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Organization and Recent Events
12 Months Ended
Dec. 31, 2021
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Organization and Recent Events

1. Organization and Recent Events

Vantage Drilling International, a Cayman Islands exempted company, together with its consolidated subsidiaries (collectively the “Company”), is 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 gas wells for our customers. Through our fleet of drilling units, we are a provider of offshore contract drilling services to major, national and independent oil and gas companies, focused on international markets. Additionally, for drilling units owned by others, we provide operational and marketing services for operating and stacked rigs, construction supervision services for rigs that are under construction, and preservation management services for rigs that are stacked.

Ongoing Impact of the COVID-19 Pandemic and Geopolitical Instability Caused by the Conflict in Ukraine

The global spread of COVID-19, including its highly contagious variants and sub-lineages, continues to pose significant risks and challenges worldwide, and has caused and continues to cause widespread illness and significant loss of life, leading governments across the world to impose and re-impose severely stringent and extensive limitations on movement and human interaction, with certain countries, including those where we maintain significant operations and derive material revenue, implementing quarantine, testing and vaccination requirements. These latest governmental reactions to the COVID-19 pandemic, as well as changes to and extensions of such approaches, have led to, and continue to result in, uncertain and volatile economic activity worldwide, including within the oil and gas industry and the regions and countries in which we operate.

While the Company has previously managed, and continues to actively manage, the business in an attempt to mitigate any ongoing and material impact from the spread of COVID-19, management anticipates that our industry, and the world at large, will need to continue to operate in, and further adapt, to the current environment for the foreseeable future.

The markets generally exhibited a strong recovery in global oil prices during 2021 and our management remains cautiously optimistic with respect to the potential for this trend to continue into 2022. However, oil and gas prices are expected to continue to be volatile as a result of, among other factors, (i) the ongoing COVID-19 pandemic, including the transmission and presence of highly contagious and new variants and the pace of vaccine rollouts, (ii) changes in oil and gas inventories, (iii) global market demand, (iv) geopolitical instability, armed conflict and social unrest, including the invasion of Ukraine by Russia in February 2022, the associated response undertaken by western nations, such as the implementation of broad sanctions, and the potential for retaliatory actions on the part of Russia, (v) potential future disagreements among OPEC+ countries regarding the supply of oil, and (vi) the potential for increased production and activity from U.S. shale producers and non-OPEC countries driven by the current oil prices, and therefore, the Company cannot predict how long oil and gas prices will remain stable or further increase, if at all, or whether they could reverse course and decline. In particular, the invasion of Ukraine by Russia has led to, and will likely continue to lead to, geopolitical instability, disruption and volatility in the markets with which we operate. It is not possible at this time to predict or determine the ultimate consequences of the conflict in Ukraine, which could include, among other things, additional sanctions, embargoes, geopolitical shifts and other material and adverse effects on macroeconomic conditions, financial markets, supply chains and currency exchange rates. While our management is actively monitoring the foregoing events and its associated financial impact 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.

Share Purchase Agreement to Sell EDC to ADES Arabia Holding and Entry into the ADES Global Strategic Alliance

On December 6, 2021, VHI, a wholly owned subsidiary of the Company, entered into a certain Share Purchase Agreement (the “ADES Purchase Agreement”) with ADES Arabia Holding (“ADES Arabia”), which wholly owns ADES, pursuant to which VHI agreed to sell to ADES Arabia (the “ADES Sale”) all of the issued and outstanding equity of VHI’s wholly-owned subsidiary, EDC, for an aggregate purchase price of $170.0 million in cash (the "Cash Consideration"), subject to certain adjustments contemplated by the ADES Purchase Agreement. In addition to the Cash Consideration, the Company will receive from ADES Arabia certain reimbursable amounts in relation to the Sapphire Driller and Aquamarine Driller Qatari contracts preparation and mobilization costs incurred prior to closing of the ADES Sale. EDC is the owner of the Emerald Driller jackup rig, which is currently operating in Qatar, and the Sapphire Driller jackup rig and the Aquamarine Driller jackup rig, which are expected to commence operations in Qatar in the second quarter of 2022. In addition, certain subsidiaries of the Company and ADES agreed, in connection with the ADES Purchase Agreement, to enter into a three-year support services agreement (the "ADES Support Services Agreement"), pursuant to which a subsidiary of the Company will provide support services to EDC post-closing of the ADES Sale, in respect of the Emerald Driller jackup rig, Sapphire Driller jackup rig and Aquamarine Driller jackup rig. The ADES Purchase Agreement became effective on December 20, 2021. The transactions contemplated by the ADES Purchase Agreement are expected to close during the second quarter of 2022 and are subject to customary closing conditions.

In addition to the ADES Purchase Agreement, the Company and ADES also entered into an agreement on December 6, 2021 to pursue a global strategic alliance (the “ADES Global Strategic Alliance”) leveraging the ADES Support Services Agreement and

ADVantage, the parties’ existing joint venture in Egypt. Pursuant to such agreement, the parties agreed to collaborate on exploring future commercial and operational opportunities.

Framework, Management and Marketing Agreements with Aquadrill

On February 9, 2021, VHI entered into a Framework Agreement and related Management and Marketing Agreements, as amended on March 16, 2021 (collectively, the “Framework, Management and Marketing Agreements”) with Aquadrill LLC, formerly known as Seadrill Partners LLC (“Aquadrill”), pursuant to which certain subsidiaries of VHI (the “VHI Entities”) agreed to provide operating, management and marketing services to Aquadrill and its subsidiaries (the “Aquadrill Entities”) with respect to four deepwater floaters owned by the Aquadrill Entities, which includes two drillships, the Polaris and the Capella, and two semisubmersibles, the Leo and the Sirius. The Framework, Management and Marketing Agreements were subject to the approval of, and were approved by, the U.S. Bankruptcy Court for the Southern District of Texas on March 18, 2021. The Sirius and the Leo have since been sold by Aquadrill and our management of the rigs has therefore concluded.

In connection with the entry into the Framework, Management and Marketing Agreements, VHI organized a new legal entity, Vantage Financial Management Co., an entity organized in the Cayman Islands (“VFMC”), to provide certain treasury management services to the Aquadrill Entities in respect of the management of the vessels subject to, and covered by, the Framework, 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.

In October 2021, in connection with the Framework, Management and Marketing Agreements, the Company and Aquadrill agreed to provide the Capella for a two well contract plus two priced optional wells for operations in Indonesia. The drilling campaign is expected to commence in the second quarter of 2022, following the completion of the Capella's current contract, after which the rig will transition to Vantage's management and will undergo scheduled maintenance and subsequently mobilize to Indonesia. Furthermore, in January 2022, one of the Company's subsidiaries entered into an agreement with Aquadrill to manage the Aquarius submersible rig, subject to the same terms and conditions outlined in the Framework Management and Marketing Agreements.

Purchase and Sale Agreement to Sell the Titanium Explorer

On December 31, 2020, we entered into a purchase and sale agreement with Best Oasis Limited (the “Buyer”) to sell the Titanium Explorer (the “Titanium Purchase and Sale Agreement”), for an aggregate purchase price of $13.8 million and we classified the rig as held for sale on our Consolidated Balance Sheets. The transaction contemplated by the Titanium Purchase and Sale Agreement closed on March 10, 2021. Pursuant to the Titanium Purchase and Sale Agreement, the Buyer was required to recycle the rig in an environmentally sound manner.

New ONGC Contract for the Platinum Explorer

On February 3, 2021, our ultra-deepwater drillship, the Platinum Explorer, received a letter of award for a two-year contract (the “New ONGC Contract”) from Oil and Natural Gas Company (“ONGC”). The Platinum Explorer concluded its prior three-year contract with ONGC in August 2021 and after being briefly out-of-service for routine maintenance, commenced the New ONGC Contract on November 23, 2021.