the Company in favor of VDC
VDI		Vantage Drilling International
VIE		Variable interest entity


	Three-Month Period Ended March 31, 2020
	Ordinary Shares
	Shares		Amount		Additional Paid-in Capital			Accumulated Earnings (Deficit)			Non-Controlling Interests			Total Equity
Balance January 1, 2020		13,115	$	13	$	634,770		$	17,064		$	1,244		$	653,091
Share-based compensation		—		—		698			—			—			698
Share-based compensation - dividend equivalents		—		—		(2,204	)		—			—			(2,204	)
Net (loss) income		—		—		—			(30,572	)		2			(30,570	)
Balance March 31, 2020		13,115	$	13	$	633,264		$	(13,508	)	$	1,246		$	621,015


	Three-Month Period Ended March 31, 2021
	Ordinary Shares
	Shares		Amount		Additional Paid-in Capital			Accumulated Deficit			Non-Controlling Interests			Total Equity
Balance January 1, 2021		13,115	$	13	$	634,181		$	(259,655	)	$	1,206		$	375,745
Share-based compensation		—		—		306			—			—			306
Share-based compensation - dividend equivalents		—		—		(760	)		—			—			(760	)
Net loss		—		—		—			(35,984	)		(13	)		(35,997	)
Balance March 31, 2021		13,115	$	13	$	633,727		$	(295,639	)	$	1,193		$	339,294

(in thousands)
Fiscal year:
Remaining 2017	$	1,591
2018		6,311
2019		1,643
Thereafter		-
Total	$	9,545


Name	Year Built	Water Depth Rating (feet)		Drilling Depth Capacity (feet)		Location	Status
Jackups
Emerald Driller	2008		375		30,000	Qatar	Operating
Sapphire Driller	2009		375		30,000	Cameroon	Contract preparation
Aquamarine Driller	2009		375		30,000	Malaysia	Contract preparation
Topaz Driller	2009		375		30,000	Montenegro	Operating
Soehanah	2007		375		30,000	Indonesia	Warm stacked
Drillships (1)
Platinum Explorer	2010		12,000		40,000	India	Operating
Tungsten Explorer	2013		12,000		40,000	Mediterranean	Warm stacked


	Percentage of Days Contracted		Revenues Contracted (1) (in thousands)
	2021	2022	2021		2022			Beyond
Jackups	59%	7%	$	68,196		$	8,827		$	—
Drillships	30%	42%	$	34,838		$	67,342		$	32,208

	Percentage of Days Contracted				Revenues Contracted (in thousands)
	2017		2018		2017		2018		Beyond
Jackups		100%		40%	$	22,944	$	40,146	$	7,727
Drillships		55%		61%	$	38,825	$	124,186	$	67,727

	Three Months Ended September 30,						Change
	2017			2016			$			%
(unaudited, in thousands)
Revenues
Contract drilling services	$	51,831		$	34,755		$	17,076			49	%
Management fees		342			993			(651	)		-66	%
Reimbursables		5,523			4,194			1,329			32	%
Total revenues		57,696			39,942			17,754			44	%
Operating costs and expenses
Operating costs		49,848			30,983			18,865			61	%
General and administrative		6,949			10,128			(3,179	)		-31	%
Depreciation		18,538			18,977			(439	)		-2	%
Total operating costs and expenses		75,335			60,088			15,247			25	%
Loss from operations		(17,639	)		(20,146	)		2,507			-12	%
Other income (expense)
Interest income		231			11			220		**
Interest expense and financing charges		(19,258	)		(18,722	)		(536	)		3	%
Other, net		858			669			189			28	%
Reorganization items		-			35			(35	)		-100	%
Total other expense		(18,169	)		(18,007	)		(162	)		1	%
Loss before income taxes		(35,808	)		(38,153	)		2,345			-6	%
Income tax provision		4,260			3,373			887			26	%
Net loss	$	(40,068	)	$	(41,526	)	$	1,458			-4	%


			Incorporated by Reference
Exhibit Number	Exhibit Description	Filed Herewith	Form	File Number	Exhibit	Filing Date
2.1	Joint Prepackaged Chapter 11 Plan of Offshore Group Investment Limited and its Affiliated Debtors, dated December 1, 2015, which is Exhibit A to the Disclosure Statement		T-3	022-29012	99.T3E.1	12/02/15
3.1A	Certificate of Incorporation of the Company		S-4	333-170841	3.3	11/24/10
3.1B	Fourth Amended and Restated Memorandum and Articles of Incorporation of the Company		8-K	333-159299-15	3.1	03/08/19
4.1	First Lien Indenture, dated as of November 30, 2018, by and between Vantage Drilling International, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee and first lien collateral agent		8-K	333-159299-15	4.1	12/04/18
4.2	First Supplemental Indenture by and between Vantage Drilling International, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee and first lien collateral agent, dated January 24, 2019		10-K	333-159299-15	4.4	03/10/2020
4.3	Second Supplemental Indenture by and between Vantage Drilling International, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee and first lien collateral agent, dated February 13, 2019		10-K	333-159299-15	4.5	03/10/2020
4.4	Shareholders Agreement dated as of February 10, 2016, by and among Offshore Group Investment Limited and the Shareholders (as defined therein)		8-K	333-159299-15	10.1	02/17/16
4.5	Amendment No. 1 to the Shareholders Agreement, dated as of February 10, 2016, by and among Offshore Group Investment Limited and the Shareholders (as defined therein)		8-K	333-159299-15	10.1	03/08/19
4.6	Registration Rights Agreement, dated as of February 10, 2016, by and among Offshore Group Investment Limited and each of the Holders (as defined therein) party thereto		8-K	333-159299-15	10.2	02/17/16
4.7	Amendment No. 1 to the Registration Rights Agreement, dated as of May 9, 2016, by and among Vantage Drilling International (f/k/a Offshore Group Investment Limited) and each of the Holders party thereto		10-Q	333-159299-15	10.3	5/13/16
4.8	Registration Rights Agreement among Vantage Drilling International, Vantage Drilling Company and the joint official liquidators of Vantage Drilling Company, dated as of April 26, 2017		10-K/A	333-212081	10.1	05/01/17


	VANTAGE DRILLING INTERNATIONAL

Date: ~~November 7, 2017~~May 6, 2021	By:	/s/ ~~THOMAS J. CIMINO~~ DOUGLAS E. STEWART
		~~Thomas J. Cimino~~Douglas E. Stewart
		Chief Financial Officer, General Counsel and Corporate Secretary
		(Principal Financial and Accounting Officer)