
	Predecessor Company February 10, 2016			Reorganization Adjustments			Fresh-Start Adjustments			Successor Company February 10, 2016
(in thousands, except share and par value information)
ASSETS
Current assets
Cash and cash equivalents	$	182,171		$	66,875	^(a)	$	—		$	249,046
Trade receivables		74,297			—			—			74,297
Inventory		64,272			—			(20,030	)^(f)		44,242
Prepaid expenses and other current assets		16,511			—						16,511

Total current assets		337,251			66,875			(20,030	)		384,096

Property and equipment
Property and equipment		3,480,890			—			(2,589,755	)		891,135
Accumulated depreciation		(543,315	)		—			543,315			—

Property and equipment, net		2,937,575			—			(2,046,440	)^(g)		891,135

Other assets
Other assets		21,963			—			(11,910	)^(h)		10,053

Total other assets		21,963			—			(11,910	)		10,053

Total assets	$	3,296,789		$	66,875		$	(2,078,380	)	$	1,285,284

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	34,547		$	—		$	—		$	34,547
Accrued liabilities		44,307			—			—			44,307
Current maturities of long-term debt		—			1,430	^(b)		—			1,430
VDC note payable		62,627			(62,627	)^(c)		—			—

Total current liabilities		141,481			(61,197	)		—			80,284

Long–term debt		—			818,525	^(b)		—			818,525
Other long-term liabilities		30,645			—			(18,148	)^(h)		12,497
Liabilities subject to compromise		2,694,456			(2,694,456	)^(d)					—
Commitments and contingencies
Shareholders’ equity
Predecessor ordinary shares, $0.001 par value, 50 million shares authorized; one thousand shares issued and outstanding		—			—			—			—
Predecessor additional paid-in capital		595,119			(595,119	)^(e)		—			—
Successor ordinary shares, $0.001 par value, 50 million shares authorized; 5,000,053 shares issued and outstanding		—			5	^(b)(c)		—			5
Successor additional paid-in capital		—			373,973	^(b)(c)		—			373,973
Accumulated deficit		(179,198	)		2,239,430	^(e)		(2,060,232	)⁽ⁱ⁾		—

Total VDI shareholders’ equity		415,921			2,018,289			(2,060,232	)		373,978
Noncontrolling interests		14,286			(14,286	)^(e)		—			—

Total equity		430,207			2,004,003			(2,060,232	)		373,978

Total liabilities and equity	$	3,296,789		$	66,875		$	(2,078,380	)	$	1,285,284

a)	Reflects the net use of cash on the Effective Date from implementation of the Reorganization Plan (in thousands):


Sources:
Net proceeds from 10% Second Lien Notes	$	76,125

Total Sources		76,125
Uses:
Repayment of Credit Facility borrowings		(7,000	)
Debt issuance costs		(2,250	)

Total Uses		(9,250	)

Net Sources	$	66,875

Represents the issuance of the new debt in connection with the Reorganization Plan: (1) the conversion of the pre-petition revolving credit facility into (i) $143.0 million of the 2016 Term Loan Facility and (ii) $7.0 million of cash; (2) the issuance of $76.1 million of new 10% Second Lien Notes due December 31, 2020 in a rights offering raising net proceeds of approximately $73.9 million after backstop premium and offering costs and (3) issuance of 4,344,959 New Shares of the Company and $750.0 million face value of Convertible Notes.

c)	Reflects the settlement of the VDC Note by issuing 655,094 New Shares in accordance with the Reorganization Plan.

d)	Reflects the settlement of LSTC in accordance with the Reorganization Plan as follows:


(in thousands)
2017 Term Loan	$	323,543
2019 Term Loan		341,250
7.5% Senior Notes		1,086,815
7.125% Senior Notes		727,622
Prepetition credit facility		150,000
Accrued interest		65,226

Liabilities subject to compromise of the Predecessor Company		2,694,456
Fair value of equity issued to debtholders		(311,351	)
Fair value of Convertible Notes issued to debtholders		(603,080	)
Issuance of 2016 Term Loan Facility		(143,000	)
Credit Facility settled in cash		(7,000	)

Gain on settlement of liabilities subject to compromise (debt forgiveness)	$	1,630,025

e)	Reflects the cumulative impact of reorganization adjustments discussed above:


(in thousands)
Gain on settlement of liabilities subject to compromise	$	1,630,025
Cancellation of Predecessor company equity		595,119
Acquisition of non-controlling interests		14,286

Net impact to retained earnings (deficit)	$	2,239,430

f)	An adjustment of $20.0 million was recorded to inventory to decrease its net book value to estimated fair value. This inventory was part of the original shipyard value and the adjustment is based on the adjustment for the decrease in value for the individual drilling rigs; see (g) below.

An adjustment of $2.0 billion was recorded to decrease the net book value of property and equipment to estimated fair value. The fair value was determined utilizing the income approach for drilling rigs and related rig equipment. The discount ed cash flow method under the income approach estimates the future cash flow that an asset is expected to generate. Future cash flow is converted to a present value equivalent using the estimated Discount Rate. The components of property and equipment, net as of February 10, 2016 and the fair value at February 10, 2016 are summarized in the following table:


	Successor		Predecessor
	February 10, 2016		February 10, 2016
(in thousands)
Drilling rigs	$	847,035	$	2,863,307
Capital spares		16,422		32,080
Leasehold improvements, office and technology equipment		18,389		18,389
Assets under construction		9,289		23,799

	$	891,135	$	2,937,575

h)	Represents the adjustments of deferred equipment survey and inspection costs, mobilization costs and mobilization revenue to estimated fair value.

i)	Reflects the cumulative impact of fresh-start adjustments discussed above:


(in thousands)
Property and equipment fair value adjustments	$	(2,046,440	)
Inventory fair value adjustments		(20,030	)
Deferred mobilization expense write-off		(7,654	)
Deferred equipment certification write-off		(4,256	)
Deferred mobilization revenue write-off		18,148

Net impact to retained earnings (deficit)	$	(2,060,232	)